2014

Men's Wearhouse Reports Fiscal 2013 First Quarter Results - Q1 2013 diluted earnings per share was $0.65, compares to prior year diluted earnings per share of $0.52

- Company reaffirms EPS guidance for fiscal full year 2013

FREMONT, Calif., June 12, 2013 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the fiscal first quarter ended May 4, 2013.

FIRST QUARTER RESULTS

Net earnings for the fiscal 2013 first quarter were $33.1 million, or $0.65 diluted earnings per share, compared to net earnings of $26.9 million, or $0.52 diluted earnings per share last year.  The Company estimates that approximately $0.10 of the increase is attributable to a tuxedo prom season shift from the second quarter.  This shift is primarily caused by an earlier Easter. 

Total net sales for the fiscal 2013 first quarter increased 5.1% to $616.5 million from $586.6 million for the same prior year period.  Retail segment sales for the quarter increased by 4.4% or $23.5 million and corporate apparel sales increased by 13.0% or $6.5 million as compared to the prior year quarter.

The consolidated total gross margin was up $23.9 million or 9.4% with the total gross margin rate increasing 177 basis points primarily because of the favorable penetration of tuxedo revenues.  The retail segment total gross margin was up 8.2% and the corporate apparel gross margin increased 31.6%. 

SG&A expenses increased by $12.3 million or 5.8% and increased 22 basis points primarily due to higher store and non-store payroll related costs, including increased medical benefit costs, and higher advertising expense.

The table below is a summary of net sales for fiscal 2013 first quarter.  The dollars shown are U.S. dollars in millions and due to rounded numbers may not sum.  The Moores comparable store sales change is based on the Canadian dollar.  Comparable sales exclude the net sales of a store for any month of one period if the store was not open throughout the same month of the prior period and include e-commerce net sales, beginning in fiscal 2013. 

Because fiscal 2012 was a 53 week year, comparable store sales for the current year are shown on a trailing 52 week basis, comparing the most relevant time periods, as well as on a fiscal period basis.  The fiscal period basis is higher than the trailing basis comparison primarily due to the favorable calendar shift for prom tuxedo rental revenues into the fiscal first quarter.  There will be an offsetting unfavorable calendar shift primarily in the second quarter resulting in a mostly neutral full year impact.


First Quarter Net Sales Summary – Fiscal 2013



Net Sales

Comparable Store Sales Change


Net Sales Change

Current
Quarter

Current
Quarter

Trailing

Current
Quarter
Fiscal

Prior Year
Quarter
Fiscal

Total Retail Segment

4.4%

$23.5

$560.2




       Men's Wearhouse

8.2%

$30.4

$401.8

1.6%

7.1%

3.8%

       Moores

(3.1%)

($1.7)

$53.8

(7.0%)

(2.8%)

7.1%

       K&G

(5.6%)

($5.8)

$97.3

(6.7%)

(5.3%)

(4.0%)

       MW Cleaners

8.7%

$0.6

$7.2











Corporate Apparel Segment

13.0%

$6.5

$56.4











Total Company

5.1%

$30.0

$616.5












Doug Ewert, Men's Wearhouse president and chief executive officer, stated, "Net sales at our core flagship brand Men's Wearhouse stores, which represented 65% of our total first quarter sales, got off to a slow start in February and were comping negatively until about President's weekend.  After that we began to pick up in both clothing sales and tuxedo revenues."  Men's Wearhouse sales were up 8.2% over last year's first quarter sales, and comparable store sales increased 1.6%.  The higher margin tuxedo rental revenues comparable store sales increased 6.5% in the first quarter of 2013 driven mainly by the Easter holiday shift allowing for an earlier prom season that increased rental rates, unit rentals, and sales of tuxedo accessories.  Additionally, an increase in clothing product average unit retails more than offset decreases in units sold per transaction and average transactions per store.

Moores, the Canadian retail brand, was 9% of the total first quarter sales and had a comparable store sales decrease of 7.0% due mainly to decreased average transactions per store and units sold per transaction.  K&G was 16% of the Company's total first quarter sales with a comparable store sales decrease of 6.7%, with lower average transactions per store and units sold per transaction offsetting an increase in average unit retails.  Ewert noted, "The decrease in the K&G comps were in-line with internal expectations for the quarter.  However, the Moores sales were below internal expectations as we are facing headwinds in Canada."  The Corporate Apparel segment, which represented 9% of total first quarter sales, had a sales increase of 13.0% due mainly to a higher level of customer-directed new uniform rollouts.

During the first quarter of fiscal 2013, the Company repurchased approximately 1.0 million shares for $33.0 million under our new $200.0 million share repurchase program announced in March 2013.  Additionally, on April 12, 2013, the Company amended and restated its credit facility as previously reported.

2013 GUIDANCE

The Company continues to expect diluted earnings per share in a range of $2.70 to $2.80.  However, the Company now expects Men's Wearhouse tuxedo rental revenue comparable store sales growth to come in slightly lower to a range of +4% to +5%.  Ewert stated, "The future reservations are running slightly below our initial expectations."  The Moores comparable store sales are now expected to be -2% to -3% on an annual basis as a result of a continued decrease in average transactions per store.  These decreases are being primarily offset by a favorable retail margin rate and lower SG&A expenses.

CONFERENCE CALL AND WEBCAST INFORMATION

At 9:00 a.m. Eastern time on Thursday, June 13, 2013, Company management will host a conference call and real time webcast to review fiscal 2013 first quarter results and its outlook for fiscal 2013.

To access the conference call, dial 480-629-9692.  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 20, 2013 by calling 303-590-3030 and entering the access code of 4619806#, or a webcast archive will be available free on the website for approximately 90 days.

STORE INFORMATION


May 4, 2013

April 28, 2012

 February 2, 2013


Number of Stores

Sq. Ft.

(000's)

Number of Stores

Sq. Ft.

(000's)

Number of Stores

Sq. Ft.

(000's)








Men's Wearhouse

644

3,680.5

611

3,482.3

638

3,650.0








Men's Wearhouse and Tux

281

384.6

336

463.3

288

395.1








Moores, Clothing for Men

120

764.4

117

741.9

120

763.5








K&G (a)

96

2,282.0

98

2,329.2

97

2,299.3








Total

1,141

7,111.5

1,162

7,016.7

1,143

7,107.9









(a)  92, 91 and 92 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 1,141 stores.  The Men's Wearhouse, Moores and K&G stores carry a full selection of suits, sport coats, furnishings and accessories in exclusive and non-exclusive merchandise brands 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, Alexandra and Yaffy 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 February 2, 2013.  For additional information on Men's Wearhouse, please visit the Company's websites at www.menswearhouse.com, www.mooresclothing.com, www.kgstores.com, www.twinhill.com, www.dimensions.co.uk and www.alexandra.co.uk

Contact:
Jon Kimmins, CFO
(510) 723-8639

Ken Dennard
Dennard ▪ Lascar Associates
(832) 594-4004
ken@dennardlascar.com

       

THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


FOR THE THREE MONTHS ENDED

May 4, 2013 AND April 28, 2012

(In thousands, except per share data)











Three Months Ended


Variance



% of


% of




Basis


2013

Sales

2012

Sales


Dollar

%

Points










Net sales:









          Retail clothing product

$    423,737

68.73%

$  420,469

71.68%


$    3,268

0.78%

(2.95)

          Tuxedo rental services

98,482

15.97%

78,489

13.38%


19,993

25.47%

2.59

          Alteration and other services   

37,962

6.16%

37,734

6.43%


228

0.60%

(0.28)

               Total retail sales

560,181

90.86%

536,692

91.50%


23,489

4.38%

(0.64)

               Corporate apparel clothing product sales

56,355

9.14%

49,882

8.50%


6,473

12.98%

0.64

                    Total net sales

616,536

100.00%

586,574

100.00%


29,962

5.11%

0.00










                   Total cost of sales

338,616

54.92%

332,525

56.69%


6,091

1.83%

(1.77)










Gross margin (a):









        Retail clothing product

238,254

56.23%

231,863

55.14%


6,391

2.76%

1.08

        Tuxedo rental services

83,984

85.28%

67,476

85.97%


16,508

24.46%

(0.69)

        Alteration and other services

9,544

25.14%

10,176

26.97%


(632)

(6.21%)

(1.83)

        Occupancy costs

(71,274)

(12.72%)

(68,698)

(12.80%)


(2,576)

(3.75%)

0.08

               Total retail gross margin

260,508

46.50%

240,817

44.87%


19,691

8.18%

1.63

               Corporate apparel clothing product margin

17,412

30.90%

13,232

26.53%


4,180

31.59%

4.37

                   Total gross margin

277,920

45.08%

254,049

43.31%


23,871

9.40%

1.77










Selling, general and administrative expenses

225,367

36.55%

213,102

36.33%


12,265

5.76%

0.22










Operating income

52,553

8.52%

40,947

6.98%


11,606

28.34%

1.54










Net interest

(223)

(0.04%)

(305)

(0.05%)


82

(26.89%)

0.02










Earnings before income taxes

52,330

8.49%

40,642

6.93%


11,688

28.76%

1.56










Provision for income taxes

19,374

3.14%

14,062

2.40%


5,312

37.78%

0.75










Net earnings including non-controlling interest

32,956

5.35%

26,580

4.53%


6,376

23.99%

0.81










Net loss attributable to non-controlling interest

135

0.02%

304

0.05%


(169)

55.59%

0.03










Net earnings attributable to common shareholders

$    33,091

5.37%

$  26,884

4.58%


$  6,207

23.09%

0.78










Net earnings per diluted common share attributable to common shareholders

$        0.65


$      0.52















Weighted-average diluted common shares outstanding:

50,788


51,237
























(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)








May 4,


April 28,



2013


2012






ASSETS









Current assets:





Cash and cash equivalents

$           155,099


$           118,716


Accounts receivable, net

64,468


69,249


Inventories

598,916


606,522


Other current assets

66,544


66,392







   Total current assets

885,027


860,879

Property and equipment, net

390,077


367,628

Tuxedo rental product, net

144,089


112,368

Goodwill

87,313


89,230

Intangible assets, net

31,357


33,961

Other assets

6,318


4,745







   Total assets

$         1,544,181


$         1,468,811






LIABILITIES AND EQUITY









Current liabilities:





Accounts payable

$           161,533


$           159,058


Accrued expenses and other current liabilities

185,133


179,172


Income taxes payable

6,366


967







   Total current liabilities

353,032


339,197






Deferred taxes and other liabilities

92,099


100,935







   Total liabilities

445,131


440,132






Equity:





Preferred stock

-


-


Common stock

728


721


Capital in excess of par

388,497


368,025


Retained earnings

1,214,087


1,113,130


Accumulated other comprehensive income

33,824


44,647


Treasury stock, at cost

(550,815)


(510,615)







   Total equity attributable to common shareholders

1,086,321


1,015,908







Non-controlling interest

12,729


12,771







   Total equity

1,099,050


1,028,679







   Total liabilities and equity

$         1,544,181


$         1,468,811

 

 

THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


FOR THE THREE MONTHS ENDED

May 4, 2013 AND April 28, 2012

(In thousands)








Three Months Ended



2013


2012






CASH FLOWS FROM OPERATING ACTIVITIES:










Net earnings including non-controlling interest

$           32,956


$           26,580


Non-cash adjustments to net earnings:





   Depreciation and amortization

21,355


20,681


   Tuxedo rental product amortization

7,328


5,988


   Other

10,339


11,944


Changes in operating assets and liabilities

(1,312)


127







        Net cash provided by operating activities

70,666


65,320






CASH FLOWS FROM INVESTING ACTIVITIES:





Capital expenditures

(25,127)


(30,664)


Proceeds from sales of property and equipment

38


8







        Net cash used in investing activities

(25,089)


(30,656)






CASH FLOWS FROM FINANCING ACTIVITIES:





Proceeds from issuance of common stock

1,359


3,233


Cash dividends paid

(9,263)


(9,357)


Deferred financing costs

(1,771)


-


Tax payments related to vested deferred stock units

(3,310)


(4,017)


Excess tax benefits from share-based plans

199


1,960


Repurchases of common stock

(33,009)


(33,866)







        Net cash used in financing activities

(45,795)


(42,047)







Effect of exchange rate changes

(746)


793






DECREASE IN CASH AND CASH EQUIVALENTS

(964)


(6,590)







Balance at beginning of period

156,063


125,306


Balance at end of period

$         155,099


$         118,716

 

SOURCE The Men's Wearhouse



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