Jos. A. Bank Clothiers Inc. (JOSB), the company that Men’s Wearhouse Inc. spurned as a suitor only to woo as a target, reported third-quarter earnings at the top of its forecast range as direct marketing sales surged 24 percent from a year earlier.
Third-quarter profit excluding some items was 51 cents a share in the quarter ended Nov. 2, the Hampstead, Maryland-based company said today in a statement. That compared with the company’s prediction of 49 cents to 51 cents and an average analyst estimate of 50 cents. Revenue climbed 6.3 percent to $247.5 million.
Jos. A. Bank Chief Executive Officer Neal Black said on a conference call today that the company will “evaluate” the $1.54 billion buyout offer from larger rival Men’s Wearhouse. (MW) Black said he can’t give a timeline for a response to Men’s Wearhouse, which made the $55-a-share bid on Nov. 26.
“I can assure you that we want to act expeditiously with the sole goal of delivering increased value for our shareholders, but not at the expense of distracting our management team during the most crucial selling period,” Black said. The company is evaluating “several potential acquisition candidates,” he said.
Houston-based Men’s Wearhouse let a previous takeover offer from Jos. A. Bank expire. Jos. A. Bank has said it’s considering acquisitions to accelerate its expansion in addition to internal plans such as enhancing its website.
Jos. A. Bank, which sells men’s suits, sportswear, shoes and accessories, said third-quarter net income rose to $13.6 million, or 49 cents a share, from $13.3 million, or 47 cents, a year earlier.
“The key data point was the November gain in total sales, comparable sales and direct,” Mark Montagna, a Nashville, Tennessee-based analyst at Avondale Partners, said in an e-mail. “That should not have been unexpected given how important the winter coats, gloves, scarves and hats are to Jos. A. Bank.”
Montagna has the equivalent of a hold rating on the shares.
Jos. A. Bank was little changed at $56.90 at 12:10 p.m. in New York. The stock had gained 34 percent this year through yesterday and is trading above Men’s Wearhouse offer of $55 a share.
The Men’s Wearhouse offer price is 8.7 percent higher than Jos. A. Bank’s closing price Nov. 25 and 32 percent higher than on Oct. 8, the day before it bid for Men’s Wearhouse. The takeover would be funded with cash on hand and debt financing, Men’s Wearhouse has said.
Men’s Wearhouse, taking the advice of its largest shareholder, Eminence Capital LLC, is turning the tables on Jos. A. Bank to expand its base of men’s clothing stores. The deal, which would create a company with about 1,700 stores, would add to earnings in the first year after closing, helped by as much as $150 million in annual savings in purchasing, customer service and marketing over three years, Men’s Wearhouse said last month in a statement.
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