Company abruptly fires its founder on the day it was scheduled to hold its annual shareholder's meeting.
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(Photo: Martin E. Klimek for USA TODAY)
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George Zimmer founded the Men's Wearhouse chain in 1973
No reason was given for dismissal, but Zimmer says there were disputes with board
Zimmer was known for slogan, "You're going to like the way you look. I guarantee it."
Men's Wearhouse no longer likes the way George Zimmer looks.
Zimmer, the founder, chairman and the public face of the discount apparel chain, has been terminated, according to a brief statement from the company.
Men's Wearhouse gave no reason for Zimmer's departure ? which surfaced on Wednesday, just hours before the company postponed its annual shareholders meeting. A company spokesman declined comment but said Zimmer's departure won't affect operations.
TV AD: George Zimmer's famed slogan in company's marketing
Since the mid-1980s, Men's Wearhouse TV ads featured the baritone-voiced Zimmer with his signature slogan: "You're going to like the way you look. I guarantee it."
The former substitute schoolteacher built Men's Wearhouse from a lone Houston store that used a cigar box as a cash register into one of the nation's largest men's specialty retailers, with 1,239 stores under the Men's Wearhouse, Moores, K&G and Tux brands.
In a statement to cable news channel CNBC, Zimmer said in the past several months he had expressed his concerns about the direction of the company to the board of directors and that the board had "chosen to silence my concerns through termination as an executive officer."
Zimmer's ouster comes less than a week after Men's Wearhouse reported a 23% gain in first-quarter earnings on a 5% sales increase. After falling about 16% in 2012, shares were up about 20% so far this year before Wednesday's announcement. Shares slumped nearly 7% in early trading before closing off 1% at $37.04.
Zimmer, 64, served as CEO from 1991 until 2011, when he was named executive chairman. According to the company's latest proxy, he holds a 3.5% stake.
Richard Jaffe, a retail analyst at Stifel & Co., says Zimmer's abrupt departure came as a surprise. Jaffe, who has a buy rating on the company, says Zimmer's transition from hands-on manager to executive chairman may have hastened his ouster.
"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,'' Jaffe says. "We believe that this led to a conflict with the board and his subsequent termination."
Zimmer earned nearly $2 million last year in pay, bonuses and other compensation. Men's Wearhouse will owe Zimmer $250,000 annually for four years under a licensing deal for his image in advertising and marketing efforts, according to the proxy.
"This was a guy who founded and built the company, who probably thought that things can go on the same way forever, and that's the problem with founders,'' says Robbie Vorhaus, an independent communications strategist.
"You can get a guy with a big ego, and he doesn't want to go away. But management is beholden to customers and shareholders,'' Vorhaus says. "You couldn't do this to a Martha Stewart or an Oprah Winfrey, who are the faces of their brands. But Zimmer was becoming irrelevant."
Gene Grabowski, a branding and crisis-management expert at Levick, says Men's Wearhouse is due for a new brand image.
"Most companies go through a transition period and change the way they present themselves,'' Grabowski says. "(Zimmer) and the slogan were getting a little aged. There is appeal to an older audience. They have to find a way to cater to a younger clientele. I could even see them using a woman to promote the brand."
