With Men's Warehouse (MW) guiding lower and Jos. A. Bank (NASDAQ:JOSB) recently reporting a meager 1.4% gain in March same store sales, the latter's 11 cents per share beat for fourth quarter earnings is nothing short of, well, astounding. Where'd the beat come from?
One explanation might be the rise in prepaid expenses, which jumped to 9.6% of sales from 7.6% a year earlier. The biggest contributor to that change, according to the 10-K, was prepaid rent, which was zero last year. (Put another way, this year the rent is being capitalized.) The difference between zero and the $3.2 million which was prepaid this year is 11.6 cents, which (surprise, surprise) is the beat.
Update: Just off the phone with CEO Bob Wildrick and CFO David Ullman, who disagree with that analysis. Ullman says the company always prepays its rent, but it showed up this time because the year ended February 3; last year it ended January 28, and the rent is due the first of the month. "It's not capitalizing anything," he says. "It's a prepayment of rent" for February. "We always pay the same day of the month."
As for the skimpy conference call, the barring of analyst questions and the lack of any mention of the fourth quarter in the earnings release: Wildrick said there is no ulterior motive. He says in retrospect he wished the fourth quarter was discussed in the release and that it was "a mistake on our part" not to do so. Not taking analyst questions: "We had the four top officers there and we thought we said everything we could say and see what happens."
Jokes one reader: "Men's Signature Suits -- 50% off!!! Men's dress shirts -- 50% off!!! Guidance - 100% off!!! Analyst questions -- 100% off!!!"