Tailored Brands will continue to capitalize on the strength of its custom clothing business in 2018 — after growing the category to more than $100 million in sales last year.
In reporting strong results for 2017 after the market closed Wednesday, Doug Ewert, chief executive officer, said he believes the company is now “the largest and fastest-growing retailer of men’s custom clothing. So far this year, custom sales are now trending above $3 million per week, and we are clearly in the early innings of this opportunity. With custom suits starting at around $400, we can serve a large addressable market of men who want a personalized look and a perfect fit and a reasonable price.”
He said the plan is to “significantly increase the penetration of custom as a percentage of total suits sold.” The bedrock of this strategy is the company’s ability to deliver a custom suit in an increasingly shorter period of time. “During 2017, we tested expedited custom delivery and validated our hypothesis that the faster we can deliver a custom suit, the more customers will give it a try,” he said.
Earlier this year, Tailored Brands said it will now deliver Joseph Abboud or Jos. A. Bank Reserve clothing within three weeks. Expanding upon that is the new Custom Express program, which can deliver a select assortment of custom suits in just one week. “Based on overwhelmingly popular demand in our pilot stores, we’ll expand Custom Express into more Men’s Wearhouse and Jos. Bank stores throughout the year,” Ewert said.
Additionally, the company will roll out custom shops to more of its stores as well this year. In 2017, it tested expanded custom shops in about 60 stores, he said, and the strength of the response is prompting the company to add these shops to approximately 450 Men’s Wearhouse, Jos. Bank and Moores stores during 2018.
“Custom is a win-win for Tailored Brands and our customers. Our research and experience show that men who buy custom suits from us are happier with their purchase, shop more frequently and have a higher annual spend than off-the-rack customers. We’ll be dedicating significant marketing efforts to build awareness for custom, including promoting it to our special occasion customers and hosting nationwide custom trunk shows,” Ewert said.
Other growth initiatives for this year include building a stronger branding message through digital channels and moving further away from promotions. “The Men’s Wearhouse branding campaign reinforces our brand promise that you’re going to like the way you look,” Ewert said. “The campaign features our expert style consultants and master tailors in the stores, who instill customers with confidence and reinforces the importance of fit for all men, including big and tall. In Q4, we continued to invest behind this successful campaign, which helped increase transactions, new-to-file customers and positive comps at Men’s Wearhouse.”
At Jos. A. Bank, whose financial profile the company has been working diligently to improve since acquiring the chain in 2014, a branding campaign launched last fall is taking hold, he said. Called Tradition Tailored for Today, the campaign “evolved the marketing mix away from pure product and promotional advertising to more advertising focus on lifestyle and brand building. In 2018, we plan to further distinguish Jos. Bank as a lifestyle brand with elevated storytelling around what makes shopping with us different.”
Lastly, the company will work this year to enhance omnichannel capabilities, he said. Last year, the company’s e-commerce site saw 65 million visitors, an increase of 8 percent over the prior year. “In 2018, we’ll create both online and in-store digital experiences to drive discovery, encourage store visits and augment the in-store retail experience.”
For the full year, net profits nearly quadrupled, to $96.7 million, or $1.95 a diluted share, from $25 million, or 51 cents, in 2016. It was a case of doing more with less, as sales for the year slipped modestly, to $3.3 billion from $3.38 billion.
Comparable sales inched up 0.1 percent, with a 1.1 percent decline at the Men’s Wearhouse division and a 5.4 percent gain at the Jos. A. Bank unit. (Results saw some firming in the fourth quarter, when total comps perked up 2.5 percent, with a 2.3 percent gain from Men’s Wearhouse and a 5.3 percent rise at Jos. A. Bank).
Tailored Brands cut its debt by about $200 million, to $1.4 billion, and lowered its inventories by 11 percent. It also sold its MW Cleaners business, an independent dry cleaning business that was not a part of its formalwear rental operations, for $18 million.
“In 2018, we plan to further reduce our debt, invest behind our growth strategies and return cash to shareholders via our dividend,” Ewert said.