Men's Wearhouse Reports Fiscal 2011 Second Quarter Results
- Q2 2011 GAAP diluted earnings per share was $1.09 and adjusted diluted earnings per share was $1.11
- Company provides guidance for third quarter and updated guidance for full year of fiscal 2011
- Conference call at 5:00 pm Eastern today
HOUSTON, Sept. 7, 2011 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the second quarter ended July 30, 2011.
Second Quarter Net Sales Summary – Fiscal 2011 | ||||||
U.S. dollars, in millions | Total Net | Comparable Store Sales | ||||
Current Year | Prior Year | Current Year | Prior Year | |||
Total Company | $ 655.5(a) | $ 537.0(a) | 22.1% | |||
Total Retail Segment | $ 586.0 | $ 532.4 | 10.1% | |||
MW | 407.0 | 367.4 | 10.8% | 10.9% | 2.7% | |
K&G | 92.5 | 87.6 | 5.7% | 5.4% | - 4.6% | |
Moores Canada | 80.3 | 71.6 | 12.3% | 4.4% (b) | 0.6% (b) | |
Corporate Apparel Segment | $ 69.5 | $ 4.6 | 1,401.3% | |||
Year-To-Date Net Sales Summary – Fiscal 2011 | ||||||
U.S. dollars, in millions | Total Net | Comparable Store Sales | ||||
Current Year | Prior Year | Current Year | Prior Year | |||
Total Company | $ 1,235.9(a) | $ 1,010.5(a) | 22.3% | |||
Total Retail Segment | $ 1,106.7 | $ 1,002.1 | 10.4% | |||
MW | 761.7 | 685.7 | 11.1% | 10.8% | 2.6% | |
K&G | 199.3 | 185.8 | 7.2% | 7.5% | - 4.8% | |
Moores Canada | 133.5 | 118.9 | 12.2% | 5.0% (b) | 0.5% (b) | |
Corporate Apparel Segment | $ 129.2 | $ 8.3 | 1,454.4% | |||
(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. | ||||||
GAAP diluted earnings per share were $1.09 for the second quarter ended July 30, 2011. Adjusted diluted earnings per share were $1.11 after excluding $0.7 million ($0.5 million after tax or $0.01 per diluted share outstanding) in acquisition integration expenses and $1.0 million ($0.7 million after tax or $0.01 per diluted share outstanding) for a non-cash asset impairment charge. This compares to adjusted diluted earnings per share guidance given June 8, 2011 of $1.02 to $1.05. In second quarter fiscal 2010, GAAP diluted earnings per share were $0.81 and adjusted diluted earnings per share were $0.84 after excluding $2.7 million ($1.7 million after tax or $0.03 per diluted share outstanding) in acquisition costs.
GAAP diluted earnings per share were $1.61 for the six months ended July 30, 2011. Adjusted diluted earnings per share were $1.64 after excluding $1.4 million ($0.9 million after tax or $0.02 per diluted share outstanding) in acquisition integration expenses and $1.0 million ($0.7 million after tax or $0.01 per diluted share outstanding) for a non-cash asset impairment charge. For the six months ended July 31, 2010, GAAP diluted earnings per share were $1.06 and adjusted diluted earnings per share were $1.09 after excluding $2.7 million ($1.7 million after tax or $0.03 per diluted share outstanding) in acquisition costs.
SECOND QUARTER HIGHLIGHTS
Total Company net sales increased 22.1% for the quarter. The Company's acquisition of Dimensions and Alexandra in the UK (completed on August 6, 2010 and included in the Company's corporate apparel segment) contributed $63.2 million of the consolidated sales increase or 11.8% of the consolidated growth rate.
In our retail segment, comparable store sales increased at each of our brands. The increases were primarily attributable to increased retail clothing product sales. Increases at Men's Wearhouse/Men's Wearhouse and Tux were driven by increases in average units sold per transaction and increased store traffic levels offsetting decreases in average unit retails. Increases at K&G were driven by increases in average unit retails and units sold per transaction offsetting decreases in store traffic levels. Increases at Moores were driven by increases in units sold per transaction offsetting decreases in average unit retails and store traffic levels. There was also a 6.2% comparable store sales increase in U.S. tuxedo rental services revenues.
Retail segment total gross margin, as a percentage of related net sales, increased 104 basis points. Lower product margins, which resulted mainly from increased promotions, were primarily offset by leverage of fixed occupancy costs.
Adjusted selling, general and administrative expenses increased 15.9%, but as a percentage of total net sales decreased 177 basis points. The Company's corporate apparel segment drove 7.6% of the quarter over quarter increase and the balance, 8.3%, was related to payroll costs and increased expenses associated with increased sales in the Company's retail segment.
Operating income was $89.0 million. Excluding $0.7 million in acquisition integration costs and $1.0 million for a non-cash asset impairment charge, operating income was $90.8 million or 13.9% of total net sales. This compares with the adjusted prior year operating income of $71.8 million or 13.4% of total net sales, which excluded $2.7 million in costs associated with the acquisitions.
The financial results of the combined UK operations, excluding acquisition integration costs, were $0.03 accretive to the Company's second quarter diluted earnings per share. Integration costs were $0.7 million ($0.5 million after tax or $0.01 per diluted share outstanding).
Total inventories of $547.9 million increased 30.3% from the prior year second quarter of $420.4 million. Excluding inventory from the acquired UK operations, inventories increased 9.9% to support increased retail sales and planned promotions in the second half of fiscal 2011.
The Company did not repurchase any shares of its common stock during the second quarter; however, the Company did repurchase 500,000 shares at an average cost of $29.98 per share subsequent to quarter end.
2011 GUIDANCE
For the fiscal year, GAAP diluted earnings per share is expected to be in a range of $2.07 to $2.14. Adjusted diluted earnings per share are expected to be in a range of $2.13 to $2.20. Adjusted earnings per share exclude acquisition integration expenses and impairment charges of $4.6 million ($3.0 million after tax or $0.06 per diluted share outstanding).
For the third quarter of the fiscal year, GAAP diluted earnings per share is expected to be in a range of $0.62 to $0.64. Adjusted diluted earnings per share are expected to be in a range of $0.64 to $0.66. Adjusted earnings per share exclude acquisition integration expenses of $1.6 million ($1.1 million after tax or $0.02 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 third quarter diluted earnings per share.
Guidance | Guidance | ||
FY 2011 | 3Q FY 2011 | ||
Total Sales Increase | 12.5% to 13.5% (1) | 3.0% to 4.0% (1) | |
Comparable Store Sales Growth (2) | |||
MW | +7% to +8% | +2% to +3% | |
K&G | +4% to +5% | +2% to +3% | |
Moores | +2% to +3% | flat to +1% | |
Gross Profit Margin | 43.25% to 43.45% (3) | 44.75% to 44.90% (3) | |
S G & A (as % of Sales) | 36.00% to 36.15% (4) | 35.75% to 35.90% (4) | |
Effective Tax Rate | 34.9% | 33.9% | |
Weighted Average Shares Outstanding (millions) | 51.7 | 51.4 | |
GAAP EPS (5) | $2.07 to $2.14 | $0.62 to $0.64 | |
Adjusted EPS (5) | $2.13 to $2.20 (4) | $0.64 to $0.66 (4) | |
Foreign Exchange Conversion (avg.) | |||
US Dollar to GBP | 1.63 | 1.63 | |
US Dollar to Canadian Dollar | 1.02 | 1.01 | |
Footnotes to Guidance:
- Includes US$225 million for full year FY 2011 and US$55 million for 3Q FY 2011 of sales from acquired operations of Dimensions and Alexandra.
- Includes an assumed U.S. comparable store increase in tuxedo rental revenues of 4% to 5% for the full year FY 2011 and a flat to 1% increase in 3Q FY 2011.
- Occupancy costs are expected to be flat to a low single digit decrease for full year FY 2011 and flat to 1% increase for 3Q FY 2011.
- Excludes acquisition integration costs and impairment charges.
- Reflects the dilutive effect of participating securities which approximates $0.01 for the third quarter and $0.03 for the full year.
CONFERENCE CALL AND WEBCAST INFORMATION
At 5:00 p.m. Eastern time on Wednesday, September 7, 2011, Company management will host a conference call and real time webcast to review the second quarter of fiscal 2011 and its outlook for the third 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 September 14, 2011 by calling 303-590-3030 and entering the access code of 4468052#, or a webcast archive will be available free on the website for approximately 90 days.
STORE INFORMATION
July 30, 2011 | July 31, 2010 | January 29, 2011 | |||||||
Number | Sq. Ft. (000's) | Number | Sq. Ft. (000's) | Number | Sq. Ft. (000's) | ||||
Men's Wearhouse | 591 | 3,364.3 | 584 | 3,307.0 | 585 | 3,319.0 | |||
Men's Wearhouse and Tux | 370 | 514.3 | 434 | 596.4 | 388 | 535.7 | |||
Moores, Clothing for Men | 117 | 738.9 | 117 | 735.7 | 117 | 737.8 | |||
K&G (a) | 100 | 2,369.9 | 104 | 2,426.7 | 102 | 2,394.1 | |||
Total | 1,178 | 6,987.4 | 1,239 | 7,065.8 | 1,192 | 6,986.6 | |||
(a) 90, 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 1,178 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 and Form 10-Q for the quarter ended April 30, 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 (Unaudited) | ||||||||||||
FOR THE THREE MONTHS ENDED | ||||||||||||
July 30, 2011 AND July 31, 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 | $ 401,789 | 61.29% | $ 357,599 | 66.59% | $ 44,190 | 12.36% | (5.30) | |||||
Tuxedo rental services | 148,267 | 22.62% | 142,462 | 26.53% | 5,805 | 4.07% | (3.91) | |||||
Alteration and other services | 35,978 | 5.49% | 32,299 | 6.01% | 3,679 | 11.39% | (0.53) | |||||
Total retail sales | 586,034 | 89.40% | 532,360 | 99.14% | 53,674 | 10.08% | (9.74) | |||||
Corporate apparel clothing product sales | 69,495 | 10.60% | 4,629 | 0.86% | 64,866 | 1,401.30% | 9.74 | |||||
Total net sales | 655,529 | 100.00% | 536,989 | 100.00% | 118,540 | 22.07% | 0.00 | |||||
Total cost of sales | 346,284 | 52.83% | 276,717 | 51.53% | 69,567 | 25.14% | 1.29 | |||||
Gross margin (a): | ||||||||||||
Retail clothing product | 222,893 | 55.48% | 200,507 | 56.07% | 22,386 | 11.16% | (0.60) | |||||
Tuxedo rental services | 128,105 | 86.40% | 120,426 | 84.53% | 7,679 | 6.38% | 1.87 | |||||
Alteration and other services | 8,596 | 23.89% | 7,853 | 24.31% | 743 | 9.46% | (0.42) | |||||
Occupancy costs | (68,410) | (11.67%) | (69,803) | (13.11%) | 1,393 | 2.00% | 1.44 | |||||
Total retail gross margin | 291,184 | 49.69% | 258,983 | 48.65% | 32,201 | 12.43% | 1.04 | |||||
Corporate apparel clothing product margin | 18,061 | 25.99% | 1,289 | 27.85% | 16,772 | 1,301.16% | (1.86) | |||||
Total gross margin | 309,245 | 47.17% | 260,272 | 48.47% | 48,973 | 18.82% | (1.29) | |||||
Selling, general and administrative expenses | 220,227 | 33.60% | 191,168 | 35.60% | 29,059 | 15.20% | (2.00) | |||||
Operating income | 89,018 | 13.58% | 69,104 | 12.87% | 19,914 | 28.82% | 0.71 | |||||
Net interest | (229) | (0.03%) | (275) | (0.05%) | 46 | 16.73% | (0.02) | |||||
Earnings before income taxes | 88,789 | 13.54% | 68,829 | 12.82% | 19,960 | 29.00% | 0.73 | |||||
Provision for income taxes | 31,519 | 4.81% | 25,867 | 4.82% | 5,652 | 21.85% | (0.01) | |||||
Net earnings including noncontrolling interest | 57,270 | 8.74% | 42,962 | 8.00% | 14,308 | 33.30% | 0.74 | |||||
Net earnings attributable to noncontrolling interest | (192) | (0.03%) | - | 0.00% | (192) | 100.00% | (0.03) | |||||
Net earnings attributable to common shareholders | $ 57,078 | 8.71% | $ 42,962 | 8.00% | $ 14,116 | 32.86% | 0.71 | |||||
Net earnings per diluted common share attributable to common shareholders | $ 1.09 | $ 0.81 | ||||||||||
Weighted average diluted common shares outstanding: | 51,792 | 52,806 | ||||||||||
(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 SIX MONTHS ENDED | |||||||||
July 30, 2011 AND July 31, 2010 | |||||||||
(In thousands, except per share data) | |||||||||
Six Months Ended | Variance | ||||||||
% of | % of | Basis | |||||||
2011 | Sales | 2010 | Sales | Dollar | % | Points | |||
Net sales: | |||||||||
Retail clothing product | $ 812,050 | 65.70% | $ 722,289 | 71.48% | $ 89,761 | 12.43% | (5.78) | ||
Tuxedo rental services | 221,408 | 17.91% | 214,616 | 21.24% | 6,792 | 3.16% | (3.33) | ||
Alteration and other services | 73,287 | 5.93% | 65,240 | 6.46% | 8,047 | 12.33% | (0.53) | ||
Total retail sales | 1,106,745 | 89.55% | 1,002,145 | 99.18% | 104,600 | 10.44% | (9.63) | ||
Corporate apparel clothing product sales | 129,168 | 10.45% | 8,310 | 0.82% | 120,858 | 1,454.37% | 9.63 | ||
Total net sales | 1,235,913 | 100.00% | 1,010,455 | 100.00% | 225,458 | 22.31% | 0.00 | ||
Total cost of sales | 680,035 | 55.02% | 549,180 | 54.35% | 130,855 | 23.83% | 0.67 | ||
Gross margin (a): | |||||||||
Retail clothing product | 445,781 | 54.90% | 400,607 | 55.46% | 45,174 | 11.28% | (0.57) | ||
Tuxedo rental services | 191,439 | 86.46% | 181,254 | 84.46% | 10,185 | 5.62% | 2.01 | ||
Alteration and other services | 19,604 | 26.75% | 16,730 | 25.64% | 2,874 | 17.18% | 1.11 | ||
Occupancy costs | (135,581) | (12.25%) | (139,494) | (13.92%) | 3,913 | 2.81% | 1.67 | ||
Total retail gross margin | 521,243 | 47.10% | 459,097 | 45.81% | 62,146 | 13.54% | 1.29 | ||
Corporate apparel clothing product margin | 34,635 | 26.81% | 2,178 | 26.21% | 32,457 | 1490.22% | 0.60 | ||
Total gross margin | 555,878 | 44.98% | 461,275 | 45.65% | 94,603 | 20.51% | (0.67) | ||
Selling, general and administrative expenses | 423,223 | 34.24% | 370,818 | 36.70% | 52,405 | 14.13% | (2.45) | ||
Operating income | 132,655 | 10.73% | 90,457 | 8.95% | 42,198 | 46.65% | 1.78 | ||
Net interest | (497) | (0.04%) | (500) | (0.05%) | 3 | 0.60% | (0.01) | ||
Earnings before income taxes | 132,158 | 10.69% | 89,957 | 8.90% | 42,201 | 46.91% | 1.79 | ||
Provision for income taxes | 47,696 | 3.86% | 33,433 | 3.31% | 14,263 | 42.66% | 0.55 | ||
Net earnings including noncontrolling interest | 84,462 | 6.83% | 56,524 | 5.59% | 27,938 | 49.43% | 1.24 | ||
Net loss attributable to noncontrolling interest | 41 | 0.00% | - | 0.00% | 41 | 100% | 0.00 | ||
Net earnings attributable to common shareholders | $ 84,503 | 6.84% | $ 56,524 | 5.59% | $ 27,979 | 49.50% | 1.24 | ||
Net earnings per diluted common share attributable to common shareholders | $ 1.61 | $ 1.06 | |||||||
Weighted average diluted common shares outstanding: | 51,994 | 52,717 | |||||||
(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) | |||||
July 30, | July 31, | ||||
2011 | 2010 | ||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ 162,301 | $ 281,500 | |||
Accounts receivable, net | 65,289 | 19,066 | |||
Inventories | 547,899 | 420,386 | |||
Other current assets | 66,087 | 60,195 | |||
Total current assets | 841,576 | 781,147 | |||
Property and equipment, net | 337,517 | 333,133 | |||
Tuxedo rental product, net | 88,786 | 91,690 | |||
Goodwill | 90,251 | 60,449 | |||
Intangible assets, net | 36,839 | 2,504 | |||
Other assets | 10,424 | 20,346 | |||
Total assets | $ 1,405,393 | $ 1,289,269 | |||
LIABILITIES AND EQUITY | |||||
Current liabilities: | |||||
Accounts payable | $ 130,068 | $ 82,163 | |||
Accrued expenses and other current liabilities | 151,754 | 129,971 | |||
Income taxes payable | 23,994 | 7,589 | |||
Current maturities of long-term debt | - | 45,226 | |||
Total current liabilities | 305,816 | 264,949 | |||
Deferred taxes and other liabilities | 71,864 | 64,402 | |||
Total liabilities | 377,680 | 329,351 | |||
Equity: | |||||
Preferred stock | - | - | |||
Common stock | 715 | 708 | |||
Capital in excess of par | 351,181 | 332,677 | |||
Retained earnings | 1,074,942 | 1,002,995 | |||
Accumulated other comprehensive income | 49,327 | 36,308 | |||
Treasury stock, at cost | (461,760) | (412,770) | |||
Total equity attributable to common shareholders | 1,014,405 | 959,918 | |||
Noncontrolling interest | 13,308 | - | |||
Total equity | 1,027,713 | 959,918 | |||
Total liabilities and equity | $ 1,405,393 | $ 1,289,269 | |||
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||
FOR THE SIX MONTHS ENDED | |||||
July 30, 2011 AND July 31, 2010 | |||||
(In thousands) | |||||
Six Months Ended | |||||
2011 | 2010 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net earnings including noncontrolling interest | $ 84,462 | $ 56,524 | |||
Non-cash adjustments to net earnings: | |||||
Depreciation and amortization | 37,805 | 36,885 | |||
Tuxedo rental product amortization | 17,076 | 20,812 | |||
Other | 9,751 | 11,177 | |||
Changes in assets and liabilities | (27,078) | 4,890 | |||
Net cash provided by operating activities | 122,016 | 130,288 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Capital expenditures | (38,258) | (25,865) | |||
Proceeds from sales of property and equipment | 51 | 23 | |||
Net cash used in investing activities | (38,207) | (25,842) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from issuance of common stock | 4,552 | 1,321 | |||
Cash dividends paid | (12,671) | (9,535) | |||
Tax payments related to vested deferred stock units | (2,955) | (2,656) | |||
Excess tax benefits from share-based plans | 1,386 | 780 | |||
Purchase of treasury stock | (48,999) | (144) | |||
Net cash used in financing activities | (58,687) | (10,234) | |||
Effect of exchange rate changes | 808 | 1,270 | |||
INCREASE IN CASH AND CASH EQUIVALENTS | 25,930 | 95,482 | |||
Balance at beginning of period | 136,371 | 186,018 | |||
Balance at end of period | $ 162,301 | $ 281,500 | |||
SOURCE The Men's Wearhouse
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