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Jos. A. Bank Expects Q1 Net Dip

Quarterly sales are down 3 percent, primarily in April, despite Internet strength.

Jos. A. Bank Clothiers Inc. on Monday prepared Wall Street for its second consecutive quarterly earnings disappointment, sending its shares down more than 7 percent.

The Hampstead, Md.-based men’s specialty retailer forecast earnings of between 27 and 30 cents a diluted share for the three months ended May 4. That comes against year-ago earnings per share of 53 cents and the current analyst consensus estimate of 46 cents.

Despite double-digit improvement in its e-commerce and other direct-to-consumer business, overall sales for the quarter declined about 3 percent, the company said, which would put them at about $195.3 million versus the $201.4 million recorded during the first quarter of last year.

R. Neal Black, Jos. A. Bank’s president and chief executive officer, said the worst of the sales decline was in April.

 

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The company previously hadn’t provided guidance for the quarter.

The first-quarter performance follows a letdown in fourth-quarter results, reported in April, when holiday promotions of seasonal sportswear failed to excite consumers and earnings fell 35.7 percent to $28.4 million, or $1.01 a diluted share, despite a 2.4 percent increase in sales to $354.8 million. Last year’s final quarter was somewhat better than the 95-cent EPS for which the company had prepared investors well after the markets closed on Friday, Jan. 25, as the three-month period drew to a close.

Shares Monday closed at $42.90, down $3.31 or 7.2 percent. They had recovered some of the territory lost following the fourth-quarter earnings warning in January, which prompted a $6.99, or 15.1 percent, slide to $39.28 on Jan. 28.

Weather figured prominently in Bank’s problems in the more recent quarter, just as it did at the end of 2012.

Black said gross margin was down “primarily due to higher inventory sourcing costs and lower average selling prices due mostly to increased percentage of sales of winter clearance products.”

Like other retailers preparing to report first-quarter results, Bank suffered during the February-to-April period because of unseasonably cool weather. In what could be viewed as a worst-case scenario, chilly temperatures lingered long enough for stores to be deprived of meaningful markup on cold-weather merchandise.

In addition to success with its e-commerce efforts, Black noted that the company had managed to improve its advertising efficiency in the most recent quarter.

“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,” he said. “As such, we will continue to test, evaluate and refine our merchandising and advertising offerings to optimize the appeal to our customers.

“Additionally, starting this spring, we have introduced new and more focused casual assortments and additional slim-fit suit inventories responding to customer demand,” he concluded.

The company, an aggressive promoter previously successful with “buy-one-get-several-free” campaigns, had amassed a track record of strong quarterly results before hitting difficulties last year.

During its fourth-quarter conference call on April 4, Black’s commentary was followed by a question-and-answer session in which questions submitted to the company by analysts were asked of Black by David Ullman, chief financial officer, rather than, as is done customarily, asked by the analysts themselves.

Visibility has also been hampered by the discontinuation of coverage by two analysts, Richard Jaffe of Stifel Nicolaus and Margaret Whitfield of Sterne Agee. Stifel underwent a “reallocation” of resources, it said, and Sterne discontinued coverage of the specialty retail sector.