Men's Wearhouse Falls after Disappointing Earnings
The company reported adjusted quarterly earnings per share near $0.53, which was $0.02 lower than the consensus analyst estimate and $0.01 lower than the lower end of management's projected range.
Q1 adjusted earnings per share of $0.53 represented an approximate 3.5% decrease compared to that of the same quarter last year. In contrast, Q1 revenue increased by close to 1.1% compared to that of the same quarter last year.
As compared to Q1 last fiscal year, sales and gross margins of the company's retail segment increased. This segment consists of the company's Men's Wearhouse, K&G and Moores Canada stores. However, sales and gross margins of Men's Wearhouse's corporate apparel segment decreased. The corporate apparel segment provides corporate uniforms and other work clothing, and comprised around 8.5% of Men's Wearhouse's Q1 revenue.
In its Q1 2012 earnings release, Men's Wearhouse provided guidance for full year 2012 earnings per share of $2.70 to $2.78, reaffirming the range the company provided in its Q4 2011 earnings release. In addition, the company provided earnings per share guidance of $1.12 to $1.13 for Q2 2012.
Is it realistic for Men's Wearhouse to leave its full year earnings per share guidance unchanged after a disappointing quarter? As a means to recover lost ground, the company offers positive projections about new customer programs in its corporate apparel segment. If these programs fail to live up to expectations and Men's Wearhouse fails to find other ways to improve its yearly earnings, management may soon lower its guidance range.
Shares of Men's Wearhouse traded more than 16% lower this morning. Men's clothing retailer Jos. A. Bank Clothiers (NASDAQ: JOSB) also traded lower this morning, falling more than 2%.
Disclosure: At the time of this writing, I did not own shares of any companies mentioned in this post.
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