Jos. A. Bank's earnings rise 50% to $9.6 million

Sales in fiscal 4Q gain 30% to $100 million as men's chain expands

March 30, 2004|By June Arney | June Arney,SUN STAFF

Retailer Jos. A. Bank Clothiers Inc. reported yesterday a 50 percent increase in earnings in its fourth quarter as the company continues its expansion.

The Hampstead men's apparel chain posted net income of $9.6 million for the fiscal quarter that ended Jan. 31, or 85 cents a share, compared with $6.4 million, or 59 cents a share, in the fourth quarter of fiscal 2002.

Sales for the period rose 30 percent to $100.9 million from $77.9 million last year. That gain reflected an 11 percent increase in same-store sales.

"We have been putting more quality into our product," said David E. Ullman, chief financial officer for Jos. A. Bank. "Nobody else is doing what we're doing. No one is offering those levels of products and services and rolling out across the country like we are. It's a unique opportunity for us."

And customers have been responding - particularly with increased sales for the firm's highest-priced clothing line, he said. A dress-up trend in the marketplace may have helped, he said.

"It's basically the continuation of a three-year trend," said Michael M. Via, director of research for Anderson & Strudwick, an investment banking firm in Richmond, Va., that follows the company's stock. "They're just good merchants."

He attributed the results to the firm's improving profit margin, better-than-industry store sales and the fact that it occupies a unique niche that has allowed it to expand successfully. Jos. A. Bank has 214 stores - up from 166 a year ago.

"When you're expanding rapidly, finding good locations can be a risk," Via said. "But it's a non-risk. They're actually being sought out by a lot of these developers."

Developers like the idea of attracting an upscale menswear store, which often requires return visits for alterations, thereby increasing exposure for the shopping center and its other tenants, Via said.

Key competitors such as Brooks Brothers and the Men's Wearhouse Inc. are not able to expand as easily. Men's Wearhouse already has more than 500 locations, so there isn't as much room to grow, Via said. And department stores appear to "have dropped the ball," when it comes to menswear, Via said.

Jos. A. Bank plans to open 55 to 65 stores by the end of this fiscal year, with about 20 during the first half. The clothier operates in 35 states, Ullman said.

Jos. A. Bank is quick at identifying shifts in what consumers are buying, Via said. Their "performance fabrics," wrinkle-free pants and shirts, for instance, have done very well, Via said.

"They've been having upscale surprises for the past two years, so it wasn't really a surprise," Via said of yesterday's earnings news. "The gross margins keep coming in better than expected."

For its fiscal year that ended Jan. 31, the retailer reported net income of $16.6 million, or $1.49 a share, compared with $10.95 million, or $1.03 a share, in 2002. Sales for the year were $299.7 million compared with $243.4 million in fiscal 2002.

Via has no doubt the upward spiral will continue.

"I see no reason why not," he said. "They're looking at a 27 percent increase in net income in 2004 over 2003."

Despite the earnings announcement, the company's shares declined $1.33 to close at $35.89 yesterday.

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