WWD.com/business-news/financial/jos-a-bank-profits-jump-1878891/
government-trade
government-trade

Jos. A. Bank Profits Jump

Jos. A. Bank Clothiers Inc. used an aggressive promotional posture to overcome a hostile retail environment and post higher third-quarter profits.

Jos. A. Bank Clothiers Inc. used an aggressive promotional posture to overcome a hostile retail environment and post higher third-quarter profits that beat Wall Street’s expectations.

The men’s wear retailer’s net income for the quarter ended Nov. 1 increased 31 percent to $9.3 million, or 50 cents a diluted share, from $7.1 million, or 38 cents a share, last year. Sales in the quarter ended Nov. 1 rose 13.7 percent to $149.3 million from $131.3 million a year ago. On average, analysts tracked by Yahoo Finance expected earnings of 41 cents a share.

The Hampstead, Md.-based company said comparable-store sales rose 7 percent and direct marketing sales, not specified by the company, fell 11.4 percent.

In a conference call Thursday, Robert Wildrick, chief executive officer, said the increases “were driven primarily by strong promotional activity throughout the quarter, particularly late in the quarter, after slackening consumer demand due to the country’s economic problems became very clear.”

Sales were “softer than planned” in November, he said, a trend that may continue through the holiday season, leading the firm “to remain focused on aggressive promotional activity for the remainder of the year,” Wildrick said. The first half of 2009 may also remain promotional, he added.

In the quarter, suits and dress shirts were among the top performers, he said. The company’s higher-priced goods, particularly the Signature suit collection, increased their penetration in the period, rising to 26.5 percent of sales from 25.1 percent in the same quarter last year.

Sterne Agee & Leach analyst Margaret Whitfield said although gross margin fell 50 basis points to 63.2 percent of sales, “the company gained traction in sales and gross margin dollars, which has been a focus.” She maintained her “buy” rating and $45 price target for the stock.

For the first nine months of fiscal 2008, profits rose 18.3 percent to $28 million, or $1.52 a share, compared with $23.7 million, or $1.28 a share, last year. Sales in the three quarters rose 13.2 percent to $447.4 million from $395.1 million a year ago. Year-to-date comps rose 6.8 percent while direct marketing sales were down 0.4 percent.

Wildrick also noted that the company may cut back on its modest store-opening plan for 2009: “We have planned to open only 15 to 20 stores next year. We currently have signed leases for approximately nine of these stores. However, if the global financial situation gets any worse, we will reduce this number even further.”