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Three years ago, the stock of Jos. A. Bank Clothiers Inc. was trading in the $4 per share range. Under CEO Robert N. Wildrick, the company is growing the chain to 500 stores and bulking up inventory and its stock price has risen into the $50 per share range.
But over the past week, some industry observers have questioned the company's cash burn and its debt and inventory levels. What they are asking: Has Hampstead-based Jos. A Bank (www.josbank.com), which built its name on blue suits and oxford shirts, gambled its future on an overly ambitious growth plan?
"If the company doesn't get its act together, there could be some problems," said Michael Markowski, director of research at StockDiagnostics.com.
The company, which predicted money troubles at Sears and Fleming Cos., a grocery supplier to Kmart, last week issued a warning on Jos. A. Bank stock, saying the company is reporting record earnings yet has negative operating cash flow per share - a warning sign of trouble. Barron's followed with an article last weekend questioning the stock price's sustainability. Jos. A Bank officials say the company's spending on inventory and new stores is a prudent investment not a gamble.
"As you're growing, stores need to add inventory," Jos. A. Bank Chief Financial Officer David E. Ullman said. "In our case, we're opening 50 stores this year.
"Of course, we're going to have more inventory than our most recent sales quarters can support ... We need a significant amount more investment just to fuel these stores."
The company's...