Jos. A. Bank Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of men's clothing company Jos. A. Bank Clothiers (Nasdaq: JOSB  ) fell 13% today after the company announced disappointing earnings.

So what: Revenue in the first quarter was $193.3 million, failing to meet the $195.4 million analysts expected. Earnings per share also fell short by $0.02 coming in at $0.64 per share.

Now what: Profit has been growing for five straight years, and today's stock drubbing after a 13% jump in profit seems a little excessive. Shares trade at just 12.8 times forward earnings estimates, a reasonable price considering the growth. I think this move is overdone today and shares will move higher as investors reanalyze how consistent the company's growth has been.

Interested in more info on Jos. A. Bank? Add it to your watchlist.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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Read/Post Comments (3) | Recommend This Article (3)

Comments from our Foolish Readers

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  • Report this Comment On June 01, 2011, at 4:53 PM, roadruler wrote:

    Their numbers have been good over the past few years but I can't get by the fact that their inventories only turn 1.4 tiimes - terrible, terrible and well below most other retailers at 4-6 times. Doesn't make sense to me, or from a business model standpoint. I have never seen a retailer with such low turns! Lot's of outdated stuff? Also, their inventory grew 16% at 4/30/11 compared to 5/1/10. Not a good trend.

  • Report this Comment On June 02, 2011, at 2:27 AM, slashrjl wrote:

    'Most other retailers' is too broad a comparison. In the retail clothing business. If you are forward-ordering then you have to order several months in advance, since it can take a while to make lots of shirts (say) in different sizes. Mens Wearhouse has an inventory turnover rate of 2.61 (which is somewhat better than 1.4, but still nowhere near 4-6). In order to see if this is a significant I'd have to look at the business model (quick turnover of discount-items with one-off sales, vs. stocking of items appealing to repeat customers).

  • Report this Comment On June 02, 2011, at 12:39 PM, Angelsfeartotred wrote:

    Unsurprisingly, this stock has fallen due to poor stock-to-sales performance. Although the chain has expanded rapidly (maybe too rapidly?) and the stores have great lines of classics in menswear, service is good and showrooms present a good appearance, they have "overplayed their hand" to put it bluntly. The overpricing of merchandise to drastically reduce it at expected intervals is no longer fooling its customers.If anything, it is irritating them! They could increase their turns by abandoning this gimmickry or toning it down. Having trained their customers to wait for drastic price cuts, they have fallen victim to their own strategy! They need to flatten out this curve ASAP!

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