September 07, 2011 at 16:01 PM EDT
Men's Wearhouse Reports Fiscal 2011 Second Quarter Results
- Q2 2011 GAAP diluted earnings per share was $1.09 and adjusted diluted earnings per share was $1.11

HOUSTON, Sept. 7, 2011 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the second quarter ended July 30, 2011.


Second Quarter Net Sales Summary – Fiscal 2011




U.S. dollars, in millions

Total Net
Sales
Change %


Comparable Store Sales
Change % (c)


Current Year

Prior Year


Current Year

Prior Year

Total Company

 $   655.5(a)

$     537.0(a)

22.1%



Total Retail Segment

$   586.0

$     532.4

10.1%



  MW

407.0

367.4

10.8%

10.9%

2.7%

  K&G

92.5

87.6

5.7%

5.4%

- 4.6%

  Moores Canada

80.3

71.6

12.3%

4.4% (b)

0.6% (b)

Corporate Apparel Segment

$     69.5

$         4.6

1,401.3%







Year-To-Date Net Sales Summary – Fiscal 2011




U.S. dollars, in millions

Total Net
Sales
Change %


Comparable Store Sales
Change % (c)


Current Year

Prior Year


Current Year

Prior Year

Total Company

 $   1,235.9(a)

$  1,010.5(a)

22.3%



Total Retail Segment

$   1,106.7

$  1,002.1

10.4%



  MW

761.7

685.7

11.1%

10.8%

2.6%

  K&G

199.3

185.8

7.2%

7.5%

- 4.8%

  Moores Canada

133.5

118.9

12.2%

5.0% (b)

0.5% (b)

Corporate Apparel Segment

$     129.2

$         8.3

1,454.4%




(a)  Due to rounded numbers, total Company may not sum.

(b)  Comparable store sales change is based on the Canadian dollar.

(c)  Does not include ecommerce sales.  




GAAP diluted earnings per share were $1.09 for the second quarter ended July 30, 2011.  Adjusted diluted earnings per share were $1.11 after excluding $0.7 million ($0.5 million after tax or $0.01 per diluted share outstanding) in acquisition integration expenses and $1.0 million ($0.7 million after tax or $0.01 per diluted share outstanding) for a non-cash asset impairment charge.  This compares to adjusted diluted earnings per share guidance given June 8, 2011 of $1.02 to $1.05.  In second quarter fiscal 2010, GAAP diluted earnings per share were $0.81 and adjusted diluted earnings per share were $0.84 after excluding $2.7 million ($1.7 million after tax or $0.03 per diluted share outstanding) in acquisition costs.  

GAAP diluted earnings per share were $1.61 for the six months ended July 30, 2011.  Adjusted diluted earnings per share were $1.64 after excluding $1.4 million ($0.9 million after tax or $0.02 per diluted share outstanding) in acquisition integration expenses and $1.0 million ($0.7 million after tax or $0.01 per diluted share outstanding) for a non-cash asset impairment charge.  For the six months ended July 31, 2010, GAAP diluted earnings per share were $1.06 and adjusted diluted earnings per share were $1.09 after excluding $2.7 million ($1.7 million after tax or $0.03 per diluted share outstanding) in acquisition costs.

SECOND QUARTER HIGHLIGHTS

Total Company net sales increased 22.1% for the quarter.  The Company's acquisition of Dimensions and Alexandra in the UK (completed on August 6, 2010 and included in the Company's corporate apparel segment) contributed $63.2 million of the consolidated sales increase or 11.8% of the consolidated growth rate.  

In our retail segment, comparable store sales increased at each of our brands.  The increases were primarily attributable to increased retail clothing product sales.  Increases at Men's Wearhouse/Men's Wearhouse and Tux were driven by increases in average units sold per transaction and increased store traffic levels offsetting decreases in average unit retails.  Increases at K&G were driven by increases in average unit retails and units sold per transaction offsetting decreases in store traffic levels.  Increases at Moores were driven by increases in units sold per transaction offsetting decreases in average unit retails and store traffic levels.  There was also a 6.2% comparable store sales increase in U.S. tuxedo rental services revenues.  

Retail segment total gross margin, as a percentage of related net sales, increased 104 basis points.  Lower product margins, which resulted mainly from increased promotions, were primarily offset by leverage of fixed occupancy costs.  

Adjusted selling, general and administrative expenses increased 15.9%, but as a percentage of total net sales decreased 177 basis points. The Company's corporate apparel segment drove 7.6% of the quarter over quarter increase and the balance, 8.3%, was related to payroll costs and increased expenses associated with increased sales in the Company's retail segment.

Operating income was $89.0 million.  Excluding $0.7 million in acquisition integration costs and $1.0 million for a non-cash asset impairment charge, operating income was $90.8 million or 13.9% of total net sales.  This compares with the adjusted prior year operating income of $71.8 million or 13.4% of total net sales, which excluded $2.7 million in costs associated with the acquisitions.

The financial results of the combined UK operations, excluding acquisition integration costs, were $0.03 accretive to the Company's second quarter diluted earnings per share.  Integration costs were $0.7 million ($0.5 million after tax or $0.01 per diluted share outstanding).

Total inventories of $547.9 million increased 30.3% from the prior year second quarter of $420.4 million.  Excluding inventory from the acquired UK operations, inventories increased 9.9% to support increased retail sales and planned promotions in the second half of fiscal 2011.

The Company did not repurchase any shares of its common stock during the second quarter; however, the Company did repurchase 500,000 shares at an average cost of $29.98 per share subsequent to quarter end.

2011 GUIDANCE

For the fiscal year, GAAP diluted earnings per share is expected to be in a range of $2.07 to $2.14.  Adjusted diluted earnings per share are expected to be in a range of $2.13 to $2.20.  Adjusted earnings per share exclude acquisition integration expenses and impairment charges of $4.6 million ($3.0 million after tax or $0.06 per diluted share outstanding).

For the third quarter of the fiscal year, GAAP diluted earnings per share is expected to be in a range of $0.62 to $0.64.  Adjusted diluted earnings per share are expected to be in a range of $0.64 to $0.66.  Adjusted earnings per share exclude acquisition integration expenses of $1.6 million ($1.1 million after tax or $0.02 per diluted share outstanding).

The financial results of the combined UK acquisitions, excluding acquisition integration expenses, are expected to be accretive to the Company's full year and third quarter diluted earnings per share.



Guidance

Guidance

FY 2011

3Q FY 2011




Total Sales Increase

12.5% to 13.5% (1)

3.0% to 4.0% (1)

Comparable Store Sales Growth (2)



    MW

+7% to +8%

+2% to +3%

    K&G

+4% to +5%

+2% to +3%

    Moores

+2% to +3%

flat to +1%

Gross Profit Margin

43.25% to 43.45% (3)

44.75% to 44.90% (3)

S G & A (as % of Sales)

36.00% to 36.15% (4)

35.75% to 35.90% (4)

Effective Tax Rate

34.9%

33.9%

Weighted Average Shares Outstanding (millions)

51.7

51.4

GAAP EPS (5)

$2.07 to $2.14

$0.62 to $0.64

Adjusted EPS (5)

$2.13 to $2.20 (4)

$0.64 to $0.66 (4)

Foreign Exchange Conversion (avg.)



    US Dollar to GBP

1.63

1.63

    US Dollar to Canadian Dollar

1.02

1.01




Footnotes to Guidance:

  1. Includes US$225 million for full year FY 2011 and US$55 million for 3Q FY 2011 of sales from acquired operations of Dimensions and Alexandra.
  2. Includes an assumed U.S. comparable store increase in tuxedo rental revenues of 4% to 5% for the full year FY 2011 and a flat to 1% increase in 3Q FY 2011.
  3. Occupancy costs are expected to be flat to a low single digit decrease for full year FY 2011 and flat to 1% increase for 3Q FY 2011.
  4. Excludes acquisition integration costs and impairment charges.
  5. Reflects the dilutive effect of participating securities which approximates $0.01 for the third quarter and $0.03 for the full year.

CONFERENCE CALL AND WEBCAST INFORMATION

At 5:00 p.m. Eastern time on Wednesday, September 7, 2011, Company management will host a conference call and real time webcast to review the second quarter of fiscal 2011 and its outlook for the third quarter and full year of fiscal 2011.    

To access the conference call, dial 480-629-9818.  To access the live webcast presentation, visit the Investor Relations section of the Company's website at www.menswearhouse.com.  A telephonic replay will be available through September 14, 2011 by calling 303-590-3030 and entering the access code of 4468052#, or a webcast archive will be available free on the website for approximately 90 days.

STORE INFORMATION



July 30, 2011

July 31, 2010

January 29, 2011









Number
of Stores

Sq. Ft.

(000's)

Number
of Stores

Sq. Ft.

(000's)

Number
of Stores

Sq. Ft.

(000's)








Men's Wearhouse

591

3,364.3

584

3,307.0

585

3,319.0








Men's Wearhouse and Tux

370

514.3

434

596.4

388

535.7








Moores, Clothing for Men

117

738.9

117

735.7

117

737.8








K&G (a)

100

2,369.9

104

2,426.7

102

2,394.1








Total

1,178

6,987.4

1,239

7,065.8

1,192

6,986.6


(a)  90, 95 and 91 stores, respectively, offering women's apparel.



Founded in 1973, Men's Wearhouse is one of North America's largest specialty retailers of men's apparel with 1,178 stores.  The Men's Wearhouse, Moores and K&G stores carry a full selection of designer, brand name and private label suits, sport coats, furnishings and accessories and Men's Wearhouse and Tux stores carry a limited selection.  Tuxedo rentals are available in the Men's Wearhouse, Moores and Men's Wearhouse and Tux stores.  Additionally, Men's Wearhouse operates a global corporate apparel and workwear group consisting of TwinHill in the United States and Dimensions and Alexandra in the United Kingdom.  

This press release contains forward-looking information. The forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements may be significantly impacted by various factors, including sensitivity to economic conditions and consumer confidence, possibility of limited ability to expand Men's Wearhouse stores, possibility that certain of our expansion strategies may present greater risks, changes in foreign currency rates and other factors described in the Company's annual report on Form 10-K for the fiscal year ended January 29, 2011 and Form 10-Q for the quarter ended April 30, 2011.

For additional information on Men's Wearhouse, please visit the company's website at www.menswearhouse.com.  The website for K&G is www.kgstores.com.  The website for Moores is www.mooresclothing.com.  The website for Dimensions is www.dimensions.co.uk, the website for Alexandra is www.alexandra.co.uk and the website for TwinHill is www.twinhill.com.  

Contacts:

Neill Davis, Men’s Wearhouse
(281) 776-7000
Ken Dennard, DRG&L
(713) 529-6600

THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)



FOR THE THREE MONTHS ENDED

July 30, 2011 AND July 31, 2010

(In thousands, except per share data)











Three Months Ended


Variance



% of


% of




Basis


2011

Sales

2010

Sales


Dollar

%

Points








Net sales:









         Retail clothing product

$   401,789

61.29%

$  357,599

66.59%


$  44,190

12.36%

(5.30)

         Tuxedo rental services

148,267

22.62%

142,462

26.53%


5,805

4.07%

(3.91)

         Alteration and other services    

35,978

5.49%

32,299

6.01%


3,679

11.39%

(0.53)

              Total retail sales

586,034

89.40%

532,360

99.14%


53,674

10.08%

(9.74)

              Corporate apparel clothing product sales

69,495

10.60%

4,629

0.86%


64,866

1,401.30%

9.74

                 Total net sales

655,529

100.00%

536,989

100.00%


118,540

22.07%

0.00










                 Total cost of sales

346,284

52.83%

276,717

51.53%


69,567

25.14%

1.29










Gross margin (a):









         Retail clothing product

222,893

55.48%

200,507

56.07%


22,386

11.16%

(0.60)

         Tuxedo rental services

128,105

86.40%

120,426

84.53%


7,679

6.38%

1.87

         Alteration and other services

8,596

23.89%

7,853

24.31%


743

9.46%

(0.42)

         Occupancy costs

(68,410)

(11.67%)

(69,803)

(13.11%)


1,393

2.00%

1.44

              Total retail gross margin

291,184

49.69%

258,983

48.65%


32,201

12.43%

1.04

              Corporate apparel clothing product margin

18,061

25.99%

1,289

27.85%


16,772

1,301.16%

(1.86)

                 Total gross margin

309,245

47.17%

260,272

48.47%


48,973

18.82%

(1.29)










Selling, general and administrative expenses

220,227

33.60%

191,168

35.60%


29,059

15.20%

(2.00)










Operating income

89,018

13.58%

69,104

12.87%


19,914

28.82%

0.71










Net interest

(229)

(0.03%)

(275)

(0.05%)


46

16.73%

(0.02)

Earnings before income taxes

88,789

13.54%

68,829

12.82%


19,960

29.00%

0.73










Provision for income taxes

31,519

4.81%

25,867

4.82%


5,652

21.85%

(0.01)










Net earnings including noncontrolling interest

57,270

8.74%

42,962

8.00%


14,308

33.30%

0.74










Net earnings attributable to noncontrolling interest

(192)

(0.03%)

-

0.00%


(192)

100.00%

(0.03)










Net earnings attributable to common shareholders

$  57,078

8.71%

$  42,962

8.00%


$ 14,116

32.86%

0.71










Net earnings per diluted common share attributable to common shareholders

$     1.09


$      0.81















Weighted average diluted common shares outstanding:

51,792


52,806















(a)  Gross margin percent of sales is calculated as a percentage of related sales.


















THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


FOR THE SIX MONTHS ENDED

July 30, 2011 AND July 31, 2010

(In thousands, except per share data)











Six Months Ended


Variance



% of


% of




Basis


2011

Sales

2010

Sales


Dollar

%

Points










Net sales:









         Retail clothing product

$   812,050

65.70%

$   722,289

71.48%


$  89,761

12.43%

(5.78)

         Tuxedo rental services

221,408

17.91%

214,616

21.24%


6,792

3.16%

(3.33)

         Alteration and other services    

73,287

5.93%

65,240

6.46%


8,047

12.33%

(0.53)

              Total retail sales

1,106,745

89.55%

1,002,145

99.18%


104,600

10.44%

(9.63)

              Corporate apparel clothing product sales

129,168

10.45%

8,310

0.82%


120,858

1,454.37%

9.63

                   Total net sales

1,235,913

100.00%

1,010,455

100.00%


225,458

22.31%

0.00










                   Total cost of sales

680,035

55.02%

549,180

54.35%


130,855

23.83%

0.67










Gross margin (a):









       Retail clothing product

445,781

54.90%

400,607

55.46%


45,174

11.28%

(0.57)

       Tuxedo rental services

191,439

86.46%

181,254

84.46%


10,185

5.62%

2.01

       Alteration and other services

19,604

26.75%

16,730

25.64%


2,874

17.18%

1.11

       Occupancy costs

(135,581)

(12.25%)

(139,494)

(13.92%)


3,913

2.81%

1.67

              Total retail gross margin

521,243

47.10%

459,097

45.81%


62,146

13.54%

1.29

              Corporate apparel clothing product margin

34,635

26.81%

2,178

26.21%


32,457

1490.22%

0.60

                  Total gross margin

555,878

44.98%

461,275

45.65%


94,603

20.51%

(0.67)










Selling, general and administrative expenses

423,223

34.24%

370,818

36.70%


52,405

14.13%

(2.45)










Operating income

132,655

10.73%

90,457

8.95%


42,198

46.65%

1.78










Net interest

(497)

(0.04%)

(500)

(0.05%)


3

0.60%

(0.01)










Earnings before income taxes

132,158

10.69%

89,957

8.90%


42,201

46.91%

1.79










Provision for income taxes

47,696

3.86%

33,433

3.31%


14,263

42.66%

0.55










Net earnings including noncontrolling interest

84,462

6.83%

56,524

5.59%


27,938

49.43%

1.24










Net loss attributable to noncontrolling interest

41

0.00%

-

0.00%


41

100%

0.00










Net earnings attributable to common shareholders

$     84,503

6.84%

$     56,524

5.59%


$  27,979

49.50%

1.24










Net earnings per diluted common share attributable to common shareholders

$         1.61


$         1.06















Weighted average diluted common shares outstanding:

51,994


52,717















(a)  Gross margin percent of sales is calculated as a percentage of related sales.




THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



July 30,


July 31,



2011


2010






ASSETS









Current assets:





Cash and cash equivalents

$       162,301


$        281,500


Accounts receivable, net

65,289


19,066


Inventories

547,899


420,386


Other current assets

66,087


60,195







  Total current assets

841,576


781,147

Property and equipment, net

337,517


333,133

Tuxedo rental product, net

88,786


91,690

Goodwill

90,251


60,449

Intangible assets, net

36,839


2,504

Other assets

10,424


20,346







  Total assets

$    1,405,393


$     1,289,269






LIABILITIES AND EQUITY









Current liabilities:





Accounts payable

$       130,068


$          82,163


Accrued expenses and other current liabilities

151,754


129,971


Income taxes payable

23,994


7,589


Current maturities of long-term debt

-


45,226







  Total current liabilities

305,816


264,949






Deferred taxes and other liabilities

71,864


64,402







  Total liabilities

377,680


329,351






Equity:





Preferred stock

-


-


Common stock

715


708


Capital in excess of par

351,181


332,677


Retained earnings

1,074,942


1,002,995


Accumulated other comprehensive income

49,327


36,308


Treasury stock, at cost

(461,760)


(412,770)







  Total equity attributable to common shareholders

1,014,405


959,918







Noncontrolling interest

13,308


-







  Total equity

1,027,713


959,918







   Total liabilities and equity

$    1,405,393


$     1,289,269




THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


FOR THE SIX MONTHS ENDED

July 30, 2011 AND July 31, 2010

(In thousands)








Six Months Ended



2011


2010






CASH FLOWS FROM OPERATING ACTIVITIES:










Net earnings including noncontrolling interest

$           84,462


$           56,524


Non-cash adjustments to net earnings:





  Depreciation and amortization

37,805


36,885


  Tuxedo rental product amortization

17,076


20,812


  Other

9,751


11,177


Changes in assets and liabilities

(27,078)


4,890







       Net cash provided by operating activities

122,016


130,288






CASH FLOWS FROM INVESTING ACTIVITIES:





Capital expenditures

(38,258)


(25,865)


Proceeds from sales of property and equipment

51


23







       Net cash used in investing activities

(38,207)


(25,842)






CASH FLOWS FROM FINANCING ACTIVITIES:





Proceeds from issuance of common stock

4,552


1,321


Cash dividends paid

(12,671)


(9,535)


Tax payments related to vested deferred stock units

(2,955)


(2,656)


Excess tax benefits from share-based plans

1,386


780


Purchase of treasury stock

(48,999)


(144)







       Net cash used in financing activities

(58,687)


(10,234)







Effect of exchange rate changes

808


1,270






INCREASE IN CASH AND CASH EQUIVALENTS

25,930


95,482







Balance at beginning of period

136,371


186,018


Balance at end of period

$         162,301


$         281,500




SOURCE The Men's Wearhouse

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