A change in the weather has failed to produce a change in sales climate at Jos. A. Bank Clothiers Inc.
Reporting lower net and same-store sales and a steep drop in profits for the first quarter that were in line with a warning issued last month, the Hampstead, Md.-based men’s specialty retailer said that disappointing sales continued into May and the second quarter.
“The sales trend has continued into the second quarter of fiscal year 2013 as sales are down for the fiscal month of May,” said R. Neal Black, president and chief executive officer of the company. “For the remainder of 2013, we will continue to focus on our goal of returning to previous levels of gross margin rates and advertising productivity. As such, we will continue to test, evaluate and refine our merchandising and advertising offerings to optimize the appeal to our customers.”
In the three months ended May 4, net income fell 45.5 percent to $8.1 million, or 29 cents a diluted share, from $14.8 million, or 53 cents, in the 2012 period. Sales were off 2.6 percent to $196.1 million from $201.4 million, with a 12.6 percent rise in direct marketing revenues not sufficient to offset an 8.5 percent decline in same-store sales. With cost of goods sold rising 4.5 percent as revenues headed in the opposite direction, gross margin stepped back 270 basis points to 60.8 percent of sales from 63.5 percent a year ago.
Black noted that the bulk of the first-quarter sales decline came in April and that gross margins fell “primarily due to higher inventory sourcing costs and lower average selling prices due mostly to an increased percentage of sales of winter and other clearance products. Like many other retailers, we were also affected by the unseasonably cool weather, which adversely impacted both our sales and gross profit margin.”
Total inventories at quarter’s end stood at $360.4 million, 9 percent higher than they did at the end of the fourth quarter.
The 29-cent earnings per share result duplicated the expectations of analysts, who brought estimates down after the company said on May 13, in wording almost identical to that used in its financial results report Wednesday, that earnings were expected to be between 27 and 30 cents. Revenues landed slightly above the $195.4 million expected by analysts, an average based on Jos. A. Bank’s statement last month that sales for the quarter were down 3 percent.
On a trading day marked by broad declines in equities, Bank’s shares declined $1.74, or 3.9 percent, to $42.96.
The profit warning last month was similar to one issued in January regarding the company’s fourth-quarter and year-end 2012 results. Earnings in last year’s final quarter dropped 35.7 percent to $28.4 million as sales rose 2.4 percent to $354.8 million. But the ferocity of promotions needed to create holiday sales sent gross margin down 410 basis points, to 55.9 percent of sales.
The company, which will hold a conference call this morning to discuss the first-quarter results, has declined comment on a recent report in WWD that it has bid for Fifth & Pacific Cos. Inc.’s Lucky Brand division. Such an acquisition would add to its store base, currently at 606, and extend its franchise to women, wholesaling and younger customers in general.
Black said that the company this spring has “introduced new and more focused casual assortments and additional slim-fit suit inventories” in response to consumer demand.