The chief executive officer of Jos. A. Bank Clothiers Inc. said at its annual meeting yesterday that the company will begin to explore opening stores overseas since it expects to fully tap U.S. growth opportunities during the next several years.
"We have no stores in other countries but the opportunity is there and we're going to investigate that," CEO Robert N. Wildrick told a handful of shareholders who attended the meeting at its Hampstead headquarters. "In five or six years, there may be no more room for growth here."
After the meeting, Wildrick said the menswear retailer would look at markets such as China and upscale European markets.
Some analysts said U.S. retailers that can't grow anymore need to look elsewhere to build on their success. But they cautioned that U.S. business strategies don't always translate well in foreign markets, making international expansion tough. Retailers such as Wal-Mart Stores Inc. and Gap Inc. are among retailers that have retreated from other countries in recent years.
Wildrick emphasized that the international plans were preliminary and the company will build stores only where it believes it can make a profit.
Jos. A. Bank's interest in international markets comes as the company continues to expand nationally. In 2002, Jos. A. Bank had 152 stores - a number the retailer said would grow to 500 in five years. It now has 389 stores in 42 states.
Executives say they believe the chain could eventually reach as many as 600 stores nationally. But after that, they said, opportunities will be limited in the United States.
Retail analysts said international expansion can be difficult, especially if a company's name isn't well-known.
"This is a tough leap to take," said Howard Davidowitz, chairman of Davidowitz & Associates, a New York-based retail consulting and investment banking firm.
Shoppers in other countries may be more loyal to a local brand. Fashion tastes, land availability, operating costs and clothing size differences may all make it more complicated to run an American business overseas. It may also take longer to turn a profit in other countries.
There is no shortage of U.S. companies overseas. Brooks Brothers and Abercrombie & Fitch recently opened stores in London. McDonald's and Starbucks have also done well in international markets. However, several retailers have pulled out of some countries over the years.
In 2004, San Francisco-based Gap sold its 10 German operations to Swedish retailer H&M;, saying it was leaving that country to concentrate on stronger markets. Last year, Wal-Mart said it was withdrawing from Germany and South Korea because of low sales.
"There are a lot of profound challenges in trying to expand internationally," said Richard Jaffe a managing director at Stifel Nicolaus. "There are very successful, well-oiled retail machines that have not been able to make it in markets such as Europe."
Jaffe said companies sometimes do better internationally if they license their brand so that someone who better knows the country operates the business. Wildrick said Bank would look at partnering with other businesses overseas.
Davidowitz said Jos. A. Bank may want to explore less risky ways to grow the business, such as through acquisitions or starting a new brand.
For example, Gap created Old Navy as a lower-cost option several years ago, and it also owns Banana Republic. Chico's women's apparel store bought White House Black Market. And The Limited owns several brands, including Victoria's Secret and Bath & Body Works.
"If you look at most American chain retail stores they've grown by developing new concepts or acquiring," Davidowitz said.