Two weeks ago, hundreds of public investors, adults of sound mind and judgment, paid good money for stock issued by Jos. A. Bank Clothiers Inc. Their $10 a share on the barrelhead, the ultimate gesture of business faith and confidence, once would have been hard to imagine.
Former Baltimore Orioles owner Eli S. Jacobs and Boston financier John Lakian nearly put Bank on the closeout rack with a botched, debt-sodden 1986 buyout. The venerable Baltimore suit and sportcoat company was near bankruptcy and losing millions by 1989.
But Jos. A. Bank is back, thanks to a prickly, nomadic executive who arrived in 1990 as a hired-gun trouble-shooter and decided to stick around. The 1,900-worker company, now based in Hampstead, has updated its clothes in the past three years, overhauled its balance sheet and propped up sales to pre-buyout levels -- $147.71 million last year.
Now it is rapidly expanding, using more than $15 million in new shareholder cash to double store locations to about 120, mainly east of the Mississippi, by 1997.
Retail analysts don't doubt that Bank is a nice rebound story, heartwarming in a Wall Street kind of way. Timothy F. Finley, 50, the chairman and chief executive who bailed Bank out, prevailed over squabbling lenders and the worst period for apparel sales in years.
He "took a company that was very ill -- had no set purpose -- and rebuilt it into a well-accepted, quality-at-a-price apparel chain," said Peter N. Schaeffer, who follows retail stocks for New York investment firm Dillon Read & Co. Inc.
It's not clear, however, whether Bank is suited for continued success.
Its main customers -- white-collar men -- are tight with a clothing buck. Several other quickly growing chains are chasing the same shoppers. Bank has de-emphasized sportswear and women's apparel -- lines with bigger profit margins and greater national sales.
And men don't dress up for work like they used to.
Every time an insurance company proclaims "casual Friday" or a consultant works from his home instead of the office, they're taking money from suitmakers' cotton-lined, button-flap pockets.
Mr. Finley, speaking softly and precisely in a recent interview, expects Bank to thrive. Its merchandise is far more focused than it was, he said. It knows its customers. Its prices are unbeatable. Executives need places to shop as traditional haberdashers wane. And the blue-jeans-at-work syndrome, Mr. Finley said, is not a big problem.
"Just because you're casual on Friday doesn't mean you're casual on Monday, Tuesday, Wednesday, Thursday," he said. "After all, we survived the Nehru jacket and the leisure suit."
Buyout nearly fatal
Jos. A. Bank almost didn't survive its 1986 buyout. John Lakian, a Boston investment banker who's now running for governor of Massachusetts, led a group including Mr. Jacobs in buying the clothier for $105 million from Quaker Oats Co.
It was a cliche of '80s dealmaking. The debt was high -- 80 percent of the price and deal fees. The bonds were junk. And the investment banker was Drexel Burnham Lambert.
The buyout quickly went bad. Sales fell, loans soured and losses mounted. Bank, descended from a company founded in 1905, edged toward bankruptcy court.
Desperate, Bank's board hired Mr. Finley, a no-nonsense, cut-to-the-quick consultant based in Charlotte, N.C.
Mr. Finley's experience with business mayhem had started early. His father's illness forced him at 22 to go home to Zanesville, Ohio, and run the struggling family meatpacking concern.
The young son's prescription was brutal but effective: He liquidated the company.
He had later jobs at accountants Deloitte & Touche, then called Deloitte, Haskins & Sells, and textile maker Cannon Mills.
In the late 1980s he worked as a freelance crisis consultant -- something akin to getting the wheelchair concession at the bottom of a steep, icy ski trail. As recession set in and buyouts went bad, there was no lack of business.
At Bank, Mr. Finley took over as interim CEO. He made rapid changes, closing bad stores, eliminating more than 200 jobs, getting better computers and saving $800,000 annually by moving managers from their comfortable Owings Mills offices into jerry-built space next to Bank's Hampstead factory.
'Ready, Fire, Aim'
Mr. Finley, who colleagues say sometimes explodes when things go awry, "used to have a motto that said, 'Ready, Fire, Aim,' " said J. William Porter, a Charlotte bankruptcy lawyer who knows him well. "When you're in the crisis management business, that's what you have to do."
Mr. Finley returned Bank's merchandise to its pre-buyout focus on less-than-$400 suits and other "careerwear." Previous managers, he believed, raised prices too much, made stores too fancy and confused customers by increasing sportswear lines.
And he persuaded bondholders to convert to equity, pulling Bank's net worth from minus $40 million into positive territory.
Bank bounced back.