April 10, 2013, 12:06 PM

JoS. A. Bank's increased marketing costs offset 2012 web sales growth

The multichannel merchant boosted direct sales 23% last year.

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E-commerce sales and total sales were up in 2012 for JoS. A. Bank Clothiers Inc., but the growing costs of online marketing through Google's search engine and other means are cutting into profits, the merchant said in its year-end earnings release and conference call with analysts.

For the fiscal year ended Feb. 2, JoS. A. Bank, No. 207 in the Internet Retailer Top 500 Guide, reported:

  • Net sales of $1.05 billion, a 7.2% increase compared with $979.9 million in 2011.
  • Direct marketing sales, most of which the retailer says are composed of e-commerce sales, represented 11.4% of total sales, up from 9.9% a year earlier, as direct marketing sales increased 22.7% to around $119.6 million from an estimated $97.5 million in 2011.
  • Comparable store sales decreased 0.5%.
  • Net income was $79.7 million versus $97.5 million, a decrease of 18.3%.
  • The number of active customers for both stores and Internet grew 14% and now totals 4.1 million.

The direct channel was responsible for around 31.6% of the company’s growth in 2012, Internet Retailer estimates.

Jos A. Bank president and CEO R. Neal Black told analysts last week that despite total sales growth for the year, he was “disappointed” in the comparable store decrease and that the growth was offset by increased marketing costs and lower margins. The merchant is focused going forward on driving additional revenue through its web site by investing in functionality that consumers want, he said.

“Our biggest challenge is the rapid increase of Internet marketing costs particularly with vendors like Google,” Black also told analysts. “We'll be focused in 2013 on keeping the growth of marketing costs more in line with the growth in revenue. We continue with other efforts including product expansions, new promotional activity, international shipping, tablet and mobile formats and social marketing in conjunction with our ongoing affiliate programs.”

A “significant percentage” of JoS. A. Bank sales are now transacted on tablet devices and its international shipping functionality is “working well,” he added, as the retailer has now shipped to more than 70 countries.

JoS. A. Bank did not break out fourth quarter sales.

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