Shares of Men's Wearhouse increased 28% after it snubbed the USD 2.3 billion takeover offer of rival Jos. A. Bank. According to a Forbes report, even Jos. A. Bank shares made a 7.5% jump in afternoon trading.
Belus Capital Advisors Chief Executive Officer and Chief Equities Strategist Brian Sozzi said the rejection was a bluff, and the market had knew it. Sozzi believed that a transaction would eventually take place between both clothing retail stores. According to Forbes, Men's Wearhouse would benefit from the takeover as a merger would broaden its customer base. Jos. A. Bank's customers had higher incomes while Men's Wearhouse served younger and middle-income customers.
Jos. A. Bank posted a lower net income for the second quarter of this year at USD 14.2 million, as compared to the USD 23.2 million in the same period last year. Jos. A. Bank President R. Neal Black said despite the sales decline, their gross profit margin had stabilized.
"Specifically, our gross profit margin rate increased in both the fiscal months of June and July and the overall rate for the second quarter increased approximately 40 basis points from last year," Black added.
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