Jos. A. Bank Tanks on Earnings Guidance

Jos. A. Bank

has updated its earnings guidance and the outlook is not good. Net income for the 2012 fiscal year is expected to be 20 percent lower than 2011. Commenting in this regard, President and CEO R. Neal Black stated, “Total company sales for the year will be up, but not enough to offset higher marketing expenses and lower gross margin.” Black went on to comment that “…the aftermath of Hurricane Sandy, the distractions created by the presidential election and the uncertainty of the fiscal cliff” also negatively impacted the firm during the most recent quarter. That's right, the difficulty of choosing between "Obama" and "Obama Lite" along with a financial situation that was completely out of consumers' hands were partially to blame for the decline in suit sales. Making a little more sense, Black further noted, “…many of the promotional items and a large part of our holiday assortment were items that sell best in cold weather and the weather was unseasonably warm.” Black went on to provide this bit of positive news: “Despite the disappointing earnings results on a year-over-year basis, the fourth quarter and full year of fiscal 2012 will still be very profitable."

While the earnings guidance is dismal, the company made a few positive moves during the quarter. In September, the Hampstead, Maryland firm launched a tuxedo rental website. If all goes well, customers will be able to rent a tuxedo while watching the 2016 presidential debates instead of foregoing a rental altogether. The men's clothing giant opened its 600th store in December, as well. Overall, the company expects to grow to 800 stores over the next several years.

As can be expected, Jos. A. Bank has been the punching bag of choice thus far in the market on Monday. The firm is down nearly 18 percent in trading, To make matters worse, the stock is at its lowest point in nearly two and a half years. Currently at around $38, it is at its lowest point since September 1, 2010, when it dipped to $37.76. Unless something happens to turn the company's fortunes around quickly, the stock will perform on par with its performance in August of 2009, when it hovered in the mid-to-high $30s for most of the month.