– Q1 2011 GAAP diluted earnings per share was $0.52 and adjusted diluted earnings per share was $0.53
– Company provides guidance for second quarter and updated guidance for full year of fiscal 2011
– Conference call at 5:00 pm Eastern today
HOUSTON, June 8, 2011 /PRNewswire/ — The Men’s Wearhouse (NYSE: MW) today announced its consolidated financial results for the first quarter ended April 30, 2011.
First Quarter Net Sales Summary – Fiscal 2011
Total Net Sales Comparable Store Sales
U.S. dollars, in millions Change % Change % (c)
Current Year Prior Year Current Year Prior Year
Total Company $ 580.4(a) $ 473.5(a) 22.6%
Total Retail
Segment $ 520.7 $ 469.8 10.8%
MW 354.7 318.3 11.4% 10.8% 2.4%
K&G 106.7 98.3 8.6% 9.3% - 4.9%
Moores Canada 53.2 47.4 12.2% 6.0% (b) 0.2% (b)
Corporate
Apparel
Segment $ 59.7 $ 3.7 1,521.1%
(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 $0.52 for the first quarter ended April 30, 2011. Adjusted diluted earnings per share were $0.53 after excluding $0.7 million ($0.4 million after tax or $0.01 per diluted share outstanding) in acquisition integration expenses. This compares to adjusted diluted earnings per share updated guidance given May 5, 2011 of $0.47 to $0.50 and original guidance given March 9, 2011 of $0.27 to $0.30. Infirst quarter of 2010, GAAP diluted earnings per share were $0.26.
FIRST Quarter REVIEW
Total Company net sales increased 22.6% for the quarter.
In our retail segment, comparable store sales increased at each of our brands due to increased units per transaction, higher average ticket and, at K&G and Moores, an increase in customer traffic. There was also a 3.9% comparable store sales increase in tuxedo rental services revenues.
Corporate apparel segment net sales increased $56.0 million to $59.7 million for the quarter compared to the same prior year quarter. The increase was primarily due to US$54.0 million in revenues from our acquisitions of Dimensions and Alexandra in the UK on August 6, 2010.
Total gross margin, as a percentage of total net sales, was flat at 42.5%. Occupancy costs as a percent of sales decreased, alteration margin as a percent of sales increased and tuxedo rental margins increased. These increases were offset by a decrease in retail segment clothing margin as a percent of sales, which resulted mainly from increased promotions, and the increased mix of the lower margin corporate apparel segment.
Selling, general and administrative expenses were $203.0 million for the first quarter and increased 13.0% from the prior year’s SG&A of $179.7 million. Excluding $0.7 million in acquisition integration costs, first quarter SG&A expenses were $202.3 million or an increase of 12.6% to the prior year quarter. Adjusted SG&A related to the acquired UK operations resulted in an 8.0% increase. The remaining 4.6% adjusted increase was primarily due to increased payroll related costs and increased expenses associated with increased sales. As a percentage of total net sales, adjusted SG&A decreased 308 basis points from 37.9% to 34.9%.
Operating income was $43.6 million. Excluding $0.7 million in acquisition integration costs, operating income was $44.3 million or 7.6% of total net sales. This compares with the prior year operating income of $21.4 million or 4.5% of total net sales.
The financial results of the combined UK operations, excluding acquisition integration costs, were $0.01 accretive to the Company’s first quarter diluted earnings per share. Integration costs were $0.7 million ($0.4 million after tax or $0.01 per diluted share outstanding).
Total inventories of $521.1 million increased 18.8% from the prior year first quarter of $438.7 million. Excluding inventory from the acquired UK operations, inventories decreased 1.1%.
The Company had no borrowings under its bank credit facility at the end of first quarter fiscal 2011.
During the quarter, the Company repurchased 1.8 million shares for a total of $49.0 million.
2011 GUIDANCE
For the fiscal year, GAAP diluted earnings per share is expected to be in a range of $2.00 to $2.08. Adjusted diluted earnings per share are expected to be in a range of $2.04 to $2.12. Adjusted earnings per share exclude acquisition integration expenses of $3.5 million ($2.2 million after tax or $0.04 per diluted share outstanding).
For the second quarter of the fiscal year, GAAP diluted earnings per share is expected to be in a range of $1.01 to $1.04. Adjusted diluted earnings per share are expected to be in a range of $1.02 to $1.05. Adjusted earnings per share exclude acquisition integration expenses of $0.9 million ($0.6 million after tax or $0.01 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 second quarter diluted earnings per share.
Guidance Guidance
FY 2011 2Q FY 2011
Total Sales Increase 12% to 13% (1) 20% to 21% (1)
Comparable Store Sales Growth (2)
MW +5% to +7% +8% to +9%
K&G +3% to +4% +2% to +3%
Moores +2% to +3% +6% to +7%
Gross Profit Margin 43.05% to 43.25% (3) 46.65% to 46.80% (3)
S G & A (as % of Sales) 36.00% to 36.20% (4) 33.65% to 33.80% (4)
Effective Tax Rate 35.7% 35.9%
Weighted Average Shares Outstanding
(millions) 52.0 51.8
GAAP EPS $2.00 to $2.08 $1.01 to $1.04
Adjusted EPS $2.04 to $2.12 (4) $1.02 to $1.05 (4)
Foreign Exchange Conversion (avg.)
US Dollar to GBP 1.60 1.59
US Dollar to Canadian Dollar 1.03 1.03
Footnotes to Guidance: 1. Includes US$224 million for full year FY 2011 and US$63 million for 2Q FY2011 of sales from acquired operations of Dimensions and Alexandra. 2. Includes an assumed U.S. comparable store increase in tuxedo rental revenues of 7% to 8% for the full year FY 2011 and a 6% to 7% increase in 2Q FY 2011. 3. Occupancy costs are expected to be flat for full year FY 2011 and decrease low single digit for 2Q FY 2011. 4. Excludes acquisition integration costs.
CONFERENCE CALL AND WEBCAST INFORMATION
At 5:00 p.m. Eastern time on Wednesday, June 8, 2011, Company management will host a conference call and real time webcast to review the first quarter of fiscal 2011 and its outlook for the second quarter and full year of fiscal 2011.
To access the conference call, dial 480-629-9819. 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 June 15, 2011 by calling 303-590-3030 and entering the access code of 4444587#, or a webcast archive will be available free on the website for approximately 90 days.
STORE INFORMATION
April 30, 2011 May 1, 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 587 3,340.0 582 3,292.7 585 3,319.0
Men's Wearhouse and Tux 382 528.4 447 614.1 388 535.7
Moores, Clothing for Men 117 737.4 117 735.5 117 737.8
K&G (a) 101 2,392.4 106 2,465.6 102 2,394.1
Total 1,187 6,998.2 1,252 7,107.9 1,192 6,986.6
(a) 91, 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 1,187 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.
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
In thousands, except per share data
(Unaudited)
FOR THE THREE MONTHS ENDED
April 30, 2011 AND May 1, 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 $ 410,261 70.69% $ 364,690 77.03% $ 45,571 12.50% (6.34)
Tuxedo rental
services 73,141 12.60% 72,154 15.24% 987 1.37% (2.64)
Alteration and
other services 37,309 6.43% 32,941 6.96% 4,368 13.26% (0.53)
Total retail
sales 520,711 89.72% 469,785 99.22% 50,926 10.84% (9.50)
Corporate
apparel
clothing
product sales 59,673 10.28% 3,681 0.78% 55,992 1,521.11% 9.50
Total net
sales 580,384 100.00% 473,466 100.00% 106,918 22.58% 0.00
Total cost of
sales 333,751 57.51% 272,463 57.55% 61,288 22.49% (0.04)
Gross margin
(a):
Retail
clothing
product 222,888 54.33% 200,100 54.87% 22,788 11.39% (0.54)
Tuxedo rental
services 63,334 86.59% 60,828 84.30% 2,506 4.12% 2.29
Alteration and
other services 11,008 29.50% 8,877 26.95% 2,131 24.01% 2.56
Occupancy
costs (67,171) (12.90%) (69,691) (14.83%) 2,520 3.62% 1.93
Total retail
gross margin 230,059 44.18% 200,114 42.60% 29,945 14.96% 1.58
Corporate
apparel
clothing
product margin 16,574 27.77% 889 24.15% 15,685 1,764.34% 3.62
Total gross
margin 246,633 42.49% 201,003 42.45% 45,630 22.70% 0.04
Selling,
general and
administrative
expenses 202,996 34.98% 179,650 37.94% 23,346 13.00% (2.97)
Operating
income 43,637 7.52% 21,353 4.51% 22,284 104.36% 3.01
Net interest (268) (0.05%) (225) (0.05%) (43) (19.11%) 0.00
Earnings
before income
taxes 43,369 7.47% 21,128 4.46% 22,241 105.27% 3.01
Provision for
income taxes 16,177 2.79% 7,566 1.60% 8,611 113.81% 1.19
Net earnings
including
noncontrolling
interest 27,192 4.69% 13,562 2.86% 13,630 100.50% 1.82
Net loss
attributable
to
noncontrolling
interest 233 0.04% - 0.00% 233 100.00% 0.04
Net earnings
attributable
to common
shareholders $ 27,425 4.73% $ 13,562 2.86% $ 13,863 102.22% 1.86
Net earnings
per diluted
common share
attributable
to common
shareholders $ 0.52 $ 0.26
Weighted
average
diluted common
shares
outstanding: 52,197 52,628
(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)
April 30, May 1,
2011 2010
ASSETS
Current assets:
Cash and cash equivalents $ 145,657 $ 219,562
Accounts receivable, net 72,004 24,640
Inventories 521,082 438,671
Other current assets 67,911 67,510
Total current assets 806,654 750,383
Property and equipment, net 329,592 336,771
Tuxedo rental product, net 95,180 101,731
Goodwill 91,021 60,780
Intangible assets, net 38,343 3,225
Other assets 7,642 13,465
Total assets $ 1,368,432 $ 1,266,355
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 153,144 $ 99,720
Accrued expenses and other current liabilities 170,847 136,183
Income taxes payable 597 2,826
Current maturities of long-term debt - 45,780
Total current liabilities 324,588 284,509
Deferred taxes and other liabilities 70,736 62,741
Total liabilities 395,324 347,250
Equity:
Preferred stock - -
Common stock 714 707
Capital in excess of par 343,846 329,030
Retained earnings 1,024,168 964,834
Accumulated other comprehensive income 52,793 37,304
Treasury stock, at cost (461,760) (412,770)
Total equity attributable to common shareholders 959,761 919,105
Noncontrolling interest 13,347 -
Total equity 973,108 919,105
Total liabilities and equity $ 1,368,432 $ 1,266,355
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THREE MONTHS ENDED
April 30, 2011 AND May 1, 2010
(In thousands)
Three Months Ended
2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings including noncontrolling interest $ 27,192 $ 13,562
Non-cash adjustments to net earnings:
Depreciation and amortization 18,652 18,690
Tuxedo rental product amortization 5,546 6,978
Other 9,823 9,312
Changes in assets and liabilities 17,821 732
Net cash provided by operating activities 79,034 49,274
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (14,284) (11,099)
Proceeds from sales of property and equipment 22 -
Net cash used in investing activities (14,262) (11,099)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 1,539 783
Cash dividends paid (6,409) (4,756)
Tax payments related to vested deferred stock units (2,955) (2,656)
Excess tax benefits from share-based plans 691 763
Purchase of treasury stock (48,999) (144)
Net cash used in financing activities (56,133) (6,010)
Effect of exchange rate changes 647 1,379
INCREASE IN CASH AND CASH EQUIVALENTS 9,286 33,544
Balance at beginning of period 136,371 186,018
Balance at end of period $ 145,657 $ 219,562
SOURCE The Men’s Wearhouse
Released June 8, 2011