The proprietor of Males’s Wearhouse and JoS. A. Financial institution, which as soon as dominated the marketplace for inexpensive males’s fits, filed for chapter safety late Sunday, as demand plummeted for its company clothes with the coronavirus pandemic conserving America’s workplace staff at house.
The corporate, Tailor-made Manufacturers, had roughly 1,400 shops and 18,000 staff. It had already announced plans in July to remove 20 p.c of its company jobs and shut as much as 500 shops, and on Sunday mentioned that it deliberate to make use of the restructuring course of to slash its debt by at the least $630 million.
“Our enduring dedication to assist prospects feel and look their greatest will enable us to beat the challenges of Covid-19,” Dinesh Lathi, chief government of Tailor-made Manufacturers, mentioned in a statement accompanying the submitting in United States Chapter Court docket for the Southern District of Texas.
The attire business has been hit significantly exhausting by the pandemic, prompting chapter filings from retailers just like the Neiman Marcus Group, J. Crew and J.C. Penney. Lord & Taylor, as soon as a significant presence in America’s malls, and its proprietor Le Tote filed for chapter a number of hours earlier than Tailor-made Manufacturers on Sunday. The proprietor of Ann Taylor and Lane Bryant, Ascena Retail, which just some years in the past was one of many nation’s largest retailers for inexpensive skilled clothes for ladies, sought Chapter 11 safety on July 23.
Many clothes shops shut their doorways throughout the lockdowns, resulting in unpaid rents and workers furloughs. That blow to brick-and-mortar retailers got here as they have been already struggling to adapt to the rise of e-commerce and altering client conduct.
With tens of millions of Individuals unemployed or working from house, and a pause on proms and weddings, demand has plummeted for Tailor-made Manufacturers’ core product: males’s fits. The corporate reported that web gross sales had fallen by 60.four p.c within the three months that ended Could 2, in contrast with the identical interval final 12 months.
Brooks Brothers, a extra upscale vendor of fits and preppy garments that has been in enterprise since 1818, additionally noticed demand for its wares crater throughout the pandemic. It filed for chapter in early July.
Males’s Wearhouse was based in 1973 by George Zimmer, who turned recognized for his catchy slogan in TV and radio commercials: “You’re going to love the best way you look. I assure it.” The enterprise, catering to the widespread man who needed to look sharp for work with out breaking the financial institution, took off. Males’s Wearhouse had about 100 shops when it went public in 1992.
“They got here out with a reasonable possibility that allowed a man to go in and purchase all the pieces from one place, all at a sure high quality and all at a sure worth level,” mentioned Mark-Evan Blackman, assistant professor and males’s put on specialist on the Style Institute of Know-how. “For a few years, they have been thought of by sure prospects to be the one recreation on the town.”
However the firm’s troubles predate the pandemic. In 2013, the corporate abruptly fired Mr. Zimmer, then the executive chairman, saying he had been unwilling to cede control to the board and had pushed to sell the company to private investors against shareholders’ interests. In response, Mr. Zimmer released a letter expressing his considerations that the corporate was heading within the mistaken route.
Mr. Zimmer, now 71, mentioned it was painful to see the corporate search chapter safety after he had invested a lot of his life constructing it. He attributes the corporate’s downfall to selections made after his contentious exit.
“It’s a crying disgrace,” Mr. Zimmer mentioned in an interview. “I spent 40 years creating a extremely neat firm, and it solely took seven years to destroy it.”
In 2014, Males’s Wearhouse acquired the boys’s put on firm JoS. A. Financial institution, forming the mother or father group Tailor-made Manufacturers. The merger was meant to unite the 2 retail firms and seize an even bigger share of the market of budget-conscious swimsuit consumers and renters.
As an alternative of accelerating gross sales, the merger mired Tailor-made Manufacturers in debt. On Could 2, the corporate had long-term debt of $1.four billion and $244.2 million of money and money equivalents.
“Whenever you merge two poorly performing firms collectively and layer on lots of debt, it’s normally not a recipe for fulfillment, and it hasn’t been,” mentioned Ivan Feinseth, director of analysis for Tigress Monetary Companions.
The merger was ill-conceived, Mr. Feinseth mentioned, as a result of the 2 firms had basically completely different enterprise fashions and it was tough and costly to consolidate their stock and brick-and-mortar areas into one seamless enterprise.
On the similar time, Tailor-made Manufacturers confronted different pressures. It struggled to compete with the rise of quick vogue and the dominance of on-line retailers, whereas saddled with the intensive actual property and working prices of sustaining shops.
It was additionally damage by the relaxation of office dress codes, inspired by tech start-up culture. The casual workwear trend had such sweeping influence that Goldman Sachs, a leader in an industry known for its formality, gave its employees the green light in 2019 to wear casual clothes.
“Fifteen years ago, every guy had a suit in his closet, whether he was a plumber or a middle management administrator,” said Mr. Blackman of the Fashion Institute of Technology. “That’s no longer the case. Tailored garments have been hurting for a very long time.”
Tailored Brands, like most of the retailers that have filed for bankruptcy during the pandemic, plans to stay in business and use the Chapter 11 filing to cut down on debt and close stores. To sustain its business moving forward, Tailored Brands will have to reinvent its business model and significantly improve its online presence, said Anthony Campagna, global director of fundamental research at ISS EVA, an analytics firm.
“There is a place in the market you can sell lower-tier men’s clothing,” he said. “It’s just a matter of positioning it correctly.”