Warmer weather hurts sales at Jos A Bank

The company is left with higher inventories of outerwear, but is seeing improved spring traffic.

By Benzinga Mar 30, 2012 4:16PM
Image: Businessman looking out the window (© Corbis)

By Lear Yann, Benzinga Staff Writer

Shares of men's clothing company Jos A Bank Clothiers (JOSB) were slumping again Friday, two days after reporting a disappointing fourth quarter.

The stock tumbled some 10% after news of the quarter, and was trading Friday at $50.44. Before the quarterly report Wednesday, shares had been close to $55.

Margins are falling at the clothing chain. It met expectations on profit, which rose 8% to $1.58 a share, but missed on sales for the quarter. Revenue rose 9% to $346.3 million, but still couldn't meet the $353.4 million analysts wanted to see. The company blamed a milder winter that adversely impacted outerwear and cold-weather merchandise sales in the fourth quarter.

Lower winter sales pushed up inventory levels to the mid-20% range. But most of the items are perennial in terms of style, the company said, and will not require liquidation. Jos A Bank expects an inventory level of 15% to 20% at year's end. As cost inflation continues at an estimated 7%, the company expects higher inventories to contribute slightly to gross margins.

The picture for the full year was brighter. Profit jumped 13.6% to $97.5 million. On a per-share basis, earnings of $3.49 beat expectations for $3.47. Full-year sales rose 14.2% to a record $979.9 million, but were far below analyst estimates of $1.09 billion. Same-store sales rose 7.6% for the year and direct-marketing sales increased 14.7%.

Higher promotions were mainly responsible for the spike in sales, aided by increased store traffic. But those markdowns took a toll on margins, bringing them 50 basis points down from a year earlier. In 2010, margins grew by 130 basis points. Rising costs for cotton, wool and other materials also hurt margins last year.

While winter sales suffered from the warmer weather, spring sales are already in full bloom. CEO E. Neal Black noted that spring clothing sales have picked up significantly, in contrast with weak spring sale trends last year. With Easter being closer this year, the company expected this period to be a test of how sales would turn out.

The company is branching into new categories, including tuxedo rentals, custom clothing for larger sizes and slimmer-cut suits and shirts. It's also seeking future growth through store expansion and a strengthened online business, which currently has a database of 3.2 million active customers.

More from Benzinga
Mar 30, 2012 5:35PM
If economic numbers relate to consumer spending & jos can make good margins on expanding sizing and fashion then I'd be tempted. tuxedo rental I was not expecting
Mar 30, 2012 4:20PM
I'm surprised they did as well as they did with the weather this year. Crazy.
Apr 2, 2012 8:14AM
"And suits so fine, they made Sinatra look like a hobo"

I wouldn't go long Joseph A Bank. More companies are embracing casual dressing.
Mar 30, 2012 9:56PM
Very wonderful post. Well done!Continue writing!http://www.topvibrambar.com/
Mar 30, 2012 5:38PM
This wouldn't have happened if we had a REPUBLICAN PRESIDENT
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125 rated 1
267 rated 2
455 rated 3
612 rated 4
682 rated 5
695 rated 6
632 rated 7
472 rated 8
279 rated 9
147 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.