Jos. A. Bank's streak ending

Clothier expecting profit decline after 5 quarters of gains

`Tough retail environment'

May 17, 2001|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

After recording five straight quarters of gains in sales and earnings, Jos. A. Bank Clothiers Inc. said yesterday that business had slowed in its first quarter, mostly because of uneasy consumer confidence and the slowdown in the economy.

Sales in stores open at least a year - a benchmark of retail performance - dropped eight-tenths of a percentage point for the three months that ended May 5.

The Hampstead retailer of men's apparel and accessories said it expects first-quarter earnings to fall 38 percent to 44 percent, or 9 cents to 10 cents per share, compared with 16 cents per share a year ago. The company will release its first-quarter earnings May 22 after the stock market closes.

With the opening of 11 stores since the second half of last year, Bank's total sales - which include stores open less than a year - increased by 2 percent to $47.4 million, compared with $46.4 million in the first quarter of last year. Catalog sales fell 19 percent, and Internet sales soared by 138 percent.

"While our sales increased in February and March, we had to be somewhat aggressive in our pricing and promotions to make sure we cleared out our inventory and make sure we weren't left with excess goods," said David E. Ullman, executive vice president and chief financial officer. "If you look at our sales, it's not poor, but we're in a tough retail environment right now.

"We're opening new stores, but being very aggressive about cutting our expenses," Ullman said. "That way, when the economy regains its strength, we want to make sure we've got more stores out there that can contribute to our profitability."

Bank had been enjoying a string of successes with its foray into corporate casual attire and retail expansion and was one of the few retailers to report a strong holiday season. Its turnaround has been led by Chief Executive Officer Robert N. Wildrick, who was hired in late 1999 to reverse the company's sagging sales and earnings.

"While our comparable store sales were positive in both February and March and better than many in the industry, our margins were lower than last year," Wildrick said in a statement. "April started slow as a result of the Easter shift, and increased later in the month."

Company officials said yesterday that a one-time charge resulting from a "strategic action" will cut 2 cents a share from earnings in the quarter. The company did not specifiy what the action was.

Wildrick also said in his statement that results for the first three quarters of 2001 will be hurt by costs incurred in the opening of about 30 new stores this year.

Shares of Jos. A. Bank rose 9 cents to close yesterday at $8.34 on the Nasdaq stock market.

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