Unable to compete with large men’s clothing stores who offer quality merchandise at low prices, Jim Cramer on Wednesday noted that more and more family-run retailers are going out of business. The New York Times first reported on the trend last month.
With the demise of these mom-and-pop retailers, both Men’s Wearhouse and DSW are taking share. Both stocks are within striking distance of their 52-week highs.
The Men’s Wearhouse controls more than one-third of the tuxedo market and accounts for 22 percent of all domestic men’s clothing store sales, Cramer said. It averaged 7 percent same-store sales in its core brand and has grown earnings-per-share by an average of 48 percent over the last two years. The company has 1,049 stores in the U.S. under the Men’s Wearhouse, Men’s Wearhouse & Tux, and K&G brands, as well as another 117 stores in Canada under the Moore’s brand.
Meanwhile, DSW continues to take share from its competitors around the U.S. It has 328 stores in 40 states and operates in 341 leased department stores across the country. The company recently reported strong quarterly results that included a 5.6 increase in same-store sales.
“We have to accept the fact that places like Men’s Wearhouse and DSW are where people go when they want luxury at value prices,” Cramer said. “We may lament the loss of the family business, but let's celebrate the gains that these two gems can make for you as they annihilate the competition.”