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Shares of JoS. A. Bank Clothiers Inc. rallied 3.5% following the announcement of an encouraging guidance for the third quarter of fiscal 2013. The company is scheduled to report third-quarter results before the stock market opens on Dec 5, 2013.

JoS. A. Bank projects adjusted earnings per share for the third-quarter to grow 4% – 9% year over year, ranging from 49 – 51 cents per share, compared with 47 cents per share earned in the year-ago comparable quarter. Results for the third quarter continue to benefit from positive trends witnessed near the close of the second quarter, partially offset by the shutdown of government offices in the third quarter.

The company’s adjusted earnings forecast for the to-be-reported quarter excludes legal and professional charges of about 2 – 3 cents per share associated with the proposed acquisition of rival, The Men’s Wearhouse Inc. (MW - Snapshot Report).

Further, the company anticipates sales growth in the mid single-digits range, driven by a double digit upside in its direct business and nearly flat comparable store sales projections. Together, sales from the company’s comparable stores and online portal are expected to increase in the low single digits.

Driven by the improved sales forecasts, the company expects its gross margin rate to grow for the second consecutive quarter, reporting a slight increase in the third quarter.

Overall, JoS. A. Bank attributes the impressive third-quarter performance to the gains realized from the implementation of new promotional strategies and their adjustments in the past few quarters. This has helped the company achieve marketing efficiency while boosting third-quarter results. Alongside, the company continues to gain from the outstanding performance of its non-promotional segments, which continue to post sales improvement.

Going forward, the company expects to sustain the sales growth trend, on account of the strategies in place for its brands.

Last month, the Hampstead, MD-based men's apparel retailer proposed to acquire its greater rival Men’s Wearhouse for $48 per share (total of $2.3 billion) cash. However, the latter rejected the bid outright describing it as “opportunistic” and “inadequate”. Following the rejection, JoS. A. Bank communicated a deadline of Nov 14, 2013 for Men’s Wearhouse to rethink on the bid.

In a recent development, Men’s Wearhouse’s largest shareholder, Eminence Capital LLC, urged the board at Men’s Wearhouse to engage in talks for a takeover bid with JoS. A. Bank before the Nov 14 deadline. Though Eminence Capital, which owns 9.8% stake in Men’s Wearhouse, believes the offer of $48 per share was too low, it expects JoS. A. Bank to raise the bid.

Jos. A. Bank believes the merger will prove beneficial to the shareholders and customers of both the companies, creating a behemoth men’s wear retailer with nearly 2,000 stores.

While we await a public notice from Men’s Wearhouse regarding its decision on the takeover proposal, the suitor, JoS. A. Bank, carries a Zacks Rank #3 (Hold).

Other stocks performing well among apparel-shoe retailers include Finish Line Inc. (FINL - Snapshot Report) and DSW Inc. (DSW - Snapshot Report). Both these stocks carry a Zacks Rank #2 (Buy).

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