George Zimmer isn’t embarrassed to tell the world that he was fired.
The founder and former chief executive officer of Men’s Wearhouse was unceremoniously dumped in June 2013 when he floated the idea of taking the company private and disagreed with current management’s plans to buy its longtime rival, Jos. A. Bank.
That acquisition has proven to be “problematic,” he said, causing the company, now called Tailored Brands Inc., to borrow “a lot of money” — $1.8 billion — with disastrous results so far. Bank’s comparable-store sales have been in free fall — down 31.9 percent in the fourth quarter — as Tailored Brands tries to move away from Bank’s aggressive promotional cadence. The net loss in the fourth quarter was $1.1 billion and the company has also said it will close 250 stores, including 80 to 90 Jos. A. Bank units.
“I don’t think they’ve done a whole lot well since I left,” Zimmer told the audience, citing “fear and anxiety” among the employees at the store level who are “bemoaning their fate” as the business continues to struggle.
In answer to a question from the audience about what he would do to turn around the business, Zimmer reiterated what he said he told his successor, ceo Doug Ewert, upon being pushed out: “On almost any day of the year, you’ll do a fine job as the ceo, but on those select days when you’re not sure what to do, don’t call me,” Zimmer said. “I think they’re in a spot where they don’t know what’s going on.”
Despite the publicly embarrassing circumstances of his exit from Men’s Wearhouse, Zimmer wasn’t ready to retire; instead, he took the lessons he learned in his 40-year retail career and immediately “began searching for my second act.”
That “act” is Generation Tux, an online suit and tuxedo rental business, as well as Z Tailors, an on-demand personal tailoring service.
“When you think of me, you probably don’t think of technology and the Internet,” said Zimmer — famed for his TV commercials for Men’s Wearhouse and recital of the slogan “You’re going to love the way you look; I guarantee it.” But that’s where his path has led.
He was at the helm of Men’s Wearhouse when it went public in 1992, a move that caused the company to rapidly expand to satisfy the demands of Wall Street. Although Zimmer said he never regretted going public, American capitalism is “all about the shareholder and not about the stakeholder,” he said, and customer satisfaction takes a backseat to earnings per share.
To meet these demands, Men’s Wearhouse in 1999 made two acquisitions as well as its “most impactful move,” which was to introduce tuxedo rentals inside its stores. The first year, tuxedo rental sales were $1 million, but that number quickly grew to more than $400 million.
“By the time I was fired in 2013, we rented over three million tuxedos a year, dry-cleaned them all in our own dry-cleaning plants and shipped them back and forth to our stores in our trucks,” he said. “Needless to say, it was very profitable.”
With this as a backdrop, it’s not surprising that Zimmer turned to the same concept for his new businesses. After two years, Generation Tux boasts 25,000 unique visitors a week and just exceeded $1 million in retail revenue.
“But every online apparel company has one common problem,” he said. “How do you get it to fit?” Gen Tux’s solution includes self-measurement videos as well as a “promise” to send a tailor to a man’s home, drawing from its sister company, Z Tailors, which has a network of 500 tailors around the country.
“At the end of the day, we believe renting a tux comes down to trust,” Zimmer said, something that requires a blend of “high-tech and high-touch. When it comes to your wedding,” he said, “there are no back orders.
“We must focus on earning trust, and I believe this is achieved through the incorporation of high-touch practices like tailoring into our online business. I think this is the future of retail. Trust is an intangible. It takes a lifetime to create, but only a second to destroy.”
Even so, Zimmer said he has no plans to take Generation Tux into a brick-and-mortar play, although he has looked at opening pop-up stores inside regional malls.
“But right now, about 40 percent of the tuxedos we’re renting are masquerading as suits, so I think there is a strong business for suit rentals,” he revealed. “Right now, there are fewer than one million tuxedos purchased in the U.S. every year and over 10 million rented. So if that same ratio were to apply to suits, watch out.”