- The Washington Times - Tuesday, September 18, 2007

Local menswear retailer JoS. A. Bank Clothiers Inc. can achieve annual sales of $1 billion in the next five years through purely organic growth, the company said last week.

“The organic growth position of the company and the plan can be done primarily with our internal cash resources,” Robert Wildrick, the company’s chief executive officer, told analysts and reporters on a conference call last week.

The clothing chain, based in Hampstead, Md., likewise said it can meet goals of $90 million in annual profits and a target of 600 stores — it has 394 currently — by the end of 2012, without significant borrowing or acquisitions.

JoS. A. Bank said last week second-quarter earnings climbed 17 percent to $8.2 million (44 cents per diluted share) from $7 million (38 cents) a year ago. Net sales jumped 13 percent to $134 million from $119 million a year ago.

The quarter, which saw the opening of six new stores, ended Aug. 4.

“As we move through the rest of ‘07 we will experience the third quarter being the busiest new store opening period of this year,” Mr. Wildrick said. The company anticipates opening between 20 and 25 new outlets during the quarter, which started Aug. 5.

The company’s merchandise categories all posted double-digit sales growth during the quarter, led by a 15-percent increase in suit sales.

However, Mr. Wildrick acknowledged a “great deal of uncertainty” facing the economy, including a weak real estate market, high interest rates and high oil prices.

“This affects retail,” he said, but noted that the company is well-suited to weather the storm since it sells a “high-quality product at a reasonable price.”

Richard E. Jaffe, an analyst with Stifel Nicolaus & Co. Inc., agreed, saying that the company is “nicely positioned to combat economic pressures.”

“It has cleaned up its inventory … has ample cash to complete its store expansion plans and operations, and generates more than 65 percent of its sales from core merchandise,” he said.

In 2005, management made a decision to increase inventory levels in effort to boost sales, a move that some analysts criticized. During the second quarter, inventory per square foot fell 10 percent, compared with a 5 percent decline in the second quarter of 2006. Stifel Nicolaus has an investment banking relationship with JoS. A. Bank.

Earlier this month, the men’s retailer signed off on a new shareholder rights plan that makes it more difficult for an unsolicited bidder to make a hostile takeover. Shareholders as of Thursday will acquire rights to buy shares of a new series of preferred stock. The rights will become exercisable if an entity acquires 20 percent or more of the company’s common stock, encouraging a bidder to negotiate with the company’s board.

Shares of JoS. A. Bank closed up 6 cents at $32.20on the Nasdaq Global Select Market yesterday.

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