Jos. A. Bank To Grow Faster

Clothing Chain Plans To Open 30 To 40 Stores Next Fiscal Year, Taking Advantage Of Vacant Spaces

August 26, 2009|By Andrea K. Walker | Andrea K. Walker,andrea.walker@baltsun.com

Jos. A. Bank Clothiers was forced to pull back aggressive expansion plans when the economy tanked and developers stopped building the open-air shopping centers where the men's retailer tended to locate.

But the Hampstead-based clothing chain said Tuesday it was increasing the number of stores it plans to open in fiscal year 2010 as it takes advantage of real estate that has opened up as other retailers have closed stores. The company now hopes to open 30 to 40 stores, an increase from the 10 to 15 it initially planned for next year. It will change its strategy somewhat by moving into existing, rather than new, spaces.

"Really, the economy slowed us down from an availability point of view, not because we couldn't open stores," said R. Neal Black, Jos. A. Bank's president and CEO. "We're making money, and we have plenty of cash. It was really a matter of being confident that we could find enough proper sites where we could open stores successfully."

This couldn't be a better time for companies to lease new real estate, retail brokers and experts said. As operations such as Circuit City and Boscov's department stores have closed locations, developers are looking for tenants to fill the empty spaces. More are willing to offer bargains and lower rates than a few years ago to get a good tenant.

"It's a good time to be looking at new real estate," said Richard E. Jaffe, an analyst with Stifel Nicolaus in New York who follows Jos. A. Bank. "You never can be sure you'll find the values and locations that you want. But there is no question that this a better time than 12 months ago."

Getting into the market now while the prices are low will help Jos. A. Bank gain market share and could put it them at an advantage when the market picks up, experts said.

"If you're a retailer today and you're running a successful business and your balance sheet allows you to make moves today that will benefit you over the next 10 or 20 years, then you should do that," said Mark Renbaum, an executive with St. John Properties in Baltimore.

Other retailers have also taken advantage of high vacancies in the real estate market. Kohl's department stores bought several locations vacated by Mervyn's on the West Coast after the department store went out of business.

Black said his company's decision to open more stores is not an indication that it thinks the economy is improving. The company has maintained sales gains throughout the recession because of heavy discounting.

"I am frankly not seeing it yet at the retail level," Black said. "Our results continue to be driven by promotional activity. I don't sense that the customer is requiring less than that. When we feel that, that's when I know that [the] economy is better. Right now, [customers are] pretty demanding on the price side."

The company, which has 467 stores in 42 states and Washington, has opened more than 350 of those stores in the past 10 years. It has a long-term goal of operating 600 stores. Black said the new stores will be opened in markets where the company already has locations.

While Jos. A. Bank is expanding, most retailers are still being cautious as consumers continue to curb spending. There are very few new store openings in the market right now.

Jaffe said the company is in a good financial position to look at new real estate even as the timing for a turnaround in the economy remains uncertain.

"It's not like Jos. A Bank isn't making a lot of money; they're just making less than they could if the economy was better," Jaffe said. "They're doing OK in a rough environment."

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