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Men’s Wearhouse Pursues Possible Purchase of Allen Edmonds

Discussion in 'Classic Menswear' started by chogall, Oct 22, 2013.

  1. brokencycle

    brokencycle Senior member

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    While the MJS article is positive, the idea of Men's Wearhouse buying is scary. There just doesn't seem to be a good strategic fit for the two companies. The customer segmentation is very different, and the overall focus of the two businesses are different, and I think the Men's Wearhouse brand will devalue Allen Edmonds simply because Men's Wearhouse is a low-end product now trying to sell a much higher end product -- not dissimilar how brands can destroy themselves by offering diffusion lines.

    For that reason, I just don't see Men's Wearhouse offering much more money than other potential buyers.

    Hopefully whoever buys will keep the company moving in the right direction.

    On that note, as styleforvm can we pool a couple hundred million to buy AE?
     
    Last edited: Oct 24, 2013
  2. Willin

    Willin Senior member

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    It's simply a play for the PE firm to cash out while the getting is still good and they have a suitor. They couldn't give a damn who they sell to. The CEO probably knows the writing is on the wall for the AE brand if they sell to MW but he has little say in the matter.
     
  3. JLibourel

    JLibourel Senior member

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    That raises the question of whether MW would become the exclusive retailer of A-E. For instance, as of a few years ago (not sure whether this is still true), the amount of shoes A-E sold to Nordstrom alone equalled Alden's total production. Would the new ownership be willing to give up that and much other business? And what about all the A-E company stores and outlets? Somehow, I think the management of MW are shrewd enough to realize that the typical A-E customer and the typical MW customer are two rather different animals.
     
  4. brokencycle

    brokencycle Senior member

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    Yes, but businesses with a strategic interest are willing to pay a premium. My point is that MW probably doesn't have a strong enough strategic play to buy AE to justify much of a premium, so there is a possibility someone else will offer more.



    They are; however, there are two problems in that scenario.

    1. Brands that focus on price or cost containment tend not to do well when they acquire higher end brands. How many times have we seen that?

    2. Companies that tend to try doing two different retail strategies often don't do well with the non-primary one. As an example, Sam's Club has done okay but not great while Costco has boomed.
     

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