The Jos. A. Bank and Mens Warehouse pacman like dance fascinates me. These are companies I don't quite get selling products I don't want. But the companies have surprisingly high valuations and in Jos. A. Bank's (JOSB's) case the business appears remarkably consistent and remarkably profitable.

I asked my readers to do some due-diligence for me, taking photos of JOSB stores over the Black Friday sales. I got back a small, biased sample. Most my readers (with a value-manager exception noted below) are not the sort of people who shop there. A typical response I got was this:

This [with attached photos] is the Jos Bank store at the Galleria Mall in Ft Lauderdale, FL. I started taking pictures and they asked why I was doing it. Tried to take the front from both sides and from the escalator so you get an idea, took pics of shelves and prices, hope it helps. This was Black Friday 7:30 pm, I was the only person in the store.

Several other people said that they were the "only person in the store". And yet JOSB reported in their conference call that their sales over the Black Friday period were great. Here is a direct quote from their last conference call:

We're particularly happy with our strong sales in week 4 of November which includes Thanksgiving and Black Friday, and also the first week of December so far which includes Cyber Monday. Customers really responded to our combination of fresh and timely product offerings, strong door-buster pricing and compelling values throughout the store. And we achieved these strong sales without deterioration in the efficiency of our advertising spending and without a deterioration of our gross profit margin rate.

Even by the standards of retail advertising there is double-talk here. The company does have "door-buster pricing" but it also has nine months of inventory, something they justify on the basis that a wide offering is a competitive advantage and that men's fashion changes slowly. "Fresh and timely product offerings" is not something I associate with JOSB. Nor is "fresh and timely" consistent with JOSB's accounts. And the sales aren't "door busters" if the seeming absence of customers is anything to go by.

Whatever: JOSB seems to work. For years they have had great sales from lightly trafficked stores. Indeed Vitaly Katsenelson (someone I make a point of reading) has commented on it in the past. This is from 2008 (at the height of the crisis). Vitaly made a pile of money on the stock:

When I think of the Jos. A. Bank (JOSB), I think of Yogi Berra’s saying “Nobody goes there because it is too crowded.” 

Only in the case of JOSB, it sounds like this: “EVERYBODY goes there because it is NOT crowded.” As most men who shop there will attest, you are lucky to see and handful of customers shop [...] at any given time. Nevertheless, it seems that JOSB operates in a very different economy and there is an incredible disconnect between its performance this year and the rest of the economy as well as other retailers. 

JOSB reported 3rd quarter numbers couple of days ago and they were stellar even by a healthy economy’s standards. 

They were truly incredible considering that negative double-digit same-store sales for retailers have become the norm. JOSB reported same store sales of 7% for the quarter (the company doesn’t report monthly numbers anymore). Total sales were up 13.7%. Operating profits before taxes were up 20.3%. Cash was up year-over-year, and inventory growth lagged sales. Every single metric was simply beautiful.

And Vitaly does shop at JOSB - and proudly shows me his cheap suits. He clearly spends a pile of money without achieving sartorial elegance. [Still he made good money on the stock and I would take that over a decent fashion sense any day...]

One of JOSB's tricks might be that they keep the average ticket per customer very high by getting them to buy several suits and multiple ties and shirts simultaneously with their "buy-one-get-three-free" marketing. A high average ticket means you can have lots of sales but not many customers.

[Contra: selling three suits at once would tend to fill most men's wardrobes. In most houses the wife has three to five times the hanging space of the husband. Six suits would fill mine permanently. Its hard to get return customers when their wardrobe is already packed with clothes.]

The situation at JOSB is so anomalous that people with a better sense of humour than me just decide to laugh at it. I can't do any better than this: