Jos. A. Bank Clothiers Inc. capped off another good year in 2010 with a strong fourth quarter, but the specter of rising raw material prices is looming large for the future.
In the three months ended Jan. 29, the Hampstead, Md.-based men’s specialty store chain posted net income of $40.9 million, or $1.47 a diluted share, 3 cents better than the $1.44 expected, on average, by analysts polled by Yahoo Finance. That was 15.5 percent above the year-ago profit of $35.5 million, or $1.28. Revenues grew 14 percent to $318.3 million from $279.3 million in the 2009 quarter as gross margin improved to 61.3 percent of sales from 60.7 percent a year ago.
Neal Black, chief executive officer, said the question for 2011 is: “How is the customer going to respond to the inevitable price increases?”
So far, consumers are not balking from paying slightly higher prices on several test items, which gives Black reason for optimism. “We’re all in the same boat,” he said of his vendors and competitors. “We all have to pay higher prices for commodities and we have to find a way to pay for them. It’s just a matter of when. But we think we can walk the tightrope.”
He said prices could rise in excess of 15 percent on some items such as corduroy pants, where the raw material increases are “out of sight.” But other classifications won’t rise as much. “The range is wide,” he said, “but across the assortment, it should be midsingle-digit increases.”
Black said the plan at Jos. A. Bank is to gradually inch prices up. “We want to manage the process so it’s not shocking,” he said. “So we’ll do it step by step, and we’ve already started. So far it’s under control and business is not slowing down.”
Black said he expects the promotional atmosphere, which drove sales in the fourth quarter, to continue to be prevalent this year. Additionally, the company is “bullish” about its e-commerce business, which “reached a new plateau” during the holidays. “We will try to sustain that this year.”
Turning to tuxedo rentals, Black said he is “happy with the results so far, but it will be hard to make a judgment until the third quarter when we’ll get a big peak from summer weddings.” And Black said the company’s five factory outlets that opened in 2010 are doing well enough to warrant an expansion of the concept. “Our target is to add 10 to 12 this year,” he said, “but real estate in the outlet world is quite full so the pace will be driven by the availability of appropriate real estate at the price we want to pay.”
For the full year, net income rose 20.6 percent to $85.8 million, or $3.08 a diluted share, from $71.2 million, or $2.56, in 2009. Sales rose 11.4 percent, to $858.1 million from $770.3 million a year ago, and were up 7 percent on a same-store basis. Gross margin expanded to 62.6 percent of sales from 61.3 percent in 2009.
According to the company’s annual report, filed Wednesday with the Securities and Exchange Commission, capital expenditures in 2011 will be between $33 million and $38 million, primarily to cover the opening of 40 to 50 stores and the renovation of several others.
The company said this year it expects inventories to increase “at a rate higher than experienced in recent years” due to a variety of factors, including new stores and higher inventory sourcing costs. Year-end inventories were $233.3 million, a 6.9 percent increase from the prior year.
The company’s shares closed Wednesday at $50.55, up $1.83 or 3.8 percent.
My character, Dinah Madani, is just the coolest, [most] badass woman imaginable," says @amberroserevah. The actress stars in @marvel's newest series on @netflix, @thepunisher. To prepare for her role, Revah sat down with Homeland agents to get a real sense of with Dinah's day-to-day life is really like. Read our full interview on WWD.com. #wwdeye (📷: @jilliansollazzo)
A scene from the 91st annual @macys Thanksgiving Day Parade. The parade, which boasts 50 million TV viewers and 3.5 million on-site spectators, is considered one of the largest and most watched parades in the world. (📷: Jason Szenes/EPA-REX)
The circus came to @bloomingdales 59th Street on Tuesday night and lit up Lexington Avenue with acrobatic dancers, death-defying knife throwing, sword swallowing and aerial acts with no net. The 45 minutes of theatrics built up to unveiling the holiday windows depicting @swarovski crystal-encrusted circus pieces and scenes from “The Greatest Showman” – songs from the soundtrack included. See the rest of the photos on WWD.com #wwdfashion (📷: Joshua Scott)
The psychedelic fashion that pervaded the ’60s is back with an exhibit at the @museumofcityny. “Mode New York: Fashion Takes a Trip” chronicles the changing styles from 1960 through 1973 and features designers such as @ysl, @oscardelarenta and more. The exhibition, which is on display through April 1, is organized into four periods: First Lady Fasion, Youthquake, New Bohemia and New Nonchalance. Pictured here is model Pat Bardonella during the Garvey Day Parade in 1968. (📷: @kwamebphoto) #wwdeye #wwdfashion
“People should be a lot more honest in expressing both the dark and light of themselves. We need to give each other the space to do that because it’s the only way we can grow and evolve,” says @noelwells of her new film “Mr. Roosevelt,” which is largely based on her own struggles. Unexpectedly leaving @nbcsnl in 2014 after just one season, Wells felt set back in her self-esteem and career trajectory. She quickly refocused her energy to more personal projects, which led to the completion of “Mr. Roosevelt.” Read the rest of WWD’s interview with the “Master of None” actress on WWD.com #wwdeye (📷: @jilliansollazzo)
@barbrastreisand is giving fans a chance to see her perform up close in a new concert series, which makes its debut on @Netflix today. From behind-the-scenes takes to her concert performance in Miami last December, the two-hour streaming special captures Streisand in her element. Pictured here is the singer/actress photographed for WWD in 1963. (📷: Palmieri Tony) #wwdeye #wwdarchive
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)