Jos. A Bank got rid of a 'toxic' strategy - and now business is getting even worse
Sales at Jos. A Bank has declined since it stopped doing the "buy one, get three free" promotion that made it famous.
Men's Wearhouse CEO Doug Ewert says his company underestimated how much Jos. A Bank's strategy had already backfired.
"What we did not know then but do now was just how toxic some of the promotions were and how deep and far-reaching the transformation required would be," Ewert said in a conference call with analysts last week.
It's now clear that the ridiculous promotions were all that was bringing many customers to stores. Jos. A Bank's same-store sales fell 14.6% in the most recent quarter.
Like many retailers, Jos. A Bank offered promotions in hopes that customers would come back later and buy full-price items.
But the promotions were doing more harm than good because customers became addicted to them.
"We realized that returning the brand to sustainable growth was going to require eliminating the most toxic offers," Ewert told analysts.
Other retailers have also struggled after offering too many discounts.
Bed Bath and Beyond's profits declined 10% in the most recent quarter, with executives blaming expenses related to the 20% off coupons customers have come to expect.
The necessity of being careful with discounts is a lesson brands like Ralph Lauren, Coach, Michael Kors know all too well. These companies have reported disappointing earnings recently.
Shares for all three have declined in the past year.