Clothier's profit up 20% despite slower sales

Bank says winter apparel sat during warm October

December 07, 2004|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Men's retailer Jos. A. Bank Clothiers Inc. reported a 20 percent increase in fiscal third-quarter earnings yesterday, but a meager rise in same-store sales as a warm autumn caused shoppers to delay cold-weather purchases of leather jackets and sweaters.

The Hampstead-based company, which was criticized by analysts last year for having too much inventory relative to the number of stores it needed to stock, also said it missed out on some sales because it didn't have enough suits in stock.

Bank's stock fell about 8 percent, or $2.17, on the news to close at $24.06 on the Nasdaq stock market.

Earnings per share for the fiscal quarter that ended Oct. 30 increased to 24 cents compared with 20 cents in the corresponding quarter last year. Net income jumped to $3.4 million in the quarter this year from $2.9 million last year.

Sales at stores open at least a year posted only a 0.4 percent rise. In comparison, comparable-store sales increased 10.2 percent in the second quarter.

Bank, which has 262 stores in 37 states and Washington, took a hit in October when sales fell 7.1 percent and sent the stock plummeting 13 percent. The last time the retailer saw a month-over-month sales drop was in February 2003, when a snowstorm during Presidents Day weekend cut into sales of most retailers.

The company blamed the October drop on unseasonably warm weather. Customers bought marked-down summer clothing rather than winter wear.

The company, which launched its first major television and magazine advertising campaign last month, said its sales were also held down by the presidential election. Many retail messages were overshadowed by the tight election.

"Merchandise trends in the third quarter were affected by national election campaigning both on the airwaves and in the mailbox," said Neal Black, Bank's chief merchandising officer.

Black also said the company had too few of certain items, such as fashion sport suits. He said the company, which stocked more conservatively than last year, had 10 percent to 15 percent less inventory than it needed.

"A year ago, people were on their backs because their inventory levels were extremely elevated relative to sales," said Margaret Whitfield, an analyst with Ryan Beck & Co. "Now they're going to be moving to slowly increase those levels."

"We see sales perking up again as we've adjusted our inventory," said Robert N. Wildrick, the company's president and chief executive officer.

Third-quarter sales increased 14.7 percent to $82.6 million, up from $72 million for the comparable period in 2003. Sales for the nine months that ended Oct. 30 increased 23.1 percent to $244.6 million, up from $198.7 million for the same span the previous year.

Whitfield said she expects a strong end-of-year showing. Same-store sales rebounded last month, when the company posted a 7.5 percent sales increase. "It's in the past," Whitfield said. "They might have missed some sales in certain areas. It shouldn't stop them from hitting their targets."

David E. Ullman, Bank's chief financial officer, said the company's luxury line of suits continued to be its best seller. Clothing made from silk, merino wool and cashmere also sold well. Catalog and internet sales increased 18.5 percent.

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