Jos A Bank Clothiers (Nasdaq:JOSB) issued a guidance up date after market close on Friday. The news is dark, very dark. They attempted the classic Friday dump hoping that by Monday there would be other news they could hide behind. Well baring war, famine, pestilence there is nowhere to hide. Lets shine a bright light on this one.
The press release is laughable in its own right. The problem is severe margin compression for anyone who is modestly analytical. Management claims that the distraction of the fiscal cliff and the presidential elections were factors. Buddy your margins do not compress because elections are being held. No economist can find this correlation.
They also point to Hurricane Sandy. Well for your stores that are damaged you have insurance which should help you control inventory. In other stores that were close by you would expect some emergency purchases as customers need to quickly replenish lost or damaged articles of clothing. So I guess in a clothing emergency Jos A Banks is not an option.
Lets look at the board. The earnings problem and the way they tried to shield it have some serious governance problems.
At the top of our list is William Herron CPA aged 67 and former partner with Arthur Anderson. I cannot comprehend how a career CPA auditor can take part in this nonsense but there he is.
The lead independent director is also the chairman-emeritus. Not a classic combination for transitional responsibilities. Andrew Giordano is 80 years of age and from his profile seems very involved in non-profit type activities.
James Ferstl aged 80 has a retail background. He is the only merchant on the board. I suspect his retail savvy is a little dated.
Robert Wildrick aged 68 Chairman spends much of his time with the Economic Alliance Of Greater Baltimore and the Palm Beach Town Council. Somehow these activities did nothing to protect the shareholder from wealth destruction.
Sidney Ritman aged 80 and Henry Holmes aged 64 seem to be relinquishing positions as they prepare for retirement.
None of the directors has any significant board responsibilities elsewhere. In fact the whole bunch seem to be a little on the light side.
Looking at comments made by Chief Executive R. Neal Black after Q3 results disappointed investors he had already been blaming Hurricane Sandy and the presidential elections. Investors will be excused if they feel they are in an echo chamber.
The USA is a democracy. There will be elections. You cannot have a business model that is incompatible with democracy. Just because Dem’s and GOP cannot get along does not mean men run naked. There are ways to compel them to buy clothes.
On occasion there is very bad weather. You need to be able to deal with it. not just cry about it.