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Jos. A Bank Earnings Beat by a Penny

Zacks Equity Research

Driven by top-line growth and improved gross margin, Jos. A Bank Clothiers Inc.’s (JOSB) adjusted earnings for the third quarter of fiscal 2013 rose 8.5% year over year to 51 cents per share, and came a penny ahead of the Zacks Consensus Estimate.

On a reported basis, earnings came in at 49 cents per share versus 47 cents in the comparable year-ago quarter.

Net sales in the quarter grew 6.3% year over year to $247.5 million primarily driven by improved Direct Marketing sales and an enhanced omni-channel business model. Moreover, the company’s top line handily surpassed the Zacks Consensus Estimate of $232.0 million.

Comparable-store sales (comps) dropped 0.1% in the quarter while Direct Marketing sales rose 23.5% year over year.  Comps, including Internet sales, improved 2.4% in the reported quarter.

Gross profit for the quarter came in at $142.1 million, up 7.1% from the comparable prior-year period figure of $132.6 million. Further, as a percentage of sales it improved 40 basis points (bps) to 57.4% primarily benefiting from lower sourcing costs and higher average selling retail.

During the quarter, operating income on a reported basis rose 1.8% year over year to $21.6 million. However, operating margin contracted 40 bps to 8.7% as the benefit of higher gross margin was more than offset by increased operating expenses as a percentage of sales.

Balance Sheet

As of Nov 2, 2013, cash and short-term investments were $339.9 million and there was no long-term debt. During the first three quarters of fiscal 2013, Jos. A. Bank deployed $22.1 million toward opening stores as well as relocating and remodeling of existing stores.

Overall, Jos. A Bank attributes the impressive third-quarter performance to the implementation of new promotional strategies over the past few quarters. These measures helped the company to achieve marketing efficiency and thereby boost results. Additionally, the company continues to benefit from robust performances in its non-promotional segments, which have recorded consistent sales growth. Going forward, Jos. A Bank expects to sustain the upward trend in sales due to the planned strategies for its brands.

Other Stocks Worth Considering

Jos. A Bank currently carries a Zacks Rank #3 (Hold). Some better-ranked apparel/shoe retail stocks include Finish Line Inc. (FINL), Fossil Group, Inc. (FOSL) and Five Below, Inc. (FIVE). All these have a Zacks Rank #2 (Buy).

Read the Full Research Report on FOSL
Read the Full Research Report on JOSB
Read the Full Research Report on FIVE
Read the Full Research Report on FINL

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