Chico's (NYSE:CHS) - the one-time trendy specialty retailer - announced second-quarter earnings at the end of August that were better than expected, growing sales and profits year over year. Could the retail slump slowly be ending? Perhaps not, but there are some retailers doing well in this recession. One of them is Maryland-based menswear chain, Jos. A Banks (Nasdaq:JOSB). Actually, they've been doing well for the entire decade. Here are five reasons for you to love it.

IN PICTURES: Seven Ways To Position Yourself For Recovery

Reason #1 - EPS High
Its second-quarter results were off the charts with sales up almost 10% and earnings per share 38.8%. Its EPS of $0.68 beat analyst estimates by $0.14 and same store sales grew 5.2% year over year. Most impressively, this was its 13th consecutive quarter with an EPS increase. How many retailers can say this over the last three years? Not many, that's for sure.

Reason #2 - Consistency
As mentioned above, the company has been doing well in recent years. In fact, it's increased its EBIT earnings for 10 consecutive years, growing them from $2.2 million in 1999 to $96 million in fiscal 2008. At the same time, sales have grown from $193.5 million at the turn of the century to $695.9 million this past year. It's a remarkably consistent business whose best days are likely ahead of it, not behind it.

Reason #3 - Shorts

Company Short Ratio
Jos. A Banks (Nasdaq:JOSB) 28.4%
Macy\'s (NYSE:M) 8.6%
Men\'s Wearhouse (NYSE:MW) 12.4%
Nordstrom (NYSE:JWN) 15.4%
Sears Holdings (Nasdaq:SHLD) 12.7%

I usually don't pay too much attention to the short ratio. As a long-term investor, if I believe a stock is worth buying, no amount of skepticism from traders is going to keep me away. But it is interesting to note that shorts hold 28.4% of its float. This is higher than all four of its competitors listed above including Sears, which the last time I looked was darn close to unfixable.

I have a hard time understanding why anyone would be comfortable betting against a consistent performer like Jos. A Banks, when a classic underachiever such as Sears is a far more suitable candidate for shorting. It's beyond comprehension. (Learn more about the short interest in our article Short Interest: What It Tells Us.)

Reason #4 - More Than Comps
Good retail isn't just about beating comps. It's about far more with good merchandising, which includes proper buying, at the top of the list. If you get people into the stores and they see nothing worth buying, you're out of business in a hurry. That's why I was amused to hear that the Wall Street Journal named Jos. A Banks' Traveler dress shirt as the best wrinkle-free shirt in America. Companies that buy and merchandise well (other examples include Buckle and Coach) will always be able to withstand whatever an economy throws at it. Jos. A Banks is no different.

Reason #5 - Expansion
One of the benefits of a terrible economy is that stronger companies are able to take advantage of whatever the marketplace gives it. In Jos. A Banks' case, it is excellent real estate opportunities at reasonable lease rates, which has allowed it to expand more quickly than planned, tripling its store openings in 2009 to between 30 and 40 stores across the country. Already in all but five states, it plans to have 600 stores open in the very near future. Given how consistent it's been, I see bigger profits and sales on the horizon providing even more growth for its stock in the coming years.

The Bottom Line
I love retail and everything about it. When it's done right, it's a thing of beauty. Not many companies do it right but Jos. A Banks does and the numbers bear this out. Only a fool would short this stock. And I'm no fool. (Read Analyzing Retail Stocks to learn about the most important metrics to look at when analyzing retail stocks.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Economics

    Is a Recession Coming?

    In the space of a week, the VIX Index, a measure of market volatility, spiked from 13, suggesting extreme complacency, to over 50, evidencing total panic.
  2. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  3. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  4. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  5. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  6. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  8. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  9. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  10. Professionals

    What to do During a Market Correction

    The market has what? Here's what you should consider rather than panicking.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. The New Deal

    A series of domestic programs designed to help the United States ...
  3. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  4. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  5. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  6. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!