Letter to our Stakeholders
In 2012, Men’s Wearhouse achieved our 40th straight year of successful operations, ending the year with $2.5 billion in total sales, an increase of 4.4 percent over 2011, and diluted EPS of $2.55.
Through most of 2012, we were pleased with our business, but the fourth quarter brought North America a major storm, an election, a peek over the fiscal cliff and protracted financial uncertainty. Even in this time of heightened financial conservatism for our customers, Men’s Wearhouse realized a number of significant achievements.
Leveraging Brand Strength
Men’s Wearhouse is assuredly a strong brand. In the 2012 Annual Rankings for U.S. Retail Clothing compiled by YouGov’s BrandIndex, Men’s Wearhouse ranked fourth behind Victoria’s Secret, J. C. Penney and Old Navy. In likeability studies we compiled, Men’s Wearhouse rated an extraordinary 80 percent.
In addition to our brand strength, we offer remarkable elasticity. Our brands attract Boomers and Millennials, traditionalists and the contemporary, all manners of body types and a variety of price points. Beyond broad appeal, we successfully produce and promote exclusive brands underneath the Men’s Wearhouse umbrella through relationships like BLACK with Vera Wang.
Every Man, Every Occasion
Supported by the concerted efforts of our merchandising and marketing departments, we have demonstrated that our Men’s Wearhouse and Moores brands appeal to a broad range of consumers, from Boomers to Millennials.
Today’s high school seniors preparing for prom, college students suiting up for internship interviews and recent graduates buying their first work wardrobes see our store offerings’ relevance to their own lifestyles, much as their fathers do.
In response, we continue to advance our merchandising. Our slim fit product line is the fastest growing piece of our business, appealing to fashion-forward consumers of all generations. And designer denim, a line added to our casual wear within the last several years, is booming.
2012 also brought an exciting addition to the Men’s Wearhouse team, with iconic menswear designer Joseph Abboud named Chief Creative Director. By marrying North America’s leading menswear specialty retailer with Abboud’s vision and ability, the Men’s Wearhouse brand will be even better positioned to bring contemporary, well-made menswear directly to our customers at great prices.
This retail giant brings more than three decades’ experience in the men’s fashion industry and a well-deserved reputation for exclusive, timeless apparel and brands that reflect the modern man.
As Chief Creative Director with Men’s Wearhouse, Abboud will leverage his extensive industry and design knowledge, working directly with Men’s Wearhouse’s merchants and sourcing team to enhance the company’s offerings. Abboud will contribute unique, distinctive, quality concepts to our stores while also developing new brands for Men’s Wearhouse.
BLACK by Vera Wang
BLACK by Vera Wang is our exclusive collection of modern, sophisticated rental tuxedos available in slim, standard and big and tall fits. Contemporary in cut and fit, our tuxedos offer superior drape, a luxurious feel and are exclusive to Men’s Wearhouse.
Since late summer 2012, when the tuxedos were available in stores, BLACK by Vera Wang propelled a 7 percent increase in overall tuxedo rental business at Men’s Wearhouse and a 16 percent increase at Moores.
New Stores, New Markets
Men’s Wearhouse continues to capitalize on opportunities to gain significant market share. With our tuxedo rental business’ strong contribution to store economics,
Men’s Wearhouse can now move successfully into markets previously considered too small.
In the U.S. and Canada, we see opportunity to open another 100-125 full-line locations projected to achieve meaningful annual sales. As many of these stores will enter new markets but benefit from national advertising coverage, we expect to further leverage our expenses and add to our profitability.
We also see opportunity to reach new customers in destination outlet centers across the country. To that end, in 2012 we launched the Men’s Wearhouse Outlet Store concept.
Elevating our Brands
In 2012, our marketing, store construction, training and events specialists contributed significantly to elevating our brand experiences. Men’s Wearhouse highlights include:
Store remodeling — we are halfway through a multi-year effort to update and upgrade our store interiors.
Improved in-store experience, from mannequin display to store layouts.
Powerful, effective marketing, including strong television, inclusive website integration and consistent messaging across traditional and social media channels.
E-Commerce, E-mail and
E-Engaging Our Customers
Men’s Wearhouse deploys technology to reach our customers where they live and shop. We added more people and processes to improve customer satisfaction, reducing our average online order fulfillment time from three days to less than one day.
We invested in technologies to increase customer engagement and launched improved website functionality and cross-channel communications on social media, e-mail and SMS.
In 2012, we introduced tuxedo.menswearhouse.com, featuring interactive “Build a Tux” functionality, live chat, a store finder and inspiration for wedding, proms and formal, quinceañera and special event fashions. We also launched two mobile applications for our tuxedo customers:
Group manager app to help brides and grooms manage their wedding parties.
Prom app to help high school kids handle their prom fashions through their phones.
Behind the scenes, we increased our central inventory to support our online business and provided functionality to our store employees so they can add online items to in-store transactions to increase customer satisfaction and transaction values.
The Next 40 Years
For the past four decades, our success has hinged on the performance of our employees and the caliber of leadership represented at every level of our company. Together, we celebrate another successful year and look forward to the next 40 years. There is no question in my mind that our best days are ahead of us.
NO ONE DOES IT BETTER
Forty years ago, I started The Men’s Wearhouse with $7,000, a college buddy of mine, a shoebox for a cash register and lots of dreams. I wanted to create an environment that would be engaging, fun and provide a valuable service, while still being profitable. Amazingly, my dreams have been actualized beyond those early dreams. This has been accomplished by literally thousands of men and women, many of whom I have come to know personally and some who have become friends or close associates.
I am proudest of the fact that since becoming a public company in 1992, we have been able to achieve a compounded annual growth rate (CAGR) for sales of 14.4 percent and a net income CAGR of 16.8 percent, while still maintaining our core values. These values include compassion, caring, mutual trust, employee engagement, having fun and delivering world-class customer service. We have consistently delivered value to our shareholders and customers by focusing on our employees. Their positive engagement with our company has contributed to us being voted as a “Fortune 100 Best Company to Work For” for the 12th time in 2012, when we achieved our highest ranking ever — #50 (the highest ranking apparel company).
We have also been active in our communities, another important stakeholder group. For years, we have been a major contributor to the United Negro College Fund, as well as helping many other charities that our employees have chosen to support. Last year, our National Suit Drive delivered 130,000 gently used garments to men trying to overcome financial and educational barriers to enter the workforce.
As I look forward to the next 40 years, my hope is that the old aphorism “the more things change, the more things stay the same” characterizes how we stay true to our core values, core competencies and win-win-win strategies. While growing organically, adding significant technology through the web and mobile applications, and making acquisitions, we stay focused on employee engagement and customer satisfaction, which leads to shareholder value. I will continue to do my best to help Doug, our senior executives and our thousands of dedicated employees make it happen and actualize their dreams — I guarantee it!