There’s only one thing more valuable than a sharp new suit, and that’s a strong stock that has taken a beating. Jos A Bank (Nasdaq: JOSB) is such a company, after getting knocked down 7.8% in the last 12 months. But today, the suit maker showed exactly why investors shouldn’t donate it to Goodwill any time soon.
Suit up!
According to the earnings report released earlier today, Bank’s net income for Q2 2012 grew from $20.6 million in 2011 to $23.2 million, a 12.7% increase. Meanwhile, EPS also shot up, from $0.74 to $0.83, a 12.2% boost. These numbers crushed analyst expectations of $0.73 per share, and were a huge improvement from Q1’s uninspiring $0.53 earnings per share.
A lot of this strength came from Jos A Bank’s direct marketing segment, which increased sales just over 39%. The direct marketing division is in charge of the company’s catalog call center and Internet orders. Internet purchases, in particular, saw a lot of growth, due to higher website traffic and better conversion rates.
Store sales weren’t as great, but they did pretty darn well, with sales increasing 9.4% year over year. According to the company, increased dollars per transaction were the drive behind these sales, which offset slightly lower traffic than last year. All of these factors helped push same store sales up 6.1% during the quarter.
Suit down?
One thing that may catch wise investor’s eyes is Jos A Bank’s inventory. According to the earnings report, inventories increased 16% year over year, not an insignificant amount. While many may see this as a worrisome sign that suits aren’t selling, there’s a reasonable explanation for it. The company opened nine new stores this quarter, to bring its grand total up to 568 (up from 526 the same time last year). Banks has made it clear that it plans to continue expanding, and has mentioned that, in the next few years, the company may have as many as 800 stores in the U.S. With all this forthcoming growth, it makes sense that the company would increase inventories in preparation, but investors should keep an eye on this stat nevertheless.
Nothing suits me like a suit
Before you click BUY based on one great quarter from Jos A Bank, you need to see how it compares to its competitors, like Macy’s (NYSE: M) and Men’s Wearhouse (NYSE: MW).
|
Company |
P/E |
Quarterly Revenue Growth |
Gross Margin |
Operating Margin |
Earnings per Share |
|---|---|---|---|---|---|
| Jos A Bank | 14.29 | 4% | 62% | 16% | $3.38 |
| Macy’s | 12.83 | 3% | 40% | 9% | $3.16 |
| Men’s Wearhouse | 13.85 | 1% | 44% | 8% | $2.30 |
Source: Yahoo! Finance
As you can see, Jos A Bank has better growth, stronger margins, and more earnings per share than either Macy’s or Men’s Wearhouse. It's a little pricier right now but, for the strength of the stock, I’d be happy to pay handsomely for it (and look handsome in one of their suits). That’s why I’m giving it a big, green thumb up on my CAPS page. If you’re looking for a solid growth stock in retail, look no further.
Jos A Bank is obviously an excellent company, but it’s not the only great stock out there. We here at the Fool spend our days figuring out which company is going to have a great year, and recently we found our Top Stock for 2012. You can get all the info on why this retailer puts all others to shame right here, and it’s completely free. Get your copy today.
