Market Overview

Men's Wearhouse Reports Fiscal 2012 Second Quarter Results

- Q2 2012 GAAP diluted earnings per share was $1.15 compared to per share guidance of $1.12 to $1.13

- Company provides guidance for fiscal third and fourth quarters and raises guidance for fiscal full year 2012

HOUSTON, Sept. 5, 2012 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the fiscal second quarter ended July 28, 2012 and will file its Form 10-Q tomorrow morning, September 6, 2012.

Net earnings for the 2012 fiscal second quarter was $59.4 million, or $1.15 diluted earnings per share, compared to net earnings of $57.1 million, or $1.09 diluted earnings per share, in the same period in 2011. Last year's second quarter adjusted diluted earnings per share was $1.11 after excluding $0.7 million ($0.5 million after tax or $0.01 per diluted share) in acquisition related integration costs and $1.0 million ($0.7 million after tax or $0.01 per diluted share) for a non-cash asset impairment charge. 

Net sales for the second quarter of fiscal 2012 increased 1.0% to $662.3 million from $655.5 million for the same period a year ago, in line with expectations, and retail segment sales increased 3.2% or $18.7 million.  Diluted earnings per share of $1.15 was better than the $1.12 to $1.13 guidance given on June 6, 2012 mainly as a result of a higher than planned retail segment gross margin for second quarter 2012 and a slightly lower than expected tax rate.

Doug Ewert, Men's Wearhouse president and chief executive officer, stated, "Sales at our flagship brand Men's Wearhouse stores, which represented approximately 65% of our total second quarter sales, were above both prior year sales and our plan for the 2012 second quarter.  Comparable store sales increased 4.4% as our customers continue to respond positively to our long standing service model and our trend right men's apparel during both promotional and non-promotional periods.  In addition, our higher margin tuxedo rental revenues experienced strong U.S. comparable store sales of 4.3% in the second quarter, driven by increased unit rentals and unit rental rates as well as increased sales of tuxedo accessories.

"Moores, our retail brand in Canada, was roughly 12% of our total sales mix in the 2012 second quarter and also had a better than expected comparable store sales increase of 2.5%.  Moores continues to perform well in its market," continued Ewert. "K&G's sales, which were roughly 14% of our total sales for the second quarter, fell below our expectations with a comparable store sales decrease of 3.3%.  We continue to focus on improving K&G's performance and in late August we rolled out our new marketing campaign featuring Blair Underwood, accomplished actor and Broadway star.  We are excited about this initiative and about having an exclusive relationship to sell his BU Collection, a premier line of men's tailored suits.  Our Corporate Apparel segment, which represented 9% of our total 2012 second quarter sales, performed as planned for the quarter and is poised for a solid second half as launch dates for customer uniform programs come into effect."

The following is a summary of net sales for second quarter and year to date fiscal 2012.  The dollars shown are U.S. dollars in millions and due to rounded numbers may not sum.  Comparable store sales do not include ecommerce sales and the Moores' comparable store sales change is based on the Canadian dollar.

Second Quarter Net Sales Summary – Fiscal 2012



Net Sales

Comparable Store Sales Change


Net Sales Change

Current Year

Current Year

Prior Year

Total Retail Segment

3.2%

$18.7

$604.7



       Men's Wearhouse

5.5%

$22.5

$429.5

4.4%

10.9%

       K&G

(2.7%)

($2.5)

$90.0

(3.3%)

5.4%

       Moores

(2.4%)

($2.0)

$78.4

2.5%

4.4%

       MW Cleaners

10.8%

$0.7

$6.8









Corporate Apparel Segment

(17.1%)

($11.9)

$57.6









Total Company

1.0%

$6.8

$662.3





Year-To-Date Net Sales Summary – Fiscal 2012



Net Sales

Comparable Store Sales Change


Net Sales Change

Current Year

Current Year

Prior Year







Total Retail Segment

3.1%

$34.6

$1,141.4



       Men's Wearhouse

5.2%

$39.3

$801.0

4.1%

10.8%

       K&G

(3.1%)

($6.2)

$193.1

(3.7%)

7.5%

       Moores

0.2%

$0.3

$133.8

4.4%

5.0%

       MW Cleaners

9.8%

$1.2

$13.5









Corporate Apparel Segment

(16.8%)

($21.7)

$107.5









Total Company

1.0%

$13.0

$1,248.9



2012 FINANCIAL GUIDANCE

For the fiscal year, the Company expects GAAP diluted earnings per share in a range of $2.74 to $2.80, an increase of 15% to 18% over the prior year adjusted diluted earnings per share.  Fiscal 2012 is a 53-week year with an extra week included in the fourth quarter.  Diluted earnings per share from the extra week are estimated at $0.02.

For the third quarter, GAAP diluted earnings per share is expected to be in a range of $0.95 to $0.98, a 20% to 24% increase over the prior year adjusted diluted earnings per share.  For the fourth quarter, GAAP diluted earnings per share is expected to be in a range of $0.12 to $0.15, a significant increase over the prior year adjusted loss per share of $0.05.

The following is a summary of guidance information.  All comparable store sales growth is based on a 52-week comparable time period.  Comparisons to prior year are to adjusted numbers which exclude acquisition related integration costs and a non-cash asset impairment charge.


Guidance

Guidance

Guidance

FY 2012

3Q FY 2012

4Q FY 2012





GAAP Diluted EPS

$2.74 to $2.80

$0.95 to $0.98

$0.12 to $0.15









Sales




Total Sales Increase

4.8% to 5.6%

8.8% to 9.3%

11.3% to 11.8%

Comparable Store Sales Growth




     MW: 63% of FY12 Total Sales

 +4% to +5%

+8% to +9%

+3% to +4%

  MW Tuxedo Rental Revenues

+6% to +7%

+10% to +11%

+1% to +2%

     K&G: 15% of FY12 Total Sales

-1% to -2%

-1.0% to flat

+1% to +2%

     Moores: 11% of FY12 Total Sales

+4% to +5%

+7 to +8%

+3 to +4%

Corporate Apparel: 9% of FY12 Total Sales

-2% to -3%

+11% to +12%

+11% to +12%









Gross Margin




Change in Gross Margin as Percent of Sales

+0.65% to +0.75%

+0.15% to +0.25%

+0.85% to +0.95%









SG&A




Increase in SG&A

+4.70% to +5.45%

+4.35% to +5.10%

+5.85% to +6.60%









Other




Effective Tax Rate

34.4%

34.4%

30.8%

Weighted Average Shares (millions)

50.960

50.810

50.880

Average Foreign Exchange Conversion Rates




  US Dollar to the Pound

1.568

1.558

1.558

  US Dollar to the Canadian Dollar

0.998

1.002

1.000

Dilutive Effect of Participating Securities

$0.03

$0.01

$0.00

CONFERENCE CALL AND WEBCAST INFORMATION

At 9:00am Eastern time on Thursday, September 6, 2012, Company management will host a conference call and real time webcast to review fiscal second quarter 2012 results and its outlook for the fiscal third quarter, fourth quarter and full year 2012.

To access the conference call, dial 480-629-9645.  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 13, 2012 by calling 303-590-3030 and entering the access code of 4561672#, or a webcast archive will be available free on the website for approximately 90 days.

STORE INFORMATION


July 28, 2012

    July 30, 2011

 January 28, 2012









Number of Stores

Sq. Ft.

(000's)

Number of Stores

Sq. Ft.

(000's)

Number of Stores

Sq. Ft.

(000's)








Men's Wearhouse

613

3,506.3

591

3,364.3

607

3,462.7








Men's Wearhouse and Tux

325

449.0

370

514.3

343

474.6








Moores, Clothing for Men

117

741.8

117

738.9

117

741.7








K&G (a)

98

2,326.6

100

2,369.9

99

2,351.2








Total

1,153

7,023.7

1,178

6,987.4

1,166

7,030.2










(a) 92, 90 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 1,153 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.  Most 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, Alexandra and Yaffy in the UK. 

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 28, 2012 and 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.twinhill.com, www.dimensions.co.uk and www.alexandra.co.uk

Contact:
Ken Dennard, DRG&L
(832) 594-4004

          

THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


FOR THE THREE MONTHS ENDED

July 28, 2012 AND July 30, 2011

(In thousands, except per share data)











Three Months Ended


Variance



% of


% of




Basis


2012

Sales

2011

Sales


Dollar

%

Points










Net sales:









          Retail clothing product

$413,024

62.36%

$401,789

61.29%


$11,235

2.80%

1.07

          Tuxedo rental services

154,124

23.27%

148,267

22.62%


5,857

3.95%

0.65

          Alteration and other services   

37,540

5.67%

35,978

5.49%


1,562

4.34%

0.18

               Total retail sales

604,688

91.30%

586,034

89.40%


18,654

3.18%

1.90

               Corporate apparel clothing product sales

57,614

8.70%

69,495

10.60%


(11,881)

(17.10%)

(1.90)

                    Total net sales

662,302

100.00%

655,529

100.00%


6,773

1.03%

0.00










                   Total cost of sales

342,045

51.64%

346,284

52.83%


(4,239)

(1.22%)

(1.18)










Gross margin (a):









        Retail clothing product

228,986

55.44%

222,893

55.48%


6,093

2.73%

(0.03)

        Tuxedo rental services

132,889

86.22%

128,105

86.40%


4,784

3.73%

(0.18)

        Alteration and other services

9,395

25.03%

8,596

23.89%


799

9.30%

1.13

        Occupancy costs

(69,367)

(11.47%)

(68,410)

(11.67%)


(957)

(1.40%)

0.20

             Total retail gross margin

301,903

49.93%

291,184

49.69%


10,719

3.68%

0.24

             Corporate apparel clothing product margin

18,354

31.86%

18,061

25.99%


293

1.62%

5.87

                   Total gross margin

320,257

48.36%

309,245

47.17%


11,012

3.56%

1.18










Selling, general and administrative expenses

228,667

34.53%

220,227

33.60%


8,440

3.83%

0.93










Operating income

91, 590

13.83%

89,018

13.58%


2,572

2.89%

0.25










Net interest

(365)

(0.06%)

(229)

(0.03%)


(136)

59.39%

(0.02)










Earnings before income taxes

91,225

13.77%

88,789

13.54%


2,436

2.74%

0.23










Provision for income taxes

31,655

4.78%

31,519

4.81%


136

0.43%

(0.03)










Net earnings including noncontrolling interest

59,570

8.99%

57,270

8.74%


2,300

4.02%

0.26










Net earnings attributable to noncontrolling interest

(177)

(0.03%)

(192)

(0.03%)


15

(7.81%)

0.00










Net earnings attributable to common shareholders

$ 59,393

8.97%

$  57,078

8.71%


$ 2,315

4.06%

0.26










Net earnings per diluted common share attributable to common shareholders

$     1.15


$      1.09















Weighted average diluted common shares outstanding:

50,932


51,792
























(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 28, 2012 AND July 30, 2011

(In thousands, except per share data)











Six Months Ended


Variance



% of


% of




Basis


2012

Sales

2011

Sales


Dollar

%

Points










Net sales:









          Retail clothing product

$ 833,493

66.74%

$  812,050

65.70%


$ 21,443

2.64%

1.03

          Tuxedo rental services

232,613

18.63%

221,408

17.91%


11,205

5.06%

0.71

          Alteration and other services   

75,274

6.03%

73,287

5.93%


1,987

2.71%

0.10

               Total retail sales

1,141,380

91.39%

1,106,745

89.55%


34,635

3.13%

1.84

               Corporate apparel clothing product sales

107,496

8.61%

129,168

10.45%


(21,672)

(16.78%)

(1.84)

                    Total net sales

1,248,876

100.00%

1,235,913

100.00%


12,963

1.05%

0.00










                    Total cost of sales

674,570

54.01%

680,035

55.02%


(5,465)

(0.80%)

(1.01)










Gross margin (a):









        Retail clothing product

460,849

55.29%

445,781

54.90%


15,068

3.38%

0.40

        Tuxedo rental services

200,365

86.14%

191,439

86.46%


8,926

4.66%

(0.33)

        Alteration and other services

19,571

26.00%

19,604

26.75%


(33)

(0.17%)

(0.75)

        Occupancy costs

(138,065)

(12.10%)

(135,581)

(12.25%)


(2,484)

(1.83%)

0.15

               Total retail gross margin

542,720

47.55%

521,243

47.10%


21,477

4.12%

0.45

               Corporate apparel clothing product margin

31,586

29.38%

34,635

26.81%


(3,049)

(8.80%)

2.57

                   Total gross margin

574,306

45.99%

555,878

44.98%


18,428

3.32%

1.01










Selling, general and administrative expenses

441,769

35.37%

423,223

34.24%


18,546

4.38%

1.13










Operating income

132,537

10.61%

132,655

10.73%


(118)

(0.09%)

(0.12)










Net interest

(670)

(0.05%)

(497)

(0.04%)


(173)

34.81%

(0.01)










Earnings before income taxes

131,867

10.56%

132,158

10.69%


(291)

(0.22%)

(0.13)










Provision for income taxes

45,717

3.66%

47,696

3.86%


(1,979)

(4.15%)

(0.20)










Net earnings including noncontrolling interest

86,150

6.90%

84,462

6.83%


1,688

2.00%

0.06










Net loss attributable to noncontrolling interest

127

0.01%

41

0.00%


86

(209.76%)

0.01










Net earnings attributable to common shareholders

$  86,277

6.91%

$   84,503

6.84%


$ 1,774

2.10%

0.07



















Net earnings per diluted common share attributable to common shareholders

$       1.67


$       1.61















Weighted average diluted common shares outstanding:

51,084


51,994















(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 28,


July 30,



2012


2011






ASSETS









Current assets:





Cash and cash equivalents

$          106,399


$           162,301


Accounts receivable, net

69,622


65,289


Inventories

577,078


547,899


Other current assets

70,786


66,087







   Total current assets

823,885


841,576

Property and equipment, net

383,015


337,517

Tuxedo rental product, net

116,586


88,786

Goodwill

87,672


90,251

Intangible assets, net

32,093


36,839

Other assets

4,748


10,424







   Total assets

$       1,447,999


$        1,405,393






LIABILITIES AND EQUITY









Current liabilities:





Accounts payable

$          119,433


$           130,068


Accrued expenses and other current liabilities

161,850


151,754


Income taxes payable

728


23,994







   Total current liabilities

282,011


305,816






Deferred taxes and other liabilities

98,401


71,864







   Total liabilities

380,412


377,680






Equity:





Preferred stock

-


-


Common stock

722


715


Capital in excess of par

372,601


351,181


Retained earnings

1,163,324


1,074,942


Accumulated other comprehensive income

36,302


49,327


Treasury stock, at cost

(517,894)


(461,760)







   Total equity attributable to common shareholders

1,055,055


1,014,405







Noncontrolling interest

12,532


13,308







   Total equity

1,067,587


1,027,713







    Total liabilities and equity

$     1,447,999


$      1,405,393

 

THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


FOR THE SIX MONTHS ENDED

July 28, 2012 AND July 30, 2011

(In thousands)








Six Months Ended



2012


2011






CASH FLOWS FROM OPERATING ACTIVITIES:










Net earnings including noncontrolling interest

$          86,150


$          84,462


Non-cash adjustments to net earnings:





   Depreciation and amortization

41,775


37,805


   Tuxedo rental product amortization

17,956


17,076


   Other

12,790


9,751


Changes in operating assets and liabilities

(50,239)


(27,078)







        Net cash provided by operating activities

108,432


122,016






CASH FLOWS FROM INVESTING ACTIVITIES:





Capital expenditures

(68,846)


(38,258)


Proceeds from sales of property and equipment

14


51







        Net cash used in investing activities

(68,832)


(38,207)






CASH FLOWS FROM FINANCING ACTIVITIES:





Proceeds from issuance of common stock

3,939


4,552


Cash dividends paid

(18,613)


(12,671)


Tax payments related to vested deferred stock units

(4,421)


(2,955)


Excess tax benefits from share-based plans

2,039


1,386


Repurchases of common stock

(41,296)


(48,999)







        Net cash used in financing activities

(58,352)


(58,687)







Effect of exchange rate changes

(155)


808






INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(18,907)


25,930







Balance at beginning of period

125,306


136,371


Balance at end of period

$         106,399


$         162,301

 

 

SOURCE Men's Wearhouse, Inc.

 

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