UPDATE 3:46 p.m. ET– Zimmer in a statement to CNBC took the chance to tell his side of the story, implying that his firing was the result of long-standing differences between him and the Board [via BI]:
Over the last 40 years, I have built MW into a multi-billion dollar company with amazing employees and loyal customers who value the products and service they receive at MW. Over the past several months I have expressed my concerns to the Board about the direction the company is currently heading.
Instead of fostering the kind of dialogue in the Boardroom that has in part contributed to our success, the Board has inappropriately chosen to silence my concerns through termination as an executive officer.
UPDATE 3:15 p.m. ET — Richard Jaffe, an analyst at Stifel Financial Corp., offers an explanation for Zimmer’s firing [via BuzzFeed]:
The use of Zimmer as spokesperson has, coincidently [sic] been under review as management has been evaluating his effectiveness, particularly with the millennial consumer.
We believe that despite Zimmer’s planned transition to a smaller role at the company, he had difficulty letting go of the reins and the leadership of the business. We believe that this led to a conflict with the board and his subsequent termination.
And Zimmer’s firing won’t really affect the company. Citing Jaffe, BuzzFeed notes that the company “has the legal rights to his image and more than 500 hours of footage of the man.”
Apparently, Men’s Wearhouse Inc. doesn’t like the way its founder looks anymore.
In a terse release issued Wednesday, Men’s Wearhouse said it has fired the face of the company and its executive chairman, George Zimmer, who appeared in many of its TV commercials with the slogan “You’re going to like the way you look. I guarantee it.”
“The Board of Directors of Men’s Wearhouse today announced that it has terminated George Zimmer from his position as Executive Chairman,” the release reads. “The Board expects to discuss with Mr. Zimmer the extent, if any, and terms of his ongoing relationship with the Company.”
The timing was even odd — the announcement happened the morning the company’s annual shareholder meeting had been set to take place. The company delayed the meeting but didn’t give a new date.
Men’s Wearhouse gave no reason for the abrupt firing of Zimmer, who built Men’s Wearhouse from one small Texas store using a cigar box as a cash register to one of the North America’s largest specialty men’s clothiers with 1,143 locations. The company generated revenue of $2.48 billion in its latest fiscal year ended Feb. 2.
The abrupt departure comes a week after Men’s Wearhouse reported that its fiscal first-quarter profit increased 23 percent, helped by stronger margins and an earlier prom season.
So the big question remains: Why was Zimmer let go? As of this writing, no one has an answer to that question. But you can bet there’s much, much more to this story.
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.
The news shocked analysts and corporate governance experts, who tried to speculate what happened.
Zimmer, who handed over his CEO title to Douglas Ewert in 2011, was the company’s personable, down-to-earth face, his slogan almost a cultural touchstone.
As of late morning, the company’s website still prominently spotlighted Zimmer, calling him “The Man Behind The Brand” and linking to YouTube videos of “the man in action.”
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 his 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 launched its first TV commercial in the 1970s when commercials for clothing were rare. Zimmer starred in his first TV commercial in 1986, with the line “I guarantee it.”
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 1980s and then went into the tuxedo rental business in 2000.
Zimmer owned 1.8 million shares of Men’s Wearhouse as of the company’s May 9 proxy filing, a 3.5 percent stake in the company.
Shares of Men’s Wearhouse fell more than 2 percent, or 80 cents, to $36.67 in morning trading. The stock has traded between $25.97 and $38.59 in the past 52 weeks, and ended Tuesday up about 20 percent since the start of the year.
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The AP contributed to this report. Featured image ZUMA/Newscom.