Love is sacrifice. With its $825 million purchase of Eddie Bauer, Jos. A. Bank (JOSB) has put the ribbon on a year long act of self-destruction that somehow created more than $350 million of wealth for shareholders.
Now there’s a lot different ways to take this story. One is Jos A. Bank taking down earnings blaming the weather and the fact that they give you seven suits every time you buy one. That’s one angle, but I’m not here to do that. What I want to talk about is creating shareholder value.
What Neal Black and the rest of the crew over at Jos. A. Bank did was make a huge amount of money for shareholders out of almost nothing. Over the last year you have a 36% gain on Jos. A. Bank stock and there’s been no growth. The company’s grown at 0.5% over the last 5 years, and they’ve caught their share of the S&P 500 (^GSPC) rally and then some.
It’s important to note Jos. A. Bank did it without activists, they did it without a bunch of noise, they didn’t go all that weird in terms of messing with the company, they just decided they were going to create value for shareholders. This is not the same as creating enterprise value for Jos. A. Bank. Once you get all the animal spirits going in a takeover battle, you start losing a little enterprise value.
The important thing as a shareholder though, is your stock goes higher. If I was smart enough and lucky enough to be long Jos. A. Bank this morning, I’m hitting the bid on the stock, and I’m sending a Valentine’s Day card to Neal Black and the rest of the crew thanking them for making me this much money for owning 600 stores that really amount to just about nothing.
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