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<div class="KonaFilter image-container float_right"><div class="image on-image">REUTERS</div></div><keyword id="1743713" type="COMPANY" weightage="60" keywordseo="Mens-Wearhouse">Men's Wearhouse</keyword> has <a href="http://www.marketwatch.com/story/mens-wearhouse-rejects-jos-a-banks-bid-2013-10-09-9911557?siteid=yhoof2">rejected Jos. A. Bank's offer</a> to buy the company for $2.3 billion, saying that the deal "significantly undervalues Men's Wearhouse."
The merger would have created a men's apparel powerhouse and revived Men's Wearhouse, <a href="http://www.businessinsider.com/mens-wearhouse-reports-sales-are-down-2013-9">which has struggled since the ouster of founder George Zimmer</a> in June, said Brian Sozzi, chief equities strategy at Belus Capital. 
"Men's Wearhouse would be absolutely silly not to take the money and run," Sozzi said. "The company is not a growth retailer."
It's clear that Jos. A. Bank is beating Men's Wearhouse in the fierce competition for customers. 
Jos. A Bank's shares have gained more than 8% in the past six months, while Men's Wearhouse only gained 1.6%. 
And while Men's Wearhouse <a href="http://www.businessinsider.com/mens-wearhouse-reports-sales-are-down-2013-9">reported a disappointing outlook</a> for future months, Jos. A. Bank executives <a href="http://seekingalpha.com/article/1676362-jos-a-bank-clothiers-management-discusses-q2-2013-results-earnings-call-transcript">recently said that</a> sales are increasing. 
So what does Jos. A. Bank have that Men's Wearhouse doesn't? 
Those infamous "buy one, get seven free" sales. 
"Those promotions are why Jos. A. Bank is getting foot traffic that Men's Wearhouse isn't," <a href="http://www.linkedin.com/pub/brian-pitera/5/a3b/650">Brian Pitera</a>, a principal of consultancy at A.T. Kearney, <a href="http://www.businessinsider.com/jos-a-bank-is-dominating-mens-wearhouse-2013-9">told us last month</a>. "To compete, Men's Wearhouse is going to have to step up promotions and advertising." 
While Jos. A. Bank's promotions sound too good to be true, the brand actually <a href="http://www.businessinsider.com/jos-a-bank-business-model-2012-11">manages to make money</a> by selling the products at higher initial mark-ups than necessary. In other words, Jos. A. Bank builds the cost of free products into the one full-priced suit you purchase. 
Sozzi said the deal might still happen. 
"This was not so some fly by night, hastily put together deal," Sozzi said. "This is something that Jos A. Bank has clearly been working on for a while and they could sweeten the deal a bit."

Why Men's Wearhouse Could Benefit From A Jos. A. Bank Takeover 

<div class="image-container float_right"><div class="image"><a href="https://www.youtube.com/watch?v=I45E9HpQejs">Jos A Bank</a></div></div>It's clear that Jos. A. Bank is beating <keyword id="1743713" type="COMPANY" weightage="60" keywordseo="Mens-Wearhouse">Men's Wearhouse</keyword> in the fierce competition for customers. 
Jos. A Bank's shares have gained more than 8% in the past six months, while Men's Wearhouse only gained 1.6%. 
And while Men's Wearhouse <a href="http://www.businessinsider.com/mens-wearhouse-reports-sales-are-down-2013-9">reported a disappointing outlook</a> for future months, Jos. A. Bank executives <a href="http://seekingalpha.com/article/1676362-jos-a-bank-clothiers-management-discusses-q2-2013-results-earnings-call-transcript">recently said that</a> sales are increasing. 
Both retailers market to men who want to look current, but can't afford to shop at Nordstrom. Both face similar challenges in getting cash-strapped customers to go shopping. 
So what does Jos. A. Bank have that Men's Wearhouse doesn't? 
Those infamous "buy one, get seven free" sales. 
"Those promotions are why Jos. A. Bank is getting foot traffic that Men's Wearhouse isn't," said <a href="http://www.linkedin.com/pub/brian-pitera/5/a3b/650">Brian Pitera</a>, a principal of consultancy A.T. Kearney. "To compete, Men's Wearhouse is going to have to step up promotions and advertising." 
While Jos. A. Bank's promotions sound too good to be true, the brand actually <a href="http://www.businessinsider.com/jos-a-bank-business-model-2012-11">manages to make money</a> by selling the products at higher initial mark-ups than necessary. In other words, Jos. A. Bank builds the cost of free products into the one full-priced suit you purchase. 
And once customers are in the store, Jos. A. Bank can count on them making impulse purchases on accessories like ties and belts. 
"Critics can hate on Jos. A. Bank's promotions and call them a 'bait and switch,' but they actually have a tried-and-true tactic for getting people in stores," Pitera told us. "That's more than Men's Wearhouse can say." 
To get customers back in stores, Men's Wearhouse is going to have to come up with an aggressive promotions strategy, Pitera said. 
"Men's Wearhouse doesn't need fancy designers or big names," Pitera said. "What they need is to give customers the value they're looking for right now."

Why Jos. A. Bank Is Beating Men's Wearhouse In The Competition For Male Shoppers

<table class="image-container float_right" width="200"><tr><td><div class="image"></div>Alex Wong/Getty Images</td></tr></table>Jos. A Bank is <a href="http://www.businessinsider.com/jos-a-bank-revealed-its-worst-nightmare-2013-1">facing a dilemma</a> because its customers aren't responding to the ridiculous deals it offers.
But the struggling retailer has one loyal customer in Federal Reserve Chairman <keyword id="45366" type="PERSON" weightage="60" keywordseo="Ben-Bernanke">Ben Bernanke</keyword>. 
Bernanke <a href="http://www.time.com/time/specials/packages/article/0,28804,1946375_1947251_1947520,00.html">told Time</a> in 2009 that he buys all his suits there. 
Detailing the contents of his wallet, he said: 
"I've got a D.C. driver's license, my American Express card, a debit card, a Jos. [A.] Bank card where I get my suits, I have a health insurance card. And then I have a variety of other cards, phone numbers, United Airlines, frequent flyer. And I have $45...$75...$85. I'm all set."
The average Jos. A Bank suit costs around $650 before promotions like <a href="http://www.businessinsider.com/jos-a-bank-business-model-2013-1">"buy one, get two free"</a> suits. Meanwhile, more upscale labels <a href="http://www.saksfifthavenue.com/The-Men-s-Store/Apparel/Sportcoats-Suits-and-Vests/Suits/shop/_/N-52g5h8?FOLDER%3C%3Efolder_id=2534374306443708">like Armani</a> charge thousands of dollars. 
The U.S. economic problems Bernanke details in Fed meetings are also part of the reason Jos. A Bank is flailing. 
"The problems come down to the investment perhaps in a job where income growth is next to nothing," said Brian Sozzi, chief equities analyst at NBG Productions. "Or, for a job interview that they may never call back." 
SEE ALSO: <a href="http://www.businessinsider.com/jos-a-bank-revealed-its-worst-nightmare-2013-1">Jos. A Bank's Worst Nightmare Is Coming True &gt;</a>

BEN BERNANKE: Jos. A Bank Is Where I Get My Suits

<div class="image-container float_right" style="width:400px"><div class="image"></div><a href="https://www.youtube.com/user/josabankbrand?feature=watch">Jos A Bank / YouTube</a></div>In the apparel industry, most companies are known for their clothes.
Suitmaker Jos. A Bank, however, is best known for its outrageous promotions.
But these popular promotions may be losing their effectiveness.
Shares of Jos. A Bank are getting punished today after the company announced a <a href="http://www.businessinsider.com/jos-a-bank-2012-earnings-warning-2013-1">shocking warning </a>regarding its recent financial performance. In their own words:
However, many of the promotional items and a large part of our holiday assortment were items that sell best in cold weather and the weather was unseasonably warm. Historically, we have had strength with these types of items, but our customers (specifically at our stores) didn't respond as well to our promotional offers as they had in the past. Our customers responded well to our suit promotions during this period, but our non-suit customers responded poorly to our holiday season offerings, even at very low prices on products such as sweaters, outerwear, hats, gloves, scarves, and jackets made of heavier fabrics such as camel's hair and cashmere.
Promotional pricing usually works if the customer believes it will soon go away. However, Jos. A Bank offers similar promotions on a rolling basis.
Perhaps, the customer is finally realizing that they'll never miss out on a Jos. A Bank deal.
The Business Model
You may have heard of one of their recent promotions: <a href="https://www.youtube.com/watch?v=I45E9HpQejs">Buy 1, Get 7 Free</a>. You buy 1 suit at regular price, and they give you 2 more free suits, 2 dress shirts, 2 silk ties, and an Android smartphone.
More common promotions include 70% off all suits and buy one suit, get two free.
How can a company like this make money?
Three words: higher initial markups.
You'll see those three words all <a href="http://www.sec.gov/Archives/edgar/data/920033/000092003312000007/josbfy201110-k.htm">over their regulatory filings</a>.
The markup is the difference between the cost of a good and the price it's sold at. The higher the markup, the more you can discount and still make a profit.
For example, a typical store might sell you a $400 suit and offer 25% off. In Jos A Banks' world, they'd rather price a suit at $1,000 and offer it at 70% off.
Either place you shop, you pay $300 for a suit that might be of identical quality to the one sold at the other place.
But the $1,000 initial price tag gives the perception of higher quality. And the 70% discount gives the illusion of a great deal. Combine those two things and it's no surprise why the bargain-hunting American male would be seduced by Jos A Bank's offering.
This business model had been working for quite a while. Sales and profits have been climbing for years.
And more importantly, the gross profit margin has trended up from 58% to 62%.over the last five full fiscal years.
<div class="image-container click-to-enlarge" style="width:610px"><div class="image"><a title_source="Jos A Bank, SEC" title_caption="" class="zoomin" href="http://static2.businessinsider.com/image/50b929b069beddd02d00000b-960/jos-a-bank.png"></a></div><a href="http://www.sec.gov/Archives/edgar/data/920033/000092003312000007/josbfy201110-k.htm">Jos A Bank, SEC</a></div>
 However, any profit margin is no good without sales.
And if the secret of Jos. A Bank's success is out, then they may have lost their ability to differentiate themselves from the competition.
SEE ALSO: <a href="http://www.businessinsider.com/jos-a-bank-revealed-its-worst-nightmare-2013-1">Jos. A Bank's Worst Nightmare Is Coming True &gt;</a>

Why The Core Of Jos. A Bank's Business Model Is Giving Tons Of Suits Away For Free

<div class="image-container float_right" style="width:400px"><div class="image"></div><a href="http://upload.wikimedia.org/wikipedia/commons/b/b9/Jos._A._Bank_Arborland_Shopping_Center_Ann_Arbor_Michigan.JPG">Wikimedia Commons</a></div>Jos. A Bank is facing a horrible dilemma as its business model shows signs of cracking. 
One sentence from the <a href="http://www.businessinsider.com/jos-a-bank-2012-earnings-warning-2013-1">company's Friday release</a> reveals just how bad the suit shop's problems are. 
"Historically, we have had strength with these types of items, but our customers (specifically at our stores) didn't respond as well to our promotional offers as they had in the past," the company said. 
Jos. A Bank's business model is centered around promotions, particularly its famous <a href="http://www.businessinsider.com/jos-a-bank-business-model-2012-11">"buy one, get seven free"</a> deal.
The idea behind the company's marketing is to make customers an offer they can't refuse. In reality, Jos. A Bank relies on <a href="http://www.businessinsider.com/jos-a-bank-business-model-2012-11">higher initial mark-ups before offering discounts</a> to make money.
The higher mark-ups also create the perception of better quality. While other retailers might offer a suit for $600 and offer 25 percent off, Jos. A Bank's $1000 suit with 70 percent off seems like a better investment to customers.
The strategy has worked for years. Until recently, the company reported healthy gains in profit and sales. 
But if these extreme promotions can't even hold consumer interest, Jos. A Bank might have to rethink its entire strategy. 
"It comes down to the investment perhaps in a job where income growth is next to nothing," said Brian Sozzi, chief equities analyst at NBG Productions. "Or, for a job interview that they may never call back."
Investors aren't happy with the retailer, either. Shares <a href="http://www.businessinsider.com/jos-a-bank-stock-drop-2013-1">are plummeting</a> after the company's Friday warning.
Sozzi also said that the shopping experience at Jos. A Bank might be turning off consumers.
"It could take two to three weeks to receive the suit since it has to be tailored and the store associates also try and sell you add-on items," Sozzi said. "So, that alleged 'great deal' you are getting has hidden costs, in addition to the fact you can't leave that day with the suit."
SEE ALSO: <a href="http://www.businessinsider.com/jos-a-bank-business-model-2012-11">How Jos. A Bank Makes Money Buy Selling 1 Suit And Giving 7 Away For Free &gt;</a>
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Jos. A Bank's Worst Nightmare Is Coming True

Late Friday night, Jos. A Bank released a <a href="http://www.businessinsider.com/jos-a-bank-2012-earnings-warning-2013-1">huge warning</a> regarding its current year's financial results.
Specifically, they said that earnings for the year would be down by 20 percent.
Analysts were looking for a gain.
The stock is down around 16 percent in pre-market trading. 
SEE ALSO: <a href="http://www.businessinsider.com/jos-a-bank-business-model-2012-11">How Jos. A Bank Makes Money Buy Selling 1 Suit And Giving 7 Away For Free &gt;</a>
From <a href="http://www.marketwatch.com/investing/stock/josb">MarketWatch</a>:
<table class="image-container" width="200"><tr><td><div class="image"></div><a href="http://www.marketwatch.com/investing/stock/josb">MarketWatch</a></td></tr></table>

Jos. A Bank Shares Are Getting Destroyed Right Now

<div class="image-container float_right" style="width:370px"><div class="image"></div><a href="http://www.flickr.com/photos/smithereen/4468170626/">smithereen11 | Flickr</a></div>Friday night is a classic time for companies and government to take out the trash — release some bad news so that people forget about it over the weekend.
Still, 8:05 on a Friday night is a very unusual time to drop a big earnings warning, which is exactly what suits retailers Jos. A Bank did last week.
<a href="http://www.businessinsider.com/jos-a-bank-2012-earnings-warning-2013-1">Sam Ro wrote up the warning</a>, which basically had two main points.
2012 net income was going to be about 20% lower than it was in 2011.
Customers stopped responding as much to the company's promotions, and it blamed stuff like the election, the fiscal cliff, and the weather.
We're eager to see how the market reacts to this huge news, as well as the unusual timing of the release.
<a href="http://www.businessinsider.com/jos-a-bank-2012-earnings-warning-2013-1">For more on the earnings warning, see here &gt;</a>

We Can't Wait To See What The Market Does With Jos. A Bank Today

<div class="image-container float_right" style="width:400px"><div class="image"></div><a href="https://www.youtube.com/watch?v=I45E9HpQejs">Jos A Bank</a></div>At 8:05 PM ET Friday, discount suit-seller Jos. A. Bank dropped a bombshell.
"[N]et income for fiscal year 2012 is expected to be approximately 20% lower than net income for fiscal year 2011," they wrote.
According to Yahoo Finance, analysts were expecting earnings to climb around 8 percent from last year's earnings of $3.49 per share.
Among other things, management blamed Hurricane Sandy, the election, the fiscal cliff, and warm weather.
Jos. A Bank's sales strategy centers around <a href="http://www.businessinsider.com/jos-a-bank-business-model-2012-11">marking its suits up and then offering abnormally large discounts through outrageous promotions</a>.
However, this model may have revealed its first cracks.
"...our customers (specifically at our stores) didn't respond as well to our promotional offers as they had in the past," they wrote.
SEE ALSO: <a href="http://www.businessinsider.com/jos-a-bank-business-model-2012-11">How Jos. A Bank Makes Money Buy Selling 1 Suit And Giving 7 Away For Free &gt;</a>
------------------------------------------------------- 
Here's the full release via <a href="http://finance.yahoo.com/q/ae?s=JOSB+Analyst+Estimates">Yahoo Finance</a>:
HAMPSTEAD, Md., Jan. 25, 2013 (GLOBE NEWSWIRE) -- JoS. A. Bank Clothiers, Inc. (<a href="http://finance.yahoo.com/q?s=josb">JOSB</a>) announces that net income for fiscal year 2012 is expected to be approximately 20% lower than net income for fiscal year 2011. Actual results will depend on, among other things, sales for the remainder of the year, expenses and normal year-end processing. Fiscal year 2012 is a 53-week year which will end February 2, 2013; fiscal year 2011 was a 52 week year which ended January 28, 2012.
Commenting on the earnings update, R. Neal Black, President and CEO of JoS. A. Bank Clothiers, Inc. stated: "Total company sales for the year will be up, but not enough to offset higher marketing expenses and lower gross margin. We are disappointed that we were not able to drive the sales gains we had expected. The fourth quarter started out slowly, as the first two weeks of fiscal November were negatively impacted by the aftermath of Hurricane Sandy, the distractions created by the presidential election and the uncertainty of the fiscal cliff. Going into the critical holiday selling season, starting on Black Friday, we believed we had a strong marketing and promotional strategy for the period. However, many of the promotional items and a large part of our holiday assortment were items that sell best in cold weather and the weather was unseasonably warm. Historically, we have had strength with these types of items, but our customers (specifically at our stores) didn't respond as well to our promotional offers as they had in the past. Our customers responded well to our suit promotions during this period, but our non-suit customers responded poorly to our holiday season offerings, even at very low prices on products such as sweaters, outerwear, hats, gloves, scarves, and jackets made of heavier fabrics such as camel's hair and cashmere. On the positive side, our Direct Marketing business continues to perform well, with double-digit sales growth so far for the fourth quarter. Despite the disappointing earnings results on a year-over-year basis, the fourth quarter and full year of fiscal 2012 will still be very profitable."
"The Company continues to maintain solid cash flows and a strong balance sheet. Additionally, during fiscal year 2012 we achieved several positive accomplishments. We opened our 600th store during the year, opened a total of 46 new stores in fiscal year 2012 and expect to open between 45 and 50 new stores in fiscal year 2013. We have continued to grow our new business initiatives such as our tuxedo rental and big and tall businesses which are starting to gain critical mass. And, for the first time we exceeded the $1 billion annual sales milestone in fiscal year 2012. We continue to remain very positive about the Company's long-term prospects," stated Mr. Black.

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Why The Core Of Jos. A Bank's Business Model Is Giving Tons Of Suits Away For Free

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