Jos. A. Bank, which has been criticized for what some analysts and others consider high inventory levels, said yesterday that it believes the practice of stocking up on menswear in its stores could assist the company during slow economic times.
The Hampstead-based men's clothier had $207 million in inventory at the end of last year, 12.7 percent higher than the $184 million in inventory in 2006, David Ullman, Bank chief financial officer told analysts in a conference call yesterday.
"While others are cutting inventory, we will continue to have a strong inventory position," said Chief Executive Officer Robert N. Wildrick. "We will have products when others may be out of stock."
Wildrick also said that the company was able to buy goods before prices in other countries increased.
"We have a significant amount of inventory, which we purchased at lower prices, so this should help us as the pipeline prices continue to go up," he said.
Wildrick believes the inventory issue will enable Bank to lure customers, even as consumers pull back on spending. He hopes the increased inventory will convince customers to choose Bank over other competitors during the downturn.
Jos. A. Bank is defending itself against a class action lawsuit in Baltimore federal court that deals in part with inventory levels and earnings.
The case claims Bank said it increased inventory and sales and was experiencing higher profit, when the opposite was true. During a June 2006 conference call about weak first-quarter earnings, analysts asked company executives if the large fall in inventory levels was intentional and had forced the retailer to cut prices.
Wildrick has said those earnings were an aberration.
A second suit filed in Delaware Chancery Court by the Norfolk County Retirement System, a Massachusetts pension fund, claims an inventory surplus led to a 16 percent profit decline in the first quarter of fiscal year 2006.
The company has not commented on that case.
Wildrick's comments yesterday were made as he discussed Bank's fiscal 2007 earnings, which were released last week. Those earnings were up 16 percent for a net income of $50.2 million.
Wildrick said yesterday that it is going to be a tough year for Bank and other retailers as consumers trim spending. He said Bank will continue to spend on advertising even as competitors are scaling back.
Wildrick also addressed criticism the company has received for not answering questions from analysts during conference calls, saying the retailer prefers to address those issues in Securities and Exchange Commission documents so that its answers are not "misconstrued."
Shares of the company, which has 426 stores in 42 states and the District of Columbia, rose more than 5 percent to close at $25.54 yesterday.