Men's clothier Jos. A. Bank said Monday that it will test out factory outlet stores, which sell goods at lower prices, as it looks for new revenue streams.
The Hampstead-based men's retail chain plans to open five stores by the end of the fiscal year. If the stores perform well, the company said it would open more. Company executives believe there might be a market for as many as 50 to 75 factory outlet stores in the U.S.
Jos. A. Bank now has seven clearance outlet stores, where it sells items that aren't bought from its full-priced stores. The company has developed a new line of merchandise to sell in the planned outlet stores.
R. Neal Black, Jos. A. Bank's chief executive, said in a statement that "a factory store concept is a natural extension of our brand" that will enable the company to reach "a unique customer base that has limited overlap with the customer base in our regular stores."
The company said it would locate the first stores in outlet centers along the East Coast.
David Ullman, the company's chief financial officer, said in an interview that people who would shop in the factory stores most likely won't frequent the full-priced stores. Ullman also said there aren't many tailored-clothing options like Jos. A. Bank in the factory outlet business now.
"We think that in the factory centers that tailored clothing is undersold," Ullman said. "Even those retailers who sell menswear are mostly focused on casual and sportswear. We'll have more of a balance with tailored clothing, as well as sportswear and casual."
Jos. A. Bank first revealed that it might open factory outlet stores during an earnings conference call earlier this month.
It is part of a strategy by the company to look for new opportunities for growth. It is also expanding its tuxedo rental business and a big-and-tall clothing line.
As retail sales have slowed and fewer shopping malls and open-air centers have been built, the company was looking for new places to open stores.
The company also plans to open 30 full-priced stores this year in spaces left vacant by retailers that have gone out of business. It now operates 473 stores in 42 states.
One retail analyst said that moving into the outlet business is a good strategy for the company.
"If you are a growing company, you have got to go somewhere," said Howard Davidowitz, chairman of Davidowitz & Associates, a retail brokerage and consulting firm based in New York. "The outlet center is doing better than others. So it is a good place to go."