Daily Record: Jos. A Bank Planning More Outlets
Hampstead-based clothier Jos. A. Bank said Monday it plans to open five more outlet stores this year, a move analysts call a smart expansion that will expose the brand to new customers.
The retailer already operates seven outlet, or factory, stores — three in Maryland, and one each in Pennsylvania, Virginia, Ohio and Georgia.
Outlet stores have been among the most productive stores — if not the most profitable — for retailers during the recession, said Margaret Whitfield, an analyst for Sterne, Agee & Leach in New York City, who called the move a “very positive development” for Jos. A. Bank.
“Occupancy charges are below that of a typical mall space, and [outlets] do seem to develop a different customer base,” she said. “Shoppers that go to outlets are not necessarily the same ones going to lifestyle malls. … There are some who only like shopping in outlets because they feel as if they’re getting a better deal.”
She pointed to Polo Ralph Lauren as an example, noting its 163 outlets (which accounted for half of its stores in 2009) are faring better than its regular stores. According to its latest financial statement, same-store sales at Ralph Lauren stores for the first nine months of fiscal 2010 declined 13 percent while factory stores declined 1 percent.
Jos. A. Bank has weathered the recession well and posted a record profit of $71.2 million in 2009.
CEO R. Neal Black said in a statement the company could expand its outlets concept in 2011 depending on how the five new stores perform in their first year.
“If initially successful, we believe there is an opportunity for us to open an additional 50-75 factory stores in the U.S.,” Black said, adding the factory stores will be “incremental to the company’s ongoing plans to expand to approximately 600 full-line stores.”
Jos. A. Bank, which has 473 retail stores in 42 states and the District of Columbia, did not say where it would open its factory stores this year, and the company’s chief financial officer and media liaison was not available for additional comment.
In his statement Black also said Jos. A. Bank has developed new products for its factory stores. In its last annual report, the company said it has traditionally used its outlets to liquidate products and offer other products at a reduced price and has historically has been able to sell most or all of its inventory through outlet stores and its Web site.
Whitfield and others said expanding its outlet stores would be a good opportunity for Jos. A. Bank to offer new sportswear products, a line it launched in the early 1990s.
Rene Daniel, a principal with Trout, Daniel & Associates, a commercial real estate broker in Timonium, said offering more casual clothing makes sense for a Jos. A. Bank factory store because customers at outlets are typically less formal.
He also said that would help distinguish the outlets from the retailer’s full line stores, which are highly promotional on a regular basis.
“If I can buy three suits for the prices of one in a normal store why would I go to an outlet store?” he said. “They’re better off loading up on T-shirts and sportswear.”
This article was orginally published in the Maryland Daily Record.
Published on: April 12, 2010.
By Liz Farmer