JoS. A. Bank: War of Shorts & Bulls Intensifies (JOSB)

JoS. A. Bank Clothiers, Inc. (NASDAQ: JOSB) is perhaps the most controversial of all retail apparel  companies for investors.  Many have been against it after endless promotions and concerns over margins, yet the company has managed through time  to hold its own.  For retail and apparel investors there may be no larger cult stock.  Last night’s earnings report is only going to add more fuel to the fire of the war between the JOSB bulls and bears.

The men’s clothing retailer said third quarter net income rose more than 7% to $12.6 million; also gaining by more than 7% was a $0.45 EPS report.  Total sales rose 7.4% in the quarter $173.3 million.  The problem is that Thomson Reuters expected $0.50 EPS and $177.89 million in revenues.

The company did note that its comparable store sales rose 3.0% and direct marketing sales rose 14.9%.  A year ago’s net sales were $161.309 million and gross profits were $100.8 million; for the last quarter the $173.268 million in sales came with gross profit of $110.839 million.

Where the problem was pointed was below-plan sales in August when weather was hot, with September and October each improving.  The company noted that the sales were even stronger in November and early December.  As far as a loose guidance ahead, “Right now, to date, the fourth quarter has started out strong. November suit sales and total sales were up substantially compared to last year and were ahead of our plans. Our fourth quarter results last year were very strong. Therefore we remain cautious, but our merchandising and marketing plans are in place for the most important selling period of the quarter and the year and we have confidence in those plans.”

The company noted that the results showed record earnings growth in 36 of the past 37 quarters on a year-over-year basis, including 18 quarters in a row.  That is not helping out this morning.  Shares closed at $45.04 yesterday, but Jos. A. Bank is indicated to open down about 7% to under $42.00.  Its 52-week trading range is $25.79 to $47.36 and its market cap as of yesterday was $1.24 billion.

To illustrate just how much of a battleground situation exists between bulls and bears, the short interest as of mid-November was 3.722 million shares against an average daily volume of about 350,000 shares.  That is more than 10 days to cover.  That short interest is very high but still under the 2010 peak of 4,768,583 recorded in mid-September.