– Q2 2009 GAAP diluted EPS was $0.75 compared with Q2 2008 GAAP diluted EPS of $0.63 and adjusted diluted EPS of $0.72
– Company provides guidance for the third quarter of fiscal 2009
– Conference call at 5:00 pm Eastern today
HOUSTON, Sept. 9 /PRNewswire-FirstCall/ — The Men’s Wearhouse (NYSE: MW) today announced its consolidated financial results for the second quarter ended August 1, 2009.
Second Quarter Sales Summary - Fiscal 2009
------------------------------------------
Total Comparable
Sales Store Sales
U.S. dollars, in millions Change % Change %
------------------------- -----------
Current Year Prior Year Current Year Prior Year
------------ ---------- ------------ ----------
Total Company $526.2 $545.3 -3.5%
MW $359.0(a) $362.7(a) -1.0% -2.0%(b) -7.8%(b)
K&G $93.6 $96.4 -2.9% -3.6% -8.9%
United States $461.0 $470.0 -1.9% -2.4% -8.0%
Moores $65.2 $75.3 -13.3% -3.4%(c) -2.8%(c)
Year-To-Date Sales Summary - Fiscal 2009
----------------------------------------
Total Comparable
Sales Store Sales
U.S. dollars, in millions Change % Change %
------------------------- -----------
Current Year Prior Year Current Year Prior Year
------------ ---------- ------------ ----------
Total Company $990.3 $1,036.4 -4.4%
MW $670.0(a) $690.6(a) -3.0% -4.4%(b) -7.2%(b)
K&G $198.1 $197.0 +0.6% -0.6% -11.6%
United States $886.0 $911.3 -2.8% -3.5% -8.2%
Moores $104.3 $125.1 -16.6% -3.7%(c) -3.3%(c)
(a) Includes retail stores and ecommerce.
(b) Comparable store sales do not include ecommerce. Stores from the
After Hours acquisition are included beginning Q2 of fiscal 2008.
(c) Comparable store sales change is based on the Canadian dollar.
Diluted earnings per common share were $0.75 for the second quarter ended August 1, 2009. This compares to diluted earnings per common share guidance given June 8, 2009 of $0.56 to $0.60. Prior year second quarter GAAP diluted earnings per common share were $0.63 and adjusted diluted earnings per common share were $0.72 excluding $7.3 million (pre tax) or $0.09 per diluted share outstanding in costs incurred in connection with the closure of the Canadian based manufacturing facility operated by the Company’s subsidiary, Golden Brand.
SECOND Quarter REVIEW
-- Total Company sales decreased 3.5% for the quarter.
-- Clothing product sales, representing 69.2% of fiscal second quarter
2009 total net sales, decreased 5.6% due to decreases in the
Company's comparable store sales primarily driven by a
reduction in store traffic levels.
-- Tuxedo rental sales, representing 24.6% of fiscal second quarter
2009 total net sales, increased 1.7%.
-- Gross margin before occupancy costs, as a percentage of total net sales,
decreased 86 basis points from 59.9% to 59.1%. Clothing product
margins, as a percentage of related sales, decreased 205 basis points
due to increased promotional activities and were modestly offset by
higher alteration service margins and the impact of the higher margin
tuxedo rental revenues that increased as a mix of total sales from 23.4%
to 24.6%.
-- Occupancy costs increased, as a percentage of total net sales, by 36
basis points from 13.5% to 13.9% due to the deleveraging effect of
reduced comparable store sales. On an absolute dollar basis, occupancy
costs decreased 0.9% from $73.8 million in the prior year to $73.1
million.
-- Selling, general, and administrative expenses were $173.9 million in the
current year and $198.9 million in the prior year. During the quarter,
the Company entered into an agreement with a third party vendor who
assumed our unredeemed gift card liability, which resulted in the
recognition of other income from gift card breakage of $3.2 million
($2.0 million after tax or $0.04 per diluted share outstanding).
Excluding other income from gift card breakage, adjusted SG&A
expenses of $177.1 million decreased 7.6% from the prior year's
adjusted SG&A of $191.6 million which excludes $7.3 million in costs
associated with the closing of Golden Brand. The decrease is primarily
due to cost-cutting measures and operational efficiencies. As a
percentage of total net sales, adjusted SG&A decreased 148 basis
points from 35.1% to 33.7%. Adjusted SG&A excluding advertising
decreased 9.5% from the prior year quarter.
-- Operating income was $63.9 million or 12.1% of total net sales compared
to adjusted operating income of $61.5 million or 11.3% of total net
sales for the same period last year which excludes $7.3 million in
Golden Brand closure costs. Net income was $39.5 million or 7.5% of
total net sales compared to adjusted net income of $37.3 million or 6.8%
of total net sales for the same period last year which excludes $4.5
million in Golden Brand closure costs (net of tax).
-- Cash and cash equivalent balances plus amounts held in short-term
investments as of the end of the second quarter of 2009 were $163.9
million, an increase of $44.7 million over the same period last year.
-- Total inventories of $430.8 million declined 5.8% from the prior year
second quarter of $457.2 million.
-- Long term debt as of the end of the second quarter of 2009 was $43.2
million, a decrease of $41.1 million from the same period last year.
THIRD QUARTER FISCAL 2009 GUIDANCE
For the third quarter, the Company expects GAAP diluted earnings per common share to be in a range of $0.27 to $0.30.
The Company anticipates comparable store sales of its retail apparel business to decline in a range of 2% to 3% and comparable store sales of its tuxedo rental revenues to increase in a range of 1% to 2% for the third quarter. Total Company sales are expected to be flat to a decrease of 2% for the third quarter.
Gross profit before occupancy costs for the third quarter is expected to decline in the low single digit range from the prior year as the Company continues a more aggressive posture in strengthening its value proposition for customers. Occupancy costs are expected to be flat for the third quarter in absolute dollar terms.
Selling, general and administrative expenses for the third quarter are expected to decline by 4% to 5% from the prior year, excluding advertising costs and $1.8 million in prior year costs associated with the closing of Golden Brand.
This guidance includes an estimated effective tax rate of approximately 33.0% for the third quarter. The Company’s effective tax rate for the fiscal year is now estimated at 36.1%.
Weighted average fully diluted common shares outstanding are estimated to be 52.285 million for the third quarter and 52.195 million for the full year.
UPDATED CONFERENCE CALL AND WEBCAST INFORMATION
At 5:00 pm Eastern time on Wednesday, September 9, 2009, company management will host a conference call and real time web cast to review the fiscal second quarter and its outlook for the third quarter of fiscal 2009.
To access the conference call, dial 480-629-9772. 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 16, 2009 by calling 303-590-3030 and entering the access code of 4143979#, or a webcast archive will be available free on the website for approximately 90 days.
STORE INFORMATION
August 1, 2009 August 2, 2008 January 31, 2009
-------------- -------------- ----------------
Number Number Number
of Sq. Ft. of Sq. Ft. of Sq. Ft.
Stores (000's) Stores (000's) Stores (000's)
------ ------- ------ ------- ------ -------
Men's Wearhouse 580 3,274.1 572 3,213.9 580 3,263.1
Men's Wearhouse
and Tux 473 644.4 493 668.6 489 665.0
Moores, Clothing
for Men 117 732.7 116 721.2 117 729.3
K&G (a) 108 2,488.4 106 2,442.6 108 2,493.4
Total 1,278 7,139.6 1,287 7,046.3 1,294 7,150.8
(a) 94, 90 and 93 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 1,278 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.
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 and other factors described in the Company’s annual report on Form 10-K for the year ended January 31, 2009 and Form 10-Q for the quarter ended May 2, 2009.
For additional information on Men’s Wearhouse, please visit the Company’s website at www.menswearhouse.com.
CONTACT: Neill Davis, EVP & CFO, Men's Wearhouse (281) 776-7000
Ken Dennard, DRG&E (713) 529-6600
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
FOR THE THREE MONTHS ENDED
August 1, 2009 AND August 2, 2008
(In thousands, except per share data)
Three Months Ended Variance
------------------ --------
% of % of Basis
2009 Sales 2008 Sales Dollar % Points
---- ----- ---- ----- ------ --- ------
Net sales:
Clothing
product $364,302 69.23% $386,108 70.81% $(21,806) (5.65%) (1.58)
Tuxedo
rental
services 129,567 24.62% 127,453 23.37% 2,114 1.66% 1.25
Alteration
and other
services 32,339 6.15% 31,728 5.82% 611 1.93% 0.33
------ ---- ------ ---- --- ---- ----
Total
net
sales 526,208 100.00% 545,289 100.00% (19,081) (3.50%) 0.00
Total cost
of sales 288,420 54.81% 292,246 53.59% (3,826) (1.31%) 1.22
------- ----- ------- ----- ------ ------ ----
Gross
margin(a) 237,788 45.19% 253,043 46.41% (15,255) (6.03%) (1.22)
Selling,
general
and
adminis-
trative
expenses 173,896 33.05% 198,886 36.47% (24,990) (12.56%) (3.43)
------- ----- ------- ----- ------- ------- -----
Operating
income 63,892 12.14% 54,157 9.93% 9,735 17.98% 2.21
Net interest - 0.00% (346) 0.06% (346) (100.00%) (0.06)
--- ---- ---- ---- ---- ------- ------
Earnings
before
income
taxes 63,892 12.14% 53,811 9.87% 10,081 18.73% 2.27
Provision
for income
taxes 24,407 4.64% 20,986 3.85% 3,421 16.30% 0.79
------ ---- ------ ---- ----- ----- ----
Net earnings $39,485 7.50% $32,825 6.02% $6,660 20.29% 1.48
======= ==== ======= ==== ====== ===== ====
Net earnings
per diluted
common
share (b) $0.75 $0.63
===== =====
Weighted
average
diluted
common
shares
outstanding: 52,255 51,862
====== ======
(a) Gross margin as a percentage of related sales:
Three Months Ended Variance
------------------ --------
2009 % of 2008 % of
Related Related Basis
Sales Sales Dollar % Points
---- ------- ---- ------- ------ --- ------
Clothing
margin $194,115 53.28% $213,634 55.33% $(19,519) (9.14%) (2.05)
Tuxedo
margin 108,092 83.43% 106,651 83.68% 1,441 1.35% (0.25)
Alteration
and other
services
margin 8,649 26.74% 6,524 20.56% 2,125 32.57% 6.18
Occupancy
costs (73,068) (13.89%) (73,766) (13.53%) 698 0.95% (0.36)
------- ------ ------- ------ --- ---- -----
Gross
margin $237,788 45.19% $253,043 46.41% $(15,255) (6.03%) (1.22)
======== ===== ======== ===== ======== ====== =====
(b) Calculated based on net earnings less net earnings allocated to
participating securities of $388 thousand for the quarter ended
August 1, 2009.
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
FOR THE SIX MONTHS ENDED
August 1, 2009 AND August 2, 2008
(In thousands, except per share data)
Six Months Ended Variance
---------------- --------
% of % of Basis
2009 Sales 2008 Sales Dollar % Points
---- ----- ---- ----- ------ --- ------
Net sales:
Clothing
product $723,364 73.04% $774,599 74.74% $(51,235) (6.61%) (1.70)
Tuxedo
rental
services 200,986 20.29% 197,647 19.07% 3,339 1.69% 1.22
Alteration
and other
services 65,992 6.66% 64,139 6.19% 1,853 2.89% 0.47
------ ---- ------ ---- ----- ---- ----
Total
net
sales
990,342 100.00% 1,036,385 100.00% (46,043) (4.44%) 0.00
Total cost
of sales 564,565 57.01% 571,587 55.15% (7,022) (1.23%) 1.86
------- ----- ------- ----- ------ ------- ----
Gross
margin(a) 425,777 42.99% 464,798 44.85% (39,021) (8.40%) (1.86)
Selling,
general
and
adminis-
trative
expenses 353,109 35.66% 395,536 38.16% (42,427) (10.73%) (2.51)
------- ----- ------- ----- ------- ------- -----
Operating
income 72,668 7.34% 69,262 6.68% 3,406 4.92% 0.65
Net interest (160) 0.02% (1,124) 0.11% (964) (85.77%) (0.09)
---- ---- ------ ---- ---- ------- -----
Earnings
before
income
taxes 72,508 7.32% 68,138 6.57% 4,370 6.41% 0.75
Provision
for income
taxes 27,767 2.80% 25,370 2.45% 2,397 9.45% 0.36
------ ---- ------ ---- ----- ---- ----
Net Earnings $44,741 4.52% $42,768 4.13% $1,973 4.61% 0.39
======= ==== ======= ==== ====== ==== ====
Net earnings
per diluted
common
share(b) $0.85 $0.82
===== =====
Weighted
average
diluted
common
shares
outstanding: 52,105 51,863
====== ======
(a) Gross margin as a percentage of related sales:
Six Months Ended Variance
---------------- --------
2009 % of 2008 % of
Related Related Basis
Sales Sales Dollar % Points
---- ------- ---- ------- ------ --- ------
Clothing
margin $385,720 53.32% $433,634 55.98% $(47,914) (11.05%) (2.66)
Tuxedo
margin 167,479 83.33% 164,280 83.12% 3,199 1.95% 0.21
Alteration
and other
services
margin 18,212 27.60% 14,204 22.15% 4,008 28.22% 5.45
Occupancy
costs (145,634) (14.71%) (147,320) (14.21%) 1,686 1.14% (0.49)
-------- ------- -------- ------- ----- ---- -----
Gross
margin $425,777 42.99% $464,798 44.85% $(39,021) (8.40%) (1.86)
======== ===== ======== ===== ======== ====== =====
(b) Calculated based on net earnings less net earnings allocated to
participating securities of $442 thousand for the six months ended
August 1, 2009.
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
August 1, August 2,
2009 2008
---- ----
Current assets:
Cash and cash equivalents $144,449 $119,248
Short-term investments 19,490 -
Accounts receivable, net 17,129 19,047
Inventories 430,777 457,212
Other current assets 51,876 59,012
------ ------
Total current assets 663,721 654,519
Property and equipment, net 375,595 400,791
Tuxedo rental product, net 107,848 90,860
Goodwill 59,266 61,538
Other assets, net 16,466 25,351
------ ------
Total assets $1,222,896 $1,233,059
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $78,918 $102,780
Accrued expenses and other current
liabilities 115,488 118,113
Income taxes payable 19,276 9,347
------ -----
Total current liabilities $213,682 $230,240
Long-term debt 43,161 84,221
Deferred taxes and other liabilities 63,289 67,320
------ ------
Total liabilities 320,132 381,781
------- -------
Shareholders' equity:
Preferred stock - -
Common stock 703 698
Capital in excess of par 319,029 308,670
Retained earnings 961,670 915,541
Accumulated other comprehensive income 33,988 38,905
------ ------
Total 1,315,390 1,263,814
Treasury stock, at cost (412,626) (412,536)
-------- --------
Total shareholders' equity 902,764 851,278
------- -------
Total liabilities and equity $1,222,896 $1,233,059
========== ==========
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE SIX MONTHS ENDED
August 1, 2009 AND August 2, 2008
(In thousands)
Six Months Ended
----------------
2009 2008
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $44,741 $42,768
Non-cash adjustments to net earnings:
Depreciation and amortization 43,881 46,925
Tuxedo rental product amortization 22,089 21,819
Other (334) 4,606
Changes in assets and liabilities (248) (30,511)
---- -------
Net cash provided by operating activities 110,129 85,607
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (28,757) (49,524)
Proceeds from sales of available-for-sale
investments - 59,921
Other investing activities - 12
--- ---
Net cash provided by (used in) investing
activities (28,757) 10,409
------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 1,051 1,181
Proceeds from revolving credit facility - 100,600
Payments on revolving credit facility (25,000) (105,975)
Cash dividends paid (7,344) (7,281)
Purchase of treasury stock (90) (156)
Other financing activities (1,588) (1,320)
------ ------
Net cash used in financing activities (32,971) (12,951)
------ -------
Effect of exchange rate changes 8,636 (3,263)
----- ------
INCREASE IN CASH AND CASH EQUIVALENTS 57,037 79,802
Balance at beginning of period 87,412 39,446
------ ------
Balance at end of period $144,449 $119,248
======== ========
SOURCE Men’s Wearhouse
Released September 9, 2009