Whitworth's Relational Investors Buys a New Suit (JOSB)
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One interesting new position investing guru Ralph Whitworth's Relational Investors disclosed on Wednesday was JOS A Bank Clothiers, Inc. (NASDAQ: JOSB).
Relational Investors held 750,100 shares, or 2.68%, of the apparel retailer best known for its buy one suit get __ suits free sales as of March 31, 2012. They didn't own any shares as of December 31, 2012
Operationally, JOS A Bank has been an underachiever of late. In 2012, while net sales reached a record $1.05 billion, comparable store sales fell 0.5%. In addition, 2012 net income fell 18.3% to $79.7 million. To make matters worse, a few days ago, JOS A Bank trimmed first quarter 2013 exceptions. The company now sees Q1 EPS of $0.27-$0.30, down from $0.53 last year and below the then Wall Street consensus of $0.46. The company blamed gross margins due to higher inventory sourcing costs and lower average selling prices due mostly to increased percentage of sales of winter clearance products. Also, sales fell 3% in Q1, mostly in April, as the company was affected by the unseasonably cool weather.
Meanwhile, cash flow and the company's balance sheet is strong. The company is holding $377 million in cash and short term investments, or about 31% of the market cap of the entire company. Also, the company's Internet business is a bright spot with double-digit sales growth. The company is also focused on returning to previous levels of gross margin rates and advertising productivity.
While it is unclear if the known activist investors Whitworth will target JOS A Bank Clothiers, the case can be made for some rabble-rousing. The stock may be worth a look for those with a 6-12 month time horizon.
Shares of JOS A Bank Clothiers are up 0.85% to $43.71 in afternoon trading Thursday.
Relational Investors held 750,100 shares, or 2.68%, of the apparel retailer best known for its buy one suit get __ suits free sales as of March 31, 2012. They didn't own any shares as of December 31, 2012
Operationally, JOS A Bank has been an underachiever of late. In 2012, while net sales reached a record $1.05 billion, comparable store sales fell 0.5%. In addition, 2012 net income fell 18.3% to $79.7 million. To make matters worse, a few days ago, JOS A Bank trimmed first quarter 2013 exceptions. The company now sees Q1 EPS of $0.27-$0.30, down from $0.53 last year and below the then Wall Street consensus of $0.46. The company blamed gross margins due to higher inventory sourcing costs and lower average selling prices due mostly to increased percentage of sales of winter clearance products. Also, sales fell 3% in Q1, mostly in April, as the company was affected by the unseasonably cool weather.
Meanwhile, cash flow and the company's balance sheet is strong. The company is holding $377 million in cash and short term investments, or about 31% of the market cap of the entire company. Also, the company's Internet business is a bright spot with double-digit sales growth. The company is also focused on returning to previous levels of gross margin rates and advertising productivity.
While it is unclear if the known activist investors Whitworth will target JOS A Bank Clothiers, the case can be made for some rabble-rousing. The stock may be worth a look for those with a 6-12 month time horizon.
Shares of JOS A Bank Clothiers are up 0.85% to $43.71 in afternoon trading Thursday.
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