December 06, 2011 at 16:01 PM EST
Men's Wearhouse Reports Fiscal 2011 Third Quarter Results
- Q3 2011 GAAP diluted earnings per share was $0.77 and adjusted diluted earnings per share was $0.79 compared to adjusted diluted earnings per share guidance of $0.64 to $0.66

HOUSTON, Dec. 6, 2011 /PRNewswire/ -- The Men’s Wearhouse (NYSE: MW) today announced its consolidated financial results for the third quarter ended October 29, 2011.

Third 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

 $   584.6(a)

$     550.1(a)

6.3%



Total Retail Segment

$   523.8

$     494.6

5.9%



  MW

368.5

349.1

5.6%

5.5%

9.6%

  K&G

80.2

78.0

2.7%

1.6%

- 0.2%

  Moores Canada

69.0

61.5

12.2%

      8.6% (b)

   5.6% (b)

Corporate Apparel Segment

$     60.8

$       55.5

9.5%





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

 $   1,820.5(a)

$  1,560.6(a)

16.7%



Total Retail Segment

$   1,630.5

$  1,496.7

8.9%



  MW

1,130.2

1,034.8

9.2%

9.0%

4.8%

  K&G

279.4

263.9

5.9%

5.7%

- 3.5%

  Moores Canada

202.5

180.4

12.2%

      6.2% (b)

   2.1% (b)

Corporate Apparel Segment

$      190.0

$       63.8

197.6%









(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.



PER SHARE INFORMATION

GAAP diluted earnings per share were $0.77 for the third quarter ended October 29, 2011.  Adjusted diluted earnings per share were $0.79 after excluding $1.0 million ($0.7 million after tax or $0.01 per diluted share outstanding) in acquisition related integration costs and $0.7 million ($0.5 million after tax or $0.01 per diluted share outstanding) for non-cash asset impairment charges.  This compares to adjusted diluted earnings per share guidance given September 7, 2011 of $0.64 to $0.66.  In third quarter fiscal 2010, GAAP diluted earnings per share were $0.47 and adjusted diluted earnings per share were $0.57 after excluding $1.4 million ($1.1 million after tax or $0.02 per diluted share outstanding) in acquisition and acquisition related integration costs, $2.0 million ($1.5 million after tax or $0.03 per diluted share outstanding) in tuxedo distribution closure costs and $3.2 million ($2.4 million after tax or $0.05 per diluted share outstanding) for non-cash asset impairment charges.

GAAP diluted earnings per share were $2.37 for the nine months ended October 29, 2011.  Adjusted diluted earnings per share were $2.43 after excluding $2.5 million ($1.6 million after tax or $0.03 per diluted share outstanding) in acquisition related integration costs and $1.7 million ($1.1 million after tax or $0.02 per diluted share outstanding) for non-cash asset impairment charges.  For the nine months ended October 30, 2010, GAAP diluted earnings per share were $1.54 and adjusted diluted earnings per share were $1.66 after excluding $4.1 million ($2.7 million after tax or $0.05 per diluted share outstanding) in acquisition and acquisition related integration costs, $2.0 million ($1.5 million after tax or $0.03 per diluted share outstanding) in tuxedo distribution closure costs and $3.4 million ($2.2 million after tax or $0.04 per diluted share outstanding) for non-cash asset impairment charges.

Note: Due to rounded numbers, the adjusted earnings per share may not sum.

THIRD QUARTER HIGHLIGHTS

Total Company net sales increased 6.3% for the quarter.    

  • Retail segment sales increased 5.9%.  
    • This increase was primarily attributable to increased retail clothing product sales driven by increases in average unit selling prices and units sold per transaction offsetting fewer transactions per store.  
    • Tuxedo rental services revenues had U.S. comparable store sales of 1.9% driven by an increase in average rental price.  
  • Corporate apparel segment sales increased 9.5% primarily due to one additional week in the current year quarter of U.K. operations acquired on August 6, 2010 and increased catalog and internet sales at our U.K. operations and increased catalog sales at our U.S. operations.

Total Company gross margin increased 14.1% to $268.2 million and as a percentage of sales, increased 315 basis points.

  • Retail segment total gross margin, as a percentage of related net sales, increased 324 basis points.  This increase was primarily attributable to higher product margins driven by higher average net selling prices per unit at all brands and lower K&G product cost charge-offs.
  • Corporate apparel segment gross margin, as a percentage of related sales, increased from 26.5% in the third quarter of 2010 to 29.4% in the third quarter of 2011 due mainly to an improved mix of higher margin UK customers in the 2011 results, partially offset by higher Twin Hill product costs.

Total Company adjusted SG&A expenses increased 6.4% to $206.4 million* and as a percentage of sales increased 5 basis points.

  • The Company’s corporate apparel segment drove 1.7% of the quarter over quarter increase and the balance, 4.7%, was related to payroll related costs and increased expenses associated with increased sales in the Company’s retail segment.  

Adjusted operating income increased 50.4% to $61.7 million* and as a percentage of sales, increased 310 basis points.  

  • The financial results of the U.K. operations, excluding acquisition integration costs, were $0.03 accretive to the Company’s third quarter diluted earnings per share.  Integration costs were $1.0 million ($0.7 million after tax or $0.01 per diluted share outstanding).

Total inventories increased 21.1% primarily to support increased retail sales and planned promotions in the fourth quarter as well as replenish comparatively oversold levels in the prior year as we embarked on a more aggressive promotional cadence.  

The Company repurchased 500,000 shares of its common stock during the third quarter at an average cost of $29.98 per share.  

Total cash and cash equivalents at quarter end were $138.5 million.

*  Adjusted SG&A and adjusted operating income for third quarter 2011 excludes $1.0 million in acquisition related integration costs and $0.7 million for non cash asset impairment charges.  Adjusted SG&A and adjusted operating income for third quarter 2010 excludes $1.4 million in acquisition and acquisition related integration costs, $2.0 million in tuxedo distribution closure costs and $3.2 million in non cash asset impairment charges.  

2011 GUIDANCE

For the fiscal year, GAAP diluted earnings per share is expected to be in a range of $2.21 to $2.24.  Adjusted diluted earnings per share are expected to be in a range of $2.28 to $2.31.  Adjusted earnings per share exclude acquisition related integration costs of $4.0 million ($2.6 million after tax or $0.05 per diluted share outstanding) and impairment charges of $1.7 million ($1.1 million after tax or $0.02 per diluted share outstanding). Both GAAP and adjusted earnings per share reflect the dilutive effect of participating securities which approximates $0.03 for the full year.

Estimated fourth quarter GAAP and adjusted diluted loss per share include a $0.02 per share negative impact from previous guidance due to the shifting of certain costs into the fourth quarter, which favorably impacted the third quarter, and severance costs due to a reorganization in the Company’s technology workgroup.

For the fourth quarter of the fiscal year, GAAP diluted loss per share is expected to be in a range of ($0.17) to ($0.14).  Adjusted diluted loss per share is expected to be in a range of ($0.15) to ($0.12).  Adjusted earnings per share exclude acquisition related integration costs of $1.5 million ($1.0 million after tax or $0.02 per diluted share outstanding).  Neither GAAP nor adjusted loss per share have an impact from the dilutive effect of participating securities.

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


Guidance

Guidance

FY 2011

4Q FY 2011




Total Sales Increase

13.3% to 13.4% (1)

3.5% to 4.0% (1)

Comparable Store Sales Growth (2)



    MW

+7% to +8%

+5% to +6%

    K&G

+3% to +4%

-2% to flat

    Moores

+5% to +6%

+3 to +4%

Gross Margin

43.70% to 43.75% (3)

38.65% to 38.85% (3)

S G & A (as % of Sales)

35.95% to 36.00% (4)

40.75% to 40.95% (4)

Effective Tax Rate

34.6%

43.0%

Weighted Average Shares Outstanding (millions)

51.7

51.4

Foreign Exchange Conversion (avg.)



    US Dollar to GBP

1.62

1.63

    US Dollar to Canadian Dollar

1.01

0.98



Footnotes to Guidance:

  1. Includes US$222 million for full year FY 2011 and US$51 million for 4Q 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 14% to 15% increase in 4Q FY 2011.
  3. Occupancy costs are expected to be flat to a 1% decrease for full year FY 2011 and 1% to 2% increase for 4Q FY 2011.  
  4. Excludes acquisition related integration costs and impairment charges.

CONFERENCE CALL AND WEBCAST INFORMATION

At 5:00 p.m. Eastern time on Tuesday, December 6, 2011, Company management will host a conference call and real time webcast to review the third quarter of fiscal 2011 and its outlook for the fourth 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 December 13, 2011 by calling 303-590-3030 and entering the access code of 4488091#, or a webcast archive will be available free on the website for approximately 90 days.

STORE INFORMATION


October 29, 2011

October 30, 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

597

3,399.6

586

3,319.3

585

3,319.0








Men’s Wearhouse and Tux

361

503.7

408

561.0

388

535.7








Moores, Clothing for Men

117

741.9

117

737.1

117

737.8








K&G (a)

100

2,375.4

102

2,391.8

102

2,394.1








Total

1,175

7,020.6

1,213

7,009.2

1,192

6,986.6








(a)  92, 91 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 1,175 stores.  The Men’s Wearhouse, Moores and K&G stores carry a full selection of men’s designer, brand name and private label suits, sport coats, furnishings and accessories and Men’s Wearhouse and Tux stores carry a limited selection.  K&G stores carry a full selection of women’s apparel.  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 Twin Hill 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 subsequent Forms 10-Q.

For additional information on Men’s Wearhouse, please visit the Company’s websites at www.menswearhouse.com, www.kgstores.com, www.mooresclothing.com,  www.dimensions.co.uk, www.alexandra.co.uk and 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

October 29, 2011 AND October 30, 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

$    377,307

64.54%

$    350,250

63.67%


$    27,057

7.73%

0.87

         Tuxedo rental services

112,005

19.16%

111,297

20.23%


708

0.64%

(1.07)

         Alteration and other services    

34,480

5.90%

33,022

6.00%


1,458

4.42%

(0.10)

              Total retail sales

523,792

89.60%

494,569

89.90%


29,223

5.91%

(0.31)

              Corporate apparel clothing product sales

60,810

10.40%

55,534

10.10%


5,276

9.50%

0.31

                   Total net sales

584,602

100.00%

550,103

100.00%


34,499

6.27%

0.00










                  Total cost of sales

316,433

54.13%

315,104

57.28%


1,329

0.42%

(3.15)










Gross margin (a):









       Retail clothing product

215,638

57.15%

187,019

53.40%


28,619

15.30%

3.76

       Tuxedo rental services

96,244

85.93%

93,813

84.29%


2,431

2.59%

1.64

       Alteration and other services

7,811

22.65%

8,424

25.51%


(613)

(7.28%)

(2.86)

       Occupancy costs

(69,425)

(13.25%)

(68,978)

(13.95%)


(447)

(0.65%)

0.69

              Total retail gross margin

250,268

47.78%

220,278

44.54%


29,990

13.61%

3.24

              Corporate apparel clothing product  margin

17,901

29.44%

14,721

26.51%


3,180

21.60%

2.93

                  Total gross margin

268,169

45.87%

234,999

42.72%


33,170

14.11%

3.15










Selling, general and administrative expenses

208,147

35.60%

200,588

36.46%


7,559

3.77%

(0.86)










Operating income

60,022

10.27%

34,411

6.26%


25,611

74.43%

4.01










Net interest

(284)

(0.05%)

(274)

(0.05%)


(10)

3.65%

0.00










Earnings before income taxes

59,738

10.22%

34,137

6.21%


25,601

74.99%

4.01










Provision for income taxes

19,836

3.39%

8,789

1.60%


11,047

125.69%

1.80










Net earnings including noncontrolling interest

39,902

6.83%

25,348

4.61%


14,554

57.42%

2.22










Net earnings attributable to noncontrolling interest

(25)

0.00%

(89)

(0.02%)


64

(71.91%)

0.01










Net earnings attributable to common shareholders

$      39,877

6.82%

$      25,259

4.59%


$    14,618

57.87%

2.23










Net earnings per diluted common share attributable to common shareholders

$          0.77


$          0.47















Weighted average diluted common shares outstanding:

51,339


52,895
























(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 NINE MONTHS ENDED

October 29, 2011 AND October 30, 2010

(In thousands, except per share data)











Nine Months Ended


Variance



% of


% of




Basis


2011

Sales

2010

Sales


Dollar

%

Points










Net sales:









         Retail clothing product

$1,189,357

65.33%

$ 1,072,539

68.73%


$116,818

10.89%

(3.40)

         Tuxedo rental services

333,413

18.31%

325,913

20.88%


7,500

2.30%

(2.57)

         Alteration and other services    

107,767

5.92%

98,262

6.30%


9,505

9.67%

(0.38)

              Total retail sales

1,630,537

89.56%

1,496,714

95.91%


133,823

8.94%

(6.34)

              Corporate apparel clothing product sales

189,978

10.44%

63,844

4.09%


126,134

197.57%

6.34

                   Total net sales

1,820,515

100.00%

1,560,558

100.00%


259,957

16.66%

0.00










                   Total cost of sales

996,468

54.74%

864,284

55.38%


132,184

15.29%

(0.65)










Gross margin (a):









       Retail clothing product

661,419

55.61%

587,626

54.79%


73,793

12.56%

0.82

       Tuxedo rental services

287,683

86.28%

275,067

84.40%


12,616

4.59%

1.89

       Alteration and other services

27,415

25.44%

25,154

25.60%


2,261

8.99%

(0.16)

       Occupancy costs

(205,006)

(12.57%)

(208,472)

(13.93%)


3,466

1.66%

1.36

              Total retail gross margin

771,511

47.32%

679,375

45.39%


92,136

13.56%

1.93

              Corporate apparel clothing product margin

52,536

27.65%

16,899

26.47%


35,637

210.88%

1.18

                  Total gross margin

824,047

45.26%

696,274

44.62%


127,773

18.35%

0.65










Selling, general and administrative expenses

631,370

34.68%

571,406

36.62%


59,964

10.49%

(1.93)










Operating income

192,677

10.58%

124,868

8.00%


67,809

54.30%

2.58










Net interest

(781)

(0.04%)

(774)

(0.05%)


(7)

0.90%

(0.01)










Earnings before income taxes

191,896

10.54%

124,094

7.95%


67,802

54.64%

2.59










Provision for income taxes

67,532

3.71%

42,222

2.71%


25,310

59.95%

1.00










Net earnings including noncontrolling interest

124,364

6.83%

81,872

5.25%


42,492

51.90%

1.58










Net (earnings) loss attributable to noncontrolling interest

16

0.00%

(89)

(0.01%)


105

(117.98%)

0.01










Net earnings attributable to common shareholders

$ 124,380

6.83%

$    81,783

5.24%


$  42,597

52.09%

1.59



















Net earnings per diluted common share attributable to common shareholders

$        2.37


$          1.54















Weighted average diluted common shares outstanding:

51,776


52,776















(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)




October 29,


October 30,



2011


2010

ASSETS









Current assets:





Cash and cash equivalents

$   138,545


$  197,843


Accounts receivable, net

66,094


65,069


Inventories

616,758


509,422


Other current assets

61,088


62,830







  Total current assets

882,485


835,164

Property and equipment, net

348,785


333,007

Tuxedo rental product, net

85,876


86,121

Goodwill

88,707


90,580

Intangible assets, net

35,378


38,678

Other assets

3,579


21,831







  Total assets

$1,444,810


$1,405,381






LIABILITIES AND EQUITY









Current liabilities:





Accounts payable

$  155,610


$  145,138


Accrued expenses and other current liabilities

146,391


130,550


Income taxes payable

22,727


12,294


Current maturities of long-term debt

-


45,584







  Total current liabilities

324,728


333,566






Deferred taxes and other liabilities

76,429


72,664







  Total liabilities

401,157


406,230






Equity:





Preferred stock

-


-


Common stock

717


709


Capital in excess of par

356,414


336,942


Retained earnings

1,108,662


1,023,467


Accumulated other comprehensive income

41,504


37,651


Treasury stock, at cost

(476,749)


(412,761)







  Total equity attributable to common shareholders

1,030,548


986,008







Noncontrolling interest

13,105


13,143







  Total equity

1,043,653


999,151







   Total liabilities and equity

$1,444,810


$1,405,381




THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


FOR THE NINE MONTHS ENDED

October 29, 2011 AND October 30, 2010

(In thousands)








Nine Months Ended



2011


2010






CASH FLOWS FROM OPERATING ACTIVITIES:










Net earnings including noncontrolling interest

$         124,364


$           81,872


Non-cash adjustments to net earnings:





  Depreciation and amortization

56,572


57,210


  Tuxedo rental product amortization

25,923


31,732


  Other

26,164


11,284


Changes in assets and liabilities

(85,477)


(16,216)







       Net cash provided by operating activities

147,546


165,882






CASH FLOWS FROM INVESTING ACTIVITIES:





Capital expenditures

(66,960)


(43,835)


Acquisitions of businesses, net of cash

-


(97,786)


Proceeds from sales of property and equipment

59


76







       Net cash used in investing activities

(66,901)


(141,545)






CASH FLOWS FROM FINANCING ACTIVITIES:





Proceeds from issuance of common stock

5,995


2,503


Cash dividends paid

(18,880)


(14,318)


Tax payments related to vested deferred stock units

(2,955)


(2,748)


Excess tax benefits from share-based plans

1,592


952


Purchase of treasury stock

(63,988)


(144)







       Net cash used in financing activities

(78,236)


(13,755)







Effect of exchange rate changes

(235)


1,243






INCREASE IN CASH AND CASH EQUIVALENTS

2,174


11,825







Balance at beginning of period

136,371


186,018


Balance at end of period

$         138,545


$         197,843




SOURCE Men's Wearhouse

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