Men's Wearhouse Reports Fiscal 2010 First Quarter Results

- Q1 2010 GAAP diluted EPS was $0.26 compared with Q1 2009 GAAP diluted EPS of $0.10

- Company provides guidance for second quarter of fiscal 2010

- Conference call at 5:00 pm Eastern today

Jun 09, 2010, 16:01 ET from Men's Wearhouse

HOUSTON, June 9 /PRNewswire-FirstCall/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the first quarter ended May 1, 2010.

First Quarter Sales Summary – Fiscal 2010

U.S. dollars, in millions

Total Sales Change %

Comparable Store Sales Change %

Current Year

Prior Year

Current Year

Prior Year

Total Company

$   473.5

$    464.1

2.0%

MW

      $  318.3(a)

$   310.9(a)

2.4%

     2.4% (b)

   - 7.0% (b)

K&G

$     98.3

$    104.5

- 6.0%

- 4.9%

2.3%

 United States

$   426.1

$    425.0

0.2%

0.5%

- 4.7%

Moores

$     47.4

$      39.1

21.3%

      0.2% (c)

  - 4.3% (c)

(a)  Total sales from retail stores and ecommerce.

(b)  Comparable store sales do not include ecommerce.  

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

Diluted earnings per share were $0.26 for the first quarter ended May 1, 2010.  This compares to diluted earnings per share guidance given March 10, 2010 of $0.12 to $0.16.  Prior year first quarter GAAP diluted earnings per share were $0.10.

FIRST Quarter REVIEW

  • Total Company sales increased 2.0% for the quarter.  
    • Clothing product sales, representing 77.8% of fiscal first quarter 2010 total net sales, increased 2.6% due mainly to a favorable change in the U.S./Canadian dollar exchange rate and an increase in Men's Wearhouse comparable store sales resulting from increased store traffic levels.
    • Tuxedo rental sales, representing 15.2% of fiscal first quarter 2010 total net sales, increased 1.0%.        
  • Gross margin before occupancy costs, as a percentage of total net sales, increased 105 basis points from 56.1% to 57.2%.  Clothing product margins, as a percentage of related sales, increased 122 basis points due primarily to different promotional offerings, as well as the mix of products on promotion, in 2010 compared to 2009 and lower product costs.  Tuxedo rental margins, as a percentage of related sales, increased 115 basis points due primarily to lower product costs.
  • Occupancy costs decreased, as a percentage of total net sales, by 92 basis points from 15.6% to 14.7%.  On an absolute dollar basis, occupancy costs decreased 4.0% from $72.6 million in the prior year to $69.7 million due primarily to lower depreciation costs.  
  • Selling, general, and administrative expenses were $179.7 million in the current year and increased 0.2% from the prior year's SG&A of $179.2.  As a percentage of total net sales, SG&A decreased 67 basis points from 38.6% to 37.9%.
  • Operating income was $21.4 million or 4.5% of total net sales compared to operating income of $8.8 million or 1.9% of total net sales for the same period last year.
  • Cash and cash equivalent balances as of the end of the first quarter of 2010 were $219.6 million.
  • Total inventories of $435.4 million declined 2.8% from the prior year first quarter of $448.0 million.
  • Current maturities of long-term debt were $45.8 million as of the end of the first quarter of 2010.

SECOND QUARTER 2010 GUIDANCE

  • For the second quarter of the fiscal year, the Company expects GAAP diluted earnings per share in a range of $0.75 to $0.78.  
  • The Company anticipates comparable store sales at its MW stores to increase in the low single digit range, at K&G a decrease in the low to mid single digit range and at Moores a flat to low single digit increase.  Included in this outlook is a low double digit increase in comparable store tuxedo rental revenues.  
  • Total gross profit for the second quarter is expected to increase in the high single digit range from the prior year.  Occupancy costs are expected to decrease in a low single digit range in absolute dollar terms.  Selling, general and administrative expenses are expected to increase in the high single digit range from the prior year excluding the $3.2 million gift card breakage income recognized in the prior year second quarter.  SG&A expenses excluding marketing expenses are expected to increase in the mid single digit range over the adjusted prior year quarter.  
  • This guidance includes an estimated effective tax rate of 37.5% for the second quarter and an estimated effective tax rate of 36.0% for the full year.
  • Fully diluted shares outstanding of 52.765 million are estimated for the second quarter.

UPDATED CONFERENCE CALL AND WEBCAST INFORMATION

At 5:00 p.m. Eastern time on Wednesday, June 9, 2010, Company management will host a conference call and real time web cast to review the fiscal first quarter and its outlook for the second quarter of fiscal 2010.    

To access the conference call, dial 480-629-9770. 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 16, 2010 by calling 303-590-3030 and entering the access code of 4307183#, or a webcast archive will be available free on the website for approximately 90 days.

STORE INFORMATION

May 1, 2010

May 2, 2009

January 30, 2010

Number of Stores

Sq. Ft.

(000's)

Number of Stores

Sq. Ft.

(000's)

Number of Stores

Sq. Ft.

(000's)

Men's Wearhouse

582

3,292.7

581

3,276.7

581

3,284.4

Men's Wearhouse and Tux

447

614.1

478

651.9

454

623.4

Moores, Clothing for Men

117

735.5

117

732.7

117

734.6

K&G (a)

106

2,465.6

108

2,488.4

107

2,475.6

Total

1,252

7,107.9

1,284

7,149.7

1,259

7,118.0

(a)  95, 94 and 94 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 1,252 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.  The Company operates websites at www.menswearhouse.com, www.mooresclothingformen.com and www.kgstores.com.

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 and other factors described in the Company's annual report on Form 10-K for the fiscal year ended January 30, 2010.

For additional information on Men's Wearhouse, please visit the Company's website at www.menswearhouse.com.

CONTACT:

Neill Davis, EVP & CFO, Men's Wearhouse  (281) 776-7000

Ken Dennard, DRG&E  (713) 529-6600

THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

FOR THE THREE MONTHS ENDED

May 1, 2010 AND May 2, 2009

(In thousands, except per share data)

Three Months Ended

Variance

% of

% of

Basis

2010

Sales

2009

Sales

Dollar

%

Points

Net sales:

         Clothing product

$ 368,371

77.80%

$ 359,062

77.36%

$ 9,309

2.59%

0.44

         Tuxedo rental services

72,154

15.24%

71,419

15.39%

735

1.03%

(0.15)

         Alteration and other services    

32,941

6.96%

33,653

7.25%

(712)

(2.12%)

(0.29)

              Total net sales

473,466

100.00%

464,134

100.00%

9,332

2.01%

0.00

Total cost of sales

272,394

57.53%

276,145

59.50%

(3,751)

(1.36%)

(1.96)

Gross margin (a)

201,072

42.47%

187,989

40.50%

13,083

6.96%

1.96

Selling, general and administrative expenses

179,650

37.94%

179,213

38.61%

437

0.24%

(0.67)

Operating income

21,422

4.52%

8,776

1.89%

12,646

144.10%

2.63

Net interest

(225)

(0.05%)

(160)

(0.03%)

(65)

(40.63%)

(0.01)

Earnings before income taxes

21,197

4.48%

8,616

1.86%

12,581

146.02%

2.62

Provision for income taxes

7,589

1.60%

3,360

0.72%

4,229

125.86%

0.88

Net earnings

$  13,608

2.87%

$    5,256

1.13%

$ 8,352

158.90%

1.74

Net earnings per diluted common share (b)

$      0.26

$      0.10

Weighted average diluted common shares outstanding:

52,628

51,955

(a)  Gross margin as a percentage of related sales:

Three Months Ended

Variance

2010

% of

2009

% of

Basis

Related Sales

Related Sales

Dollar

%

Points

Clothing margin

$   201,058

54.58%

$   191,605

53.36%

$   9,453

4.93%

1.22

Tuxedo margin

60,828

84.30%

59,387

83.15%

1,441

2.43%

1.15

Alteration and other services margin

8,877

26.95%

9,563

28.42%

(686)

(7.17%)

(1.47)

Occupancy costs

(69,691)

(14.72%)

(72,566)

(15.63%)

2,875

3.96%

0.92

Gross margin

$  201,072

42.47%

$  187,989

40.50%

$ 13,083

6.96%

1.96

(b)  Calculated based on net earnings less net earnings allocated to participating securities.

THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

May 1,

May 2,

2010

2009

ASSETS

Current assets:

Cash and cash equivalents

$      219,562

$      107,538

Short-term investments

-

17,707

Accounts receivable, net

24,640

24,858

Inventories

435,351

448,018

Other current assets

68,830

59,752

  Total current assets

748,383

657,873

Property and equipment, net

336,771

378,510

Tuxedo rental product, net

101,731

120,083

Goodwill

60,780

57,622

Other assets, net

16,690

12,439

  Total assets

$   1,264,355

$   1,226,527

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$       99,720

$     142,984

Accrued expenses and other current liabilities

136,183

127,868

Income taxes payable

2,826

3,461

Current maturities of long-term debt

45,780

-

  Total current liabilities

284,509

274,313

Long-term debt

-

39,213

Deferred taxes and other liabilities

62,741

63,955

  Total liabilities

347,250

377,481

Shareholders' equity:

Preferred stock

-

-

Common stock

707

702

Capital in excess of par

329,030

316,034

Retained earnings

962,834

925,881

Accumulated other comprehensive income

37,304

19,055

Treasury stock, at cost

(412,770)

(412,626)

   Total shareholders' equity

917,105

849,046

  Total liabilities and equity

$  1,264,355

$  1,226,527

THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

FOR THE THREE MONTHS ENDED

May 1, 2010 AND May 2, 2009

(In thousands)

Three Months Ended

2010

2009

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings

$          13,608

$           5,256

Non-cash adjustments to net earnings:

  Depreciation and amortization

18,690

22,222

  Tuxedo rental product amortization

6,978

7,644

  Other

9,335

7,867

Changes in assets and liabilities

663

20,313

       Net cash provided by operating activities

49,274

63,302

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(11,099)

(15,035)

       Net cash used in investing activities

(11,099)

(15,035)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock

783

506

Payments on revolving credit facility

-

(25,000)

Cash dividends paid

(4,756)

(3,664)

Other financing activities

(2,037)

(1,697)

       Net cash used in financing activities

(6,010)

(29,855)

Effect of exchange rate changes

1,379

1,714

INCREASE IN CASH AND CASH EQUIVALENTS

33,544

20,126

Balance at beginning of period

186,018

87,412

Balance at end of period

$        219,562

$        107,538

SOURCE Men's Wearhouse



RELATED LINKS

http://www.menswearhouse.com