If you own Men’s Wearhouse (MW) shares, you’re not going to like the way you look this morning.
In the quarter that saw the ouster of its founder and pitchman-in-chief, George Zimmer, the retailer posted a sales decline of 2.3 percent and a 28 percent drop in profit. Virtually every facet of the Men’s Wearhouse business flagged, from suit sales to tuxedo rentals and alterations.
Analysts had expected better on all fronts, despite disappointing results recently from a string of apparel retailers, including Macy’s (M) and Jos. A Bank (JOSB). The company trimmed its own estimates for same-store sales growth for the full year by about 2 percent. “We believe the men’s apparel industry is being negatively impacted by shifting priorities and consumer spending,” Doug Ewert, who is chief executive of Men’s Warehouse, said on a conference call this morning.
The board removed Zimmer in June amid a disagreement over strategy. A few weeks later, Men’s Wearhouse bought the designer Joseph Abboud and its U.S. factory for $97.5 million in cash. Zimmer has remained mum about the specifics of his dispute with the board, but it seems likely to have involved the Abboud purchase, which was a play for vertical integration and a departure from the company’s roots as a closet full of wholesale brands. “It’s really a reshaping of the whole business model,” Ewert said today of the deal.
Zimmer had also been pushing to take the company and its almost 1,000 Men’s Wearhouse stores private, according to a June statement from the board. So today’s crummy report—and the ensuing stock market dip—may be good news for the former face of the company. If he is interested in buying back the suit empire he built up from a tiny Texas outpost four decades ago, the proposition just became about 10 percent cheaper.