Did Jos. A. Bank Really Try this Classic Earnings Announcement Ruse?
Even the best business suit eventually loses its luster and has to be replaced. Such may be the case with Jos. A. Bank Clothiers’ (NASDAQ: JOSB) venerable business model.
Shares of the company’s stock, like their famous suit promotions, aren’t “buy one, get one” yet, but the stock did fall 18 percent by the end of the day Monday. This following a company announcement that 2012 net income would be about 20 percent lower than the previous year. The retailer's 2011 net income was $97.5 million. This indicates that the company expects 2012 income around $78 million.
Much has been made of Bank President and CEO R. Neal Black’s excuse-filled statement that the Hampstead, Md.-based company's fourth-quarter sales began slow due to a host of reasons, including Hurricane Sandy, distractions of the presidential election and uncertainty surrounding whether the government would go over the fiscal cliff at the start of the New Year.
On top of that, the investing community is collectively saying, “are you serious?” after the company tried the classic, “bury the bad news on Friday when nobody is watching” trick. That doesn’t even work for China anymore. In the words of famous sportscaster, Chris Berman, “C’mon Man!”
The Associated Press reported that Black also said the retailer believed business would pick up during the holiday season but results were hampered by unseasonably warm weather and the fact that the company had geared many of its promotional items toward colder temperatures.
The truth, according to Business Insider, the company’s promotion-centered business model is simply not working.
Jos. A Bank relies on higher initial mark-ups before offering discounts to make money. While that strategy has worked in the past, it seems unable to hold consumer interest of late.
Brian Sozzi, chief equities analyst at NBG Productions adds that the shopping experience in Jos. A. Banks stores is less than optimum.
"It could take two to three weeks to receive the suit since it has to be tailored and the store associates also try and sell you add-on items," Sozzi said. "So, that alleged 'great deal' you are getting has hidden costs, in addition to the fact you can't leave that day with the suit."
Jos. A. Bank expects to open 45 to 50 new stores in fiscal 2013, adding to the 602 stores it currently has in 44 states and the District of Columbia.
Watch for a full earnings announcement this Sunday night during the Super Bowl providing the game is a close one.
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