June 19, 2013

Men's Wearhouse ousts founder, pitchman George Zimmer

Zimmer built the specialty clothing company from one small Texas store into a multi-billion-dollar empire, but was fired over an apparent boardroom disagreement.

The Associated Press

(Continued from page 1)

click image to enlarge

George Zimmer, second from left, has been abruptly dismissed from Men's Wearhouse Inc.

1999 Associated Press File Photo

Still, a few other analysts and experts in executive recruiting said privately that the ousting could be something more than just wrangling over the direction of the company and pointed out that the timing of the announcement was odd. It happened the morning that the company's annual shareholder meeting had been set to take place. Men's Wearhouse delayed the meeting but didn't give a new date.

The company said the purpose of postponing the annual meeting is to re-nominate the existing board of directors without Zimmer. It said the board expects to discuss with Zimmer the extent, if any, and terms of "his ongoing relationship" with the company, language that seemed to leave a small window open for him to remain an advertising spokesman.

Also highlighting the suddenness of the firing: The company's website still prominently spotlighted Zimmer for much of Wednesday, calling him "The Man Behind The Brand" and linking to YouTube videos of "the man in action." The pages were still available by midafternoon, though a prominent link from the site's front page had been removed.

"This is very rare to fire a founder. Founders are generally entrenched in the company," said Eleanor Bloxham, CEO of The Value Alliance, a board advisory firm.

In 1971, fresh out of college, Zimmer made his first foray into the clothing industry, working in Hong Kong for six months as a salesman for his father's coat manufacturing business, according to the company website. In 1973, he and a college roommate opened the first Men's Wearhouse store, which sold $10 slacks and $25 polyester sport coats, in Houston. His personal car was a van with the company logo on the side and clothing racks in the back.

The company aired its first TV commercial in the 1970s when commercials for clothing were rare. Zimmer starred in his first commercial in 1986, with the line "I guarantee it." In 1997, Zimmer added the line "You're going to like the way you look" in the ads.

Men's Wearhouse kept expanding, focusing on large markets where business was sluggish to take advantage of lower real estate costs. It also expanded beyond sports coats and trousers to casual sportswear in the 1990s and then went into the tuxedo rental business in 2000.

The company went public in 1992, and has been cited by Fortune magazine as one of the top 100 best companies to work for.

Ellis Verdi, president and founder of Devito/Verdi, which created the advertising for the company's K&G stores a few years ago, called the Men's Wearhouse ad campaign that Zimmer starred in "one of the best retail campaigns in history."

"George Zimmer allowed the company to have a strong brand image," Verdi said. "You can't just snap your fingers and get another 20-year campaign."

According to the company's most recent proxy filing, Men's Wearhouse has paid Zimmer an annual licensing fee of $10,000 for use of his likeness in ads and marketing. But it stipulates that the annual licensing fee goes up to $250,000 if Zimmer ceases to be an employee for any reason.

Zimmer owned 1.8 million shares of Men's Wearhouse as of the company's May 9 proxy filing, a 3.5 percent stake.

The company, based in Fremont, Calif., also runs the Moores retail chains and sells uniform and work wear in the U.S. and U.K.

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