Earnings Preview: Jos. A. Bank - Analyst Blog

U.S.-based high-end men’s apparel and accessories retailer, Jos. A. Bank Clothiers, Inc. (JOSB) is scheduled to report its financial results for the third quarter of fiscal 2012 on Thursday, November 29. The current Zacks Consensus Estimate for the quarter is 55 cents a share, a penny higher than 54 cents delivered in the year-ago quarter. Revenue, as per the Zacks Consensus Estimate, is pegged at $231.0 million.

Jos has reported both positive and negative surprises in the trailing four quarters that ranged from -13.1% to 15.3%. The average positive surprise over the last four quarters was therefore a mere 1.9%.

Second-Quarter Synopsis

Driven by strong top-line performance along with leveraged operating expenses, Jos’ earnings of 83 cents per share for the second quarter of fiscal 2012 surged over 12% from the comparable quarter last year. Moreover, earnings were ahead of the Zacks Consensus Estimate of 72 cents per share.

Net sales stood at $260.3 million, which was 12.9% higher than the year-ago quarter’s level, primarily due to a growth of 6.1% in comparable-store sales, a 39.3% surge in online business and the addition of new stores. The year-over-year increase in comparable sales was the outcome of higher average dollars per transaction and increased traffic while its online business benefited from an increase in conversion rates.

Bolstered by better-than-expected quarterly results, the company has decided to expand its store network to 800 stores in the United States from 572 operated as of August 29, 2012. For this, Jos intends to open nearly 45 and 50 stores in fiscal 2012 and 2013, respectively.

Zacks Consensus

The analysts following the stock expect Jos to post earnings of 83 cents a share in the third quarter of 2012, higher than 74 cents delivered in the third quarter of 2011. Currently, the Zacks Consensus Estimate for the quarter ranges between a low of 52 cents and a high of 60 cents a share.

For fiscal 2012, the Zacks Consensus Estimate stands at $3.79 per share, which is higher than the earnings of $3.49 in 2011. Currently, the Zacks Consensus Estimate ranges between a low of $3.67 and a high of $3.96 a share.

Agreement & Magnitude of Earnings Estimate Revisions

We do not see any estimate revisions over the last 30 days, either for the third quarter or for fiscal 2012. Therefore, the magnitude of estimate revisions for the company depicts a neutral outlook and remains unchanged for the third quarter as well as fiscal 2012.

Our Recommendation

At the end of the second quarter of 2012, Jos had cash and short-term investments of $292.2 million and no long-term debt. We believe that the company has ample liquidity to fund its long-term growth plans of enhancing store count, which will ultimately boost its top line.

Moreover, the company is continuously making investments toward product expansions, new promotional activities, international shipping and technological advancements. We expect these strategies to drive Jos’ store base as well as its online sales.

However, we remain slightly cautious on the stock due to the sluggish economic recovery and rising cotton and wool prices. Therefore, we have maintained our long-term ‘Neutral’ recommendation on the stock. Moreover, the company has a Zacks #3 Rank, implying a short-term Hold rating.

One of Jos’ peers, The Men’s Wearhouse, Inc. (MW) holds a Zacks #2 Rank and is scheduled to report its third-quarter 2012 financial results on December 5, 2012. The current Zacks Consensus Estimate stands at 97 cents per share, 23.2% higher than the year-ago quarter’s earnings of 79 cents.

About The Company

Jos is a retailer and cataloger of Men's tailored and casual clothing and accessories. The company's products are sold exclusively under the Jos. A. Bank label through its company-operated retail stores and franchise stores located throughout the Northeast, Southeast, Midwest, South, and Mid-Atlantic regions of the U.S., as well as through the company's nationwide catalog operations and its e-commerce internet sites. The company's products are targeted at the male career professional.

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