FINANCE

Eminence Capital criticizes Jos. A. Bank for Eddie Bauer purchase

BY Dan Berthiaume

New York – Eminence Capital, LLC, which owns 4.9% of the common stock of Jos. A. Bank Clothiers, has sent a letter to the board of directors criticizing their announced acquisition of Eddie Bauer. According to the letter, signed by Eminence CEO Ricky Sandler, the nearly $900 million acquisition is a poor decision that has an excessive price which almost surely destroys shareholder value.

The letter also states that if the Eddie Bauer transaction proceeds, Jos. A. Bank will issue 4.7 million shares of stock to Golden Gate at $56 per share, only to repurchase nearly the same number of shares from the market at $65 per share, directly destroying more than $40 million of value. Furthermore, the letter claims that Jos. A. Bank used misleading financial guidance to justify the deal and also criticizes a $50 million breakup fee, which Golden Gate Capital will receive if Jos. A. Bank winds up accepting a more favorable offer.

“With the announcement of an agreement to acquire Eddie Bauer you have confirmed the suspicions we feared most and laid out in our recent lawsuit: the management team and board of Jos. A. Bank are willing to engage in desperate tactics in an effort to protect their jobs and paychecks in blatant disregard for the best interests of shareholders,” states the letter. “Make no mistake about it – we intend to hold the Board accountable for its actions both through the upcoming proxy vote and through direct actions in court.”

Eminence Capital filed a lawsuit in January 2014 to force Jos. A. Bank to accept a proposed $1.6 billion merger with Men’s Wearhouse.

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FINANCE

Lumber Liquidators has solid Q4; will open 30-40 stores

BY Dan Berthiaume

Toano, Va. – Lumber Liquidators reported impressive results for the fourth quarter and fiscal year 2013. For the quarter, net income increased 50.6% to $20.8 million, from $13.8 million in the fourth quarter of the prior year.

Net sales increased $47.8 million to $258.4 million in fourth quarter 2013, from $210.7 million in fourth quarter 2012. Same-store sales increased 15.6% for the quarter, driven by an 8.6% increase in the number of customers invoiced and a 7% increase in the average sale.

For the full year, net income increased 64.4% to $77.4 million, compared to $47.1 million in the prior year. Net sales increased 23.0% to $1 billion in 2013 from $813.3 million in 2012, as same-store sales increased 15.8%.

Looking ahead, Lumber Liquidators affirmed previously issued guidance that it expects to open a total of 30 to 40 new store locations and remodel of a total of 25 to 35 existing stores, all in the “store of the future” format. Net sales are expected to be in the range of $1.15 to $1.2 billion and same-store sales are projected to increase in the high single to low-double digits.

"We achieved record highs for net sales and operating margin in the fourth quarter as we continued to gain share in a highly fragmented market,” said president and CEO Robert M. Lynch. “We gained further traction in our key, multi-year strategic initiatives while continuing to deliver value and legendary service to each customer. Customer demand was inconsistent during the quarter, with certain regions of the country periodically impacted by difficult weather conditions. Nevertheless, our store team, with support across the organization, delivered an unprecedented level of individualized customer service and focus on operating results.”

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FINANCE

NRF: More consumers will save tax refunds

BY Dan Berthiaume

Washington, D.C. – More Americans this year are expected to put their tax returns in the bank. According to the National Retail Federation (NRF)’s Tax Returns Survey conducted by Prosper Insights & Analytics, 46% of those expecting a refund this year will put their money into savings, up from 44% last year and the highest percent in the survey’s history.

Two-thirds (66.6%) of those surveyed are expecting a refund this year. As for other ways consumers will use their refunds, 37.7% will pay down debt, and one-quarter (25.3%) will use it toward everyday expenses. One-in-10 (10.7%) will treat themselves and invest in a major purchase, and 12.8% will spend their refunds on a vacation.

Young adults between 18 and 24 are most likely to save their tax returns, with nearly six-in-10 (57.7%) planning to contribute to their savings accounts, higher than any other age group. They are also the most likely to use their refunds for everyday expenses (34%) and to purchase a big-ticket item such as a new television or piece of furniture (18.3%). Three-in-10 (30.2%) will use their checks to pay down debt, second to last behind those 65 and older (27%).

“Financial security is top-of-mind for all Americans, and refunds can play a huge role in helping achieve that,” said NRF president and CEO Matthew Shay. “Whether consumers use a refund to pay down debt, bulk up their savings, or buy that big-ticket item they’ve been saving for, a check from Uncle Sam, large or small, goes a long way these days.”

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