Tailored Brands has announced the closing of about 250 Men's Wearhouse and Jos. A Bank stores. The men's clothing stores aren't producing expected profits, and a recent change worsened the situation. Jos. A Bank held a "buy-one-get-three-free" promotion for years, which annoyed consumers, but eliminating the sales strategy lost comparable-store sales 14.6%.
In a press release on its website, Tailored Brands explained the decision with quotations from CEO Doug Ewert.
"While our fourth quarter and full year results were consistent with our revised guidance, we remain very disappointed by the weak Jos. A. Bank results. Our transition away from unsustainable promotions has proven significantly more difficult and expensive than we expected. We do, however, remain confident that Jos. A. Bank offers a longer-term opportunity to profitably grow market share in the menswear business. Additionally, our Men's Wearhouse, Moores, and K&G brands continue to perform well, with profitability in line or ahead of our expectations. . . .
As part of our store rationalization program we plan to close approximately 250 stores during fiscal year 2016. The store closures fall into three categories. First, we expect to close 80 to 90 full-line Jos. A. Bank stores which we believe have limited potential for meaningful profit improvement. Second, we will close all Jos. A. Bank (49) and Men's Wearhouse (9) outlet stores. We have determined that outlet stores, which collectively were not profitable, are not sufficiently differentiated enough from our core offerings and have not resonated with our customers. Lastly, we intend to close between 100 and 110 MW Tux stores. These closings are a continuation of our strategy of migrating tuxedo rentals to full line stores and reflective of our new partnership with Macy's, Tuxedo Shop @ Macy's. We have refined our Tuxedo Shop @ Macy's rollout schedule and now plan to open 166 stores in 2016 with the balance of 122 stores to be opened in 2017."
Ewert did express his confidence in the remaining stores: "We do, however, remain confident that Jos. A. Bank offers a longer-term opportunity to profitably grow market share in the menswear business."
- Analyze the company's statement. Looking at the organization, style, tone, and so on, which principles of business writing are followed, and which are not?
- How will employees react to this news, particularly after the decision to end the suit promotion?