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Jos. A. Bank stock downgraded by Zacks

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With Jos. A. Bank Clothiers Inc. likely poised to announce year-end and fourth-quarter results this week, investors and analysts wonder just how bad it will be.

So far this year, stock in the Hampstead-based men's apparel chain has sat out the stock market rally, falling 6 percent even as the Nasdaq Composite Index rose 7 percent.

The concern stems from the retailer's January warning that its profit for the fiscal year ended Feb. 2 will be off 20 percent.

The problems prompted Zacks Investment Research to dub Jos. A. Bank its "bear of the day" in a report issued last week.

"The men's retailer has run catchy promotions for years, but now it seems to be catching up with the company," the Zacks report said. "After a while, the consumer seems to become immune to the discounts. Thirty percent off used to be good and then stores had to use 40 percent off. Recently it seems only 50 percent will make them open their wallets."

Zacks downgraded Jos. A. Bank's stock from sell to "strong sell" earlier this year after the earnings warning.

Jos. A. Bank's CEO, R. Neal Black, was unavailable Monday for comment on the report. The company had not announced a date for its earnings release as of Monday afternoon, but Zacks said the company was scheduled to announce results Wednesday.

In January, the chain said sales for the 2012 fiscal year would be up, but not enough to offset higher marketing expenses and a lower gross margin. Fourth-quarter sales also were hurt by the aftermath of Hurricane Sandy and uncertainties surrounding the fiscal cliff and presidential election, the company said.

The stores struggled to sell cold-weather apparel during an unseasonably warm holiday season, Black said in the statement.

"Historically, we have had strength with these types of items, but our customers (specifically at our stores) didn't respond as well to our promotional offers as they had in the past," Black said in the January statement. "Our customers responded well to our suit promotions during this period, but our non-suit customers responded poorly to our holiday season offerings, even at very low prices on products such as sweaters, outerwear, hats, gloves, scarves, and jackets made of heavier fabrics such as camel's hair and cashmere."

The company, which reported income of $97.5 million in fiscal 2011, said its final results will depend on sales and expenses for the rest of the fiscal year, which ended Feb. 2.

The company's shares have lost 6 percent of their value this year but closed up 97 cents on Monday at $40.48 per share on the Nasdaq.

"Unlike most of the stock market, shares of Jos. A. Bank haven't participated in the 2013 rally," the Zacks report said. "They were crushed by the earnings warning and have struggled to do much since."

A year ago, the retailer's stock traded at more than $54 a share.

Zacks said Jos. A. Bank's warning prompted retail stock analysts who report to the research firm to lower estimates, with projections for fourth quarter earnings down to a consensus of $1.35 per share from $1.76 per share in the last two months.

Fiscal 2013 estimates have been reduced as well, the Zacks report said.

lorraine.mirabella@baltsun.com

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