JoS. A. Bank Clothiers Inc.
) rallied 3.5% following the announcement of an encouraging
guidance for the third quarter of fiscal 2013. The company is
scheduled to report third-quarter results before the stock market
opens on Dec 5, 2013.
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JoS. A. Bank projects adjusted earnings per share for the
third-quarter to grow 4% - 9% year over year, ranging from 49 -
51 cents per share, compared with 47 cents per share earned in
the year-ago comparable quarter. Results for the third quarter
continue to benefit from positive trends witnessed near the close
of the second quarter, partially offset by the shutdown of
government offices in the third quarter.
The company's adjusted earnings forecast for the to-be-reported
quarter excludes legal and professional charges of about 2 - 3
cents per share associated with the proposed acquisition of
The Men's Wearhouse Inc.
Further, the company anticipates sales growth in the mid
single-digits range, driven by a double digit upside in its
direct business and nearly flat comparable store sales
projections. Together, sales from the company's comparable stores
and online portal are expected to increase in the low single
Driven by the improved sales forecasts, the company expects its
gross margin rate to grow for the second consecutive quarter,
reporting a slight increase in the third quarter.
Overall, JoS. A. Bank attributes the impressive third-quarter
performance to the gains realized from the implementation of new
promotional strategies and their adjustments in the past few
quarters. This has helped the company achieve marketing
efficiency while boosting third-quarter results. Alongside, the
company continues to gain from the outstanding performance of its
non-promotional segments, which continue to post sales
Going forward, the company expects to sustain the sales growth
trend, on account of the strategies in place for its brands.
Last month, the Hampstead, MD-based men's apparel retailer
proposed to acquire its greater rival Men's Wearhouse for $48 per
share (total of $2.3 billion) cash. However, the latter rejected
the bid outright describing it as "opportunistic" and
"inadequate". Following the rejection, JoS. A. Bank communicated
a deadline of Nov 14, 2013 for Men's Wearhouse to rethink on the
In a recent development, Men's Wearhouse's largest shareholder,
Eminence Capital LLC, urged the board at Men's Wearhouse to
engage in talks for a takeover bid with JoS. A. Bank before the
Nov 14 deadline. Though Eminence Capital, which owns 9.8% stake
in Men's Wearhouse, believes the offer of $48 per share was too
low, it expects JoS. A. Bank to raise the bid.
Jos. A. Bank believes the merger will prove beneficial to the
shareholders and customers of both the companies, creating a
behemoth men's wear retailer with nearly 2,000 stores.
While we await a public notice from Men's Wearhouse regarding its
decision on the takeover proposal, the suitor, JoS. A. Bank,
carries a Zacks Rank #3 (Hold).
Other stocks performing well among apparel-shoe retailers include
Finish Line Inc.
). Both these stocks carry a Zacks Rank #2 (Buy).