Men's Wearhouse Reports Fiscal 2012 First Quarter Results
- Q1 2012 GAAP diluted earnings per share was $0.52 compared to per share guidance of $0.53 to $0.54

HOUSTON, June 6, 2012 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the fiscal first quarter ended April 28, 2012.

First Quarter Net Sales Summary – Fiscal 2012


U.S. dollars, in millions

Total Net Sales Change %

Comparable Store Sales Change % (c)


Current Year

Prior Year


Current Year

Prior Year

Total Company

  $   586.6(a)

$     580.4(a)

1.1%



Total Retail Segment

$   536.7

$     520.7

3.1%



   MW

371.5

354.7

4.7%

3.8%

10.8%

   K&G

103.1

106.7

(3.4%)

(4.0%)

9.3%

   Moores Canada

55.5

53.2

4.3%

        7.1% (b)

     6.0% (b)

Corporate Apparel Segment

$     49.9

$       59.7

(16.4%)









(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.

 

PER SHARE INFORMATION

GAAP diluted earnings per share was $0.52 for the first quarter ended April 28, 2012.  This compares to GAAP diluted earnings per share guidance given March 7, 2012 of $0.53 to $0.54.  In first quarter fiscal 2011, GAAP diluted earnings per share was $0.52 and adjusted diluted earnings per share was $0.53 after excluding $0.7 million ($0.4 million after tax or $0.01 per diluted share outstanding) in acquisition related integration costs.

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

FIRST Quarter HIGHLIGHTS

Total Company net sales increased 1.1% for the quarter.    

  • Retail segment sales increased 3.1%. 
    • This increase was due mainly to increased retail clothing product sales.  Men's Wearhouse sales increased due to an increase in average unit selling prices that more than offset fewer units sold per transaction and average number of transactions per store.  Moores sales increased due to an increase in both average unit selling prices and units sold per transaction that more than offset a decrease in the average number of transactions per store.  K&G sales declined due to lower average unit selling prices that offset increases in both units sold per transaction and average number of transactions per store.
    • Tuxedo rental services revenues had U.S. comparable store sales of 8.1% driven primarily by an increase in units rented.
  • Corporate apparel segment sales decreased 16.4% primarily due to later launch dates for customer new uniform programs in fiscal 2012 as compared to fiscal 2011.

Total Company gross margin increased 3.0% to $254.0 million and as a percentage of sales increased 82 basis points.

  • Retail segment total gross margin, as a percentage of related net sales, increased 69 basis points.  This increase was primarily attributable to higher product margins driven by higher average unit selling prices in the U.S. and Canada.
  • Corporate apparel segment gross margin, as a percentage of related sales, decreased from 27.8% in the first quarter of 2011 to 26.5% in the first quarter of 2012 due mainly to the decreased new uniform program sales by our UK-based operations.

Total Company SG&A expenses increased compared to prior year adjusted SG&A by 5.3% to $213.1 million(1) and as a percentage of sales increased 147 basis points.

  • The quarter over quarter increase was primarily due to payroll related costs and advertising. Increased investments in payroll to support store growth, merchandising initiatives and further development of ecommerce put in place during the second half of the prior fiscal year caused the increase in SG&A to be more heavily weighted in the first quarter of 2012.

Net earnings decreased compared to prior year adjusted net earnings by 3.5% to $26.9 million(1) and as a percentage of sales decreased 22 basis points. 

Total inventories increased 16.4% primarily to replenish comparatively oversold levels in the prior year as we embarked on a more aggressive promotional cadence.    

Total cash and cash equivalents at quarter end were $118.7 million.

During the quarter, the Company repurchased 0.9 million shares for a total of $33.9 million.

(1) Adjusted SG&A and adjusted operating earnings for first quarter 2011 excludes $0.7 million in acquisition related integration costs.

2012 FINANCIAL GUIDANCE

For the fiscal year (which is a 53-week year under the retail calendar), the Company expects GAAP diluted earnings per share in a range of $2.70 to $2.78, an increase of 13% to 17% over the prior year adjusted diluted earnings per share.  For the second quarter, GAAP diluted earnings per share is expected to be in a range of $1.12 to $1.13, a 1% to 2% increase over the prior year adjusted diluted earnings per share.

Updated forecasted operating highlights for the year include the following:

  • Several seasonal shifts in the fiscal year calendar are expected to impact the quarterly sales results of the Company's tuxedo rental business.  Specifically, the calendar shift of the Easter Holiday favorably impacted the first quarter and is expected to negatively impact the second quarter.   The anniversary of the calendar driven peak rental period that occurred in November 2011 (11-11-11) is expected to favorably impact third quarter 2012 and negatively impact fourth quarter 2012. 
  • Corporate apparel sales declined in the first quarter and are expected to decline in the second quarter largely offset by increases in the third and fourth quarters as the Company's UK operations anniversary customer new uniform programs in fiscal 2011 and initiation of new customer programs in fiscal 2012.  The full year decrease is primarily the result of a net reduction in customer new uniform programs compared to fiscal 2011 and a weaker currency conversion rate of the pound sterling to the US dollar.   
  • Gross margins are planned to continue to increase and result largely from higher average unit selling prices and continued occupancy cost leverage.
  • On a 52-week basis, SG&A expense is expected to increase in the 3.1% to 3.6% range over prior year adjusted SG&A representing modest leverage, as a percent of sales.  The seasonality of that cost increase throughout the year will vary significantly by quarter.
    • The annual increase was more heavily weighted in the first quarter driven by increased investments in payroll put in place during the second half of the prior fiscal year as well as increased marketing expenses in fiscal 2012.
    • The rate of SG&A growth will diminish to the low single digit range for the second and third quarter stemming from 1) a moderation of payroll cost increases and 2) realization of cost synergies from the integration of the Alexandra and Dimension businesses in the UK in the prior year.
    • Lastly, SG&A increases in the fourth quarter on a 13-week basis are expected to be flat to up 1% as the Company anniversaries higher incentive compensation expenses in the prior year. 
  • New store growth includes up to 29 new Men's Wearhouse stores, three new Moores stores and one new K&G store. We also expect to close up to 47 Men's Wearhouse and Tux stores and two K&G stores.
  • Capital expenditures are anticipated to be in the range of $113.0 to $120.0 million for 2012.  This amount includes the cost of new and remodeled stores, the purchase of office space to be used to consolidate our California office locations and investment in other corporate assets.

Guidance

Guidance

FY 2012 (4) (5)

2Q FY 2012 (4)




Total Sales Increase

4.0% to 5.0%

0.75% to 1.25%

Comparable Store Sales Growth (1)



     MW (2)

 +3% to +4%

+3% to +4%

     K&G

-1% to -2%

-1% to -2%

     Moores

+2% to +3%

flat to +1%

Corporate Apparel Sales Decrease

-1% to -2%

-17% to -18%

Change in Gross Margin as Percent of Sales

+0.65% to +0.70%

+0.65% to +0.75%

Increase in S G & A (3)

+4.6% to +5.1%

+3.9% to +4.4%

Effective Tax Rate

34.6%

35.2%

Weighted Average Shares Outstanding (millions)

51.200

51.140

GAAP Diluted EPS (6)

$2.70 to $2.78

$1.12 to $1.13

Footnotes to Guidance:

  1. All comparable store information is based on a 52-week comparable time period.
  2. Includes an assumed U.S. comparable store increase in tuxedo rental revenues of 5% to 6% for the full year FY 2012 and an increase of 3% to 4% in 2Q FY 2012. 
  3. Excludes acquisition related integration costs and impairment charges incurred in prior periods. 
  4. Foreign exchange conversion rates (average) for the remainder of the fiscal year (Q2 through Q4) is 1.565 for the US dollar to the Pound and 1.000 for the US Dollar to the Canadian Dollar.
  5. Fiscal 2012 is a 53-week year with an extra week included in the fourth quarter.  Diluted earnings per share from the extra week are estimated at $0.02.
  6. Reflects the dilutive effect of participating securities, which approximates $0.04 for the full year and $0.015 for the second quarter.

CONFERENCE CALL AND WEBCAST INFORMATION

At 5:00 p.m. Eastern time on Wednesday, June 6, 2012, Company management will host a conference call and real time webcast to review the fiscal first quarter 2012 results and its outlook for the fiscal second quarter and full year 2012.

To access the conference call, dial 480-629-9771.  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 June 13, 2012 by calling 303-590-3030 and entering the access code of 4539048#, or a webcast archive will be available free on the website for approximately 90 days.

STORE INFORMATION


April 28, 2012

    April 30, 2011

 January 28, 2012








Number of Stores

Sq. Ft.

(000's)

Number of Stores

Sq. Ft.

(000's)

Number of Stores

Sq. Ft.

(000's)








Men's Wearhouse

611

3,482.3

587

3,340.0

607

3,462.7








Men's Wearhouse and Tux

336

463.3

382

528.4

343

474.6








Moores, Clothing for Men

117

741.9

117

737.4

117

741.7








K&G (a)

98

2,329.2

101

2,392.4

99

2,351.2








Total

1,162

7,016.7

1,187

6,998.2

1,166

7,030.2










(a) 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 1,162 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.  Most 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 UK. 

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 28, 2012.

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

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

April 28, 2012 AND April 30, 2011

(In thousands, except per share data)











Three Months Ended


Variance



% of


% of




Basis


2012

Sales

2011

Sales


Dollar

%

Points










Net sales:









          Retail clothing product

$    420,469

71.68%

$  410,261

70.69%


$10,208

2.49%

0.99

          Tuxedo rental services

78,489

13.38%

73,141

12.60%


5,348

7.31%

0.78

          Alteration and other services   

37,734

6.43%

37,309

6.43%


425

1.14%

0.00

               Total retail sales

536,692

91.50%

520,711

89.72%


15,981

3.07%

1.78

               Corporate apparel clothing product sales

49,882

8.50%

59,673

10.28%


(9,791)

(16.41%)

(1.78)

                    Total net sales

586,574

100.00%

580,384

100.00%


6,190

1.07%

0.00










                   Total cost of sales

332,525

56.69%

333,751

57.51%


(1,226)

(0.37%)

(0.82)










Gross margin (a):









        Retail clothing product

231,863

55.14%

222,888

54.33%


8,975

4.03%

0.82

        Tuxedo rental services

67,476

85.97%

63,334

86.59%


4,142

6.54%

(0.62)

        Alteration and other services

10,176

26.97%

11,008

29.50%


(832)

(7.56%)

(2.54)

        Occupancy costs

(68,698)

(12.80%)

(67,171)

(12.90%)


(1,527)

(2.27%)

0.10

               Total retail gross margin

240,817

44.87%

230,059

44.18%


10,758

4.68%

0.69

               Corporate apparel clothing product margin

13,232

26.53%

16,574

27.77%


(3,342)

(20.16%)

(1.25)

                   Total gross margin

254,049

43.31%

246,633

42.49%


7,416

3.01%

0.82










Selling, general and administrative expenses

213,102

36.33%

202,996

34.98%


10,106

4.98%

1.35










Operating income

40,947

6.98%

43,637

7.52%


(2,690)

(6.16%)

(0.54)










Net interest

(305)

(0.05%)

(268)

(0.05%)


(37)

13.81%

(0.01)










Earnings before income taxes

40,642

6.93%

43,369

7.47%


(2,727)

(6.29%)

(0.54)










Provision for income taxes

14,062

2.40%

16,177

2.79%


(2,115)

(13.07%)

(0.39)










Net earnings including noncontrolling interest

26,580

4.53%

27,192

4.69%


(612)

(2.25%)

(0.15)










Net loss attributable to noncontrolling interest

304

0.05%

233

0.04%


71

30.47%

0.01










Net earnings attributable to common shareholders

$      26,884

4.58%

$     27,425

4.73%


$   (541)

(1.97%)

(0.14)










Net earnings per diluted common share attributable to common shareholders

$         0.52


$          0.52















Weighted average diluted common shares outstanding:

51,237


52,197
























(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)








April 28,


April 30,



2012


2011






ASSETS









Current assets:





Cash and cash equivalents

$           118,716


$            145,657


Accounts receivable, net

69,249


72,004


Inventories

606,522


521,082


Other current assets

66,392


67,911







   Total current assets

860,879


806,654

Property and equipment, net

367,628


329,592

Tuxedo rental product, net

112,368


95,180

Goodwill

89,230


91,021

Intangible assets, net

33,961


38,343

Other assets

4,745


7,642







   Total assets

$        1,468,811


$        1,368,432






LIABILITIES AND EQUITY









Current liabilities:





Accounts payable

$          159,058


$           153,144


Accrued expenses and other current liabilities

179,172


170,847


Income taxes payable

967


597







   Total current liabilities

339,197


324,588






Deferred taxes and other liabilities

100,935


70,736







   Total liabilities

440,132


395,324






Equity:





Preferred stock

-


-


Common stock

721


714


Capital in excess of par

368,025


343,846


Retained earnings

1,113,130


1,024,168


Accumulated other comprehensive income

44,647


52,793


Treasury stock, at cost

(510,615)


(461,760)







   Total equity attributable to common shareholders

1,015,908


959,761







Noncontrolling interest

12,771


13,347







   Total equity

1,028,679


973,108







    Total liabilities and equity

$        1,468,811


$       1,368,432

 

 

THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


FOR THE THREE MONTHS ENDED

April 28, 2012 AND April 30, 2011

(In thousands)








Three Months Ended



2012


2011






CASH FLOWS FROM OPERATING ACTIVITIES:










Net earnings including noncontrolling interest

$           26,580


$           27,192


Non-cash adjustments to net earnings:





   Depreciation and amortization

20,681


18,652


   Tuxedo rental product amortization

5,988


5,546


   Other

11,944


9,823


Changes in assets and liabilities

127


17,821







        Net cash provided by operating activities

65,320


79,034






CASH FLOWS FROM INVESTING ACTIVITIES:





Capital expenditures

(30,664)


(14,284)


Proceeds from sales of property and equipment

8


22







        Net cash used in investing activities

(30,656)


(14,262)






CASH FLOWS FROM FINANCING ACTIVITIES:





Proceeds from issuance of common stock

3,233


1,539


Cash dividends paid

(9,357)


(6,409)


Tax payments related to vested deferred stock units

(4,017)


(2,955)


Excess tax benefits from share-based plans

1,960


691


Purchase of treasury stock

(33,866)


(48,999)







        Net cash used in financing activities

(42,047)


(56,133)







Effect of exchange rate changes

793


647






INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(6,590)


9,286







Balance at beginning of period

125,306


136,371


Balance at end of period

$         118,716


$         145,657

SOURCE Men's Wearhouse

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