Jos. A. Bank earns .8 a share, off 12%

Decline is attributed to cost of new stores, ad campaign, Y2K fixes

Clothing

August 25, 1999|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Jos. A. Bank Clothiers Inc. saw earnings dip 12 percent in the second quarter, the Hampstead-based men's apparel retailer reported yesterday.

The chain reported net income from continuing operations of $526,000, or 8 cents per share, compared with $597,000, or 9 cents per share, during the corresponding period a year ago. It attributed the decline to costs of operating new stores, increased advertising to sell leftover spring inventory and becoming Y2K compliant.

As the company had announced this month, a one-time, pretax charge of $2.2 million -- including a $1.8 million payment to Chairman and Chief Executive Officer Timothy F. Finley when he retired in May -- left the retailer with a net loss of $802,000, or 12 cents per share.

Despite the one-time charge, "they had a good quarter. We were disappointed they didn't post an earnings increase, but the winter overstocks hurt," said Kenneth Gassman, a retail analyst with Davenport & Co. in Richmond, Va.

"Now, the inventory's clean, and the company should post a strong third quarter."

The chain is on track to perform as well in 1999 as it did in 1998, said Andrew A. Giordano, Bank's chairman and interim chief executive officer.

Net income from recurring operations for the year is expected to meet or exceed 65 cents per share, he said.

"Excluding the one-time charge, the company is performing well," said David E. Ullman, executive vice president and chief financial officer, who said the company has been able to reduce its long-term debt by 26 percent despite investing in new stores.

Giordano said he was encouraged by second-quarter sales, including a 5 percent increase in total sales to $44.2 million and a 2 percent rise in sales at comparable stores, or locations open at least a year.

That increase came after a first-quarter drop of 8 percent in comparable sales, which the company attributed to a failed promotion in March.

Giordano attributed sales increases to the growing popularity of the chain's corporate casual wear and its line of Signature suits, Bank's brand-name, higher-quality suits.

"We're pleased with the fact that we accomplished what we did," Giordano said.

"We knew we were going to reverse that [first-quarter] trend, but until you do, you're always looking over your shoulder. We're very upbeat with what we see for the second half of the year."

Bank has opened four stores this year and will open a fifth, in McLean, Va., this month, bringing the total number of stores to 108.

Strategies for continued growth include an enhanced formal-wear program to meet demand for New Year's Eve celebrations and a corporate apparel program, which the chain launched last week at a trade show in Las Vegas.

"We're going into the business of embroidering corporate logos on blazers and polo shirts for when corporations want their people to dress up with their logos," Giordano said. "It's a growing business."

Giordano also said yesterday that the chain expects to announce a new chief executive officer within 30 days.

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