The lack of cold weather took a bite out of the business at Jos. A. Bank Clothiers Inc. in 2011, and it’s still hampering sales.
On Wednesday, the Hampstead, Md.-based specialty store chain reported a 3.3 percent rise in income for the fourth quarter to $44.2 million, or $1.58 a diluted share, from $40.9 million, or $1.47, in the prior-year period. Sales rose 8.8 percent to $346.3 million from $318.3 million.
In a telephone interview with WWD, R. Neal Black, president and chief executive officer, said, “Where we’re getting into the most trouble is in cold-weather merchandise. We would have doubled our [comparable-store sales] in the fourth quarter if we could have taken cold weather out. That’s more important to us than to many other [retailers]. We have a gigantic business in sweaters and coats and we also have a big cold-weather accessories business. It doesn’t affect the sales of suits, shirts and ties, but when you have no winter, it hurts cold-weather sales.”
Black said comps in the fourth quarter rose 3.7 percent, “but when you take out the cold weather number, it would have been closer to 8 percent.”
He said cold-weather merchandise is “huge for us in the first quarter as well.” So to counteract the lack of business there, Black said the company will “promote suits pretty aggressively. We’re also up against a weak April, so with those two things we have a good chance of turning it around.”
What is doing well, he said, is tailored clothing and furnishings. “Suits, shirts and ties led the way in 2011,” he said. “And we expect that to continue.” Suits account for more than 30 percent of the company’s net sales, according to the company’s annual report.
Much of the business is coming from slimmer silhouettes. “We’re focusing a lot on fit,” Black said. “We added a slim fit, what we call the ‘tailored fit,’ about three years ago and we’ve been building it aggressively. It’s a significant part of the business.”
The slim cuts are also making big inroads in dress shirts, sportswear and pants, he said.
This spring, Black said the company will be adding an even slimmer fit, which will be merchandised under the name “slim.” He said: “To wear the slim fit, you really have to be slim. It’s very tapered. The tailored fit will probably be the way to go for most guys. It takes out all the excess material and looks different but is still comfortable.” Still, he added, “we have enough action in the younger segment so we know there will be a business there.”
Despite the strong showing for the year and the fact that the company has posted earnings growth in 41 of the past 42 quarters, analyst reaction was mixed on Wednesday.
Richard Jaffe of Stifel Nicolaus, who rates the stock a “hold,” noted fourth-quarter EPS was 1 cent below estimates. He also cited two challenges, writing in his report that the traditional fit tailored clothing “has become less appealing, when compared to the ‘modern fit,’ a leaner, more contemporary style suit that is capturing the ‘millennial’ young man’s interest.” He also pointed to the company’s “large assortment of cold weather apparel.”
Margaret Whitfield of Sterne Agee recommended the stock, citing strong sales of suits and shirts, particularly the “high-end Signature and Signature Gold products” whose sales increased 20 percent last year to grow to more than 30 percent of total merchandise sales.
For the year, income rose 13.6 percent to $97.5 million, or $3.49 a diluted share, from $85.8 million, or $3.08, in 2010. Sales rose 14.2 percent to $979.9 million from $858.1 million, as comparable-store sales rose 7.6 percent for the year.
On a day that the Dow Jones Industrial Average fell more than 70 points, Jos. A. Bank stock closed Wednesday at $49.82, down $4.66 or 8.5 percent. The company will hold a conference call today to discuss the results.
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