J.C. Penney Launches Big and Tall Concept

by Jean E. Palmieri
From WWD Issue 04/28/2011

The gloves are coming off in the battle for the men’s big and tall customer.

J.C. Penney Co. Inc. today will take the wraps off The Foundry Big & Tall Supply Co., a new retail concept targeted to this growing market segment — one that will pit it directly against the other major players in the men’s industry, all of whom have identified this niche as one ripe for expansion.

The biggest player is Casual Male Retail Group Inc., which operates nearly 500 stores including four Destination XL superstores, which combine all of the company’s concepts: the moderate Casual Male merchandise as well as the more-upscale Rochester Big & Tall, along with shoes. The company will add 10 to 14 additional DXL stores this year and, by 2015, expects to have between 75 and 100 units in operation.

The Men’s Wearhouse Inc., which does $300 million in business in extended sizes within its stores already, has committed to test three freestanding Big & Tall stores this year. The retailer has said that sales in extended sizes are running 40 percent higher than its regular-size business. And Jos. A. Bank Clothiers Inc., which launched a Web site devoted to these sizes earlier this year, has also reported success within the category.

And Penney’s wants a chunk of the pie, which is estimated to be a $6 billion annual business.

The Foundry will start its retail rollout with six stores in the Dallas market, five of which will have a soft opening today, followed by two in Kansas City, Kan., and two in Kansas City, Mo., next week. By 2013, the chain is expected to expand to 100 units and then triple that number within five years.

The Foundry is the first of three new businesses within the Plano, Tex.-based company’s new Growth Brands Division. The other two are Clad, a men’s Web site, and Gifting Grace, an online gift site, both of which will launch later this year. None of these businesses will have any external association with J.C. Penney; instead, they’re viewed as a new businesses separate and apart from the company’s core department stores. However, they will benefit from using Penney’s strong logistics and back-office capabilities.

“This is a men’s specialty store, not a family department store,” said Steve Lossing, president of The Foundry and a 20-year men’s wear retail veteran. “It will have no public affiliation with J.C. Penney.” Lossing has been with Penney’s for the past eight years, working in three men’s areas, including big and tall. Prior to that, he was at Parisian and Kauffman’s.

“We worked with an outside firm for the branding and creative. It has a whole different look and feel,” he said. “It’s very masculine.”

The stores are actually designed to replicate a microbrewery and feature an urban, industrial feel with concrete and wood floors, brick walls, steel and wood fixtures and modern lighting. There is a lounge in the center with comfortable leather chairs where customers are invited to sit and relax. There are flat-screen TVs both in the lounge and in the rear as well as an oversize poker table. An unusual component of the design is the fitting area, or “tank room,” which replicates the cylindrical copper tanks in a brewpub. And in markets without restrictions, The Foundry actually has happy hour where customers can stop in for a beer, water or soda at designated times. “We know guys hate to shop, but we want him to feel he can hang out and relax in our store,” Lossing said.

The assortment ranges from furnishings and sportswear to tailored clothing and shoes, or “soup to nuts,” according to Lossing. In focus groups prior to opening, potential customers said they hated having to go to three different stores to complete their wardrobes, hence the comprehensive mix. “They’re very frustrated with the selection available to them,” he said.

The Foundry carries a mix of national brands and private label and is broken down into three distinct sections: the porch, the lounge and the loft.

Upon entering, customers are in a porch area, which showcases traditional collections such as Nautica, Callaway Golf and Timberland, Lossing said. On the other side of the entryway are the modern collections, including Calvin Klein, Perry Ellis and Marc Ecko Cut & Sew. That’s followed by 24 feet of private label polos in solids and stripes, along with shorts merchandised under The Foundry Supply Co. name. Denim, which is a mix of brands and private label and screen T-shirts are also found here. Private brand overall is around one-third of the assortment, Lossing said, and is most heavy in basics such as polos, Ts and shorts.

The back third of the store is the loft, which houses the tailored clothing, dress shirts, neckwear, socks, underwear, belts and dress and casual shoes. Izod, Geoffrey Beene and Cubavera also are housed here. Other brands offered include Cole Haan, Dockers, Geoffrey Beene, Levi’s and Nike.

The red brick back wall merchandises licensed team apparel and activewear. “This gives each store a local flavor,” Lossing said.

In stores, The Foundry carries from 1XL to 6XL and 1XLT to 5XLT in sportswear, but up to 10XL online. Shoes run from 10 regular to 16 wide. Tailored clothing sizes will run up to 54L in stores and up to 60 online. Prices range from $20 for a T-shirt to $200 for a suit coat.

The Web site already is up and running — it launched quietly two weeks ago and will send out its first e-mail to the public next week. “We’re running transactions on it,” Lossing said. “We sent an e-mail to around 110,000 people so we’re getting traffic, but it’s been all internal communication.”

When the marketing does hit, it will be “very unique,” Lossing said, saying it features “tongue-in-cheek” humor. For example, one ad will run the tag line: “You know what they say about a man with big hands…he shops at The Foundry Big & Tall Supply Co.”

The retailer will employ direct mail, radio, e-mails, run of paper advertising and billboards in the cities in which the stores operate. “Everything but TV,” Lossing said, noting that the company purchased some big and tall lists to mine for customers.

The target shopper for The Foundry is affluent, professional and generally 45 or older, although some younger customers may be lured by the Marc Ecko line or other more-contemporary collections. He generally makes over $75,000 a year.

Seven of the first stores are off-mall locations while three are in centers. Lossing said that it will be “interesting to see” which sites do best and he expects the big guys to gravitate more toward street locations, while tall guys may be more likely to shop in malls. Most stores will average around 5,000 square feet, with the smallest being 4,500 square feet and the largest 6,000 square feet.

Lossing declined to provide a volume projection for the new company but is confident that The Foundry’s distinct look and feel will allow it to carve a niche. “There are a lot of big and tall competitors out there,” he said. “We’re not the only ones who have identified it as a growth area.” In fact, he said the B&T population is expected to grow 25 percent over the next 10 years while the regular population growth will be flat. “People are just getting bigger and taller,” he said. “We offer a unique environment and assortment, and our associates are the cherry on top. They will bring the experience to life.

“There are not a lot of new men’s concepts out there. We want to create something exciting.”

The Dallas-area stores will hold grand-opening events on May 14 featuring autograph sessions with Dallas Cowboys linebacker Bradie James and Dallas Cowboy cheerleaders. The Kansas City grand opening will be May 21 and feature Pro Bowl quarterback Matt Cassel (Oak Park Mall store only) and signings by Kansas City Chief cheerleaders.

Ewert To Succeed Zimmer at Men’s Wearhouse in June

MRketplace

Men’s Wearhouse said today that its president and COO Doug Ewert would succeed CEO George Zimmer as soon as June 15, following the company’s annual shareholder meeting. The move was announced in January, but a date for the succession had not been set. Zimmer will remain executive chairman of the company. Ewert’s COO position will not be filled.

Zimmer said in a statement, “Doug and I are extremely pleased with the progress we have made as we transition to his appointment on June 15th. We believe this will continue to be a smooth and seamless process for our employees, customers, suppliers, and shareholders. Doug will continue to foster our company’s unique culture of customer services.”

Ewert added, “As I stated in late January, I’m extremely honored and excited to be chosen by the board to lead the next chapter in this company’s amazing story. I am looking forward to continuing to work closely with George and our outstanding leadership team for many more years to come.”

Ewert, 47, joined the company in 1995, serving as a GMM from 1996 to 1999, when he added VP of merchandising to his title. He was promoted to SVP in 2000 and a year later was named EVP and COO of the K&G business. In 2005 he became COO of the overall company. He became a company president in 2008. Ewert spent 10 years with Macy’s prior to joining Men’s Wearhouse.

George Zimmer, 62, founded Men’s Wearhouse in 1973. Today, the company operates 1,192 stores.

A Hard-Working Suit

The New Sweet Spot Is $500 to $700; They Don't Look Cheap, or Like Dad's

Wall Street Journal
By Sarah Nassauer

It can cost a man a lot less to feel like a million bucks in his suit these days.

There are more suits priced between $500 and $700 that include features once found typically on more expensive suits: fine Italian fabrics, modern cuts and narrow lapels. The goal is to attract younger men who increasingly want the current fitted, formal styles as opposed to the boxy suits and more casual officewear of their dads.

Big suit makers like Brooks Brothers and HMX, which sell suits between about $600 and $3,000, say their lowest-priced suits are experiencing the fastest sales growth. And next month Amsterdam-based Suitsupply, with 35 stores in Europe, plans to open its first U.S. store in New York with suits starting at $385. Suitsupply will offer its sometimes flashy suits with details like Italian wool fabric, brightly colored lining and working button holes, features that usually carry a higher price tag.

Other efforts to keep up quality at lower prices include J. Crew Group Inc.'s expanded men's suit selection. Sales of its men's suit have more than doubled since 2008, when the clothing company introduced a slimmer style, made with Italian wool and superior interior construction, a spokeswoman says. The style, called Ludlow, starts at about $600.



At HMX, which owns American suit brands like Hickey Freeman and Hart Schaffner Marx, the fastest growth is in its lower priced suits, around $795, says Joseph Abboud, president and chief creative officer for HMX. Sales of Hart Schaffner Marx suits, the company's brand in that price range, are up 27% year to date compared to last year, says Mr. Abboud.

The briskest sales growth at Brooks Brothers is happening in its recently expanded Suiting Essentials line, priced starting at $598, says Guy Voglino, divisional merchandise manager for men's clothing at the company. Sales of the line are up 28% in 2011 to date, compared to the same period last year, Mr. Voglino says.

Introduced in 2007 offering one fit, the line has expanded to four different fits, most recently the brand's narrowest cuts, the Fitzgerald and the Milano. Brooks Brothers offers some made-to-measure options including about 20 fabrics. The ability to individualize appeals to younger men who want to stand out even in a room of suits, says Mr. Voglino. Because each suit is specially ordered, the company saves money by producing only what it actually sells and doesn't risk bloated inventory.

The interest in suits at this price range comes amid an overall pick up in suit sales at some manufacturers. Brooks Brothers says sales of its 1818 Collection, priced about $1,000, are up 26% year-over-year. HMX is seeing double digit growth in volume and dollar sales across brands and price points, says Mr. Abboud.

"We are seeing the suit business really come back in the last six months very very strongly," says Robert Burke, a luxury-goods consultant and founder of Robert Burke Associates in New York.

Many men wait for seasonal sales in order to find a good price on a suit, but suit makers hope the new $500 to $700 range will encourage men to buy retail instead of waiting for price cuts.

Suitsupply is able to keep down prices, in part, by picking store locations slightly off main shopping streets with lower rents, says Fokke de Jong, chief executive and founder of the company. The company's new Soho New York location will be on a second floor with no street level window display. About 15% of Suitsupply suits are sold through the website.

J. Crew, like Suitsupply, controls more aspects of production from design to distribution, cutting out payments to third-party companies that typical move suits into department stores.

Men's Wearhouse which sells suits from about $199 to $700, keeps prices low by offering two-for-the-price-of-one deals, increasing sales volume and therefore buying power with its suppliers, says Doug Ewert, president and chief operating officer of the Fremont, Calif.-based company.

Maintaining the current price-to-quality relationship in men's suits is likely to become increasingly difficult. Raw material prices for desirable natural fabrics like wool and cotton are rising sharply. "If I have to guess, price is going to go up 10% to 15% on the wholesale side" heading into spring 2012, says Ronny Wurtzburger, president of Peerless Clothing which manufactures men's suits for brands like DKNY, Calvin Klein and IZOD.

We enlisted two experts for an unscientific, blind review of six suits: Salvatore Giardina, a men's suit designer and professor at the Fashion Institute of Technology, and Salvatore Cesarani, a designer and professor at Parsons The New School for Design.

The testers found striking differences in quality, sometimes out of line with the suit's price. Both testers said the $614 Suitsupply suit matched the $3,625 Armani in quality. Both saw little difference in quality between the two, or at least not enough to justify a $3,000 difference in price. Each is made with soft Italian fabric and showed the maker cared about details like pockets with extra stitching at their edges.

"It's a work of art," said Mr. Giardina when examining the sewing job in the waist band of the Armani suit pant. But after learning of the large price difference, "that means that won," Mr. Giardina said, pointing to the Suitsupply suit.

The J. Crew suit fared well with the testers noting its neat construction and that it is made of high-end Italian fabric and Bemberg lining (a type of rayon favored for its breathablity and moisture absorption).

The testers said the Hart Schaffner Marx suit didn't live up to its $895 price. Mr. Giardina noted some fraying strings on button holes and said its "AMF stitching" didn't achieve a handmade look. (AMF stitching is a wider stitch that's an aesthetic touch.) Mr. Cesarani said the jacket didn't move freely in the chest.

The test method "is an imperfect science and it's an opinion," says Mr. Abboud, noting that the suit tested is made from "super 110s wool made in Italy. "We take great pains," he adds, to make sure fabric and construction is high quality.

Mr. Giardina said the H&M suit used a lower thread count wool fabric and basic construction, but still pulled off a nice overall look. Mr. Cesarani dismissed it as "cheap looking." He docked points for the lack of extra fabric for future tailoring where the lining inside the cuff of the jacket meets the exterior fabric.

"We know that our suits are appreciated by many of our customers," said an H&M spokeswoman.

The Target suit isn't worth more than $89, both testers agreed, calling the polyester fabric a major negative.

"Target is committed to offering quality merchandise at a great value," says a Target spokeswoman. "For our business-focused guests, this means finding suits for less than $100."

Tuxedo Market in Flux for Men's Wearhouse

Wall Street Journal
By John Jannarone

With one-third of the market, Men's Wearhouse appears to have a lock on tuxedo rentals. But even founder George Zimmer can't guarantee it.

The reason: Upscale rival Jos. A. Bank Clothiers last year entered the tuxedo-rental business, which generates some $1.2 billion in annual sales. Like Men's Wearhouse, Jos. A. Bank has a nationwide network that is convenient for groomsmen from different cities seeking matching tuxedos at local stores. That should help Jos. A. Bank take market share from the remaining competition, predominantly small, privately owned stores.

Mr. Zimmer's share of the market may also be at risk. While Jos. A. Bank sells some clothing that competes directly with Men's Wearhouse, it is typically more expensive. That could mean Jos. A. Bank has a chance to win rental business from many of its own customers who have previously gone to Men's Wearhouse to rent tuxedos.

Jos. A. Bank's payoff could be plus-size. The cost of a tuxedo is usually covered by just a few rentals, but the garments can survive dozens of wears. Even after accounting for overhead expenses, the tuxedo-rental business has an operating margin of 44%, estimates Margaret Whitfield of Sterne Agee. That means revenue from a mere 3% share of the market would translate into 34 cents a share in earnings, a roughly 10% boost.

A wealthier clientele also makes Jos. A. Bank more resilient. Men's Wearhouse-branded locations saw annual declines at stores open at least a year from 2007 through 2009. But Jos. A. Bank managed to maintain growth in comparable store sales through the recession. Investors who like the look of Men's Wearhouse should try on some new duds.