Jos. A. Bank Clothiers waited until four hours after the stock markets closed Friday to inform investors that it expects its profits for the year to be down about 20 percent after its holiday promotions failed to generate anticipated sales levels.
The guidance, issued at 8:05 p.m. Friday, implies that fourth-quarter profits will be off 39.5 percent, to $26.7 million from $44.1 million in the final quarter of 2011. A 20 percent drop in profits for the year, which ends Feb. 2, would put net income at $78 million, versus $97.5 million in 2011. The projections follow a 11.2 percent drop in third-quarter profits, which missed earnings per share estimates by 9 cents, even as sales rose 11.1 percent to $232.9 million, ahead of analysts’ expectations.
The disclosure was as noteworthy for the size of the miss as for the post-market nature of its timing. The decline, subject to revision based on performance over the remainder of the year, would put EPS for the year at $3.49 on a diluted basis, 27 cents below the $3.76 consensus estimate of analysts.
Furthermore, based on the company’s approximately 28 million shares of common stock outstanding, it implies fourth-quarter EPS of 95 cents a diluted share, nearly 46 percent below the $1.76 EPS tally expected by analysts.
In explaining the anticipated shortfall, R. Neal Black, president and chief executive officer of the Hampstead, Md.-based men’s specialty store chain, mentioned Hurricane Sandy, warm weather and both the presidential election and fiscal cliff drama as sales deterrents.
Despite what Black termed “a strong marketing and promotional strategy” for holiday, customers weren’t drawn to seasonal items, either at full price or on sale. “Our customers…didn’t respond as well to our promotional items as they had in the past,” he said. “Our customers responded well to our suit promotions for this period, but our non-suit customers responded poorly to our holiday season offerings, even at very low prices on products such as sweaters, outerwear, hats, gloves, scarves and jackets made of heavier fabrics such as camel’s hair and cashmere.”
One bright note in the disclosure was of “double-digit sales growth” in direct marketing revenues for the fourth quarter. The company didn’t provide any specific projections for sales, except to say they would be up for the year, although “not enough to offset higher marketing expenses and lower gross margins,” according to Black.
“We continue to remain very positive about the company’s long-term prospects,” the ceo commented, pointing out that sales for the year would exceed $1 billion for the first time. Jos. A. Bank opened its 600th store during the fourth quarter and disclosed plans to expand to 800 units.
During regular trading hours Friday. shares of the retailer rose 52 cents, or 1.1 percent, to $46.27. After-hours trading data weren’t available.
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