Jos. A. Bank changes the way it calculates sales at stores

It will include all outlets open at least a year

February 04, 2005|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Jos. A. Bank Clothiers Inc., the Hampstead menswear chain that has faced questions about its accounting methods, announced yesterday that it would alter how it calculates store sales.

The retailer, which has 269 stores in 37 states and the nation's capital, said it will adopt the practice common in its industry to compare sales in all stores open at least a year.

Previously, Bank omitted older stores from its year-over-year sales comparisons if they were within 10 miles of a newer Bank store open at least a year.

Bank officials had said that was a truer comparison because the newer stores potentially could draw traffic from nearby older stores. But critics suggested that adjustment might have given Bank's sales comparisons an artificial boost.

"Industry practice is to include all the stores," said Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm in New York. "When you do it the way they did it, it raises suspicions. And there were suspicions."

The change comes amid continued growth in stores and sales for the chain. Bank has more than doubled its number of stores in the past four years. Its goal is to have 500 by 2009.

Bank didn't return calls yesterday regarding its latest announcement.

In a statement, Bank said its old method reflected relevant sales trends, but the company didn't explain why it was adopting a new method for calculating sales. The company said it expects sales to change very little under the new calculations.

If it had used the new methodology, Bank said, comparable store sales for fiscal year 2004 that ended Jan. 29 would have increased 7.5 percent, rather than the 8.4 percent it reported. Sales for fiscal year 2003 would have been up 7.5 percent, instead of 8.2 percent.

Bank also released its latest sales numbers yesterday, presumably the last ones under the old method. The company said sales at stores open at least a year rose 9.4 percent in the fourth quarter and 8.4 percent for the year. Internet and catalog sales increased 31 percent for the quarter and 22.7 percent for the year.

Some critics of Bank's old method considered the change an improvement.

"Sometimes that leads me to believe there is a possibility the company is trying to maintain a better posture on the earning values in the future," said Joseph Parnes, president of Technomart Investment Advisors in Baltimore. Parnes said he thinks Bank stock is overvalued.

The company has faced questions about various practices before.

Last fall, in a settlement with New York Attorney General Eliot Spitzer, Bank agreed to change advertising practices after being accused of holding perpetual sales on merchandise.

Robert N. Wildrick, the company's president and chief executive officer, caused a stir in 2003 after he sold 600,000 stock options for $24 million that were years from expiring. He said he did so to diversify his portfolio as he gets older. Analysts have also been critical of high levels of inventory, a potential sign of sales weakness, they said.

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