Jos. A. Bank Clothiers Inc. is crediting a return to more promotional pricing for its success in the second quarter.

This story first appeared in the September 3, 2009 issue of WWD. Subscribe Today.

The 467-unit men’s specialty chain, based in Hampstead, Md., not only intends to maintain a rapid promotional rhythm during the back half of the year, but also will build “the ability to offer and transact more of our compelling promotional offerings” into the relaunch of its Web site during the current third quarter, R. Neal Black, president and chief executive officer, told analysts during the company’s conference call last week.

Jos. A. Bank’s net income advanced 41.1 percent, to $12.5 million, or 68 cents a diluted share, during the second quarter ended Aug. 1 as sales rose 9.8 percent to $167.7 million and same-store sales picked up 6.2 percent. Transactions and units and amounts per transaction all improved, although gross margin declined to 61.5 percent of sales from 62.4 percent a year ago.

“Sales were softer than planned during the Father’s Day period as we attempted to test the consumer’s response to normalized pricing during this natural buying period,” Black said. “We returned to more aggressive pricing after Father’s Day and drove enough additional sales volume to deliver this quarter’s results.”

However, the strategy didn’t benefit direct marketing sales, which were down 6.7 percent during the quarter, in part because the price promotions available in stores weren’t offered online, Black noted.

“It appears that the difficult economic conditions facing consumers have not yet moderated,” he said, “and very strong, aggressive and eye-catching promotions are still required to drive sales increases.”

Analysts estimated direct marketing sales at $13.9 million, down about $1 million from the prior-year quarter.
David Ullman, executive vice president and chief financial officer, said on the call the firm would spend $18 million to $20 million during the current fiscal year to open, renovate and relocate stores, replace the existing Internet infrastructure and take on other projects. The company said last month it would accelerate its store opening plan in 2010 to as many as 40 units from the 10 to 15 it plans to open this year, on its way to a long-term objective of 600 stores in the U.S.

Black disclosed that suits grew to 35 percent of sales, or about $58.7 million, in the last quarter from 27 percent, or $41.2 million, in the comparable 2008 period. He said Jos. A. Bank is “continuing to slowly develop our business in big, tall and portly size extensions” and that the higher-end Signature and Signature Gold collections expanded their share of volume to 35 percent in the second quarter versus 27 percent in the year-ago period.

Sterne Agee analyst Margaret Whitfield raised her EPS estimate for the full year to $3.94 from $3.73 and her target price to $55 from $48 based on earnings estimates. On Tuesday, shares closed down 2 percent at $46.08. Their 52-week range is $15.38 to $50.58.

Also on Tuesday, shares of Men’s Wearhouse Inc., the largest men’s wear specialty chain in the U.S., closed up 2.9 percent to $26.65. They hit a new 52-week high of $26.93 in intraday trading.

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