Whenever I read an article about a business that is doing great and making lots of money when other companies in the same sector are doing a lot worse I start to think that the odds are they ripping off their customers. What caught my attention recently was an article about the men’s clothing chain Jos. A. Bank.
The Great Recession has been bad for the men’s clothing business. The market research firm NPD Group reported that men’s clothing sales dropped 5 percent to $51 billion for the 12 months that ended this past February, compared to a year ago. Competitors Men’s Wearhouse and Casual Male Retail Group, for example, saw sales decline last fiscal year, and the former reported a loss. But Jos. A. Bank that advertises sales endlessly has done fantastically well.
Bank has seen an 11 percent increase in sales to a record $770.3 million during the last fiscal year and a 21 percent jump in profits at a time when other chains are struggling to survive. This explains why Wall Street valued the company at $1 billion this spring for the first time. Its stock price has more than doubled since last summer. After all, strong sales produced great financial results; it ended the fiscal year with $192 million in cash and short-term investments, up 56 percent over the previous year. J.P. Morgan analyst Brian Tunick named Jos. A. Bank one of his top 10 stocks in April, noting that shares have skyrocketed 3,000 percent over the past decade. WOW!
All this explains why the 473-store chain continued to open locations during the depths of the recession, when many other retailers were closing stores. And Bank intends to open even more stores over the next few years. It built 13 stores last year and expects to add 30 to 40 more locations this year. The company’s goal is to build a chain of 600 stores. WOW!
While the company’s existing customers are purchasing less, the chain has enticed new shoppers away from competitors. So much that its customer file has grown 18 percent, to more than 5 million names. WOW!
Does all this mean that the clothing you find at Bank is terrific merchandise at great low prices? Should you be trying to find a convenient Bank store to shop at? NO! How do I know that if you shop at Bank you are definitely not getting a bargain? I went to a new Bank store close to where I live on two different occasions. First thing to know: Virtually all the time Bank is using aggressive advertising to tell people about incredible sales. They usually involve getting several items for free if you buy one at the regular price, or sometimes being able to buy clothing at a huge discount. So, here is why Bank is making so much money: American consumers are a bunch of idiots!
The regular prices at Bank are a total fiction. They are incredibly high. You would have to be mentally challenged, suffering from a serious brain disease or stoned on strong drugs if you ever bought anything at Bank at the regular price. When I say high, I really mean totally insanely high. I saw sport coats with regular prices at about $400. I bought a comparable sport coat at a different store for $80; I found a huge selection at the true clothing discounter Syms, which has just 33 stores.
The Syms slogan is “An educated consumer is our best customer.” The parallel one for Jos. A. Bank should be “A dumb consumer is our best customer.” Syms stores are very plain, along the lines of Costco, while the Bank stores are definitely much more fashionable and upscale, which is consistent with its deceptive sales pricing.
So understand this, even if you buy one and get one free at Jos. A. Bank you are still not getting any true bargain. Be warned: Do not fall for any of the slick advertising from Jos. A. Bank. It is all a con game based on highly inflated, obscene regular prices that no intelligent shopper would or should ever pay. They are so inflated that even the most terrific sounding specials are totally bogus.