Jos. A. Bank Weighs Acquisitions to Accelerate Expansion
Jos. A. Bank Clothiers Inc. (JOSB), the century-old retailer of men’s apparel, said it’s seeking potential acquisitions to accelerate expansion.
The company is being assisted in considering strategic options by Financo LLC, an investment bank specializing in the consumer industry, the Hampstead, Maryland-based retailer said yesterday in a statement.
Jos. A. Bank, which sells men’s suits, sportswear, shoes and accessories, posted an 8.5 percent decline in same-store sales in the first quarter, as fewer consumers spent less on each purchase made, David Ullman, chief financial officer, said on a conference call earlier this month. It plans to focus growth of its core businesses “through internal initiatives” such as opening stores and enhancing its Internet sites, it also said yesterday.
Men’s Wearhouse Inc. (MW), the retailer that this week ousted its founder and spokesman George Zimmer, could be a target for the company, said Donald Hodges, founder of Hodges Capital Management Inc., which owns Jos. A. Bank shares and whose firm has about $1.1 billion under management.
“That would be a great acquisition for them,” Hodges said in a phone interview. “Men’s Wearhouse more and more has copied the Jos. A. Bank formula for running discounts and sales. The board just released the founder, and there must be something behind that.”
Jos. A. Bank has bid for Fifth & Pacific Cos. (FNP)’s Lucky Brand, according to a June 4 report by Women’s Wear Daily, which didn’t say where it got the information. New York-based Fifth & Pacific’s Lucky Brand and Juicy Couture labels are attracting interest from private-equity firms and strategic buyers and Lucky Brand could raise at least $400 million in a sale, people familiar with the situation said in April.
It may be difficult for Jos. A. Bank to complete a purchase of a wholesaler such as Lucky Brand without expertise in that area and the management doesn’t have experience with acquisitions, Mark Montagna, an analyst for Avondale Partners LLC, said in a phone interview.
“The idea of an acquisition is far-fetched,” said Montagna, who has the equivalent of a sell rating on Jos. A. Bank shares. “They’d have to acquire a retailer, and there’s nothing available in what they do -- and they’re really good at what they do.”
A merger of Jos. A. Bank with Men’s Wearhouse is unlikely, given the overlap in store bases and the value-sale strategy both brands employ, Montagna also said.
Men’s Wearhouse has 1,141 stores as of May 4, according to a company filing.
Jos. A. Bank shares rose as much as 1.5 percent to $40.24 in extended trading after the statement was released yesterday. The stock slipped 0.8 percent to $39.63 at the close in New York, taking its decline this year to 6.9 percent compared with a gain of 12 percent for the Standard & Poor’s 500 Index.
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