Attention, corporate executives: If you don't like the way your colleagues dress, why not let Uncle Sam help you do something about it? That's right. With the aid of the Internal Revenue Service, and the expertise of an 85-year-old tailoring firm, companies can rent suits for their employes and deduct part of the cost as a business expense.
Haas Tailoring Co., through its Guilford Leasing subsidiary, began renting suits four years ago and it is the only company doing so in this country. But its rental business did not begin with corporate America. With its long-standing practice of making uniforms for the Army, Haas was asked by the State of New Jersey to make 700 uniforms for its prison guards. And, instead of buying them, the Garden State decided to rent.
Haas's president, Irving J. Neuman, decided that if he could rent uniforms, why not executive suits? After all, for years corporations had been renting everything from cars to office furniture to enhance their firms' image. And nothing made a more crucial first impression than what an executive was wearing.
So Neuman, a grandson of Jacob Haas, the firm's founder, began putting out feelers. He discovered that there was considerable demand for renting what are known in the trade as made-to-measure suits, which retailed for $350 to $650. Already, the firm was used to satisfying individual needs. In Washington, as throughout the country, these suits are not for sale off the rack, even at the best-known, high-quality men's stores. One can purchase a Haas-made suit only through a custom tailor shop.
The custom tailor takes one's measurements and sends them off to Haas, which makes the suit in its northeast Baltimore plant. After completing the suit, which usually takes about three weeks, Haas ships it back to the tailor. He makes any required minor alterations, and the customer is never fitted directly by Haas.
"When we first started going around discussing the rent-a-suit idea," volunteers Irving Neuman, "executives were asking our people more about the tax question than anything else. We told them to ask their own accountants or lawyers, but that didn't work. They insisted on our own explanation."
So Neuman and his colleagues began supplying answers. While it initially balked, the IRS now allows a sizable proportion of the total cost as a legitimate business expense. For example, if a firm rents a suit for $400, it can deduct up to 40 percent, or $160, as a consultation fee. That is, the amount Haas charges for flying out to the company's headquarters and providing its sartorial advice. Then, the remaining $240 can be amortized for the life of the suit--two years--on the personal income tax return of the executive for whom it was rented. But if he is in the 50 percent bracket, he receives a deduction of only $60 each year. At the end of this period, Haas reclaims the suit and often donates returns to charity.
While a firm must place a minimum $5,000 order with Guilford leasing, the Haas subsidiary also has a maximum. "We try not to exceed $20,000," points out Irving Newman, "because we just don't have the manpower and other resources to handle more." Most of the firm's clients are large to medium-sized firms, with Fortune 500 corporations almost totally missing.
Company executives will not divulge exact figures, but Haas Tailoring makes an average of 1,100 suits a week. The $350 to $650 retail price range represents a considerable mark-up for the local retail custom tailor shop, but Haas's share of the profit is not trivial. Total sales approximate $10 million annually, with Guilford accounting for 20 percent.
Why would a company lease suits from Guilford? To avail itself of Haas's expertise at relatively little cost. Nationwide, there are only two or three major tailoring firms competing with Haas, and none is in the rental business. "If any volume is involved," according to John Haas, "a company cannot call on the local custom shop. They just can't accommodate people, especially in odd sizes, like we can."
Nationally, nearly 10 million men's suits are sold each year, accounting for approximately $4 billion. Will Haas-type rental servies catch on? Walter Raymond, former editor of Men's Wear Magazine, who now handles member services for the Menswear Retailers of America trade association, thinks not: "Across the country, there are fewer than a handful of family-owned, made-to-measure firms like Haas, and getting into the rental business involves too damn much work."
Haas executives agree that their type operation, which is owned by a half dozen family members, involves special, personalized attention. For example, Irving Neuman, John Haas and Louis A. Sinsheimer Jr., senior vice president for merchandising and a family member, spend many weeks calling on custom shops from coast to coast. Most of their energy is spent on public relations. "We don't carry around an order pad," Neuman points out, "but we're letting the shops know that we're around when they need us." On the other hand, prospective corporate rental business usually begins with a corporate inquiry directly to Haas, whose executives follow up.