The Men's Wearhouse, Inc. : Men's Wearhouse Reports Fiscal 2011 Third Quarter Results
12/06/2011| 04:05pm US/Eastern
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HOUSTON, Dec. 6, 2011 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the third quarter ended October 29, 2011.
Third Quarter Net Sales Summary - Fiscal 2011
---------------------------------------------
U.S. dollars, in millions Total Net Comparable Store Sales
------------------------- --------- ----------------------
Sales Change % (c)
----- ------------
Change %
--------
Current Year Prior Year Current Year Prior Year
Total
Company $584.6(a) $550.1(a) 6.3%
------- -------- -------- ---
Total
Retail
Segment $523.8 $494.6 5.9%
------- ------ ------ ---
MW 368.5 349.1 5.6% 5.5% 9.6%
-- ----- ----- --- --- ---
K&G 80.2 78.0 2.7% 1.6% - 0.2%
--- ---- ---- --- --- ------
Moores
Canada 69.0 61.5 12.2% 8.6% (b) 5.6% (b)
------- ---- ---- ---- -------- --------
Corporate
Apparel
Segment $60.8 $55.5 9.5%
--------- ----- ----- ---
Year-To-Date Net Sales Summary - Fiscal 2011
--------------------------------------------
U.S. dollars, in millions Total Net Comparable Store Sales
------------------------- --------- ----------------------
Sales Change % (c)
----- ------------
Change %
--------
Current Year Prior Year Current Year Prior Year
Total
Company $1,820.5(a) $1,560.6(a) 16.7%
------- ---------- ---------- ----
Total
Retail
Segment $1,630.5 $1,496.7 8.9%
------- -------- -------- ---
MW 1,130.2 1,034.8 9.2% 9.0% 4.8%
-- ------- ------- --- --- ---
K&G 279.4 263.9 5.9% 5.7% - 3.5%
--- ----- ----- --- --- ------
Moores
Canada 202.5 180.4 12.2% 6.2% (b) 2.1% (b)
------- ----- ----- ---- -------- --------
Corporate
Apparel
Segment $190.0 $63.8 197.6%
--------- ------ ----- -----
(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 were $0.77 for the third quarter ended October 29, 2011. Adjusted diluted earnings per share were $0.79 after excluding $1.0 million ($0.7 million after tax or $0.01 per diluted share outstanding) in acquisition related integration costs and $0.7 million ($0.5 million after tax or $0.01 per diluted share outstanding) for non-cash asset impairment charges. This compares to adjusted diluted earnings per share guidance given September 7, 2011 of $0.64 to $0.66. In third quarter fiscal 2010, GAAP diluted earnings per share were $0.47 and adjusted diluted earnings per share were $0.57 after excluding $1.4 million ($1.1 million after tax or $0.02 per diluted share outstanding) in acquisition and acquisition related integration costs, $2.0 million ($1.5 million after tax or $0.03 per diluted share outstanding) in tuxedo distribution closure costs and $3.2 million ($2.4 million after tax or $0.05 per diluted share outstanding) for non-cash asset impairment charges.
GAAP diluted earnings per share were $2.37 for the nine months ended October 29, 2011. Adjusted diluted earnings per share were $2.43 after excluding $2.5 million ($1.6 million after tax or $0.03 per diluted share outstanding) in acquisition related integration costs and $1.7 million ($1.1 million after tax or $0.02 per diluted share outstanding) for non-cash asset impairment charges. For the nine months ended October 30, 2010, GAAP diluted earnings per share were $1.54 and adjusted diluted earnings per share were $1.66 after excluding $4.1 million ($2.7 million after tax or $0.05 per diluted share outstanding) in acquisition and acquisition related integration costs, $2.0 million ($1.5 million after tax or $0.03 per diluted share outstanding) in tuxedo distribution closure costs and $3.4 million ($2.2 million after tax or $0.04 per diluted share outstanding) for non-cash asset impairment charges.
Note: Due to rounded numbers, the adjusted earnings per share may not sum.
THIRD QUARTER HIGHLIGHTS
Total Company net sales increased 6.3% for the quarter.
-- Retail segment sales increased 5.9%.
-- This increase was primarily attributable to increased retail
clothing product sales driven by increases in average unit selling
prices and units sold per transaction offsetting fewer transactions
per store.
-- Tuxedo rental services revenues had U.S. comparable store sales of
1.9% driven by an increase in average rental price.
-- Corporate apparel segment sales increased 9.5% primarily due to one
additional week in the current year quarter of U.K. operations acquired
on August 6, 2010 and increased catalog and internet sales at our U.K.
operations and increased catalog sales at our U.S. operations.
Total Company gross margin increased 14.1% to $268.2 million and as a percentage of sales, increased 315 basis points.
-- Retail segment total gross margin, as a percentage of related net sales,
increased 324 basis points. This increase was primarily attributable to
higher product margins driven by higher average net selling prices per
unit at all brands and lower K&G product cost charge-offs.
-- Corporate apparel segment gross margin, as a percentage of related
sales, increased from 26.5% in the third quarter of 2010 to 29.4% in the
third quarter of 2011 due mainly to an improved mix of higher margin UK
customers in the 2011 results, partially offset by higher Twin Hill
product costs.
Total Company adjusted SG&A expenses increased 6.4% to $206.4 million* and as a percentage of sales increased 5 basis points.
-- The Company's corporate apparel segment drove 1.7% of the quarter over
quarter increase and the balance, 4.7%, was related to payroll related
costs and increased expenses associated with increased sales in the
Company's retail segment.
Adjusted operating income increased 50.4% to $61.7 million* and as a percentage of sales, increased 310 basis points.
-- The financial results of the U.K. operations, excluding acquisition
integration costs, were $0.03 accretive to the Company's third quarter
diluted earnings per share. Integration costs were $1.0 million ($0.7
million after tax or $0.01 per diluted share outstanding).
Total inventories increased 21.1% primarily to support increased retail sales and planned promotions in the fourth quarter as well as replenish comparatively oversold levels in the prior year as we embarked on a more aggressive promotional cadence.
The Company repurchased 500,000 shares of its common stock during the third quarter at an average cost of $29.98 per share.
Total cash and cash equivalents at quarter end were $138.5 million.
* Adjusted SG&A and adjusted operating income for third quarter 2011 excludes $1.0 million in acquisition related integration costs and $0.7 million for non cash asset impairment charges. Adjusted SG&A and adjusted operating income for third quarter 2010 excludes $1.4 million in acquisition and acquisition related integration costs, $2.0 million in tuxedo distribution closure costs and $3.2 million in non cash asset impairment charges.
2011 GUIDANCE
For the fiscal year, GAAP diluted earnings per share is expected to be in a range of $2.21 to $2.24. Adjusted diluted earnings per share are expected to be in a range of $2.28 to $2.31. Adjusted earnings per share exclude acquisition related integration costs of $4.0 million ($2.6 million after tax or $0.05 per diluted share outstanding) and impairment charges of $1.7 million ($1.1 million after tax or $0.02 per diluted share outstanding). Both GAAP and adjusted earnings per share reflect the dilutive effect of participating securities which approximates $0.03 for the full year.
Estimated fourth quarter GAAP and adjusted diluted loss per share include a $0.02 per share negative impact from previous guidance due to the shifting of certain costs into the fourth quarter, which favorably impacted the third quarter, and severance costs due to a reorganization in the Company's technology workgroup.
For the fourth quarter of the fiscal year, GAAP diluted loss per share is expected to be in a range of ($0.17) to ($0.14). Adjusted diluted loss per share is expected to be in a range of ($0.15) to ($0.12). Adjusted earnings per share exclude acquisition related integration costs of $1.5 million ($1.0 million after tax or $0.02 per diluted share outstanding). Neither GAAP nor adjusted loss per share have an impact from the dilutive effect of participating securities.
The financial results of the combined UK acquisitions, excluding acquisition related integration costs, are expected to be accretive to the Company's full year and fourth quarter diluted earnings per share.
Guidance Guidance
FY 2011 4Q FY 2011
------- ----------
Total Sales Increase 13.3% to 13.4% (1) 3.5% to 4.0% (1)
-------------------- ------------------ ----------------
Comparable Store Sales Growth
(2)
-----------------------------
MW +7% to +8% +5% to +6%
-- --------- ----------
K&G +3% to +4% -2% to flat
--- ---------- -----------
Moores +5% to +6% +3 to +4%
------ ---------- ---------
43.70% to 43.75% 38.65% to 38.85%
Gross Margin (3) (3)
------------ ----------------- -----------------
35.95% to 36.00% 40.75% to 40.95%
S G & A (as % of Sales) (4) (4)
----------------------- ----------------- -----------------
Effective Tax Rate 34.6% 43.0%
----------------------- ---- ----
Weighted Average Shares
Outstanding (millions) 51.7 51.4
----------------------- ---- ----
Foreign Exchange Conversion
(avg.)
---------------------------
US Dollar to GBP 1.62 1.63
---------------- ---- ----
US Dollar to Canadian Dollar 1.01 0.98
---------------------------- ---- ----
Footnotes to Guidance:
1. Includes US$222 million for full year FY 2011 and US$51 million for 4Q FY
2011 of sales from acquired operations of Dimensions and Alexandra.
2. Includes an assumed U.S. comparable store increase in tuxedo rental
revenues of 4% to 5% for the full year FY 2011 and a 14% to 15% increase
in 4Q FY 2011.
3. Occupancy costs are expected to be flat to a 1% decrease for full year FY
2011 and 1% to 2% increase for 4Q FY 2011.
4. Excludes acquisition related integration costs and impairment charges.
CONFERENCE CALL AND WEBCAST INFORMATION
At 5:00 p.m. Eastern time on Tuesday, December 6, 2011, Company management will host a conference call and real time webcast to review the third quarter of fiscal 2011 and its outlook for the fourth 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 December 13, 2011 by calling 303-590-3030 and entering the access code of 4488091#, or a webcast archive will be available free on the website for approximately 90 days.
STORE INFORMATION
October 29, 2011 October 30, 2010 January 29, 2011
---------------- ---------------- ----------------
Number Sq. Ft. Number Sq. Ft. Number Sq. Ft.
------ ------- ------ ------- ------ -------
of Stores (000's) of Stores (000's) of Stores (000's)
--------- ------- --------- ------- --------- -------
Men's
Wearhouse 597 3,399.6 586 3,319.3 585 3,319.0
--------- --- ------- --- ------- --- -------
Men's
Wearhouse
and
Tux 361 503.7 408 561.0 388 535.7
--------- --- ----- --- ----- --- -----
Moores,
Clothing
for
Men 117 741.9 117 737.1 117 737.8
-------- --- ----- --- ----- --- -----
K&G
(a) 100 2,375.4 102 2,391.8 102 2,394.1
--- --- ------- --- ------- --- -------
Total 1,175 7,020.6 1,213 7,009.2 1,192 6,986.6
(a) 92, 91 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 1,175 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. 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 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 subsequent Forms 10-Q.
For additional information on Men's Wearhouse, please visit the Company's websites at www.menswearhouse.com, www.kgstores.com, www.mooresclothing.com, www.dimensions.co.uk, www.alexandra.co.uk and 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
October 29, 2011 AND October 30, 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 $377,307 64.54% $350,250 63.67% $27,057 7.73% 0.87
Tuxedo rental
services 112,005 19.16% 111,297 20.23% 708 0.64% (1.07)
Alteration and other
services 34,480 5.90% 33,022 6.00% 1,458 4.42% (0.10)
------ ---- ------ ---- ----- ---- -----
Total retail sales 523,792 89.60% 494,569 89.90% 29,223 5.91% (0.31)
Corporate apparel
clothing product
sales 60,810 10.40% 55,534 10.10% 5,276 9.50% 0.31
------ ----- ------ ----- ----- ---- ----
Total net sales 584,602 100.00% 550,103 100.00% 34,499 6.27% 0.00
Total cost of sales 316,433 54.13% 315,104 57.28% 1,329 0.42% (3.15)
Gross margin (a):
Retail clothing
product 215,638 57.15% 187,019 53.40% 28,619 15.30% 3.76
Tuxedo rental
services 96,244 85.93% 93,813 84.29% 2,431 2.59% 1.64
Alteration and other
services 7,811 22.65% 8,424 25.51% (613) (7.28%) (2.86)
Occupancy costs (69,425) (13.25%) (68,978) (13.95%) (447) (0.65%) 0.69
------- -------- ------- -------- ---- ------- ----
Total retail gross
margin 250,268 47.78% 220,278 44.54% 29,990 13.61% 3.24
Corporate apparel
clothing product
margin 17,901 29.44% 14,721 26.51% 3,180 21.60% 2.93
------ ----- ------ ----- ----- ----- ----
Total gross margin 268,169 45.87% 234,999 42.72% 33,170 14.11% 3.15
Selling, general and
administrative
expenses 208,147 35.60% 200,588 36.46% 7,559 3.77% (0.86)
------- ------- ----- ----
Operating income 60,022 10.27% 34,411 6.26% 25,611 74.43% 4.01
Net interest (284) (0.05%) (274) (0.05%) (10) 3.65% 0.00
---- ------- ---- ------- --- ---- ----
Earnings before
income taxes 59,738 10.22% 34,137 6.21% 25,601 74.99% 4.01
Provision for income
taxes 19,836 3.39% 8,789 1.60% 11,047 125.69% 1.80
------ ----- ------ ------
Net earnings
including
noncontrolling
interest 39,902 6.83% 25,348 4.61% 14,554 57.42% 2.22
Net earnings
attributable to
noncontrolling
interest (25) 0.00% (89) (0.02%) 64 (71.91%) 0.01
--- ---- --- ------- --- -------- ----
Net earnings
attributable to
common shareholders $39,877 6.82% $25,259 4.59% $14,618 57.87% 2.23
======= ==== ======= ==== ======= ===== ====
Net earnings per
diluted common share
attributable to
common shareholders $0.77 $0.47
===== =====
Weighted average
diluted common
shares outstanding: 51,339 52,895
====== ======
(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 NINE MONTHS ENDED
October 29, 2011 AND October 30, 2010
(In thousands, except per share data)
Nine Months Ended Variance
----------------- --------
% of % of Basis
2011 Sales 2010 Sales Dollar % Points
---- ----- ---- ----- ------ --- ------
Net sales:
Retail clothing
product $1,189,357 65.33% $1,072,539 68.73% $116,818 10.89% (3.40)
Tuxedo rental
services 333,413 18.31% 325,913 20.88% 7,500 2.30% (2.57)
Alteration and other
services 107,767 5.92% 98,262 6.30% 9,505 9.67% (0.38)
------- ---- ------ ---- ----- ---- -----
Total retail sales 1,630,537 89.56% 1,496,714 95.91% 133,823 8.94% (6.34)
Corporate apparel
clothing product
sales 189,978 10.44% 63,844 4.09% 126,134 197.57% 6.34
------- ----- ------ ---- ------- ------ ----
Total net sales 1,820,515 100.00% 1,560,558 100.00% 259,957 16.66% 0.00
Total cost of sales 996,468 54.74% 864,284 55.38% 132,184 15.29% (0.65)
Gross margin (a):
Retail clothing
product 661,419 55.61% 587,626 54.79% 73,793 12.56% 0.82
Tuxedo rental
services 287,683 86.28% 275,067 84.40% 12,616 4.59% 1.89
Alteration and other
services 27,415 25.44% 25,154 25.60% 2,261 8.99% (0.16)
Occupancy costs (205,006) (12.57%) (208,472) (13.93%) 3,466 1.66% 1.36
-------- -------- -------- -------- ----- ---- ----
Total retail gross
margin 771,511 47.32% 679,375 45.39% 92,136 13.56% 1.93
Corporate apparel
clothing product
margin 52,536 27.65% 16,899 26.47% 35,637 210.88% 1.18
------ ----- ------ ----- ------ ------ ----
Total gross margin 824,047 45.26% 696,274 44.62% 127,773 18.35% 0.65
Selling, general and
administrative
expenses 631,370 34.68% 571,406 36.62% 59,964 10.49% (1.93)
------- ----- ------- ----- -----
Operating income 192,677 10.58% 124,868 8.00% 67,809 54.30% 2.58
Net interest (781) (0.04%) (774) (0.05%) (7) 0.90% (0.01)
---- ------- ---- ------- --- ---- -----
Earnings before
income taxes 191,896 10.54% 124,094 7.95% 67,802 54.64% 2.59
Provision for income
taxes 67,532 3.71% 42,222 2.71% 25,310 59.95% 1.00
------ ---- ------ ---- ------ ----- ----
Net earnings
including
noncontrolling
interest 124,364 6.83% 81,872 5.25% 42,492 51.90% 1.58
Net (earnings) loss
attributable to
noncontrolling
interest 16 0.00% (89) (0.01%) 105 (117.98%) 0.01
--- ---- --- ------- --- --------- ----
Net earnings
attributable to
common shareholders $124,380 6.83% $81,783 5.24% $42,597 52.09% 1.59
======== ==== ======= ==== ======= ===== ====
Net earnings per
diluted common share
attributable to
common shareholders $2.37 $1.54
===== =====
Weighted average
diluted common
shares outstanding: 51,776 52,776
====== ======
(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)
October 29, October 30,
2011 2010
---- ----
ASSETS
------
Current assets:
Cash and cash equivalents $138,545 $197,843
Accounts receivable, net 66,094 65,069
Inventories 616,758 509,422
Other current assets 61,088 62,830
------ ------
Total current assets 882,485 835,164
Property and equipment, net 348,785 333,007
Tuxedo rental product, net 85,876 86,121
Goodwill 88,707 90,580
Intangible assets, net 35,378 38,678
Other assets 3,579 21,831
----- ------
Total assets $1,444,810 $1,405,381
========== ==========
LIABILITIES AND EQUITY
----------------------
Current liabilities:
Accounts payable $155,610 $145,138
Accrued expenses and other current
liabilities 146,391 130,550
Income taxes payable 22,727 12,294
Current maturities of long-term debt - 45,584
--- ------
Total current liabilities 324,728 333,566
Deferred taxes and other liabilities 76,429 72,664
------ ------
Total liabilities 401,157 406,230
------- -------
Equity:
Preferred stock - -
Common stock 717 709
Capital in excess of par 356,414 336,942
Retained earnings 1,108,662 1,023,467
Accumulated other comprehensive
income 41,504 37,651
Treasury stock, at cost (476,749) (412,761)
-------- --------
Total equity attributable to common
shareholders 1,030,548 986,008
Noncontrolling interest 13,105 13,143
------ ------
Total equity 1,043,653 999,151
--------- -------
Total liabilities and equity $1,444,810 $1,405,381
========== ==========
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE NINE MONTHS ENDED
October 29, 2011 AND October 30, 2010
(In thousands)
Nine Months Ended
-----------------
2011 2010
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings including
noncontrolling interest $124,364 $81,872
Non-cash adjustments to net earnings:
Depreciation and amortization 56,572 57,210
Tuxedo rental product
amortization 25,923 31,732
Other 26,164 11,284
Changes in assets and
liabilities (85,477) (16,216)
------- -------
Net cash provided by
operating activities 147,546 165,882
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (66,960) (43,835)
Acquisitions of businesses,
net of cash - (97,786)
Proceeds from sales of
property and equipment 59 76
Net cash used in investing
activities (66,901) (141,545)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of
common stock 5,995 2,503
Cash dividends paid (18,880) (14,318)
Tax payments related to
vested deferred stock units (2,955) (2,748)
Excess tax benefits from
share-based plans 1,592 952
Purchase of treasury stock (63,988) (144)
------- ----
Net cash used in financing
activities (78,236) (13,755)
------- -------
Effect of exchange rate
changes (235) 1,243
---- -----
INCREASE IN CASH AND CASH
EQUIVALENTS 2,174 11,825
Balance at beginning of
period 136,371 186,018
Balance at end of period $138,545 $197,843
======== ========
SOURCE Men's Wearhouse
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