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Menguin of Fayetteville Sold for $25M

3 min read

Online tuxedo rental company Menguin Inc. of Fayetteville has been acquired for $25 million by competitor Generation Tux of Louisville, Kentucky.

The transaction closed on Sept. 5, having gained approval from the board of directors and stockholders. It was formally announced Tuesday.

Generation Tux was founded by CEO George Zimmer, who is also founder and a former executive of Men’s Wearhouse. 

Menguin and Generation Tux will continue to operate as separate brands under holding company Gen Tux Inc. Menguin founder Justin Delaney is now president of both brands.

While most of Menguin’s 20 employees will move from Fayetteville to Louisville as a result of the sale, Delaney told Arkansas Business that its customer service center will remain. Five to 10 people work at the center now.

Delaney said Menguin, which moved to Fayetteville from Atlanta in 2015, would considering building a store in Fayetteville in the future. He also said the company would like to continue its relationship with the University of Arkansas, from which the company hires about 10 interns per semester.

“It was very bittersweet for me because I did make a lot of connections with a lot of great people in northwest Arkansas, so I felt like it was important for those individuals who would like to stay behind, to still have a presence there in the community,” he said. “It makes a lot of sense for us to maintain a presence there. From an economic standpoint, we moved the company there because it has such a great environment for business. It’s very low cost of living. The government is very cooperative. There’s a lot of tax breaks, tax benefits.”

Delaney said the Menguin and Generation Tux brands employ a combined 70-100 people.

Delaney declined to say what Menguin’s revenue was before the sale but said the company logged an 800 percent compound annual growth rate for the past three years.

Meguin raised nearly $1 million from investors last summer. At the time, Delaney said he expected the company to generate revenue of $10 million-$25 million in 2016.

Delaney said he and Zimmer will collaborate in running the brands and that he will have to be involved in every aspect, from customer service to operations to finance and marketing. He said he’ll be doing what he had been doing at Menguin, but on a larger scale.

“It’s a kind of a unique situation, for me, in that I get to report to one of my idols,” he said. “So that’s really cool. But I do — for the first time in a long time — definitely do have sort of a boss. So it is a lot more responsibility. But having someone like George, who has scaled a multibillion-dollar company before, as a mentor in there to help me lead every day and to lead when the time is right for him as well, it’s really a great dynamic.”

The sale will give Menguin the resources it needs to offer a better customer experience, higher-quality products and a more stable website, Delaney said. But Menguin brings to the table its experience in digital marketing, including social media marketing techniques, and technology, he said.

“It’s sort of a perfect marriage of old school and new school,” Delaney said.

In a news release, Zimmer praised Menguin. 

“I’ve always known a good suit when I’ve seen one, just as I’ve always known a good investment when it comes my way,” he said. “We built Generation Tux to be the ultimate high-tech, high-touch clothing rental experience. Menguin’s digital marketing and entrepreneurial leadership sparked my interest; upon meeting, it became clear that we could do more together than apart.”

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