Men's Wearhouse Reports Fiscal 2011 First Quarter Results
- Q1 2011 GAAP diluted earnings per share was $0.52 and adjusted diluted earnings per share was $0.53
- Company provides guidance for second quarter and updated guidance for full year of fiscal 2011
- Conference call at 5:00 pm Eastern today
HOUSTON, June 8, 2011 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the first quarter ended April 30, 2011.
First 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 | $ 580.4(a) | $ 473.5(a) | 22.6% | |||
Total Retail Segment | $ 520.7 | $ 469.8 | 10.8% | |||
MW | 354.7 | 318.3 | 11.4% | 10.8% | 2.4% | |
K&G | 106.7 | 98.3 | 8.6% | 9.3% | - 4.9% | |
Moores Canada | 53.2 | 47.4 | 12.2% | 6.0% (b) | 0.2% (b) | |
Corporate Apparel Segment | $ 59.7 | $ 3.7 | 1,521.1% | |||
(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 $0.52 for the first quarter ended April 30, 2011. Adjusted diluted earnings per share were $0.53 after excluding $0.7 million ($0.4 million after tax or $0.01 per diluted share outstanding) in acquisition integration expenses. This compares to adjusted diluted earnings per share updated guidance given May 5, 2011 of $0.47 to $0.50 and original guidance given March 9, 2011 of $0.27 to $0.30. In first quarter of 2010, GAAP diluted earnings per share were $0.26.
FIRST Quarter REVIEW
Total Company net sales increased 22.6% for the quarter.
In our retail segment, comparable store sales increased at each of our brands due to increased units per transaction, higher average ticket and, at K&G and Moores, an increase in customer traffic. There was also a 3.9% comparable store sales increase in tuxedo rental services revenues.
Corporate apparel segment net sales increased $56.0 million to $59.7 million for the quarter compared to the same prior year quarter. The increase was primarily due to US$54.0 million in revenues from our acquisitions of Dimensions and Alexandra in the UK on August 6, 2010.
Total gross margin, as a percentage of total net sales, was flat at 42.5%. Occupancy costs as a percent of sales decreased, alteration margin as a percent of sales increased and tuxedo rental margins increased. These increases were offset by a decrease in retail segment clothing margin as a percent of sales, which resulted mainly from increased promotions, and the increased mix of the lower margin corporate apparel segment.
Selling, general and administrative expenses were $203.0 million for the first quarter and increased 13.0% from the prior year's SG&A of $179.7 million. Excluding $0.7 million in acquisition integration costs, first quarter SG&A expenses were $202.3 million or an increase of 12.6% to the prior year quarter. Adjusted SG&A related to the acquired UK operations resulted in an 8.0% increase. The remaining 4.6% adjusted increase was primarily due to increased payroll related costs and increased expenses associated with increased sales. As a percentage of total net sales, adjusted SG&A decreased 308 basis points from 37.9% to 34.9%.
Operating income was $43.6 million. Excluding $0.7 million in acquisition integration costs, operating income was $44.3 million or 7.6% of total net sales. This compares with the prior year operating income of $21.4 million or 4.5% of total net sales.
The financial results of the combined UK operations, excluding acquisition integration costs, were $0.01 accretive to the Company's first quarter diluted earnings per share. Integration costs were $0.7 million ($0.4 million after tax or $0.01 per diluted share outstanding).
Total inventories of $521.1 million increased 18.8% from the prior year first quarter of $438.7 million. Excluding inventory from the acquired UK operations, inventories decreased 1.1%.
The Company had no borrowings under its bank credit facility at the end of first quarter fiscal 2011.
During the quarter, the Company repurchased 1.8 million shares for a total of $49.0 million.
2011 GUIDANCE
For the fiscal year, GAAP diluted earnings per share is expected to be in a range of $2.00 to $2.08. Adjusted diluted earnings per share are expected to be in a range of $2.04 to $2.12. Adjusted earnings per share exclude acquisition integration expenses of $3.5 million ($2.2 million after tax or $0.04 per diluted share outstanding).
For the second quarter of the fiscal year, GAAP diluted earnings per share is expected to be in a range of $1.01 to $1.04. Adjusted diluted earnings per share are expected to be in a range of $1.02 to $1.05. Adjusted earnings per share exclude acquisition integration expenses of $0.9 million ($0.6 million after tax or $0.01 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 second quarter diluted earnings per share.
Guidance | Guidance | ||
FY 2011 | 2Q FY 2011 | ||
Total Sales Increase | 12% to 13% (1) | 20% to 21% (1) | |
Comparable Store Sales Growth (2) | |||
MW | +5% to +7% | +8% to +9% | |
K&G | +3% to +4% | +2% to +3% | |
Moores | +2% to +3% | +6% to +7% | |
Gross Profit Margin | 43.05% to 43.25% (3) | 46.65% to 46.80% (3) | |
S G & A (as % of Sales) | 36.00% to 36.20% (4) | 33.65% to 33.80% (4) | |
Effective Tax Rate | 35.7% | 35.9% | |
Weighted Average Shares Outstanding (millions) | 52.0 | 51.8 | |
GAAP EPS | $2.00 to $2.08 | $1.01 to $1.04 | |
Adjusted EPS | $2.04 to $2.12 (4) | $1.02 to $1.05 (4) | |
Foreign Exchange Conversion (avg.) | |||
US Dollar to GBP | 1.60 | 1.59 | |
US Dollar to Canadian Dollar | 1.03 | 1.03 | |
Footnotes to Guidance: | ||
1. | Includes US$224 million for full year FY 2011 and US$63 million for 2Q FY2011 of sales from acquired operations of Dimensions and Alexandra. | |
2. | Includes an assumed U.S. comparable store increase in tuxedo rental revenues of 7% to 8% for the full year FY 2011 and a 6% to 7% increase in 2Q FY 2011. | |
3. | Occupancy costs are expected to be flat for full year FY 2011 and decrease low single digit for 2Q FY 2011. | |
4. | Excludes acquisition integration costs. | |
CONFERENCE CALL AND WEBCAST INFORMATION
At 5:00 p.m. Eastern time on Wednesday, June 8, 2011, Company management will host a conference call and real time webcast to review the first quarter of fiscal 2011 and its outlook for the second quarter and full year of fiscal 2011.
To access the conference call, dial 480-629-9819. 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 15, 2011 by calling 303-590-3030 and entering the access code of 4444587#, or a webcast archive will be available free on the website for approximately 90 days.
STORE INFORMATION | |||||||
April 30, 2011 | May 1, 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 | 587 | 3,340.0 | 582 | 3,292.7 | 585 | 3,319.0 | |
Men's Wearhouse and Tux | 382 | 528.4 | 447 | 614.1 | 388 | 535.7 | |
Moores, Clothing for Men | 117 | 737.4 | 117 | 735.5 | 117 | 737.8 | |
K&G (a) | 101 | 2,392.4 | 106 | 2,465.6 | 102 | 2,394.1 | |
Total | 1,187 | 6,998.2 | 1,252 | 7,107.9 | 1,192 | 6,986.6 | |
(a) | 91, 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 1,187 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.
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 In thousands, except per share data (Unaudited) | |||||||||
FOR THE THREE MONTHS ENDED | |||||||||
April 30, 2011 AND May 1, 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 | $ 410,261 | 70.69% | $ 364,690 | 77.03% | $ 45,571 | 12.50% | (6.34) | ||
Tuxedo rental services | 73,141 | 12.60% | 72,154 | 15.24% | 987 | 1.37% | (2.64) | ||
Alteration and other services | 37,309 | 6.43% | 32,941 | 6.96% | 4,368 | 13.26% | (0.53) | ||
Total retail sales | 520,711 | 89.72% | 469,785 | 99.22% | 50,926 | 10.84% | (9.50) | ||
Corporate apparel clothing product sales | 59,673 | 10.28% | 3,681 | 0.78% | 55,992 | 1,521.11% | 9.50 | ||
Total net sales | 580,384 | 100.00% | 473,466 | 100.00% | 106,918 | 22.58% | 0.00 | ||
Total cost of sales | 333,751 | 57.51% | 272,463 | 57.55% | 61,288 | 22.49% | (0.04) | ||
Gross margin (a): | |||||||||
Retail clothing product | 222,888 | 54.33% | 200,100 | 54.87% | 22,788 | 11.39% | (0.54) | ||
Tuxedo rental services | 63,334 | 86.59% | 60,828 | 84.30% | 2,506 | 4.12% | 2.29 | ||
Alteration and other services | 11,008 | 29.50% | 8,877 | 26.95% | 2,131 | 24.01% | 2.56 | ||
Occupancy costs | (67,171) | (12.90%) | (69,691) | (14.83%) | 2,520 | 3.62% | 1.93 | ||
Total retail gross margin | 230,059 | 44.18% | 200,114 | 42.60% | 29,945 | 14.96% | 1.58 | ||
Corporate apparel clothing product margin | 16,574 | 27.77% | 889 | 24.15% | 15,685 | 1,764.34% | 3.62 | ||
Total gross margin | 246,633 | 42.49% | 201,003 | 42.45% | 45,630 | 22.70% | 0.04 | ||
Selling, general and administrative expenses | 202,996 | 34.98% | 179,650 | 37.94% | 23,346 | 13.00% | (2.97) | ||
Operating income | 43,637 | 7.52% | 21,353 | 4.51% | 22,284 | 104.36% | 3.01 | ||
Net interest | (268) | (0.05%) | (225) | (0.05%) | (43) | (19.11%) | 0.00 | ||
Earnings before income taxes | 43,369 | 7.47% | 21,128 | 4.46% | 22,241 | 105.27% | 3.01 | ||
Provision for income taxes | 16,177 | 2.79% | 7,566 | 1.60% | 8,611 | 113.81% | 1.19 | ||
Net earnings including noncontrolling interest | 27,192 | 4.69% | 13,562 | 2.86% | 13,630 | 100.50% | 1.82 | ||
Net loss attributable to noncontrolling interest | 233 | 0.04% | - | 0.00% | 233 | 100.00% | 0.04 | ||
Net earnings attributable to common shareholders | $ 27,425 | 4.73% | $ 13,562 | 2.86% | $ 13,863 | 102.22% | 1.86 | ||
Net earnings per diluted common share attributable to common shareholders | $ 0.52 | $ 0.26 | |||||||
Weighted average diluted common shares outstanding: | 52,197 | 52,628 | |||||||
(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 30, | May 1, | ||||
2011 | 2010 | ||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ 145,657 | $ 219,562 | |||
Accounts receivable, net | 72,004 | 24,640 | |||
Inventories | 521,082 | 438,671 | |||
Other current assets | 67,911 | 67,510 | |||
Total current assets | 806,654 | 750,383 | |||
Property and equipment, net | 329,592 | 336,771 | |||
Tuxedo rental product, net | 95,180 | 101,731 | |||
Goodwill | 91,021 | 60,780 | |||
Intangible assets, net | 38,343 | 3,225 | |||
Other assets | 7,642 | 13,465 | |||
Total assets | $ 1,368,432 | $ 1,266,355 | |||
LIABILITIES AND EQUITY | |||||
Current liabilities: | |||||
Accounts payable | $ 153,144 | $ 99,720 | |||
Accrued expenses and other current liabilities | 170,847 | 136,183 | |||
Income taxes payable | 597 | 2,826 | |||
Current maturities of long-term debt | - | 45,780 | |||
Total current liabilities | 324,588 | 284,509 | |||
Deferred taxes and other liabilities | 70,736 | 62,741 | |||
Total liabilities | 395,324 | 347,250 | |||
Equity: | |||||
Preferred stock | - | - | |||
Common stock | 714 | 707 | |||
Capital in excess of par | 343,846 | 329,030 | |||
Retained earnings | 1,024,168 | 964,834 | |||
Accumulated other comprehensive income | 52,793 | 37,304 | |||
Treasury stock, at cost | (461,760) | (412,770) | |||
Total equity attributable to common shareholders | 959,761 | 919,105 | |||
Noncontrolling interest | 13,347 | - | |||
Total equity | 973,108 | 919,105 | |||
Total liabilities and equity | $ 1,368,432 | $ 1,266,355 | |||
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||
FOR THE THREE MONTHS ENDED | |||||
April 30, 2011 AND May 1, 2010 | |||||
(In thousands) | |||||
Three Months Ended | |||||
2011 | 2010 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net earnings including noncontrolling interest | $ 27,192 | $ 13,562 | |||
Non-cash adjustments to net earnings: | |||||
Depreciation and amortization | 18,652 | 18,690 | |||
Tuxedo rental product amortization | 5,546 | 6,978 | |||
Other | 9,823 | 9,312 | |||
Changes in assets and liabilities | 17,821 | 732 | |||
Net cash provided by operating activities | 79,034 | 49,274 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Capital expenditures | (14,284) | (11,099) | |||
Proceeds from sales of property and equipment | 22 | - | |||
Net cash used in investing activities | (14,262) | (11,099) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from issuance of common stock | 1,539 | 783 | |||
Cash dividends paid | (6,409) | (4,756) | |||
Tax payments related to vested deferred stock units | (2,955) | (2,656) | |||
Excess tax benefits from share-based plans | 691 | 763 | |||
Purchase of treasury stock | (48,999) | (144) | |||
Net cash used in financing activities | (56,133) | (6,010) | |||
Effect of exchange rate changes | 647 | 1,379 | |||
INCREASE IN CASH AND CASH EQUIVALENTS | 9,286 | 33,544 | |||
Balance at beginning of period | 136,371 | 186,018 | |||
Balance at end of period | $ 145,657 | $ 219,562 | |||
SOURCE The Men's Wearhouse
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