Jos. A Bank has been scaling back on its massive discounts, and now sales are tanking.
The retailer’s “buy-one, get-several-free” deals on men’s suits, sport coats, sweaters, and more helped make Jos. A Bank a household name.
But Men’s Wearhouse, which acquired Jos. A Bank last year, recently began phasing out the promotions, saying they were no longer sustainable.
Jos. A Bank’s same-store sales fell 14.6% in the most recent quarter.
Analysts say fewer promotions are largely to blame for the drop.
Jos. A Bank’s promotions ran so frequently that they became the butt of late-night TV jokes. But customers came to expect the deals, according to Neil Saunders, CEO of Conlumino, a retail-consulting firm.
“As desirable as the change might be, shifting an entrenched business model is like trying to wean an addict off their choice of temptation: possible, but rarely without much pain and heartache,” Saunders wrote in a recent research note. “The pain and heartache for Jos A. Bank comes in the form of sales. …While Men’s Wearhouse always thought sales would drop over the short term, this is a far faster pace of decline than they ever anticipated.”
The fact that Jos. A Bank has to rely on such drastic measures to attract customers is a clear sign that the brand is in need of a refresh, Saunders wrote.
To improve its appeal, Men’s Wearhouse has been introducing new clothing and shoes that are designed to attract younger customers to Jos. A Bank stores.
“It’s this focus on newness that will give us the best shot at winning a larger share of closet with existing customers and expanding our reach to new and younger customers,” Men’s Wearhouse CEO Doug Ewert said on an earnings call in September.
“Bottom line: We need to give customers new reasons to shop at Joseph Bank and [give] our stores more ammunition to grow their business.”
Saunders said Jos. A Bank will remain problematic for Men’s Wearhouse going forward.
The company is booking a $90.1 million charge for the failed investment.
But Jos. A Bank won’t be returning to the “buy-one, get-seven-free” model any time soon.
“When we acquired Joseph Bank, we knew that we needed to correct the promotional model,” CEO Doug Ewert said Thursday. “However, we underestimated the impact to the near-term performance as we began to execute the difficult, but necessary, corrective steps. We remain confident that these steps will restore a long-term, sustainable, profit model and reshape the business for a healthy and growing Jos. A. Bank.”