The merger would have created a men’s apparel powerhouse and revived Men’s Wearhouse, which has struggled since the ouster of founder George Zimmer in June, said Brian Sozzi, chief equities strategy at Belus Capital.
“Men’s Wearhouse would be absolutely silly not to take the money and run,” Sozzi said. “The company is not a growth retailer.”
It’s clear that Jos. A. Bank is beating Men’s Wearhouse in the fierce competition for customers.
Jos. A Bank’s shares have gained more than 8% in the past six months, while Men’s Wearhouse only gained 1.6%.
So what does Jos. A. Bank have that Men’s Wearhouse doesn’t?
Those infamous “buy one, get seven free” sales.
“Those promotions are why Jos. A. Bank is getting foot traffic that Men’s Wearhouse isn’t,” Brian Pitera, a principal of consultancy at A.T. Kearney, told us last month. “To compete, Men’s Wearhouse is going to have to step up promotions and advertising.”
While Jos. A. Bank’s promotions sound too good to be true, the brand actually manages to make money by selling the products at higher initial mark-ups than necessary. In other words, Jos. A. Bank builds the cost of free products into the one full-priced suit you purchase.
Sozzi said the deal might still happen.
“This was not so some fly by night, hastily put together deal,” Sozzi said. “This is something that Jos A. Bank has clearly been working on for a while and they could sweeten the deal a bit.”