Over its last four years on the public markets, Jos. A. Bank (NASDAQ:JOSB) has racked up an enviable record of "earnings beats." Out of 16 earnings seasons, the company has met analyst estimates just once -- and exceeded them 15 times. Can Joe say it's so again tomorrow, when it reports its Q1 2006 numbers?

What analysts say:

  • Buy, sell, or waffle? Eight analysts know Joe. Five of them give the stock a buy rating, and three more a hold.
  • Revenues. They expect Joe to report a 19% rise in revenue tomorrow, targeting $114.5 million in sales.
  • Earnings. And a 21% improvement in profits, to $0.46 per share.

What management says:
Earlier this month, Joe released its sales numbers for the month of May and for the first four months of the fiscal year. The firm did not specify its sales results for the fiscal first quarter, so we don't yet know whether it met analyst predictions on that one. For May, Joe grew total sales 16.5%; year-to-date, 17.3%. This shows two things -- first, that sales growth is slowing as the year progresses; and second, that the firm probably missed analysts' target of 19% sales growth.

Chances are, therefore, that we could be seeing an earnings miss tomorrow as well.

What management does:
But you never know. Sales aren't the be-all and end-all of profits. It's also important to know how many pennies of profit a firm makes on the sales it closes. And in this respect, Joe has been performing admirably, growing its rolling gross margin by 210 basis points over the last 18 months, and dropping 150 of those basis points all the way down to the bottom line.

Margins %

10/04

1/05

4/05

7/05

10/05

1/06

Gross

59.8

60.4

60.7

61.2

61.4

61.9

Op.

10.9

11.3

11.4

11.7

11.8

13.3

Net

6.1

6.6

6.7

6.9

6.8

7.6

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months .

One Fool says:
Analysts use three sales-growth metrics when evaluating a retailer like Joe. In order of progressive importance, these are "total sales" from the core business, plus extra sales from newly-acquired businesses; "organic sales," which are total sales without taking account of any extra sales brought along by newly-acquired businesses; and "same-store sales," which measures the additional revenue brought in by established stores, exclusive of both newly-opened stores and any acquisitions.

In this last, most important, metric, Joe performs very well. The chain posted same-store sales growth of 5.3% in the first four months of this fiscal year, and that rate accelerated in May to 7.1%. That suggests to me that the less-than-expected total sales growth isn't really the story to focus on here. Total sales could fail to meet Wall Street's expectations if Joe simply didn't open as many stores as it had expected to. Meanwhile, those stores that were already open are doing better than expected.

Not to end on a down note, but there's one last bit of information in the sales news that does have me concerned: Joe's highest-margin sales, through the Internet and catalogs, were up strongly (19.3%) in the first four fiscal months. They grew only 3.1% in May, however. My Take on that: Joe could well have improved its profit margins further in Q1, but if it doesn't get Internet and catalog sales moving again soon, Q2 could still come unraveled.

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Competitors:

  • Sears Holdings (NASDAQ:SHLD)
  • Phillips-Van Heusen (NYSE:PVH)
  • Men's Wearhouse (NYSE:MW)
  • Nordstrom (NYSE:JWN)
  • Federated (NYSE:FD)

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Fool contributor Rich Smith does not own shares of any company named above.