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Bank Wins With Timely Strategy
If one could score earnings results like a pitcher's performance in a baseball game, then the track record of consistent profitability racked up by menswear retailer JoS. A. Bank (Nasdaq:JOSB) could be easily classed as a perfect game.
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An Enviable Track Record
The company's ability to consistently generate steady profit gains and beat analysts' expectations makes it a standout the generally boring menswear group. The company's latest quarterly results added another data point to the company's impressive stats. Net income was up 37% and sales increased 10% compared to the same period a year earlier, adding to the record run of positive earnings growth achieved in 34 of the last 35 quarters.
Other players in the menswear group like The Men's Wearhouse (NYSE:MW) and Casual Male Retail Group Inc (Nasdaq:CMRG), haven't even come close to producing the consistent levels of profitability that JOSB has, although CMRG did manage to report better-than-expected numbers as cost-cutting helped offset the impact of lower sales.
A Winning Strategy in Tough Times
So, with overall retail conditions still be on the lackluster side, how has JOSB managed to do so well? In a word: discounting.
The company hasn't shied away from slashing prices and promoting aggressively in order to keep customers in a buying mood. Discounts of 40-70% off the ticketed price are not uncommon with strong cost controls protecting margins despite the price reductions. It's a strategy that has been working for higher end retailers like Macys (NYSE:M) and Saks (NYSE:SKS) who recently reported better than expected same store sales during May. Saks now offers deep discounts through its outlet stores, similar to the approach taken by rival Nordstrom (NYSE:JWN).
The Bottom Line
With JOSB doing comfortably well in a weakened economy, chances are it will do even better once the gradually improving job market triggers a return to more normal levels of consumer spending. (For more stock analysis, take a look at Oil and Gas Plays You've Never Heard Of.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
IN PICTURES: How To Make Your First $1 Million
An Enviable Track Record
The company's ability to consistently generate steady profit gains and beat analysts' expectations makes it a standout the generally boring menswear group. The company's latest quarterly results added another data point to the company's impressive stats. Net income was up 37% and sales increased 10% compared to the same period a year earlier, adding to the record run of positive earnings growth achieved in 34 of the last 35 quarters.
Other players in the menswear group like The Men's Wearhouse (NYSE:MW) and Casual Male Retail Group Inc (Nasdaq:CMRG), haven't even come close to producing the consistent levels of profitability that JOSB has, although CMRG did manage to report better-than-expected numbers as cost-cutting helped offset the impact of lower sales.
So, with overall retail conditions still be on the lackluster side, how has JOSB managed to do so well? In a word: discounting.
The company hasn't shied away from slashing prices and promoting aggressively in order to keep customers in a buying mood. Discounts of 40-70% off the ticketed price are not uncommon with strong cost controls protecting margins despite the price reductions. It's a strategy that has been working for higher end retailers like Macys (NYSE:M) and Saks (NYSE:SKS) who recently reported better than expected same store sales during May. Saks now offers deep discounts through its outlet stores, similar to the approach taken by rival Nordstrom (NYSE:JWN).
The Bottom Line
With JOSB doing comfortably well in a weakened economy, chances are it will do even better once the gradually improving job market triggers a return to more normal levels of consumer spending. (For more stock analysis, take a look at Oil and Gas Plays You've Never Heard Of.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Eugene Bukoveczky
Contributor - Investopedia Advisor
Eugene Bukoveczky is a freelance writer for Investopedia.com. He holds a Chartered Financial Analyst (CFA) designation and has broad experience in investment research and portfolio management. He has traveled extensively during his career, working in Toronto, New York, London and Dubai. He graduated from York University School of Business with an MBA.
Eugene Bukoveczky is a freelance writer for Investopedia.com. He holds a Chartered Financial Analyst (CFA) designation and has broad experience in investment research and portfolio management. He has traveled extensively during his career, working in Toronto, New York, London and Dubai. He graduated from York University School of Business with an MBA.
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