By  on September 5, 2013

Jos A. Bank Clothiers Inc. believes the worst of its multiquarter sales decline just might be behind it.

The Hampstead, Md.-based men’s wear retailer Thursday reported top-line gains in August as it registered double-digit declines in profits and sales for the second quarter.

Neal Black, president and chief executive officer of the men’s specialty store chain, said that, contrary to the trends in the second quarter, total sales, comparable-store sales and direct-marketing sales “have all increased during the fiscal month of August 2013 as compared to the same period of 2012, so the third quarter is off to a good start, but it is still early in the quarter....With the gross margin trend turning up in the second quarter and the sales trend turning up in August, our declines may have bottomed out.”

In the three months ended Aug. 3, net income declined 38.5 percent to $14.2 million, or 51 cents a diluted share, from $23.2 million, or 83 cents, in the year-ago quarter.

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Sales contracted 10.7 percent to $232.5 million from $260.3 million as same-store sales dropped 15.9 percent and direct-marketing revenues pulled back 1.9 percent.

However, with the company reducing cost of goods sold 11.4 percent, more than the pullback in sales, gross margin advanced to 59.1 percent of sales from 58.7 percent a year ago.

The bottom-line result for the quarter was consistent with the profit warning issued on Aug. 15 for earnings per share of between 49 and 53 cents. The 51-cent reported EPS number was 1 cent below the analyst consensus estimate, tabulated after the revision in guidance, of 52 cents.

Bank’s performance over recent quarters has called into question its aggressive promotional policies, which failed to resonate during the holiday season and similarly haven’t motivated consumers to buy in recent months.

“Customers did not respond as well to some of our highly promotional marketing campaigns as they did in the prior year, causing the disappointing sales decline in the quarter,” Black commented. “At the same time, day-to-day sales on the nonpromotional portion of our business in stores increased during the quarter and have the potential to represent a larger portion of our business going forward. As we have implemented new marketing strategies, we were conservative with our marketing expenditures, which enabled us to continue to improve our marketing efficiency during the quarter.”

During a conference call with analysts, the first in recent memory in which the company took questions after its prepared remarks, Black referred to the firm’s “ongoing modification of our promotional strategy” and noted that the first signs of declining response to its promotions during the third quarter of last year followed a double-digit comp increase in August. With the anniversary of the start of Bank’s descent coming up, Black noted “our opportunity for improvement is significant” during the third and fourth quarters.

In its recent marketing, it’s backed off the “BOGO” — buy one, get one free — bandwagon with a more institutional approach tied to the tag line, “Making it work.” One recent ad showed a hard-working executive wearing one of the cotton pinpoint oxford shirts that Bank, according to the ad, will be selling for $25 “for the rest of the year.”

Investors, who’ve watched shares in the company drop from a 52-week high of $50.75 last September, greeted the news enthusiastically Thursday, sending shares up $2.25, or 5.6 percent, to $42.27.

The company on Wednesday said that Byron “Bud” Bergren, former chairman and ceo of The Bon-Ton Stores Inc., had joined its board, increasing its size to seven from six. Five of the directors, including Bergren, are classified as independent directors. Bergren will serve on the board’s audit committee. The company didn’t comment on recent calls for change at the firm from activist investor BeaconLight Capital or on its quest for acquisitions. It acknowledged its interest in making acquisitions in June after it was reported to be bidding for Fifth & Pacific Cos. Inc.’s Lucky Brand division, which includes a sizeable retail component.

In the first six months of fiscal 2013, Bank’s net income declined 41.2 percent, to $22.3 million, or 80 cents, while revenues were down 7.2 percent to $428.6 million. Since the start of the fiscal year, inventories have grown 10.3 percent to a total of $364.6 million.

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