It'll be interesting to see how this progresses in the future. On the surface, it seems to make lots of sense, but it will take some work to make sure that the addition of dry cleaning enhances the Men's Wearhouse experience and doesn't detract from it.
A successful tuxedo rental trade has spurred The Men's Wearhouse to invest in a national chain of stand-alone retail dry-cleaning stores, Neill Davis, executive vice president and CFO, told attendees at SG Cowen & Co.'s Consumer Conference in New York today.
The Houston-based retailer operates about 800 U.S. stores under the Men's Wearhouse and K&G banners and 114 Canadian stores under the Moores banner. In 2000, it began testing tuxedo rentals at its Men's Wearhouse stores. That year, the chain rented 70,000 tuxes. By January 2004, all Men's Wearhouse and Moores stores offered tux rentals and the company rented 900,000 tuxedos at a volume of $70 million for the year, Davis said.
The tuxedo business balances out any seasonal blips that might occur in the menswear market. “It is counter-seasonal and counter-cyclical to our clothing business,” he said. “It has better margins and it drives traffic, younger traffic.” Men's Wearhouse plans to continue growing its tuxedo business until it captures a significant portion of the $1.6 billion market, Davis said.
But cleaning all of those used tuxedos before re-renting them inspired the retailer to target an even more lucrative market, Davis said. To succeed in the tuxedo rental business, the company had to learn the art of dry-cleaning, Davis said. So, in late 2003, the retailer acquired Nesbit's, a Houston-based dry-cleaning business, keeping on president Michael Nesbit. In November, it acquired a second Houston dry-cleaner, Craig's Cleaners, making Men's Wearhouse the biggest dry-cleaner in Houston.
Link: ICSC SCT Newswire.
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