Gary’s Tux Shops to Merge With Gingiss Formalwear
Casual attire may rule in the office, but as men find themselves needing a tux more than once a decade, a rise in rentals is fueling a national consolidation in the men’s formal-wear industry.
Gary’s Tux Shops of Van Nuys on Wednesday agreed to merge with Chicago-based Gingiss Formalwear in a stock transaction to create the first nationwide chain of tuxedo rental stores. Additional terms of the deal were not disclosed.
With American males marrying older, more than once and in general attending more formal occasions, tuxedo sales and rentals have become a $1.4-billion-a-year business. The average tuxedo rents for $80 to $120, according to industry experts.
Meanwhile, men’s formal-wear retailers are looking ahead to flush years as a “baby boomlet” of youths, now in their preteens, start attending their first formal functions.
With more than 3.2 million teenagers expected to graduate from high school in 2007-08, almost 40% more than in 1989-90, tuxedo shops are anticipating the younger set to show up in droves in coming years, first for prom attire, then for wedding wear.
“We don’t really fluctuate with the economy,” said Michael Corrao, chief executive of Gingiss Formalwear. “We fluctuate really with the demographics. The 3- to 23-year-olds . . . they are going to be bigger than the baby boomers, and so we are very excited about that. People will get married regardless of the economy.”
The largest portion of the tuxedo business is in weddings, at 66%. Proms and black-tie affairs account for 20% to 30% of revenue. The preponderance of business comes from tuxedo rentals; only 15% of revenue comes from men’s buying tuxedos.
Tuxedo sales and rentals jumped 27% from 1996 to 1998, according to the Chicago-based International Formalwear Assn. Though the industry trade group does not yet have statistics for last year, Executive Director Jack Springer said retailers’ business for Dec. 31, 1999, celebrations “was the biggest night they ever had.”
Under Wednesday’s merger agreement, Gary’s Tux Shops, a Southland institution for almost 70 years, will become part of Gingiss Formalwear and operate under that name. Gary’s already is the largest formal retailer in the West with 175 shops, including 77 in California.
The stock-for-stock merger will give Gingiss a network of 430 stores in 33 states and push it ahead of its closest competitor, Atlanta-based After Hours by Mitchell’s, by more than 200 stores. Before Wednesday, Gingiss owned or franchised 255 locations.
“This is one large step in the pursuit of doing an industrywide consolidation,” said John Turnbull, former president and CEO of privately held Gary’s Tux Shops and now the president of the combined company. “We are the first company to establish a nationwide chain under a single brand.”
Meanwhile, Gingiss is in talks to purchase 41 shops from President Tuxedo Rental in Michigan as part of a strategy to bulk up and consolidate what has been a fragmented formal-apparel retail business.
“It’s just in recent years where we are starting to see the consolidation process,” Corrao said. “This will give us good advertising and merchandising synergies, and it’s going to help us bring our customers greater selection and greater convenience.”
The combined company expects to bring in annual sales of $155 million this year, Corrao said, adding that he expects no store closures or layoffs. Gary’s Tux Shops’ name change will not take place until after the industry’s traditional busy season, which ends in July.
In some shopping malls and cities where both stores have a presence, the name Gary’s Tux Shop will remain. That may be the case in Santa Monica and Century City, where both shops are firmly entrenched within five miles of the other. Regardless, Gary’s Tux Shop on Wilshire Boulevard in Santa Monica is a hot spot for those in the entertainment industry, who shell out $200 to $1,400 to buy a tuxedo, store manager Omid Hami said.
