Record earnings continue for Bank

Men's apparel retailer increases expectations for full-year income

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

Jos. A. Bank Clothiers Inc. reported yesterday another quarter of record earnings, thanks to unexpectedly high demand for its suits and casual clothing, and boosted its full-year earnings expectations.

The Hampstead-based men's apparel retailer more than tripled net income to $942,000, or 13 cents a share, in the second quarter that ended Aug. 3 - the fourth consecutive quarter of record earnings, Bank said. In the corresponding quarter last year, Bank earned $291,000, or 5 cents a share.

With sales and earnings exceeding expectations, Bank raised its full-year earnings-per-share estimate by a dime, to $1.35. Last year, Bank had earnings per share of $1.05. After the upbeat report, shares of Bank rose $2.74, or 16 percent, to close at $19.95 yesterday on the Nasdaq composite index.

Bank's sales were held back in the first half of the year by low clothing inventories in anticipation of weaker sales after the Sept. 11 attacks. But demand stayed strong this year, and Bank found itself without enough merchandise on the shelves to satisfy customer demand.

"The good news is we had good sales, and good sales even with lower inventory," said Robert N. Wildrick, Bank's chief executive officer. "So as the inventory goes up, we hope to do even better."

Inventories remain about 8 percent below where they should be, Wildrick said. But he said he didn't see a negative effect on sales as the stores prepared for the normally busier fall and winter shopping seasons.

The retailer's sportswear and suit lines had strong sales in the quarter, Wildrick said. Sales rose 12.5 percent to $51.9 million, compared with $46.1 million in last year's second quarter.

"People are dressing up a little bit more in the workplace than last year" because of greater job uncertainty, Wildrick said. Bank contracts directly with overseas manufacturers to make most of its merchandise, which helps the retailer control costs and squeeze more profits from sales, Wildrick said.

Bank, which had $211 million in sales last year, is forging ahead with an aggressive expansion plan that will add 17 stores through the third and fourth quarters and add at least 30 stores next year. Wildrick said yesterday that the chain, which has 145 stores in 29 states, could grow to 500 stores.

"If sales and profits continued at their current level, the number of stores opened next year could go dramatically higher," Wildrick said.

Michael M. Via, director of research for Anderson & Strudwick in Richmond, Va., said he thinks Bank can handle the growth.

"There's a market. The competition is not growing at all," Via said, pointing to Brooks Brothers and Men's Wearhouse. "The rise in popularity of upscale specialty malls is a perfect fit for Bank, and there's a lot of opportunities there."

Preston Silvey, an analyst who follows Jos. A. Bank for First Dallas Securities, said the company beat his quarterly sales estimate by $3.5 million.

"They're doing an excellent job of controlling things," Silvey said of Bank. "It seems like they're running a very responsible operation. ... A lot of their earnings growth is coming from getting rid of the middleman and getting into direct manufacturing."

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