FREMONT, Calif., Dec. 10, 2014 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced consolidated financial results for the fiscal third quarter and nine months ended November 1, 2014.
GAAP diluted EPS for fiscal third quarter 2014 was $0.14 and adjusted diluted EPS was $0.83 excluding non-operating items((1)). Results for Jos. A. Bank are included in our financial statements beginning June 18, 2014, the date of the closing of the acquisition.
Doug Ewert, Men's Wearhouse chief executive officer, commented, "We continue to be pleased with the progress we are making on the Jos. A. Bank integration. In addition, we are pleased with the overwhelmingly positive reaction of the Jos. A. Bank employees to our culture and are very optimistic about our opportunities to expand consolidated sales and margins as we complete the integration. We remain confident in our 2017 guidance and our cost synergy run-rate at the end of the third quarter is well ahead of our original $15 million projection for the end of the 2014 fiscal year and our systems conversions are on target.
"During the quarter, Jos. A. Bank's comparable sales were slightly below our internal expectations but, as part of our operating strategy for the brand, we are very encouraged by the positive increase of 123 basis points in the maintained product margin rate," added Ewert. "We also completed our review of Jos. A. Bank's inventory and concluded we will dispose of approximately $50 million of product which will be recorded as a reduction in the inventory value at the date of acquisition; a purchase price accounting adjustment. This product will be pulled from the stores as part of our regular physical inventory process in January. Additionally, we wrote off approximately $10 million of slower renting tuxedo inventory to make room for more productive inventory in anticipation of the tuxedo rollout. As a reminder, we will begin renting tuxedos from our existing rental inventory in Jos. A. Bank beginning in January 2015. The in-store training has begun and we are excited about this revenue synergy opportunity.
"Excluding Jos. A. Bank results, the third quarter adjusted operating income increased low double digits driven by strong performances at Men's Wearhouse, Moores and K&G, posting comparable sales increases of 2.2%, 8.8% and 4.4%, respectively. We are also excited about our recent announcements of in-home wedding consultations beginning early next year, the premiere of the Joseph Abboud website and the future Joseph Abboud flagship store in New York City.
"We have completed our strategic review of K&G. As part of the review, we considered offers to acquire the business, none of which were acceptable. We concluded that continuing to operate K&G as a part of the Company's overall portfolio will provide the most value to our shareholders. We would like to thank K&G's management and employees for continuing to work diligently, which has led to the strong results that have been posted this year," concluded Ewert.
FISCAL THIRD QUARTER SALES REVIEW
The tables that follow are a summary of net sales for fiscal 2014 third quarter and fiscal nine months ended November 1, 2014. The dollars shown are U.S. dollars in millions and due to rounded numbers may not sum. The Moores comparable sales change is based on the Canadian dollar. The comparable sales shown below for Jos. A. Bank are a comparison to the full periods, not a comparison of the acquisition period since June 18, 2014. 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.
Third Quarter Net Sales Summary - Fiscal 2014 --------------------------------------------- Net Sales Comparable Sales Change --------- ----------------- Net Sales Change Current Quarter Current Quarter Prior Year Quarter Total Retail Segment 42.3% $243.6 $819.2 -------------------- ---- ------ ------ Men's Wearhouse 2.0% $8.5 $436.1 2.2% 2.6% --------------- --- ---- ------ --- --- Jos. A. Bank n/a $233.3 $233.3 (8.1%) 2.4% ------------ ---------- ------ ------ ----- --- Moores 1.9% $1.3 $68.7 8.8% (2.4%) ------ --- ---- ----- --- ----- K&G 0.1% $0.0 $72.8 4.4% (4.4%) --- --- ---- ----- --- ----- MW Cleaners 7.0% $0.5 $8.2 ----------- --- ---- ---- Corporate Apparel Segment (2.6%) ($1.9) $71.5 ----------------- ----- ----- ----- Total Company 37.3% $241.7 $890.6 ------------- ---- ------ ------ Year-To-Date Net Sales Summary - Fiscal 2014 -------------------------------------------- Net Sales Comparable Sales Change --------- ----------------- Net Sales Change Current Year Current Year Prior Year Total Retail Segment 23.1% $400.1 $2,129.2 -------------------- ---- ------ -------- Men's Wearhouse 4.1% $51.4 $1,307.4 3.1% 1.6% --------------- --- ----- -------- --- --- Jos. A. Bank n/a $347.0 $347.0 (0.2%) (6.4%) ------------ --- ------ ------ ----- ----- Moores 1.8% $3.5 $199.3 8.6% (4.6%) ------ --- ---- ------ --- ----- K&G (1.4%) ($3.5) $251.5 2.7% (4.8%) --- ----- ----- ------ --- ----- MW Cleaners 7.7% $1.7 $24.0 ----------- --- ---- ----- Corporate Apparel Segment 6.2% $11.4 $195.0 ----------------- --- ----- ------ Total Company 21.5% $411.5 $2,324.2 ------------- ---- ------ --------
Net sales at our largest brand, Men's Wearhouse, which represented 49% of total third quarter sales, were up 2.0% from last year's third quarter and comparable sales increased 2.2%. On a comparable basis, an increase in clothing product average unit retails (or the net selling price per unit) more than offset decreases in units sold per transaction and average transactions per store. The higher margin tuxedo rental revenues comparable sales increased 5.3% in the third quarter of 2014.
Jos. A. Bank was 26% of the Company's total third quarter sales. Comparable sales for the third quarter decreased 8.1% with flat units sold per transaction and flat clothing product average unit retails offset by a decrease in average transactions per store. Moores, our Canadian retail brand, was 8% of the total third quarter sales and had a comparable sales increase of 8.8% due to an increase in clothing product average unit retails that more than offset a decrease in units sold per transaction while average transactions per store were flat. However, net sales for Moores only increased 1.9% due to an unfavorable change in the currency translation rate. K&G was 8% of the Company's total third quarter sales with a comparable sales increase of 4.4% due to increases in average transactions per store and units sold per transaction which more than offset a decrease in average unit retails. The Corporate Apparel segment, which represented 8% of total third quarter sales, had a sales decrease of 2.6%.
FISCAL THIRD QUARTER CONSOLIDATED RESULTS REVIEW
Sales
Total net sales increased 37.3% or $241.7 million to $890.6 million from $648.9 million.
Retail segment sales for the quarter increased by 42.3% or $243.6 million due to $233.3 million in sales at Jos. A. Bank and an increase in comparable sales at all other retail brands.
Corporate apparel sales decreased by 2.6% or $1.9 million.
Gross Margin
Total GAAP gross margin was $369.2 million. Adjusted consolidated gross margin of $390.0 million increased $96.5 million or 32.9% compared to the prior year quarter. The total adjusted gross margin rate decreased 145 basis points primarily due to lower margins at Jos. A. Bank.
Adjusted retail segment gross margin increased $94.7 million or 34.7%. The adjusted retail segment gross margin rate decreased 254 basis points including Jos. A. Bank and increased 63 basis points excluding Jos. A. Bank.
Corporate apparel gross margin increased $1.8 million or 8.7% and increased 324 basis points.
Advertising
Advertising expenses increased $19.4 million to $42.1 million, an increase of 85.9% or 124 basis points compared to the prior quarter primarily due to Jos. A. Bank advertising expenses.
SG&A
GAAP SG&A expenses increased $71.1 million to $282.0 million, an increase of 33.7% but a decrease of 84 basis points. Adjusted SG&A expenses were 190 basis points favorable to the prior year. On an absolute dollar basis, adjusted SG&A increased by $58.8 million or 28.9% primarily due to the addition of Jos. A. Bank SG&A.
Operating Income
GAAP operating income was $45.2 million compared to GAAP operating income of $60.0 million last year. Adjusted operating income was $85.7 million, an increase of $18.2 million or 26.9% over the prior year adjusted operating income of $67.5 million.
Interest and Taxes
Net interest expense for the third quarter was $25.0 million.
The effective tax rate for the third quarter was 65.3%. Excluding the impact of non-deductible transaction costs, the adjusted effective tax rate was 33.6%.
Net Earnings
GAAP net earnings were $6.8 million compared to GAAP net earnings of $38.2 million last year. GAAP diluted earnings per share was $0.14 compared to $0.79 in the prior year quarter. Adjusted net earnings were $40.1 million, or $0.83 adjusted diluted earnings per share compared to adjusted net earnings of $43.1 million, or $0.90 adjusted diluted earnings per share last year.
Balance Sheet
In connection with the acquisition of Jos. A. Bank, debt at the end of the third quarter was approximately $1.7 billion. Inventories increased $442.2 million to $1,082.4 million from $640.2 million due primarily to Jos. A. Bank and inventory related to Joseph Abboud. This increase is net of the $50 million decrease in inventory associated with the review of Jos. A. Bank's inventory at the date of acquisition. Additionally, approximately $10 million of the increase was related to an inventory build for our corporate apparel business to service existing customers and the remaining increase was primarily driven by new store openings at Men's Wearhouse.
JOS. A. BANK STANDALONE FISCAL THIRD QUARTER HIGHLIGHTS((2))
Clothing sales decreased 5.2% to $214.2 million from prior year third quarter. Maintained product margin increased 123 basis points and total clothing margin excluding occupancy increased 54 basis points to 55.6%.
Occupancy costs increased from $35.7 million in the prior year, or 14.4% of total sales, to $40.5 million, or 17.3% of total sales in the current period primarily due to deleveraging caused by the decrease in Jos. A. Bank comparable sales and the impact of new stores.
FISCAL NINE MONTH CONSOLIDATED RESULTS REVIEW
Sales
Total net sales increased 21.5% or $411.5 million to $2,324.2 million, up from $1,912.7 million.
Year-to-date retail segment sales increased by 23.1%, or $400.1 million, due to $347.0 million in sales at Jos. A. Bank since the closing of the acquisition and an increase in comparable sales at all other retail brands.
Corporate apparel sales increased by 6.2%, or $11.4 million.
Gross Margin
Total GAAP gross margin was $1,011.1 million. Adjusted consolidated gross margin of $1,038.7 million was an increase of $158.4 million, or 18.0%, compared to the prior year quarter. The total adjusted gross margin rate decreased 133 basis points primarily due to lower margins at Jos. A. Bank.
Adjusted retail segment gross margin increased $154.2 million, or 18.7%. The adjusted retail segment gross margin rate decreased 172 basis points including Jos. A. Bank and increased 23 basis points excluding Jos. A. Bank.
Corporate apparel gross margin increased $4.3 million, or 7.7%, and increased 42 basis points.
Advertising
Advertising expenses increased $40.5 million to $109.1 million, an increase of 59.0% or 111 basis points primarily due to the Jos. A. Bank advertising expenses and the brand advertising associated with the rollout of Joseph Abboud.
SG&A
GAAP SG&A expenses increased $164.1 million to $786.9 million, an increase of 26.4% or 130 basis points. Adjusted SG&A expenses were 203 basis points favorable to the prior year. On an absolute dollar basis adjusted SG&A increased by $84.5 million, or 13.8%, primarily due to the addition of Jos. A. Bank SG&A.
Operating Income
GAAP operating income was $115.2 million compared to GAAP operating income of $179.3 million last year. Adjusted operating income was $232.7 million, an increase of $33.5 million, or 16.8%, over the prior year adjusted operating income of $199.2 million.
Interest and Taxes
Net interest expense for the nine months was $39.2 million.
The effective tax rate for the nine months was 51.5%. Excluding the impact of non-deductible transaction costs, the adjusted effective tax rate was 34.7%.
Net Earnings
GAAP net earnings were $35.5 million compared to GAAP net earnings of $114.2 million last year. GAAP diluted earnings per share was $0.74 compared to $2.29 last year. Adjusted net earnings were $126.1 million, or $2.61 adjusted diluted earnings per share, compared to adjusted net earnings of $127.2 million, or $2.55 adjusted diluted earnings per share last year.
CONFERENCE CALL AND WEBCAST INFORMATION
At 9:00 a.m. Eastern time on Thursday, December 11, 2014, Company management will host a conference call and real time webcast to review fiscal 2014 third quarter and nine month results.
To access the conference call, dial 913-312-1485. To access the live webcast presentation, visit the Investor Relations section of the Company's website at http://ir.menswearhouse.com. A telephonic replay will be available through December 18, 2014 by calling 719-457-0820 and entering the access code of 5527190#, or a webcast archive will be available free on the website for approximately 90 days.
STORE INFORMATION
November 1, 2014 November 2, 2013 February 1, 2014 ---------------- ---------------- ---------------- Number of Stores Sq. Ft. Number of Stores Sq. Ft. Number of Stores Sq. Ft. (000's) (000's) (000's) ------ ------ ------ Men's Wearhouse 686 3,903.9 658 3,752.2 661 3,774.3 ---------- --- ------- --- ------- --- ------- Jos. A. Bank (a) 637 2,891.0 - - - - ------------ --- ------- --- --- --- --- Men's Wearhouse and Tux 223 309.6 261 360.5 248 344.0 -------------- --- ----- --- ----- --- ----- Moores, Clothing for Men 122 774.4 120 764.4 121 769.3 ------------- --- ----- --- ----- --- ----- K&G (b) 92 2,184.4 94 2,228.7 94 2,228.8 ------ --- ------- --- ------- --- ------- Total 1,760 10,063.3 1,133 7,105.8 1,124 7,116.4
(a) Excludes 15 franchise stores. (b) 85, 88 and 85 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 1,760 stores. The Men's Wearhouse, Jos. A. Bank, 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, Jos. A. Bank, 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. Forward-looking statements are not guarantees of future performance and a variety of factors could cause actual results to differ materially from the anticipated or expected results expressed in or suggested by these forward-looking statements. These forward-looking statements may be significantly impacted by various factors, including, but not limited to: actions by governmental entities, domestic and international economic activity and inflation, success, or lack thereof, in executing our internal operating plans and new store and new market expansion plans, including successful integration of acquisitions, including Jos. A. Bank, performance issues with key suppliers, disruption in buying trends due to homeland security concerns, severe weather, foreign currency fluctuations, government export and import policies, aggressive advertising or marketing activities of competitors, and legal proceedings. Future results will also be dependent upon our ability to continue to identify and complete successful expansions and penetrations into existing and new markets and our ability to integrate such expansions with our existing operations.
These forward-looking statements are based upon management's current beliefs or expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. The following factors, among others, could cause actual results to differ materially from those expressed or implied in the forward-looking statements: (1) the possibility that the expected benefits from the Jos. A. Bank transaction will not be realized within the anticipated time period, (2) the risks related to the costs and difficulties related to the integration of Jos. A. Bank's business and operations with our business and operations, (3) the inability to obtain, or delays in obtaining, cost savings and synergies from the transaction, (4) unexpected costs, charges or expenses resulting from the transaction, (5) litigation relating to the transaction, (6) the inability to retain key personnel and (7) the possible disruption that may be caused by the Jos. A. Bank transaction to our business and operations, including relationships with customers, employees and other third parties.
The forward-looking statements in this press release speak only as of the date hereof. Except for the ongoing obligations of Men's Wearhouse to disclose material information under the federal securities laws, Men's Wearhouse undertakes no obligation to revise or update publicly any forward-looking statement, except as required by law. Other factors that may impact the forward-looking statements are described in Men's Wearhouse's annual report on Form 10-K for the fiscal year ended February 1, 2014 and quarterly reports on Form 10-Q. For additional information on Men's Wearhouse, please visit the Company's websites at www.menswearhouse.com, www.josbank.com, www.josephabboud.com, www.mooresclothing.com, www.kgstores.com, www.twinhill.com, www.dimensions.co.uk and www.alexandra.co.uk.
Contact:
Investor Relations
(281) 776-7575
ir@tmw.com
Kelly Dilts
Men's Wearhouse, SVP, Finance & IR
Ken Dennard
Dennard ? Lascar Associates
(1) Adjusted information is non-GAAP financial information provided to enhance the user's overall understanding of the Company's current financial performance. Reconciliations of adjusted financial information to GAAP results are included in the tables at the end of this release.
(2) Based on adjusted information provided to enhance the user's overall understanding of Jos. A. Bank's current financial performance and includes reclassifications to conform Jos. A. Bank's historical results with the Company's current external reporting presentation.
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) For the Three Months Ended November 1, 2014 and November 2, 2013 (In thousands, except per share data) Three Months Ended Variance ------------------ -------- % of % of Basis 2014 Sales 2013 Sales Dollar % Points ---- ----- ---- ----- ------ --- ------ Net sales: Retail clothing product $634,447 71.24% $415,985 64.11% $218,462 52.52% 7.13 Tuxedo rental services 132,690 14.90% 122,177 18.83% 10,513 8.60% (3.93) Alteration and other services 52,025 5.84% 37,363 5.76% 14,662 39.24% 0.08 ------ ---- ------ ---- ------ ----- ---- Total retail sales 819,162 91.97% 575,525 88.69% 243,637 42.33% 3.28 Corporate apparel clothing product 71,475 8.03% 73,365 11.31% (1,890) (2.58%) (3.28) ------ ---- ------ ----- ------ ------ ----- Total net sales 890,637 100.00% 648,890 100.00% 241,747 37.26% 0.00 Total cost of sales 521,432 58.55% 355,388 54.77% 166,044 46.72% 3.78 Gross margin (a): Retail clothing product 347,138 54.72% 234,543 56.38% 112,595 48.01% (1.67) Tuxedo rental services 99,152 74.72% 102,864 84.19% (3,712) (3.61%) (9.47) Alteration and other services 14,852 28.55% 8,951 23.96% 5,901 65.93% 4.59 Occupancy costs (114,325) (13.96%) (73,456) (12.76%) (40,869) (55.64%) (1.19) -------- ------- ------- ------- ------- ------- ----- Total retail gross margin 346,817 42.34% 272,902 47.42% 73,915 27.08% (5.08) Corporate apparel clothing product 22,388 31.32% 20,600 28.08% 1,788 8.68% 3.24 ------ ----- ------ ----- ----- ---- ---- Total gross margin 369,205 41.45% 293,502 45.23% 75,703 25.79% (3.78) Advertising expenses 42,075 4.72% 22,630 3.49% 19,445 85.93% 1.24 Selling, general and administrative expenses 281,955 31.66% 210,867 32.50% 71,088 33.71% (0.84) Operating income 45,175 5.07% 60,005 9.25% (14,830) (24.71%) (4.18) Net interest (25,006) (2.81%) (1,190) (0.18%) (23,816) 2001.34% (2.62) ------- ------ ------ ------ ------- ------- ----- Earnings before income taxes 20,169 2.26% 58,815 9.06% (38,646) (65.71%) (6.80) Provision for income taxes 13,168 1.48% 20,337 3.13% (7,169) (35.25%) (1.66) ----- ----- ------ ------ Net earnings including non-controlling interest 7,001 0.79% 38,478 5.93% (31,477) (81.81%) (5.14) Net earnings attributable to non-controlling interest (208) (0.02%) (274) (0.04%) 66 24.09% 0.02 ---- ------ ---- ------ --- ----- ---- Net earnings attributable to common shareholders $6,793 0.76% $38,204 5.89% $(31,411) (82.22%) (5.12) ====== ==== ======= ==== ======== ======= ===== Net earnings per diluted common share attributable to common shareholders $0.14 $0.79 ===== ===== Weighted-average diluted common shares outstanding: 48,254 47,873 ====== ====== (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 November 1, 2014 and November 2, 2013 (In thousands, except per share data) Nine Months Ended Variance ----------------- -------- % of % of Basis 2014 Sales 2013 Sales Dollar % Points ---- ----- ---- ----- ------ --- ------ Net sales: Retail clothing product $1,598,199 68.76% $1,248,405 65.27% $349,794 28.02% 3.49 Tuxedo rental services 395,449 17.01% 368,360 19.26% 27,089 7.35% (2.24) Alteration and other services 135,585 5.83% 112,381 5.88% 23,204 20.65% (0.04) ------- ---- ------- ---- ------ ----- ----- Total retail sales 2,129,233 91.61% 1,729,146 90.40% 400,087 23.14% 1.21 Corporate apparel clothing product 194,956 8.39% 183,535 9.60% 11,421 6.22% (1.21) ------- ---- ------- ---- ------ ---- ----- Total net sales 2,324,189 100.00% 1,912,681 100.00% 411,508 21.51% 0.00 Total cost of sales 1,313,078 56.50% 1,032,465 53.98% 280,613 27.18% 2.52 Gross margin (a): Retail clothing product 876,059 54.82% 703,902 56.38% 172,157 24.46% (1.57) Tuxedo rental services 320,366 81.01% 311,971 84.69% 8,395 2.69% (3.68) Alteration and other services 37,791 27.87% 26,625 23.69% 11,166 41.94% 4.18 Occupancy costs (282,595) (13.27%) (217,521) (12.58%) (65,074) (29.92%) (0.69) -------- ------- -------- ------- ------- ------- ----- Total retail gross margin 951,621 44.69% 824,977 47.71% 126,644 15.35% (3.02) Corporate apparel clothing product 59,490 30.51% 55,239 30.10% 4,251 7.70% 0.42 ------ ----- ------ ----- ----- ---- ---- Total gross margin 1,011,111 43.50% 880,216 46.02% 130,895 14.87% (2.52) Advertising expenses 109,072 4.69% 68,584 3.59% 40,488 59.03% 1.11 Selling, general and administrative expenses 786,879 33.86% 622,785 32.56% 164,094 26.35% 1.30 Goodwill impairment charge - 0.00% 9,501 0.50% (9,501) NM (0.50) Operating income 115,160 4.95% 179,346 9.38% (64,186) (35.79%) (4.42) Net interest (39,154) (1.68%) (1,772) (0.09%) (37,382) 2109.59% (1.59) Loss on extinguishment of debt (2,158) (0.09%) - 0.00% (2,158) NM (0.09) ------ ------ --- ---- ------ --- ----- Earnings before income taxes 73,848 3.18% 177,574 9.28% (103,726) (58.41%) (6.11) Provision for income taxes 38,021 1.64% 63,162 3.30% (25,141) (39.80%) (1.67) ------ ---- ------ ---- ------- ------- ----- Net earnings including non-controlling interest 35,827 1.54% 114,412 5.98% (78,585) (68.69%) (4.44) Net earnings attributable to non-controlling interest (292) (0.01%) (174) (0.01%) (118) (67.82%) 0.00 ---- ------ ---- ------ ---- ------- ---- Net earnings attributable to common shareholders $35,535 1.53% $114,238 5.97% $(78,703) (68.89%) (4.44) ======= ==== ======== ==== ======== ======= ===== Net earnings per diluted common share attributable to common shareholders $0.74 $2.29 ===== ===== Weighted-average diluted common shares outstanding: 48,124 49,598 ====== ====== (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) November 1, November 2, 2014 2013 ---- ---- ASSETS ------ Current assets: Cash and cash equivalents $64,716 $64,764 Accounts receivable, net 84,054 80,180 Inventories 1,082,354 640,197 Other current assets 112,872 77,918 ------- Total current assets 1,343,996 863,059 Property and equipment, net 569,779 407,261 Tuxedo rental product, net 129,579 142,272 Goodwill 892,766 128,597 Intangible assets, net 673,057 60,325 Other assets 44,250 4,937 ------ ----- Total assets $3,653,427 $1,606,451 ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $263,645 $165,596 Accrued expenses and other current liabilities 283,271 168,120 Income taxes payable 13,590 10,034 Current maturities of long-term debt 11,000 10,000 ------ Total current liabilities 571,506 353,750 Long-term debt 1,678,589 90,000 Deferred taxes and other liabilities 367,612 104,950 ------- ------- Total liabilities 2,617,707 548,700 --------- Shareholders' equity: Preferred stock - - Common stock 481 704 Capital in excess of par 435,755 404,506 Retained earnings 581,956 1,177,945 Accumulated other comprehensive income 20,829 31,060 Treasury stock, at cost (3,301) (569,792) ------- Total equity attributable to common shareholders 1,035,720 1,044,423 Non-controlling interest - 13,328 --- Total shareholders' equity 1,035,720 1,057,751 --------- Total liabilities and shareholders' equity $3,653,427 $1,606,451 ==========
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Nine Months Ended November 1, 2014 and November 2, 2013 (In thousands) Nine Months Ended ----------------- 2014 2013 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings including non-controlling interest $35,827 $114,412 Non-cash adjustments to net earnings: Depreciation and amortization 80,622 65,672 Tuxedo rental product amortization 30,038 28,712 Amortization of deferred financing costs 3,014 383 Amortization of discount on long-term debt 589 - Loss on extinguishment of debt 2,158 - Loss (gain) on disposition of assets 12,247 (992) Goodwill impairment charge - 9,501 Other (14,029) 13,984 Changes in operating assets and liabilities (91,449) (72,289) -------- Net cash provided by operating activities 59,017 159,383 ------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (72,397) (81,521) Acquisition of businesses, net of cash (1,491,393) (95,693) Proceeds from sales of property and equipment 160 4,127 Net cash used in investing activities (1,563,630) (173,087) ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from new term loan 1,089,000 - Proceeds from asset-based revolving credit facility 340,000 - Payments on asset-based revolving credit facility (340,000) - Proceeds from bond issuance 600,000 - Deferred financing costs (51,072) (1,776) Proceeds from previous term loan - 100,000 Payments on previous term loan (97,500) - Cash dividends paid (26,119) (26,979) Purchase of non-controlling interest (6,651) - Proceeds from issuance of common stock 7,115 8,291 Tax payments related to vested deferred stock units (6,907) (3,865) Excess tax benefits from share-based plans 3,736 1,532 Repurchases of common stock (251) (152,129) ----- Net cash provided by (used in) financing activities 1,511,351 (74,926) --------- Effect of exchange rate changes (1,274) (2,669) ------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,464 (91,299) Balance at beginning of period 59,252 156,063 Balance at end of period $64,716 $64,764 =======
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - NON-GAAP (In thousands, except per share amounts) Use of Non-GAAP Financial Measures We have provided adjusted information in addition to providing financial results in accordance with GAAP. This non-GAAP financial information is provided to enhance the user's overall understanding of the Company's current financial performance. Specifically, we believe the adjusted results provide useful information by excluding items we believe are not indicative of our core operating results as well as certain items related to the acquisition of Jos. A. Bank. The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of this non-GAAP information to our actual results is as follows and may not sum due to rounded numbers:
Total Company - Three Months Ended November 1, 2014 --------------------------------------------------- GAAP Acquisition Purchase Price Other (1) Adjusted Results & Integration Acctg Items Results Net sales $890,637 $ - $ - $ - $890,637 Gross margin: Retail clothing product 347,138 - 11,428 - 358,566 Tuxedo rental services 99,152 10,552 - - 109,704 Alteration and other services 14,852 - - - 14,852 Occupancy costs (114,325) - (1,211) - (115,536) Total retail gross margin 346,817 10,552 10,217 - 367,586 Corporate apparel clothing product 22,388 - 22,388 ------ --- ------ Total gross margin 369,205 10,552 10,217 - 389,974 Advertising expense 42,075 - - - 42,075 Selling, general and administrative expenses 281,955 (18,646) (2,733) 1,638 262,214 Goodwill impairment charge - - - - - --- --- --- --- --- Operating income 45,175 29,198 12,950 (1,638) 85,685 Net interest (25,006) - - - (25,006) Loss on extinguishment of debt - - - - - --- --- --- --- --- Earnings before income taxes 20,169 29,198 12,950 (1,638) 60,679 Provision for income taxes 13,168 3,422 4,352 (550) 20,391 ------ ----- ----- ---- ------ Net earnings including non- controlling interest 7,001 25,776 8,598 (1,088) 40,288 Net earnings attributable to non- controlling interest (208) - - - (208) ---- --- --- --- ---- Net earnings attributable to common shareholders $6,793 $25,776 $8,598 $(1,088) $40,080 ====== ======= ====== ======= ======= Net earnings per diluted common share attributable to common shareholders $0.14 $0.53 $0.18 $(0.02) $0.83 ===== ===== ===== ====== ===== (1) Other relates to adjustments to prior estimates of costs related to store closure and separation costs with executives offset by costs related to K&G strategic alternative review. Total Company - Three Months Ended November 2, 2013 --------------------------------------------------- GAAP Acquisition Purchase Price Other (2) Adjusted Results & Integration Acctg Items Results Net sales $648,890 $ - $ - $ - $648,890 Gross margin: Retail clothing product 234,543 - - - 234,543 Tuxedo rental services 102,864 - - - 102,864 Alteration and other services 8,951 - - - 8,951 Occupancy costs (73,456) - - - (73,456) Total retail gross margin 272,902 - - - 272,902 Corporate apparel clothing product 20,600 - - - 20,600 ------ --- --- --- ------ Total gross margin 293,502 - - - 293,502 Advertising expense 22,630 - - - 22,630 Selling, general and administrative expenses 210,867 (3,786) - (3,711) 203,370 Goodwill impairment charge - - - - - --- --- --- --- --- Operating income 60,005 3,786 - 3,711 67,502 Net interest (1,190) - - - (1,190) Loss on extinguishment of debt - - - - - --- --- --- --- --- Earnings before income taxes 58,815 3,786 - 3,711 66,312 Provision for income taxes 20,337 1,311 - 1,283 22,931 ------ ----- --- ----- ------ Net earnings including non- controlling interest 38,478 2,475 - 2,428 43,381 Net earnings attributable to non- controlling interest (274) - - - (274) ---- --- --- --- ---- Net earnings attributable to common shareholders $38,204 $2,475 $ - $2,428 $43,107 ======= ====== ========================= ====== ======= Net earnings per diluted common share attributable to common shareholders $0.79 $0.05 $ - $0.05 $0.90 ===== ===== ========================= ===== ===== (2) Other includes costs related to various strategic projects, separation costs associated with former executives, and store closure costs offset by a gain on the sale of an office building.
Use of Non-GAAP Financial Measures (cont'd) Total Company - Nine Months Ended November 1, 2014 -------------------------------------------------- GAAP Acquisition Purchase Price Other (1) Adjusted Results & Integration Acctg Items Results Net sales $2,324,189 $ - $ - $ - $2,324,189 Gross margin: Retail clothing product 876,059 - 17,251 - 893,310 Tuxedo rental services 320,366 10,552 - - 330,918 Alteration and other services 37,791 - - - 37,791 Occupancy costs (282,595) - (262) - (282,857) Total retail gross margin 951,621 10,552 16,988 - 979,161 Corporate apparel clothing product 59,490 - - - 59,490 ------ --- --- --- ------ Total gross margin 1,011,111 10,552 16,988 - 1,038,651 Advertising expense 109,072 - - - 109,072 Selling, general and administrative expenses 786,879 (81,243) (3,639) (5,141) 696,856 Goodwill impairment charge - - - - - --- --- --- --- --- Operating income 115,160 91,795 20,627 5,141 232,723 Net interest (39,154) - - - (39,154) Loss on extinguishment of debt (2,158) 2,158 - - - ------ ----- --- --- --- Earnings before income taxes 73,848 93,953 20,627 5,141 193,569 Provision for income taxes 38,021 20,206 7,157 1,784 67,168 ------ ------ ----- ----- ------ Net earnings including non- controlling interest 35,827 73,747 13,469 3,357 126,401 Net earnings attributable to non- controlling interest (292) - - - (292) ---- --- --- --- ---- Net earnings attributable to common shareholders $35,535 $73,747 $13,469 $3,357 $126,109 ======= ======= ======= ====== ======== Net earnings per diluted common share attributable to common shareholders $0.74 $1.53 $0.28 $0.07 $2.61 ===== ===== ===== ===== ===== (1) Other relates to K&G strategic alternative review and cost reduction initiatives partially offset by adjustments to prior estimates of costs related to store closure and separation costs with executives. Total Company - Nine Months Ended November 2, 2013 -------------------------------------------------- GAAP Acquisition Purchase Price Other (2) Adjusted Results & Integration Acctg Items Results Net sales $1,912,681 $ - $ - $ - $1,912,681 Gross margin: Retail clothing product 703,902 - - - 703,902 Tuxedo rental services 311,971 - - - 311,971 Alteration and other services 26,625 - - - 26,625 Occupancy costs (217,521) - - - (217,521) Total retail gross margin 824,977 - - - 824,977 Corporate apparel clothing product 55,239 - - - 55,239 ------ --- --- --- ------ Total gross margin 880,216 - - - 880,216 Advertising expense 68,584 - - - 68,584 Selling, general and administrative expenses 622,785 (4,430) - (5,957) 612,398 Goodwill impairment charge 9,501 - - (9,501) - ----- --- --- ------ --- Operating income 179,346 4,430 - 15,458 199,234 Net interest (1,772) - - - (1,772) Loss on extinguishment of debt - - - - - --- --- --- --- --- Earnings before income taxes 177,574 4,430 - 15,458 197,462 Provision for income taxes 63,162 1,478 - 5,490 70,130 ------ ----- --- ----- ------ Net earnings including non- controlling interest 114,412 2,952 - 9,968 127,332 Net loss attributable to non-controlling interest (174) - - - (174) ---- --- --- --- ---- Net earnings attributable to common shareholders $114,238 $2,952 $ - $9,968 $127,158 ======== ====== ========================= ====== ======== Net earnings per diluted common share attributable to common shareholders $2.29 $0.06 $ - $0.20 $2.55 ===== ===== ========================= ===== ===== (2) Other includes the non-cash write-off of K&G goodwill, costs related to various strategic projects, separation costs associated with former executives, and store closure costs offset by a gain on the sale of an office building.
Use of Non-GAAP Financial Measures (cont'd) Jos. A. Bank Selected Metrics - Three Months Ended November 2, 2013 and November 1, 2014 ---------------------------------------------------------------------------------------- Q3 FY 2013 Adjustments (2) Q3 FY 2013 Q3 FY 2014 Adjustments (4) Q3 FY 2014 as Reported (1) Selected Metrics GAAP Selected Metrics $% (3) $% (3) Net sales: Retail clothing product $225,969 $ - $225,969 91.3% $214,162 $ - $214,162 91.8% Other sales 21,499 21,499 8.7% 19,151 19,151 8.2% ------ ------ --- ------ ------ --- Total retail net sales 247,468 - 247,468 100.0% 233,313 - 233,313 100.0% Gross margin: Retail clothing product 123,548 861 124,409 55.1% 107,635 11,428 119,063 55.6% Other margin 9,599 - 9,599 44.7% 7,510 0 7,510 39.2% Occupancy costs (33,920) (1,746) (35,666) -14.4% (39,243) (1,211) (40,454) -17.3% ------- ------- Total retail gross margin 99,227 (885) 98,342 39.7% 75,902 10,218 86,120 36.9% Maintained product margin (net sales of retail clothing product less landed cost of goods) $135,333 59.9% $130,894 61.1%
(1) As filed in Jos. A. Bank's 10-Q reclassified to be consistent with Men's Wearhouse reporting. (2) Primarily reflects converting the FIFO method used by Jos. A. Bank to weighted average cost and the resetting of the straight-line rent and tenant improvement amounts. (3) Percent of related sales. (4) Adjusted for impact of purchase price accounting items.
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SOURCE Men's Wearhouse