Jos. A. Bank's earnings rise 71% in third quarter Sales gains, savings on costs credited

Retail

November 11, 1998|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Jos. A. Bank Clothiers Inc. reported a strong profit gain of 12 cents per share for the third quarter ended Oct. 31, despite flat sales at stores open at least a year.

Income from continuing operations climbed to $2.2 million, or 32 cents per share, from $500,000, or 7 cents per share, in the third quarter of 1997, the men's apparel retailer said yesterday.

After backing out a one-time $1.4 million tax benefit, the company's earnings rose 71 percent, to 12 cents per share.

"It sounds like they had a terrific quarter," said Kenneth Gassman, a retail analyst with Richmond, Va.-based Davenport & Co., who follows the company.

The retailer, in the midst of a major expansion, attributed the strong results to solid gains in sales of men's suits and sport coats, two high-margin items.

"Our store-opening strategy of locating new stores in existing markets is designed to improve overall earnings and [to] leverage expenses," said Chairman Timothy F. Finley. "While the sales growth of our comparable stores has been temporarily slowed by opening the new stores, the comparable stores generated more profit than in 1997 as a result of strong margins.

"In addition, the new stores are contributing to the increased profitability," he said.

Bank recently opened its 100th store, and 26 have opened during the past two years. In the third quarter, comparable store sales -- sales at stores open at least a year -- were even, compared with an increase of 2 percent during 1997's third quarter. Bank's expenses declined during the quarter, because of better cost management, Gassman said.

Besides its strong suit and sport coat sales, the retailer boosted gross margins by entering the third quarter with low levels of summer merchandise, reducing the need for clearance sales, he said. And, the company's recent sale of its manufacturing plants allowed it to reduce overhead.

Bank turned in strong results despite some weakness in men's apparel, Gassman said.

But the sector is beginning to turn the corner, in part because of greater offerings of casual attire, said Kurt L. Barnard, president of Barnard's Retail Trend Report, a forecasting firm based in Upper Montclair, N.J. "Joseph Bank certainly has been one of those companies that has come to grips with the reality and stopped trying to shove very formal, tailored clothing down the throats of an unwilling male community," he said.

Pub Date: 11/11/98

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