HAMPSTEAD, MD-Margin-cutting incentives aimed at moving its inventory of winter clothing caused earnings to drop nearly $1 million during the first quarter at men’s clothing retailer Jos. A. Banks, execs with the company said.

For the quarter ending Feb. 3, earnings declined to $5.9 million, or 32 cents per share, down from $6.7 million, or 38 cents per share, a year earlier, breaking the company’s string of 18 quarters of consecutive growth.

Company officials called the drop “a bump in the road” and said the firm’s business fundamentals “remain strong” but Wall Street reacted sharply to the news, sending stocks plummeting 33%.

Jos. A. Banks chief financial officer David Ullman called the earnings decline “an aberration in our growth period,” saying the drop was due largely to increased customer demand for fall merchandise which resulted in less demand for the firm’s line of year-round clothing.”Looking back with 20-20 hindsight, we think we probably were a little too price aggressive on some of the fall goods,” R. Neal Black, the company’s chief merchandising officer said.

Sales for the quarter were up 17.7% or $113.7 million as compared to $96.6 million in the prior year’s quarter while sales at stores open at least a year increased 4.7% during that same period. Catalog and internet sales were also up 25%, the company said.Also affecting the bottom line were costs associated with the opening of seven new Jos. A. Banks stores in seven states.

The company, which operates 334 stores nationwide, added five new markets to its mix during that expansion. The firm plans three new store openings in the second quarter, including its second airport location at Regan International Airport in Washington, DC. At least 50 stores are expected to be added to the company’s lineup this year with an additional 50 coming on line in 2007, the company said.

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