Regular customers of Jos. A. Bank Clothiers are shopping in the chain's stores less often than usual. And this year, consumers have bought fewer items at lower prices than in the past, leading to a sharp drop in first quarter profits for the men's apparel seller.
To reverse those trends, the Hampstead-based retailer plans to boost online sales, lure customers who wear big and tall sizes and continue expanding with new full-line and outlet stores, part of a five-step strategy outlined Thursday by Bank CEO R. Neal Black. The chain's deep discount promotions may be a thing of the past too, Black said.
The 606-store chain had announced Wednesday that earnings for the quarter that ended May 4 slid 45 percent. Net income fell to $8.1 million, or 29 cents per share, from $14.8 million, or 53 cents per share, in the first quarter of last year. Sales were down 2.6 percent to $196.1 million, compared with $201.4 million in the first three months of fiscal 2012.
"Our performance continues the weak trend in the fourth quarter," Black said during a Thursday conference call, noting that sales at stores open at least a year dipped more than 8 percent. "These are results that are weaker than the prior year and weaker than planned."
Sales were sluggish because of unseasonably cool weather and Easter falling earlier this year, he said, cutting into the spring suit buying season. Higher raw material costs, of wool and cotton, hurt margins.
But the heavy ad promotions that helped drive sales growth through the recession are no longer as effective in bringing shoppers through the doors, and that's become a bigger factor, Black said. The company is testing new marketing strategies in hopes of driving more store traffic, he said.
Besides tweaking its marketing plan and merchandise assortment, the company expects to boost sales by taking the following steps, Black said:
- Drive revenue through the web site, which has just undergone an upgrade and where a growing share of consumers are shopping through mobile devices such as tablets.
- Expand the tuxedo rental program, which has been a growing part of the business and which is expected to become a "significant" source of revenue in the future.
- Lure customers who wear big and tall sizes by offering those sizes in all styles – "classic fit," "modern tailored fit" and "youthful, slim fit," and promoting the motto 'We can fit almost everyone.'
- Open more factory stores, including eight planned for next year, to reach customers who don’t frequent the full-line stores.
- Continue opening new, full-line stores in existing and new markets. The chain expects to open 30 to 35 new stores this year.
Mark Montagna, a senior analyst with Avondale Partners in Nashville, said such steps won't hurt but are not "game changers."
"In general, sales are going to go down this year," Montagna said. "The key...is they're changing the emphasis on their marketing to be less promotional. That will cause fewer people to go to the stores. They don't have as much of a call to action on price. It's less enticing."
Still, he said, the company has recognized that it needed to rethink its advertising strategy.
"They've taken it too far," he said. "Promotions got too steep, and it [went on] for too long. But it's going to be very difficult to retrain the customer. It's not a one-year process."
Black noted that the retailer, trying to adjust to more casual workplaces, has begun offering new casual assortments. The chain had taken a misstep in offering sportswear that ended up being too casual, he said.
"Our market niche and brand identity is based on classically styled clothes men wear to work," he said. "Men have been buying and wearing suits in the workplace, but there's a long-term trend toward casualization."
In addition to suits and ties, customers can expect to find new assortments of classic sport shirts, slacks, sweaters and jackets in the stores, he said.
"If your workplace is professional or governmental, or if you're a manager…Jos. A. Bank has the answer to your question, 'What should I wear to work?'" Black said.