Jos. A. Bank Net Income Falls as Promotions Fail

Jos A Bank

Jos. A. Bank saw net income drop over the second quarter on falling sales as consumers failed to respond to the retailer’s promotional efforts.

The company said net income declined to $14.2 million over the quarter ended 28 July from $23.1m in the same period of the prior year.

Net sales declined 10.7% over the period to $232.5 million, as comparable store sales decreased 15.9%.

“While our total sales declined in the second quarter of fiscal 2013, we achieved stability in our gross profit margin rate,” said president and CEO Neal Black. 

“Specifically, our gross profit margin rate increased in both the fiscal months of June and July and the overall rate for the second quarter increased approximately 40 basis points from last year.

“Customers did not respond as well to some of our highly promotional marketing campaigns as they did in the prior year, causing the disappointing sales decline in the quarter. At the same time, day to day sales on the non-promotional portion of our business in stores increased during the quarter and have the potential to represent a larger portion of our business going forward. As we implemented new marketing strategies, we were conservative with our marketing expenditures which enabled us to continue to improve our marketing efficiency during the quarter.”

However, the company has started to see this trend turning around, with sales rising on a total and comparable basis during August.

“The August 2013 sales increase comes on top of a double-digit sales increase in August 2012. With the gross margin trend turning up in the second quarter and the sales trend turning up in August, our declines may have bottomed out,” added Black.

“We are highly focused on improving our sales trend, and further improving both our gross profit margin rate and our marketing efficiency over the remainder of fiscal year 2013, with the overall goal of returning to previous years’ levels. We will continue to modify and implement new marketing events and the related media placement to maintain efficiency and to drive sales. We will begin to annualize our declining sales and gross margin trends during the third quarter and for all of the fourth quarter, which means our opportunity for improvement is significant during those periods.”

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