CEO's gain turns into Bank's loss

Departure payment of $1.8 million drains black ink from quarter

20 cents-a-share charge

Without Finley payout, clothier would post earnings of 7 cents to 8 cents

August 11, 1999|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Jos. A. Bank Clothiers Inc. paid its departed Chairman and Chief Executive Officer Timothy F. Finley $1.8 million when he retired in May, the company disclosed yesterday.

As a result, the Hampstead-based men's apparel retailer said, it expects to report a second-quarter loss of about 12 cents per share. The company said it will take a one-time charge of $2.2 million, or 20 cents per share, for the quarter that ended July 31.

Also yesterday, Bank announced plans to replace Finley within 45 days. Finley, 55, had been credited with reviving the once-foundering men's apparel chain during his 8 1/2 years at the helm.

The chain expects to earn 7 cents or 8 cents per share for the second quarter -- down from 9 cents per share for the second quarter of last year.

But, with the one-time charge, which also includes $400,000 for an executive search, the company anticipates a loss of about 12 cents per share.

Bank plans to report its second-quarter earnings Aug. 24.

The company's contract with Finley determined the payment, said David E. Ullman, executive vice president and chief financial officer. But Ullman said he could not comment further on the terms of Finley's contract.

After Finley stepped down, Andrew A. Giordano, a Bank director since 1994 and head of the board of directors' executive committee since 1995, stepped in as chief executive temporarily while the company searched for a replacement.

The company is still actively looking for a new chief executive while considering several candidates, among them Frank Tworecke, the company's executive vice president and chief operating officer, Ullman said yesterday.

Though Finley's departure and the resulting charge will mean a loss for the quarter, "the key is the operating performance and the strength of the business," Ullman said.

"The health of the business is good."

During the second quarter, total sales grew 5 percent, from $41.9 million to $44.2 million, the company said yesterday. Sales at stores open at least a year -- a key barometer of a retailer's performance -- rose 2 percent.

That increase was in line with company projections, Ullman said.

It came about partly because of stronger sales of sportswear and corporate casual wear -- such as slacks, sport coats and knit shirts that have become popular "casual Friday" attire in the workplace.

The retail chain has opened three new stores this year, in Bethesda, Ocean City and Morristown, N.J. It will open two more this month, in Georgia and Virginia, bringing the number of stores to 108.

Bank has hired SiteWorks Retail Real Estate Services, a Columbia-based real estate consulting firm, to find new store sites and negotiate leases. SiteWorks has started reviewing all company-owned stores throughout the country.

"They are assessing the variables that drive a successful store for us, the demographics, density, population, and that will give them and us a solid base with which to select additional stores," Ullman said.

Bank expects to open as many as three more stores this year, Ullman said.

The company's stock closed yesterday at $5.25 per share, up 38 cents.

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