The board of directors of menswear retailer
The Men's Wearhouse Inc
) has abruptly terminated the company's founder and executive
chairman George Zimmer. The company issued a statement, which
cited no reason for the termination. The company also postponed
its annual meeting of shareholders, which was scheduled on Jun
Zimmer was the face of Men's Wearhouse and appeared in many TV
commercials. He had been instrumental in Men's Wearhouse's growth
from one small store in Texas to one of North America's largest
men's clothing retailer with 1,143 locations.
It is being speculated that Men's Wearhouse was looking for a
new face to attract youth. Zimmer's termination could also be due
to his constant disagreements with the board over company
matters. According to Zimmer's statements, he remained concerned
about the company's operations. However, the company was
performing quite well. In fact, the company has outperformed
Zacks Consensus Estimate in the last seven out of ten quarters,
delivering a positive surprise of 7.3%. The actual reason for his
termination still remains a mystery.
In the recently concluded first quarter fiscal 2013 reported
on Jun 12, Men's Wearhouse delivered solid earnings growth of 25%
from the prior-year quarter, driven by a shift in the tuxedo
season from the second quarter due to an early Easter. Revenues
beat the Zacks Revenue Estimate and crept up 5.1% owing to strong
tuxedo revenues. The early Easter pushed up the rental rates and
sales of tuxedo accessories.
Men's Wearhouse reaffirmed its earnings per share expectation
for fiscal 2013 in the range of $2.70 to $2.80. However,
the company expects weak comparable store sales growth as a
result of a continued decrease in average transactions per
Men's Wearhouse holds a Zacks Rank #4 (Sell). Stocks in the
apparel industry that are performing well and are therefore worth
The Children Retail Stores Inc
Lululemon Athletica Inc
), all of them holding a Zacks Rank #2 (Buy).
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