Men's Wearhouse fires founder George Zimmer
The one thing George Zimmer couldn’t guarantee was his job at Men’s Wearhouse.
The apparel retailer’s founder and longtime pitchman was abruptly dismissed from his position as executive chairman, the retailer said in a curt statement Wednesday.
By starring in the company’s television commercials since 1985, Zimmer endeared himself to generations of shoppers. He marketed suits by intoning, in his distinctive gravelly voice: “You’re going to like the way you look. I guarantee it.”
The company said it expects to discuss with Zimmer “the extent, if any, and terms of his ongoing relationship” with the brand, which has corporate offices in Houston and Fremont, Calif. The chain added that it had postponed its annual shareholders meeting, which had been scheduled for Wednesday, so it could renominate its board members without Zimmer.
The company gave no explanation of why Zimmer, who launched the company four decades ago, was being suddenly booted. Zimmer said in his own statement that he had spent recent months expressing concerns to the board “about the direction the company is currently heading.”
“Instead of fostering the kind of dialogue in the boardroom that has, in part, contributed to our success, the board has inappropriately chosen to silence my concerns by terminating me as an executive officer,” he said.
But analysts suggested that the 64-year-old spokesman’s appeal may have waned among younger suit buyers.
“Management has been evaluating (Zimmer’s) effectiveness, particularly with the millennial consumer,” even as Zimmer was easing out of day-to-day operations, Stifel Nicolaus & Co. analyst Richard E. Jaffe wrote in a note to clients.
“We believe that despite Zimmer’s planned transition to a smaller role at the company, he had difficulty letting go of the reins and the leadership of the business,” Jaffe wrote. “We believe that this led to a conflict with the board and his subsequent termination.”
By failing to provide details about Zimmer’s firing and instead allowing rampant speculation, the company is “doing a disservice to shareholders,” said Jerry Reisman, an expert in retail law and a partner in the law firm Reisman Peirez Reisman & Capobianco.
“It leaves too many unanswered questions, and all you have left is fear,” he said. “Even if it’s a misguided fear, it could cause investors to sell the stock.”
The stock closed down 43 cents, or 1.2 percent, at $37.04 on Wednesday.
Zimmer owned 3.5 percent of its shares as of May 9, according to a Men’s Wearhouse regulatory filing.
Zimmer first ventured into the apparel industry fresh out of college in 1971, working for his father’s coat manufacturing business in Hong Kong. In 1973, he and his college roommate opened the first Men’s Wearhouse in a small space in Houston, selling $25 polyester sports coats and using a cigar box as a cash register.
Lately, the business has performed well, reporting this month that first-quarter revenue increased 5.1 percent to $616.5 million. Net income rose 23 percent to $33.1 million, or 65 cents a share, from $26.9 million, or 52 cents a share, a year earlier.
The $8.7 billion men’s clothing industry is in the midst of a turnaround after suffering a slowdown during the recession. After a 1.7 percent revenue slump on average each of the past five years, the market will start to grow 1.2 percent annually through 2018, according to research firm IBISWorld.
Industrywide, sales of men’s suits increased 13 percent from May 2012 to April 2013, to nearly $2.6 billion, according to research firm NPD Group Inc.
Zimmer was a nontraditional executive. He never forced Men’s Wearhouse employees to undergo criminal background checks.
He serves on the board for the Institute of Noetic Sciences, which conducts research into controversial topics such as psychic abilities, postmortem consciousness, alternative healing and meditation.
Records show that Zimmer donated $70,500 in 2009 and 2010 in support of Proposition 19, an ultimately defeated unsuccessful ballot imitative initiative in California that would have legalized marijuana possession and cultivation.
As for the now-vacated spokesman position, Twitter and Facebook users are suggesting that Men’s Wearhouse solicit an audition from actor Jonathan Goldsmith, who portrays the Most Interesting Man in the World character for beer brand Dos Equis.
Bearded, rumbly-voiced and besuited, he’s a dead ringer for Zimmer.
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©2013 Los Angeles Times
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What's behind firing of Men's Wearhouse founder?
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