Jos. A Bank's Marketing Strategy Cheapens Brand

The Jos. A. Banks (JOSB) selling machine is kicking on all cylinders - Monday's quarterly numbers were proof of that.

My gripe (and Herb Greenberg agrees) with the management is that they decided that no Q&A is needed after the quarterly conference call. I completely understand why the company’s management may decide to spend their time on a more productive endeavor than answering sell side analysts’ questions which most of the time have little to do with the company’s long-term future, but zero in on minute, often irrelevant short-term details. That being said, management should have done a better job communicating to the Street the change in Q&A practice.

JOSB’s marketing strategy is the weakest link in its business model. It is extremely short-term oriented and not about long-term brand building. I’d argue that it cheapens its brand.

Where Men’s Warehouse’s (MW) “I guarantee it” commercials tell you about product quality and a pleasant shopping experience (long-term brand building strategy), JOSB commercials sound like it’s a cheap car dealership that you’d expect to see in the deep suburbs of nowhere land, with a very annoying voice that tells you something along the lines of, “Only this Tuesday, the whole store is 50% off!”

But don’t worry, if you missed this Tuesday special, there are other days of the week; Wednesday, Thursday… you get the point. Yesterday, while reading JOSB’s latest 10Q, I heard the commercial at least three times on CNBC. This short-term driven marketing strategy is responsible for the volatility of same store sales.

JOSB 1-yr chart:

Comments

[Malkiel]

I agree that their ads are painful to watch, as are MW's, but let's face it, every car dealership ad ever made for any medium is painfully tasteless and yet cars keep selling. We seem to make our peace with certain industries that can never advertise well, but Jos. Bank is filling a niche in a market that's been rather empty for a while (if you have to buy better men's clothing for work good luck finding all the pieces in the jumble of skater boi stuff in places like JC Penney)...

[VitaliyKatsenelson]

Oh I agree, I love their stores and shopping experience is great. But you would not find out about that from their commercials. Well, maybe their strategy is to get you to come to their stores, once. And then you love what you see and keep coming back.

[brombonz]

Amen. I've owned JOSB since 2000 and it's one of my largest holdings. There's a jarring dissonance between its "Tiffany" store atmosphere and carnival-hustler marketing approach. Even some store employees I've talked with are embarrassed by it. I can only speculate whether management has considered a more "reality-based&qu... approach.

On the face of it,my best interpretation is that it might be an attempt to seduce a more "downscale" customer into a luxury or semi-luxury environment, where he thinks he's getting a "steal," no matter how neverending the Sale!Sale!Sale! advertising pitch.

But even that interpretation doesn't account for the TV ad placements on venues such as MSNBC talk shows, which are hardly "downscale." (If the ads are on less upscale commercial broadcast TV, I wouldn't know). Why approach a relatively sophisticated viwer wirh a "Hey, Rube" approach?

It's a "puzzlement."...

I have to say that CEO Wildrick, in his earlier days at the helm, took a similarly promotional attitude toward the stock, which had me wary for quite a while. Nonetheless he has delivered on the promised store expansion and profit growth, and along with it muted his style. But "carnival" may still be in his bones.