Men's Wearhouse Reports Fiscal 2012 First Quarter Results
- Q1 2012 GAAP diluted earnings per share was $0.52 compared to per share guidance of $0.53 to $0.54
- Company provides guidance for fiscal second quarter and reaffirms guidance for fiscal full year 2012
- Conference call at 5:00 pm Eastern today
HOUSTON, June 6, 2012 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the fiscal first quarter ended April 28, 2012.
| First Quarter Net Sales Summary – Fiscal 2012 |
|||||
| U.S. dollars, in millions |
Total Net Sales Change % |
Comparable Store Sales Change % (c) |
|||
| Current Year |
Prior Year |
Current Year |
Prior Year |
||
| Total Company |
$ 586.6(a) |
$ 580.4(a) |
1.1% |
||
| Total Retail Segment |
$ 536.7 |
$ 520.7 |
3.1% |
||
| MW |
371.5 |
354.7 |
4.7% |
3.8% |
10.8% |
| K&G |
103.1 |
106.7 |
(3.4%) |
(4.0%) |
9.3% |
| Moores Canada |
55.5 |
53.2 |
4.3% |
7.1% (b) |
6.0% (b) |
| Corporate Apparel Segment |
$ 49.9 |
$ 59.7 |
(16.4%) |
||
| (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. |
|||||
PER SHARE INFORMATION
GAAP diluted earnings per share was $0.52 for the first quarter ended April 28, 2012. This compares to GAAP diluted earnings per share guidance given March 7, 2012 of $0.53 to $0.54. In first quarter fiscal 2011, GAAP diluted earnings per share was $0.52 and adjusted diluted earnings per share was $0.53 after excluding $0.7 million ($0.4 million after tax or $0.01 per diluted share outstanding) in acquisition related integration costs.
Note: Due to rounded numbers, the adjusted earnings per share may not sum.
FIRST Quarter HIGHLIGHTS
Total Company net sales increased 1.1% for the quarter.
- Retail segment sales increased 3.1%.
- This increase was due mainly to increased retail clothing product sales. Men's Wearhouse sales increased due to an increase in average unit selling prices that more than offset fewer units sold per transaction and average number of transactions per store. Moores sales increased due to an increase in both average unit selling prices and units sold per transaction that more than offset a decrease in the average number of transactions per store. K&G sales declined due to lower average unit selling prices that offset increases in both units sold per transaction and average number of transactions per store.
- Tuxedo rental services revenues had U.S. comparable store sales of 8.1% driven primarily by an increase in units rented.
- Corporate apparel segment sales decreased 16.4% primarily due to later launch dates for customer new uniform programs in fiscal 2012 as compared to fiscal 2011.
Total Company gross margin increased 3.0% to $254.0 million and as a percentage of sales increased 82 basis points.
- Retail segment total gross margin, as a percentage of related net sales, increased 69 basis points. This increase was primarily attributable to higher product margins driven by higher average unit selling prices in the U.S. and Canada.
- Corporate apparel segment gross margin, as a percentage of related sales, decreased from 27.8% in the first quarter of 2011 to 26.5% in the first quarter of 2012 due mainly to the decreased new uniform program sales by our UK-based operations.
Total Company SG&A expenses increased compared to prior year adjusted SG&A by 5.3% to $213.1 million(1) and as a percentage of sales increased 147 basis points.
- The quarter over quarter increase was primarily due to payroll related costs and advertising. Increased investments in payroll to support store growth, merchandising initiatives and further development of ecommerce put in place during the second half of the prior fiscal year caused the increase in SG&A to be more heavily weighted in the first quarter of 2012.
Net earnings decreased compared to prior year adjusted net earnings by 3.5% to $26.9 million(1) and as a percentage of sales decreased 22 basis points.
Total inventories increased 16.4% primarily to replenish comparatively oversold levels in the prior year as we embarked on a more aggressive promotional cadence.
Total cash and cash equivalents at quarter end were $118.7 million.
During the quarter, the Company repurchased 0.9 million shares for a total of $33.9 million.
(1) Adjusted SG&A and adjusted operating earnings for first quarter 2011 excludes $0.7 million in acquisition related integration costs.
2012 FINANCIAL GUIDANCE
For the fiscal year (which is a 53-week year under the retail calendar), the Company expects GAAP diluted earnings per share in a range of $2.70 to $2.78, an increase of 13% to 17% over the prior year adjusted diluted earnings per share. For the second quarter, GAAP diluted earnings per share is expected to be in a range of $1.12 to $1.13, a 1% to 2% increase over the prior year adjusted diluted earnings per share.
Updated forecasted operating highlights for the year include the following:
- Several seasonal shifts in the fiscal year calendar are expected to impact the quarterly sales results of the Company's tuxedo rental business. Specifically, the calendar shift of the Easter Holiday favorably impacted the first quarter and is expected to negatively impact the second quarter. The anniversary of the calendar driven peak rental period that occurred in November 2011 (11-11-11) is expected to favorably impact third quarter 2012 and negatively impact fourth quarter 2012.
- Corporate apparel sales declined in the first quarter and are expected to decline in the second quarter largely offset by increases in the third and fourth quarters as the Company's UK operations anniversary customer new uniform programs in fiscal 2011 and initiation of new customer programs in fiscal 2012. The full year decrease is primarily the result of a net reduction in customer new uniform programs compared to fiscal 2011 and a weaker currency conversion rate of the pound sterling to the US dollar.
- Gross margins are planned to continue to increase and result largely from higher average unit selling prices and continued occupancy cost leverage.
- On a 52-week basis, SG&A expense is expected to increase in the 3.1% to 3.6% range over prior year adjusted SG&A representing modest leverage, as a percent of sales. The seasonality of that cost increase throughout the year will vary significantly by quarter.
- The annual increase was more heavily weighted in the first quarter driven by increased investments in payroll put in place during the second half of the prior fiscal year as well as increased marketing expenses in fiscal 2012.
- The rate of SG&A growth will diminish to the low single digit range for the second and third quarter stemming from 1) a moderation of payroll cost increases and 2) realization of cost synergies from the integration of the Alexandra and Dimension businesses in the UK in the prior year.
- Lastly, SG&A increases in the fourth quarter on a 13-week basis are expected to be flat to up 1% as the Company anniversaries higher incentive compensation expenses in the prior year.
- New store growth includes up to 29 new Men's Wearhouse stores, three new Moores stores and one new K&G store. We also expect to close up to 47 Men's Wearhouse and Tux stores and two K&G stores.
- Capital expenditures are anticipated to be in the range of $113.0 to $120.0 million for 2012. This amount includes the cost of new and remodeled stores, the purchase of office space to be used to consolidate our California office locations and investment in other corporate assets.
| Guidance |
Guidance |
|
| FY 2012 (4) (5) |
2Q FY 2012 (4) |
|
| Total Sales Increase |
4.0% to 5.0% |
0.75% to 1.25% |
| Comparable Store Sales Growth (1) |
||
| MW (2) |
+3% to +4% |
+3% to +4% |
| K&G |
-1% to -2% |
-1% to -2% |
| Moores |
+2% to +3% |
flat to +1% |
| Corporate Apparel Sales Decrease |
-1% to -2% |
-17% to -18% |
| Change in Gross Margin as Percent of Sales |
+0.65% to +0.70% |
+0.65% to +0.75% |
| Increase in S G & A (3) |
+4.6% to +5.1% |
+3.9% to +4.4% |
| Effective Tax Rate |
34.6% |
35.2% |
| Weighted Average Shares Outstanding (millions) |
51.200 |
51.140 |
| GAAP Diluted EPS (6) |
$2.70 to $2.78 |
$1.12 to $1.13 |
Footnotes to Guidance:
- All comparable store information is based on a 52-week comparable time period.
- Includes an assumed U.S. comparable store increase in tuxedo rental revenues of 5% to 6% for the full year FY 2012 and an increase of 3% to 4% in 2Q FY 2012.
- Excludes acquisition related integration costs and impairment charges incurred in prior periods.
- Foreign exchange conversion rates (average) for the remainder of the fiscal year (Q2 through Q4) is 1.565 for the US dollar to the Pound and 1.000 for the US Dollar to the Canadian Dollar.
- 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.
- Reflects the dilutive effect of participating securities, which approximates $0.04 for the full year and $0.015 for the second quarter.
CONFERENCE CALL AND WEBCAST INFORMATION
At 5:00 p.m. Eastern time on Wednesday, June 6, 2012, Company management will host a conference call and real time webcast to review the fiscal first quarter 2012 results and its outlook for the fiscal second quarter and full year 2012.
To access the conference call, dial 480-629-9771. 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 13, 2012 by calling 303-590-3030 and entering the access code of 4539048#, or a webcast archive will be available free on the website for approximately 90 days.
STORE INFORMATION
| April 28, 2012 |
April 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 |
611 |
3,482.3 |
587 |
3,340.0 |
607 |
3,462.7 |
||
| Men's Wearhouse and Tux |
336 |
463.3 |
382 |
528.4 |
343 |
474.6 |
||
| Moores, Clothing for Men |
117 |
741.9 |
117 |
737.4 |
117 |
741.7 |
||
| K&G (a) |
98 |
2,329.2 |
101 |
2,392.4 |
99 |
2,351.2 |
||
| Total |
1,162 |
7,016.7 |
1,187 |
6,998.2 |
1,166 |
7,030.2 |
||
| (a) 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 1,162 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 and Alexandra 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.
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, www.alexandra.co.uk.
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 |
||||||||
| (Unaudited) |
||||||||
| FOR THE THREE MONTHS ENDED |
||||||||
| April 28, 2012 AND April 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 |
$ 420,469 |
71.68% |
$ 410,261 |
70.69% |
$10,208 |
2.49% |
0.99 |
|
| Tuxedo rental services |
78,489 |
13.38% |
73,141 |
12.60% |
5,348 |
7.31% |
0.78 |
|
| Alteration and other services |
37,734 |
6.43% |
37,309 |
6.43% |
425 |
1.14% |
0.00 |
|
| Total retail sales |
536,692 |
91.50% |
520,711 |
89.72% |
15,981 |
3.07% |
1.78 |
|
| Corporate apparel clothing product sales |
49,882 |
8.50% |
59,673 |
10.28% |
(9,791) |
(16.41%) |
(1.78) |
|
| Total net sales |
586,574 |
100.00% |
580,384 |
100.00% |
6,190 |
1.07% |
0.00 |
|
| Total cost of sales |
332,525 |
56.69% |
333,751 |
57.51% |
(1,226) |
(0.37%) |
(0.82) |
|
| Gross margin (a): |
||||||||
| Retail clothing product |
231,863 |
55.14% |
222,888 |
54.33% |
8,975 |
4.03% |
0.82 |
|
| Tuxedo rental services |
67,476 |
85.97% |
63,334 |
86.59% |
4,142 |
6.54% |
(0.62) |
|
| Alteration and other services |
10,176 |
26.97% |
11,008 |
29.50% |
(832) |
(7.56%) |
(2.54) |
|
| Occupancy costs |
(68,698) |
(12.80%) |
(67,171) |
(12.90%) |
(1,527) |
(2.27%) |
0.10 |
|
| Total retail gross margin |
240,817 |
44.87% |
230,059 |
44.18% |
10,758 |
4.68% |
0.69 |
|
| Corporate apparel clothing product margin |
13,232 |
26.53% |
16,574 |
27.77% |
(3,342) |
(20.16%) |
(1.25) |
|
| Total gross margin |
254,049 |
43.31% |
246,633 |
42.49% |
7,416 |
3.01% |
0.82 |
|
| Selling, general and administrative expenses |
213,102 |
36.33% |
202,996 |
34.98% |
10,106 |
4.98% |
1.35 |
|
| Operating income |
40,947 |
6.98% |
43,637 |
7.52% |
(2,690) |
(6.16%) |
(0.54) |
|
| Net interest |
(305) |
(0.05%) |
(268) |
(0.05%) |
(37) |
13.81% |
(0.01) |
|
| Earnings before income taxes |
40,642 |
6.93% |
43,369 |
7.47% |
(2,727) |
(6.29%) |
(0.54) |
|
| Provision for income taxes |
14,062 |
2.40% |
16,177 |
2.79% |
(2,115) |
(13.07%) |
(0.39) |
|
| Net earnings including noncontrolling interest |
26,580 |
4.53% |
27,192 |
4.69% |
(612) |
(2.25%) |
(0.15) |
|
| Net loss attributable to noncontrolling interest |
304 |
0.05% |
233 |
0.04% |
71 |
30.47% |
0.01 |
|
| Net earnings attributable to common shareholders |
$ 26,884 |
4.58% |
$ 27,425 |
4.73% |
$ (541) |
(1.97%) |
(0.14) |
|
| Net earnings per diluted common share attributable to common shareholders |
$ 0.52 |
$ 0.52 |
||||||
| Weighted average diluted common shares outstanding: |
51,237 |
52,197 |
||||||
| (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 28, |
April 30, |
|||
| 2012 |
2011 |
|||
| ASSETS |
||||
| Current assets: |
||||
| Cash and cash equivalents |
$ 118,716 |
$ 145,657 |
||
| Accounts receivable, net |
69,249 |
72,004 |
||
| Inventories |
606,522 |
521,082 |
||
| Other current assets |
66,392 |
67,911 |
||
| Total current assets |
860,879 |
806,654 |
||
| Property and equipment, net |
367,628 |
329,592 |
||
| Tuxedo rental product, net |
112,368 |
95,180 |
||
| Goodwill |
89,230 |
91,021 |
||
| Intangible assets, net |
33,961 |
38,343 |
||
| Other assets |
4,745 |
7,642 |
||
| Total assets |
$ 1,468,811 |
$ 1,368,432 |
||
| LIABILITIES AND EQUITY |
||||
| Current liabilities: |
||||
| Accounts payable |
$ 159,058 |
$ 153,144 |
||
| Accrued expenses and other current liabilities |
179,172 |
170,847 |
||
| Income taxes payable |
967 |
597 |
||
| Total current liabilities |
339,197 |
324,588 |
||
| Deferred taxes and other liabilities |
100,935 |
70,736 |
||
| Total liabilities |
440,132 |
395,324 |
||
| Equity: |
||||
| Preferred stock |
- |
- |
||
| Common stock |
721 |
714 |
||
| Capital in excess of par |
368,025 |
343,846 |
||
| Retained earnings |
1,113,130 |
1,024,168 |
||
| Accumulated other comprehensive income |
44,647 |
52,793 |
||
| Treasury stock, at cost |
(510,615) |
(461,760) |
||
| Total equity attributable to common shareholders |
1,015,908 |
959,761 |
||
| Noncontrolling interest |
12,771 |
13,347 |
||
| Total equity |
1,028,679 |
973,108 |
||
| Total liabilities and equity |
$ 1,468,811 |
$ 1,368,432 |
||
| THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES |
||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
| (Unaudited) |
||||
| FOR THE THREE MONTHS ENDED |
||||
| April 28, 2012 AND April 30, 2011 |
||||
| (In thousands) |
||||
| Three Months Ended |
||||
| 2012 |
2011 |
|||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||
| Net earnings including noncontrolling interest |
$ 26,580 |
$ 27,192 |
||
| Non-cash adjustments to net earnings: |
||||
| Depreciation and amortization |
20,681 |
18,652 |
||
| Tuxedo rental product amortization |
5,988 |
5,546 |
||
| Other |
11,944 |
9,823 |
||
| Changes in assets and liabilities |
127 |
17,821 |
||
| Net cash provided by operating activities |
65,320 |
79,034 |
||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||
| Capital expenditures |
(30,664) |
(14,284) |
||
| Proceeds from sales of property and equipment |
8 |
22 |
||
| Net cash used in investing activities |
(30,656) |
(14,262) |
||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||
| Proceeds from issuance of common stock |
3,233 |
1,539 |
||
| Cash dividends paid |
(9,357) |
(6,409) |
||
| Tax payments related to vested deferred stock units |
(4,017) |
(2,955) |
||
| Excess tax benefits from share-based plans |
1,960 |
691 |
||
| Purchase of treasury stock |
(33,866) |
(48,999) |
||
| Net cash used in financing activities |
(42,047) |
(56,133) |
||
| Effect of exchange rate changes |
793 |
647 |
||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(6,590) |
9,286 |
||
| Balance at beginning of period |
125,306 |
136,371 |
||
| Balance at end of period |
$ 118,716 |
$ 145,657 |
||
SOURCE Men's Wearhouse
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