Bank's earnings rise sharply New stores perform well, men's clothing sales gain, retailer says

Retailing

May 27, 1998|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Jos. A. Bank Clothiers Inc. yesterday reported a sharp jump in first-quarter earnings, driven by the strong performance of its new stores and surging sales in its men's clothing line.

Income from continuing operations rose 89 percent, to $828,000 for the quarter ended May 2 from $437,000 in the same period a year ago, the Hampstead-based retailer said.

Operating earnings doubled to 12 cents per share in the quarter, compared with 6 cents a year earlier. The latest figure beat analysts' expectations of 8 cents per share.

Bank's net profit was 11 cents per share, including a penny-per-share loss from discontinued operations, after the sale of its manufacturing plants. Net income rose 103 percent to $777,000, the retailer reported.

"These numbers look great, unbelievable," said Holly L. Guthrie, an analyst with Janney Montgomery Scott Inc. in Philadelphia.

Bank had previously reported comparable store sales were up 5 percent. Analysts said that was a healthy increase over the first quarter of fiscal 1997, when the company reported comparable store sales down by 1.5 percent.

During the quarter, Bank opened seven new stores -- four in Texas and others in Georgia, Florida and Michigan -- in line with its plan to open or relocate 65 stores in three years, most in existing markets. The company expects to open 17 stores this year.

Strong sales at new stores helped boost total sales 12.2 percent, $43.4 million, said Timothy F. Finley, Bank's chairman and chief executive officer. While the company is expanding, other men's apparel retailers have gone out of business over the years, he noted.

The strong economy and resurgence in sales of men's apparel also contributed to the quarter's performance, Finley said. "We outdid ourselves. We had a great quarter."

Sales of tailored clothing, which make up the bulk of Bank's business, have been strong this year, said Kenneth Gassman, an analyst with Richmond, Va.-based Davenport & Co. Some of Bank's success has come from its introduction of a new line of wrinkle-free suits.

"We can argue that menswear [sales were] soft for so many years, that there are suits with frayed collars and cuffs that need replacement," Gassman said.

Finley said merchandising improvements have begun to pay off, too, as the company has better managed its departments and balanced its inventory.

"If you buy properly so you're not overbuying the amount of mark-downs is less and margins are higher," he said. "As you get bigger, you have more buying power."

Gross margins beat expectations slightly, coming in at 48.9 percent, compared with 48.8 percent for the same period a year ago. Guthrie said she had expected only slightly lower margins, of about 48.6 percent.

Analysts had expected the fourth-quarter sale of Bank's Baltimore sewing plant and cutting room to an upstate New York garment maker to boost Bank's financial results, allowing it to eliminate large, fixed overhead expenses.

The sale -- to a subsidiary of M.S. Pietrafesa LP, the 76-year-old maker of Polo by Ralph Lauren tailored clothing and Brooks Brothers suits -- took Bank out of manufacturing after 93 years, allowing it to focus on its core retail business.

Bank, which now has 94 stores in 28 states, had become the last men's tailored clothing retailer in the country to produce its own apparel. "On the expense side, they were able to leverage their expenses," Guthrie said. "Expenses were up, but not up nearly as much as sales."

Pub Date: 5/27/98

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