Tripled earnings suggest Jos. Bank suits buyer tastes

Corporate casual line's boom helps give clothier boost in first quarter

May 21, 2002|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Jos. A. Bank Clothiers Inc. seems to have what men want these days.

The Hampstead-based company reported yesterday that it more than tripled earnings in the first quarter and boosted earnings expectations for the full year. Suit sales are on the rebound, and the company's corporate casual clothing line continues to boom, said Bank's chief executive officer, Robert N. Wildrick.

"We have the products right now that the customer wants," Wildrick said. "More of our goods are selling at regular price. We're not needing to take the markdowns because we have so many hot items right now.

"We seem to be right in tune with what the customer wants right now."

In the quarter that ended May 4, Bank's profit more than tripled to $1.73 million from $506,000 in the corresponding quarter last year. Earnings per share jumped to 25 cents from 8 cents during the comparable period last year.

Even as many other apparel retailers have suffered over the past several months, Bank's sales grew 18 percent to $55.8 million.

Sales at stores open at least a year - a key measure among retailers - rose 7.5 percent at Bank.

By comparison, Men's Wearhouse Inc., one of Bank's larger competitors that focuses heavily on suits, posted negative same-store sales at its U.S. stores each month from January through April.

Bank added corporate casual clothing to its product mix 2 1/2 years ago - a move that continues to pay off for the company. Today, suit sales account for 27 percent of the business, while corporate casual sales account for more than 40 percent, Wildrick said. The company also sells accessories, from shoes and socks to ties and belts.

"The casual trend is pretty much here to stay," said Michael M. Via, director of research for Anderson and Strudwick in Richmond, Va., which follows Bank. "I haven't seen evidence that people are going back to suits. I think the way [Bank is] set up, they have on the shelf what people want."

The company's centralized headquarters and distribution center in Hampstead - from which Bank runs its retail, catalog and e-commerce business - is also helping the company increase profit margins, Via said. The company said yesterday that gross profit jumped 25 percent in the quarter to $29.4 million.

Increasingly, Bank is on investors' radar screens. The price of Bank's shares has more than quadrupled in the past year as the company regularly posts positive sales growth and surpasses earnings expectations.

A year ago, the company's shares traded at $5.53. Yesterday, shares of Bank closed at $23.60 - down slightly from an all-time high on Friday of $23.86.

Bank also raised its earnings projection for fiscal year 2002 from $1.16 per share to $1.25 - an increase that could be "a real positive" for the company among investors, according to Preston Silvey, a retail analyst with First Dallas Securities.

Silvey said he thinks management has done "a very good job of seeing the trends and growing the company in a responsible way."

"They're doing real well," Silvey said.

Bank will benefit with either its corporate casual or suit lines as the overall retail environment recovers, Silvey said.

Wildrick said yesterday that Bank, which currently has 137 stores, can expand into a 400- to 500-store company in the next five years. The company added 21 stores last year and plans to open 23 to 25 this year.

And if business continues to be "exceptional," Bank expects to open at least 30 stores next year, the company said yesterday in its earnings report.

Bank "is finding a very receptive real estate market getting very good terms on their leases," said Via of Anderson and Strudwick. "I think they're going to be very successful in their expansion strategy. A lot of these [new stores] are in existing markets so they won't have to raise advertising" expenses to market the stores.

Wildrick, Bank's chief executive, said the company faces a favorable real estate market because it's opening more stores this year than most other menswear companies. Mall and commercial real estate developers are looking to Bank to round out their properties with an upscale men's apparel retailer, Wildrick said.

"We're basically right now the only game in town."

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