Jos. A. Bank Clothiers Inc. confirmed yesterday that it will move from its leased headquarters at McDonogh Crossroads in Owings Mills to the distribution center it owns in Carroll County to cut costs.
The move to Hampstead, which will be completed by late May, comes at a time privately held Bank is searching in every corner to decrease expenses, increase revenues and restore profitability.
The classic men's and women's clothier recently reached an agreement with bondholders to convert its $50 million in "junk-bond" debt from a leveraged buyout in 1986 into equity.
Bank has also embarked on a $6.5 million advertising campaign to help bolster sales at its 40 stores across the country.
The highly visible, 35,000-square-foot space it has off Reisterstown Road was being leased from MacKenzie & Associates for several hundred thousand dollars a year, according to Bank Chief Executive Timothy L. Finley.
In order to break the lease, the clothier has to pay MacKenzie $300,000 a year for the next seven years.
"That payment is significantly less than the payment we would have had if we stayed," Mr. Finley said. "It's the kind of thing I had to do to get the company restructured," especially since the Hampstead building is underutilized.
All 140 employees in Owings Mills will be moved to the Hampstead distribution and manufacturing center, he said.
The building is being reconfigured so that there will be 35,000 square feet of office space -- the same amount Bank has in Owings Mills.
Mr. Finley said that the mortgage on the Hampstead building in Carroll County is "so small I don't even know what it is."
Robert J. Aumiller, executive vice president of MacKenzie & Associates, the owner of McDonogh Crossroads, said losing its anchor tenant will not be a problem. All the space that had been leased by Bank has already been re-leased, he said.
CMG Health, a tenant at McDonogh, will expand to take part of the Bank space, and DISC Inc., a computer software company based in Pikesville, will move to the remainder of the space.
"This is not a bad omen for McDonogh," Mr. Aumiller said.
The prominent clothing manufacturer has been based in the Baltimore area since 1898.