Retailer to grow fast

Jos. A. Bank hopes to add 200 stores, nearly double sales by 2012

October 26, 2007|By Andrea K. Walker | Andrea K. Walker,Sun reporter

Jos. A. Bank Clothiers, which has aggressively expanded from a small regional chain to a national player, is poised to open even more stores than it had once planned.

The men's retailer in Hampstead said it thinks it can have 200 more stores open by 2012, twice as many as it had previously planned. It opened its 400th store this week in Orlando, Fla. The retailer also said it hopes to reach $1 billion in revenue in the next five years, nearly double the $546 million revenue last year.

Company executives said they decided to open more stores after a survey by an outside consultant found that there was still room left in markets where it doesn't have as many outlets, such as in California and the Midwest. The survey also found that the chain could open more stores closer together.

"We realized there were still places we could open and that maybe we needed to re-evaluate our goal," said Robert Wildrick, Bank's chief executive, who was part of the management team that took over the company a decade ago.

Since the survey, the company said it plans to look at international markets once it has reached 600 stores in the United States.

Some retail experts said there is risk in expanding this aggressively in a retail sector with so much competition. There aren't many specialty retail chains that have as many stores as the 600 Bank envisions. A slowdown in consumer spending also could make an expansion more difficult.

"Six hundred appears to be a stretch to me given its premium market and the narrowness of its focus," said Richard E. Jaffe, an analyst with Stifel, Nicolaus & Co. He pointed out that other popular specialty chains such as J. Crew, Talbots, Ann Taylor and Abercrombie & Fitch all have fewer than 600 stores.

But Wildrick said in a recent interview at company headquarters that there is a demand for more of its stores because there is less competition in the menswear sector.

Men's Warehouse and Brooks Brothers are some of the other stores that specialize in men's clothing.

Bank stores have found a good fit in open-air lifestyle centers, boutique malls that are often found in affluent suburbs. Lifestyle centers don't have department stores that sell men's clothes and so are looking for tenants like Bank.

"A lot of developers approach us with good deals for real estate," Wildrick said.

"It's hard to have a complete development without a menswear store," he said.

Bank had fewer than 100 stores when a new management team took over in 1999. Since then, revenue increased from $194 million to $546 million last year.

It has been criticized for a variety of its business activities including overly aggressive advertising techniques, the way it calculated store sales and the size of its inventory levels, which have tended to be higher than at most retail businesses.

It has addressed many of the issues, including lowering its inventory levels and changing the way it calculates sales.

Wildrick said it kept higher inventory levels to stock new stores and to ensure that its current stores always had enough merchandise in stock. He said men are more finicky shoppers then women and might not return if they can't find their shirt size.

Wildrick said part of the reason the menswear chain has done well is by keeping its merchandise innovative, even while maintaining a "classic" style. For instance it has introduced products such as business suits that wick sweat from the body to keep the wearer cool. It recently introduced a stain-resistant cashmere sweater, which an executive demonstrated recently by pouring cola on a yellow sweater. The brown soda rolled right off.

To succeed in its new expansion, one analyst said, Bank will have to find other ways to continue to distinguish itself from competitors.

"The name of the game is to be able to build something that outsells your competitors and continue to take market share," said Howard Davidowitz, chairman of Davidowitz & Associates, a retail investment banking firm and consultant in New York.

"The question is: Can they present an assortment unique enough and offering enough value to drive customer traffic? If they can, they win. If they don't, they bet the company."

andrea.walker@baltsun.com

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