One on One is a weekly feature offering excerpts of interviews conducted by The Evening Sun with newsworthy business leaders. Timothy L. Finley is the new chief executive of Jos. A. Bank Clothiers Inc., a Baltimore-based clothing manufacturer and retailer that has begun an aggressive marketing campaign developed by W.B. Doner and Co.
Q. Why is it necessary to [Jos. A.] Bank's success to develop a multimillion dollar advertising campaign during a time when the company has to carefully allocate its resources?
A.The purpose of the advertising campaign is to capitalize on top of the mind awareness that Joe Bank presently does not have. In other words, it's my belief that Joseph Banks has a good product, it has a solid, loyal customer base, but in order for it to grow any, or to prosper, it's going to have to create an awareness. So I view advertising . . . in this case as something that's indispensable to the survival of the company.
Q.Doesn't Joe Bank already have an identity? At least, in the Baltimore community?
A.It does in the Baltimore community but it doesn't nationally.
Q.Currently, the company is struggling under $70 million dollars in debt as a result of a leveraged buyout in 1986. How do you expect to retire such financial obligations in this economic climate?
A.I don't. As we speak, we've reached an agreement in principle with our bondholders whereby the debt that is presently on our balance sheet is going to be reflected as preferred stock, which is not debt. So the company in effect is being recapitalized.
Q.So what will be your remaining debt?
A.Simply the bank loan. The bank loan and trade down.
Q.And how much is that?
A.In the neighborhood of about $25 million.
Q.And you find that that is going to be manageable?
A.Oh, absolutely. We've become a healthy company financially.
Q.How did you accomplish such a feat?
A.I'm just smart. Well, I did it because I think the bondholders in this instance saw in the company what we saw in the company . . . I felt very strongly that this company would not succeed in a Chapter 11. Some companies can, but by and large most companies don't. Chapter 11 is not, contrary to popular opinion, a haven for reorganization. It's a haven for litigation. And therefore, by its nature, the administrative costs of a Chapter 11 are devastating and in my judgment, they would have been devastating to this company and it would have paralyzed it. And [we] would have had no damn business going in there. So TC fought that and I had some credibility because I [have] run companies in Chapter 11 and I've been there.
Q.Several retailers that have survived in Baltimore for years recently folded. Why is this recession taking such a toll?
A.For several reasons. The first and the most formidable is that retailing by its nature has too much capacity. Five years ago, there was allegedly enough retail to handle the needs of 500 million people. So what you're seeing for the most part is shake out in the retail industry. And I think the second aspect is, there's a lot of unemployment. It's probably the first white collar recession we ever had. We used to produce goods and services in this country and now we produce services, and as a result of that, it's going to have a greater impact, particularly in our business.
Q.In regard to the company's operation here and elsewhere, how many employees and stores do you have and do you expect to trim or expand your operations?
A.We have 40 stores in, I believe, 27 cities as far west as Denver and as far northeast as Boston, as far south as Houston, Memphis, [Tenn.] Charlotte, [N.C.] and Atlanta. In the next year, our strategy will be to stay put because I think 1991 is going to be tough. It's going to be tough for us and everybody else, I think it's going to be a continual shake up. After that, I think we have to add stores to survive, and I'm looking at 10. And of those 10, I believe, 7 are in new cities.
Q.What region of the country?
A.Interestingly enough, they will be in the Midwest.
A.Right now it's prospering and they're all starting to reflect our styling somewhat. I'll probably add some stores in the southeast, and maybe in Texas again. Those are good markets for us, really good markets.
Q.How many employees do you have?
A.Fourteen hundred and fifty-two.
Q.Are there any plans to close or consolidate stores?
A.Yes, in one particular area. We have a store in the Loop in Chicago and the business is moving to Michigan Avenue, so in those types of situations, we'll close stores or consolidate stores or move stores.
Q.It's not a shutdown completely, but more a shuffling?
A.Yes, we're not doing it for that purpose. It's hard to run a retail company by shutting down stores all the time. That doesn't work.
Q.How do you explain that several retailers, whether they're based here or elsewhere, have been doing just that?