On the surface the Jos A. Bank deal appears to offer a synergistic partnership between a brand-in-need and an industry powerhouse eager to expand but the plot thickens as the deal may not go through at all. Jos A. Bank, the men’s apparel retailer known for offering bargain-chic deals, has gone all-in by asking outdoor, casual lifestyle brand Eddie Bauer to be their corporate Valentine. In a possible $825 million-dollar deal, Bank has sought to rapidly expand its portfolio, however, the two will be changing their status updates to “it’s complicated” rather than “in a relationship” as details have emerged.
On the surface the Jos A. Bank deal appears to offer a synergistic partnership between a brand-in-need and an industry powerhouse eager to expand, but the plot thickens as the deal may not go through at all. In what would best be termed a bizarre love triangle [more Valentine’s Day humor], Jos A. Bank and their biggest competitor, Men’s Wearhouse (MW), have been locking horns as the latter recently attempted a hostile takeover. While MW sees a Bank takeover as the final step towards industry dominance, Bank is just not that into them. The Bauer deal has been perceived by many industry experts as a means for Bank to become too big to be bought. However, Bank has kept an out clause in the deal. Should Jos A. Bank relent and tender another offer from Men’s Wearhouse, Bank reserves the right to cancel the Eddie Bauer deal before it is completed.
Following a decade of turnaround plans that have included a 2009 bankruptcy, a line overhaul and multiple management changes Bauer has looked to package themselves into a larger portfolio to solve their woes. Though Bauer possesses a formidable retail network, in-store sales have been lackluster while the all-around brand has failed to gain traction among younger buyers leaving significant heavy lifting for any would-be buyer.
In a tough marketplace with fewer shoppers opting for generics, Bank could benefit from adding a name-brand to their portfolio. Whether taking on an injured brand caught in a multi-year turnaround will stave off MW or fulfill their long-term strategy remains to be seen.
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