By Paul Pannone
Jos. A. Bank got battered by a Wall Street selloff yesterday, as stock price fell over 13% due to lower earning and sales performance expectation. The disappointing announcement came on a day when investors were in sell-mode fueling the stock slide.
eWedNewz monitors Bank’s progress in the volatile tailored suit business and watches the progress of their tuxedo rental program. Sources near the story said Bank shifted plans from creating their own inventory to partnering with Jim’s Formal Wear, tagging them with the liability. Both Bank and Jim’s moved cautiously into the arrangement, abandoning initial reports that said a very aggressive move was planned to claim their portion of the rental market, targeting Men’s Wearhouse. Bank is interested in the Men’s Wearhouse 33% market share of tuxedo rentals in the U.S.
But the move is slow, as a test pilot program that began in 32 of the retailer’s 476 stores remains only two-thirds complete as of May 1. Current plans won’t see the complete rollout until later this year. “Because tuxedo rentals represent forward business, sales in 2010 covered the company’s investment. and it won’t be until 2011 and beyond when it will be a meaningful contributor to the bottom line,” said Neal Black of Bank in a recent statement.
According to a WWD story, the caution continues. In an interview the verdict on the success of tuxedo rentals is still not rendered. “Regarding the company’s newly launched tuxedo rental program, Montagna said, “Investors have been looking to robust growth…[but] the comp would imply this is not occurring.”
Black said that the company did not break out sales for this category of business and won’t make a determination on the success of the initiative until after the prom and wedding season. “We are getting sales,” he said, noting that the company doesn’t own the inventory and has invested little to get into the business. “There’s only upside.”
Reports say Tuxedo rentals along with all other wedding related business is soft this season, contrary to positive wedding reports offered up in late 2010. eWedNewz continues to monitor the story.
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