Men's Wearhouse Reports Fiscal 2015 Second Quarter And Six Month Results
- Strong performance continues at legacy brands
- Q2 2015 GAAP adjusted diluted earnings per share was $1.07
- Conference call scheduled for Wednesday, September 9th at 9:00 a.m. Eastern time
FREMONT, Calif., Sept. 8, 2015 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced consolidated financial results for the fiscal second quarter ended August 1, 2015.
GAAP diluted EPS for fiscal second quarter 2015 was $0.98 and adjusted EPS was $1.07 excluding non-operating items(1).
Doug Ewert, Men's Wearhouse chief executive officer, stated, "We continue to be pleased with the performance of our legacy brands. Comparable sales increased 3.1% at Men's Wearhouse, 0.7% at Moores and 6.7% at K&G. Excluding rental revenue, Men's Wearhouse clothing comps were 6.5% driven by higher average unit retails. Men's Wearhouse comparable rental revenue decreased 3.3% which was slightly better than internal expectations.
"The Jos. A. Bank business struggled in the second quarter with comparable sales decreasing 9.4%," added Ewert. "Now that we have a full year under our belt, we have become even more convinced that changing the promotional messages to be clear and compelling without unusual quantity requirements, like buy one get three free offers, will broaden the appeal of the Joseph A. Bank brand. This fall we will be well positioned to fully implement our strategy as all systems will be integrated, new products will be introduced, the new customer rewards program will be available, we will have new sales force incentives supported with extensive training and we will have new marketing strategies in place.
"We are focused on rebuilding the Jos. A. Bank profit model. In doing so, we expect top-line volatility as we establish a promotional model with broader customer appeal and strengthen the margin profile. Taking this into consideration, as well as the impact of the second quarter results, we still expect to be within our EPS guidance range of $2.70 to $2.90 and continue to be confident in our 2017 guidance," concluded Ewert.
SECOND QUARTER SALES REVIEW
The table that follows is a summary of net sales for the fiscal 2015 second quarter ended August 1, 2015. The dollars shown are U.S. dollars in millions and, due to rounded numbers, may not sum. The Moores comparable sales change is based on the Canadian dollar. The comparable sales shown below for Jos. A. Bank are a comparison to the Jos. A. Bank second quarter, a portion of which was prior to the acquisition on June 18, 2014. Comparable sales exclude the net sales of a store for any month of one period if the store was not owned or open throughout the same month of the prior period and include e-commerce net sales.
| Second Quarter Net Sales Summary – Fiscal 2015 |
||||||
| Net Sales |
Comparable Sales Change |
|||||
| Net Sales Change
|
Current Quarter |
% of Total |
Current |
Prior Year |
||
| Total Retail Segment |
16.6% |
$122.5 |
$858.9 |
93% |
||
| Men's Wearhouse |
4.4% |
$19.7 |
$470.0 |
51% |
3.1% |
4.4% |
| Jos. A. Bank |
95.0% |
$108.0 |
$221.7 |
24% |
(9.4%) |
1.0% |
| Moores |
(10.5%) |
($8.2) |
$69.9 |
8% |
0.7% |
10.2% |
| K&G |
2.9% |
$2.5 |
$88.7 |
10% |
6.7% |
5.6% |
| MW Cleaners |
5.8% |
$0.5 |
$8.6 |
1% |
||
| Corporate Apparel Segment |
(8.2%) |
($5.5) |
$61.2 |
7% |
||
| Total Company |
14.6% |
$117.0 |
$920.1 |
|||
| Year-To-Date Net Sales Summary – Fiscal 2015 |
||||||
| Net Sales |
Comparable Sales Change |
|||||
| Net Sales Change
|
Current |
% of Total |
Current Year
|
Prior Year
|
||
| Total Retail Segment |
28.5% |
$373.1 |
$1,683.2 |
93% |
||
| Men's Wearhouse |
6.3% |
$55.1 |
$926.4 |
51% |
4.9% |
3.6% |
| Jos. A. Bank |
285.0% |
$324.1 |
$437.8 |
24% |
(5.6%) |
4.4% |
| Moores |
(10.1%) |
($13.2) |
$117.4 |
7% |
0.7% |
8.4% |
| K&G |
3.4% |
$6.1 |
$184.7 |
10% |
7.0% |
2.0% |
| MW Cleaners |
6.6% |
$1.0 |
$16.9 |
1% |
||
| Corporate Apparel Segment |
(1.2%) |
($1.5) |
$122.0 |
7% |
||
| Total Company |
25.9% |
$371.6 |
$1,805.2 |
|||
Net sales at our largest brand, Men's Wearhouse, were up 4.4% from last year's second quarter. Comparable sales increased 3.1% due primarily to an increase in clothing product average unit retails. The higher margin rental revenues comparable sales decreased 3.3% in the second quarter of 2015.
Jos. A. Bank comparable sales for the second quarter decreased 9.4% with decreases in both units sold per transaction and average transactions per store. Moores, our Canadian retail brand, had a comparable sales increase of 0.7% due to an increase in clothing product average unit retails slightly offset by a decrease in average transactions per store. However, net sales for Moores decreased 10.5% due to an unfavorable change in the currency translation rate. K&G comparable sales increased 6.7% due to an increase in average transactions per store. The Corporate Apparel segment had a sales decrease of 8.2% primarily driven by an unfavorable change in the currency translation rate.
SECOND QUARTER GAAP OPERATING RESULTS
Total net sales increased 14.6%, or $117.0 million, to $920.1 million. Retail segment net sales increased by 16.6%, or $122.5 million. Corporate apparel sales decreased by 8.2% or $5.5 million.
Total gross margin was $418.7 million, an increase of $60.1 million, or 16.8%. As a percent of sales, total gross margin increased 86 basis points to 45.5% of net sales.
Advertising expense increased $6.8 million to $45.0 million. This increase represented a 13 basis point increase in expense.
Selling, general and administrative expenses ("SG&A") decreased $2.0 million to $275.6 million, a 462 basis points decrease.
Operating income increased $55.4 million to $98.1 million, representing 10.7% of net sales compared to 5.3% in the prior year.
SIX MONTH GAAP OPERATING RESULTS
Total net sales increased 25.9%, or $371.6 million, to $1,805.2 million. Retail segment net sales increased by 28.5%, or $373.1 million. Corporate apparel sales decreased by 1.2% or $1.5 million.
Total gross margin was $800.2 million, an increase of $158.3 million, or 24.7%. As a percent of sales, total gross margin decreased 45 basis points to 44.3% of net sales.
Advertising expense increased $28.6 million to $95.6 million. This increase represented a 62 basis point increase in expense.
SG&A increased $46.3 million to $551.2 million, a 469 basis points decrease.
Operating income increased $83.4 million to $153.4 million, representing 8.5% of net sales compared to 4.9% in the prior year.
SECOND QUARTER ADJUSTED OPERATING RESULTS (1)
In our fourth quarter earnings release we provided historical baselines of operating results for fiscal year 2014 in order to provide comparable results to fiscal year 2015. These baselines include Jos. A. Bank operations for the 2014 full year and exclude items we believe are not indicative of our core operating results as well as certain items related to the acquisition of Jos. A. Bank. Below is a comparison of the consolidated second quarter FY 2015 adjusted operating results to second quarter FY 2014 baseline.
| Q2 FY15 |
Q2 FY15 |
Q2 FY14 |
Q2 FY14 |
Variance |
|||||||
| $ |
% of Sales |
$ |
% of Sales |
Dollar |
% |
Basis Points |
|||||
| Net sales: |
|||||||||||
| Retail clothing product |
$ 649,190 |
70.56% |
$ 646,189 |
69.49% |
$ 3,001 |
0.46% |
1.07 |
||||
| Rental services |
157,049 |
17.07% |
165,130 |
17.76% |
(8,081) |
-4.89% |
(0.69) |
||||
| Alteration and other services |
52,674 |
5.72% |
51,953 |
5.59% |
721 |
1.39% |
0.14 |
||||
| Total retail sales |
858,913 |
93.35% |
863,272 |
92.83% |
(4,359) |
-0.50% |
0.52 |
||||
| Corporate apparel clothing product |
61,161 |
6.65% |
66,656 |
7.17% |
(5,495) |
-8.24% |
(0.52) |
||||
| Total net sales |
920,074 |
100.00% |
929,928 |
100.00% |
(9,854) |
-1.06% |
- |
||||
| Gross margin: (2) |
|||||||||||
| Retail clothing product |
367,336 |
56.58% |
358,961 |
55.55% |
8,375 |
2.33% |
1.03 |
||||
| Rental services |
131,698 |
83.86% |
137,234 |
83.11% |
(5,536) |
-4.03% |
0.75 |
||||
| Alteration and other services |
15,556 |
29.53% |
14,773 |
28.44% |
783 |
5.30% |
1.10 |
||||
| Occupancy costs |
(113,355) |
-13.20% |
(113,651) |
-13.17% |
296 |
-0.26% |
(0.03) |
||||
| Total retail gross margin |
401,235 |
46.71% |
397,317 |
46.02% |
3,918 |
0.99% |
0.69 |
||||
| Corporate apparel clothing product |
18,542 |
30.32% |
20,024 |
30.04% |
(1,482) |
-7.40% |
0.28 |
||||
| Total gross margin |
419,777 |
45.62% |
417,341 |
44.88% |
2,436 |
0.58% |
0.75 |
||||
| Advertising expense |
44,981 |
4.89% |
47,130 |
5.07% |
(2,149) |
-4.56% |
(0.18) |
||||
| Selling, general and administrative expenses |
269,106 |
29.25% |
267,728 |
28.79% |
1,378 |
0.51% |
0.46 |
||||
| Operating income |
$ 105,690 |
11.49% |
$ 102,483 |
11.02% |
$ 3,207 |
3.13% |
0.47 |
||||
| (1) See Use of Non-GAAP Financial Measures for reconciliation to GAAP. |
|||||||||||
| (2) Gross margin percent of related sales. |
|||||||||||
Total net sales decreased 1.1%, or $9.9 million from $929.9 million baseline net sales. Retail segment net sales for the quarter decreased by 0.5%, or $4.4 million, to $858.9 million due primarily to a decrease in rental volume. Corporate apparel sales decreased by 8.2%, or $5.5 million.
Total adjusted gross margin of $419.8 million increased $2.4 million or 0.6% and increased 75 basis points compared to baseline total gross margin. Excluding Jos. A. Bank, total adjusted gross margin increased 37 basis points. Adjusted retail segment gross margin increased $3.9 million, or 1.0%, and increased 69 basis points from prior year baseline primarily due to higher retail clothing margin offset somewhat by lower rental margin. The adjusted retail segment gross margin rate increased 18 basis points excluding Jos. A. Bank. Corporate apparel gross margin decreased $1.5 million, or 7.4%, and increased 28 basis points.
On a stand-alone basis, total Jos. A. Bank adjusted retail gross margin (including rental margin, alteration margin and occupancy) increased 123 basis points from 37.7% to 39.0%. Jos. A. Bank adjusted retail clothing margin increased 177 basis points from 54.4% to 56.2%.
Advertising expense was $45.0 million. This represents a decrease of $2.1 million or 18 basis points, compared to the prior year baseline primarily due to the anniversary of the rollout of Joseph Abboud.
Adjusted SG&A expenses of $269.1 million were 46 basis points unfavorable to the prior year baseline primarily due to higher payroll related costs. On an absolute dollar basis, adjusted SG&A increased by $1.4 million, or 0.5%, to prior year baseline.
Adjusted operating income was $105.7 million, an increase of $3.2 million, or 3.1%, over the prior year baseline operating results of $102.5 million.
INTEREST AND TAXES
GAAP net interest expense for the second quarter was $26.5 million.
The effective tax rate for the second quarter was 33.3%. Excluding the impact of integration and acquisition costs, the adjusted effective tax rate was 34.1%.
NET EARNINGS
GAAP net earnings were $47.8 million compared to GAAP net earnings of $12.3 million last year. GAAP EPS was $0.98 compared to $0.25 in the prior year quarter. Adjusted net earnings were $52.2 million, or $1.07 adjusted EPS.
FISCAL SIX MONTH ADJUSTED OPERATING RESULTS (1)
In our fourth quarter earnings release we provided historical baselines of operating results for fiscal year 2014 in order to provide comparable results to fiscal year 2015. These baselines include Jos. A. Bank operations for the 2014 full year and exclude items we believe are not indicative of our core operating results as well as certain items related to the acquisition of Jos. A. Bank. Below is a comparison of the consolidated six month FY 2015 adjusted operating results to six month FY 2014 baseline.
| YTD FY15 |
YTD FY15 |
YTD FY14 |
YTD FY14 |
Variance |
|||||||
| $ |
% of Sales |
$ |
% of Sales |
Dollar |
% |
Basis Points |
|||||
| Net sales: |
|||||||||||
| Retail clothing product |
$ 1,316,052 |
72.90% |
$ 1,278,325 |
71.90% |
$ 37,727 |
2.95% |
1.00 |
||||
| Rental services |
260,178 |
14.41% |
271,277 |
15.26% |
(11,099) |
-4.09% |
(0.85) |
||||
| Alteration and other services |
106,954 |
5.92% |
104,741 |
5.89% |
2,213 |
2.11% |
0.03 |
||||
| Total retail sales |
1,683,184 |
93.24% |
1,654,343 |
93.05% |
28,841 |
1.74% |
0.19 |
||||
| Corporate apparel clothing product |
121,979 |
6.76% |
123,481 |
6.95% |
(1,502) |
-1.22% |
(0.19) |
||||
| Total net sales |
1,805,163 |
100.00% |
1,777,824 |
100.00% |
27,339 |
1.54% |
- |
||||
| Gross margin: (2) |
|||||||||||
| Retail clothing product |
740,553 |
56.27% |
716,652 |
56.06% |
23,901 |
3.34% |
0.21 |
||||
| Rental services |
218,743 |
84.07% |
226,317 |
83.43% |
(7,574) |
-3.35% |
0.65 |
||||
| Alteration and other services |
33,686 |
31.50% |
30,756 |
29.36% |
2,930 |
9.53% |
2.13 |
||||
| Occupancy costs |
(226,164) |
-13.44% |
(222,056) |
-13.42% |
(4,108) |
1.85% |
(0.01) |
||||
| Total retail gross margin |
766,818 |
45.56% |
751,669 |
45.44% |
15,149 |
2.02% |
0.12 |
||||
| Corporate apparel clothing product |
35,537 |
29.13% |
37,102 |
30.05% |
(1,565) |
-4.22% |
(0.91) |
||||
| Total gross margin |
802,355 |
44.45% |
788,771 |
44.37% |
13,584 |
1.72% |
0.08 |
||||
| Advertising expense |
95,637 |
5.30% |
89,117 |
5.01% |
6,520 |
7.32% |
0.29 |
||||
| Selling, general and administrative expenses |
533,091 |
29.53% |
529,827 |
29.80% |
3,264 |
0.62% |
(0.27) |
||||
| Operating income |
$ 173,627 |
9.62% |
$ 169,827 |
9.55% |
$ 3,800 |
2.24% |
0.07 |
||||
| (1) See Use of Non-GAAP Financial Measures for reconciliation to GAAP. |
|||||||||||
| (2) Gross margin percent of related sales. |
|||||||||||
Total net sales increased 1.5%, or $27.3 million from $1,777.8 million baseline net sales. Retail segment net sales for the six months increased by 1.7%, or $28.8 million, to $1,683.2 million due primarily to an increase in clothing sales at Men's Wearhouse. Corporate apparel sales decreased by 1.2%, or $1.5 million.
Total adjusted gross margin of $802.4 million increased $13.6 million, or 1.7%, and increased 8 basis points compared to baseline total gross margin. Excluding Jos. A. Bank, total adjusted gross margin increased 1 basis point. Adjusted retail segment gross margin increased $15.1 million, or 2.0%, and increased 12 basis points from prior year baseline primarily due to higher retail clothing margin. The adjusted retail segment gross margin rate increased 2 basis points excluding Jos. A. Bank. Corporate apparel gross margin decreased $1.6 million, or 4.2%, and decreased 91 basis points.
On a stand-alone basis, total Jos. A. Bank adjusted retail gross margin (including rental margin, alteration margin and occupancy) decreased 15 basis points from 39.0% to 38.9%. Jos. A. Bank adjusted retail clothing margin increased 45 basis points from 56.3% to 56.7%.
Advertising expense was $95.6 million. This represents an increase of $6.5 million, or 29 basis points, compared to the prior year baseline primarily due to increased advertising expense to support branding initiatives.
Adjusted SG&A expenses of $533.1 million were 27 basis points favorable to the prior year baseline primarily due to lower payroll related costs and other synergies. On an absolute dollar basis, adjusted SG&A increased by $3.3 million, or 0.6%, to prior year baseline.
Adjusted operating income was $173.6 million, an increase of $3.8 million, or 2.2%, over the prior year baseline operating results of $169.8 million.
INTEREST AND TAXES
GAAP net interest expense for the six months was $52.9 million. Loss on extinguishment of debt was $12.7 million and was adjusted for as a non-operating item. The loss was a result of the $400 million partial refinancing of our term loan to a fixed rate of 5.0%.
The effective tax rate for the six months was 33.8%. Excluding the impact of acquisition, integration and other costs, the adjusted effective tax rate was 35.2%.
NET EARNINGS
GAAP net earnings for the six months were $58.1 million compared to GAAP net earnings of $28.7 million last year. GAAP EPS was $1.20 compared to $0.60 in the prior year six months. Adjusted net earnings were $78.2 million, or $1.61 adjusted EPS.
BALANCE SHEET
As a result of the acquisition of Jos. A. Bank, total debt at the end of the second quarter 2015 was approximately $1.7 billion. The Company did not make any pre-payments on its debt during the quarter.
Inventories decreased $87.5 million to $957.0 million at the end of the second quarter 2015 from $1,044.5 million at prior year second quarter due primarily to purchase price accounting related adjustments at Jos. A. Bank.
Capital expenditures through the second quarter of fiscal year 2015 were $56.8 million compared to $40.8 million in the prior year.
CALL AND WEBCAST INFORMATION
At 9:00 a.m. Eastern time on Wednesday, September 9, 2015, management will host a conference call and real time webcast to discuss fiscal 2015 second quarter and six month results.
To access the conference call, dial 412-902-0030. To access the live webcast presentation, visit the Investor Relations section of the Company's website at http://ir.menswearhouse.com. A telephonic replay will be available through September 15, 2015 by calling 201-612-7415 and entering the access code of 13616094#, or a webcast archive will be available free on the website for approximately 90 days.
| STORE INFORMATION |
||||||
| August 1, 2015 |
August 2, 2014 |
January 31, 2015 |
||||
| Number of |
Sq. Ft. |
Number of |
Sq. Ft. |
Number of |
Sq. Ft. |
|
| Men's Wearhouse (a) |
704 |
3,974.3 |
679 |
3,867.0 |
698 |
3,955.7 |
| Jos. A. Bank (b) |
636 |
2,925.0 |
629 |
2,861.8 |
636 |
2,922.2 |
| Men's Wearhouse and Tux |
201 |
280.8 |
233 |
322.2 |
210 |
291.2 |
| Moores, Clothing for Men |
124 |
781.0 |
121 |
769.1 |
123 |
779.0 |
| K&G (c) |
89 |
2,109.0 |
94 |
2,228.8 |
91 |
2,164.4 |
| Total |
1,754 |
10,070.1 |
1,756 |
10,048.9 |
1,758 |
10,112.5 |
| (a) |
Includes one Joseph Abboud store. |
| (b) |
Excludes 14, 15 and 15 franchise stores, respectively. |
| (c) |
81, 85 and 83 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 1,754 stores. The Men's Wearhouse, Jos. A. Bank, Moores and K&G stores carry a full selection of suits, sport coats, furnishings and accessories in exclusive and non-exclusive merchandise brands and Men's Wearhouse and Tux stores carry a limited selection. Most K&G stores carry a full selection of women's apparel. Tuxedo and suit rentals are available in the Men's Wearhouse, Jos. A. Bank, 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 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. Forward-looking statements are not guarantees of future performance and a variety of factors could cause actual results to differ materially from the anticipated or expected results expressed in or suggested by these forward-looking statements. These forward-looking statements may be significantly impacted by various factors, including, but not limited to: actions by governmental entities, domestic and international economic activity and inflation, success, or lack thereof, in executing our internal operating plans and new store and new market expansion plans, as well as integration of acquisitions, including Jos. A. Bank, performance issues with key suppliers, disruptions in our supply chain, severe weather, foreign currency fluctuations, government export and import policies, advertising or marketing activities of competitors, and legal proceedings. Future results will also be dependent upon our ability to continue to identify and complete successful expansions and penetrations into existing and new markets and our ability to integrate such expansions with our existing operations.
The forward-looking statements in this press release speak only as of the date hereof. Except for the ongoing obligations of Men's Wearhouse to disclose material information under the federal securities laws, Men's Wearhouse undertakes no obligation to revise or update publicly any forward-looking statement, except as required by law. Other factors that may impact the forward-looking statements are described in our latest annual report on Form 10-K and our filings on Form 10-Q. For additional information on Men's Wearhouse, please visit the Company's websites at www.menswearhouse.com, www.josbank.com, www.josephabboud.com, www.mooresclothing.com, www.kgstores.com, www.twinhill.com, www.dimensions.co.uk and www.alexandra.co.uk.
Contact:
Investor Relations
(281) 776-7575
[email protected]
Kelly Dilts
Men's Wearhouse, SVP, Finance & IR
Ken Dennard
Dennard - Lascar Associates
(1) Adjusted information is non-GAAP financial information provided to enhance the user's overall understanding of the Company's current financial performance. Reconciliations of GAAP to adjusted financial information are included in the tables at the end of this release.
| THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES |
||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS |
||||||||
| (Unaudited) |
||||||||
| For the Three Months Ended August 1, 2015 and August 2, 2014 |
||||||||
| (In thousands, except per share data) |
||||||||
| Three Months Ended |
Variance |
|||||||
| % of |
% of |
Basis |
||||||
| 2015 |
Sales |
2014 |
Sales |
Dollar |
% |
Points |
||
| Net sales: |
||||||||
| Retail clothing product |
$ 649,190 |
70.56% |
$ 530,728 |
66.09% |
$118,462 |
22.32% |
4.47 |
|
| Rental services |
157,049 |
17.07% |
161,096 |
20.06% |
(4,047) |
(2.51%) |
(2.99) |
|
| Alteration and other services |
52,674 |
5.72% |
44,598 |
5.55% |
8,076 |
18.11% |
0.17 |
|
| Total retail sales |
858,913 |
93.35% |
736,422 |
91.70% |
122,491 |
16.63% |
1.65 |
|
| Corporate apparel clothing product |
61,161 |
6.65% |
66,656 |
8.30% |
(5,495) |
(8.24%) |
(1.65) |
|
| Total net sales |
920,074 |
100.00% |
803,078 |
100.00% |
116,996 |
14.57% |
0.00 |
|
| Total cost of sales |
501,393 |
54.49% |
444,536 |
55.35% |
56,857 |
12.79% |
(0.86) |
|
| Gross margin (a): |
||||||||
| Retail clothing product |
367,140 |
56.55% |
287,374 |
54.15% |
79,766 |
27.76% |
2.41 |
|
| Rental services |
131,698 |
83.86% |
134,868 |
83.72% |
(3,170) |
(2.35%) |
0.14 |
|
| Alteration and other services |
15,556 |
29.53% |
11,699 |
26.23% |
3,857 |
32.97% |
3.30 |
|
| Occupancy costs |
(114,255) |
(13.30%) |
(95,423) |
(12.96%) |
(18,832) |
(19.74%) |
(0.34) |
|
| Total retail gross margin |
400,139 |
46.59% |
338,518 |
45.97% |
61,621 |
18.20% |
0.62 |
|
| Corporate apparel clothing product |
18,542 |
30.32% |
20,024 |
30.04% |
(1,482) |
(7.40%) |
0.28 |
|
| Total gross margin |
418,681 |
45.51% |
358,542 |
44.65% |
60,139 |
16.77% |
0.86 |
|
| Advertising expense |
44,981 |
4.89% |
38,226 |
4.76% |
6,755 |
17.67% |
0.13 |
|
| Selling, general and administrative expenses |
275,577 |
29.95% |
277,612 |
34.57% |
(2,035) |
(0.73%) |
(4.62) |
|
| Operating income |
98,123 |
10.66% |
42,704 |
5.32% |
55,419 |
129.77% |
5.35 |
|
| Net interest |
(26,473) |
(2.88%) |
(13,074) |
(1.63%) |
(13,399) |
102.49% |
(1.25) |
|
| Loss on extinguishment of debt |
- |
0.00% |
(2,158) |
(0.27%) |
2,158 |
(100.00%) |
0.27 |
|
| Earnings before income taxes |
71,650 |
7.79% |
27,472 |
3.42% |
44,178 |
160.81% |
4.37 |
|
| Provision for income taxes |
23,871 |
2.59% |
15,104 |
1.88% |
8,767 |
58.04% |
0.71 |
|
| Net earnings including non-controlling interest |
47,779 |
5.19% |
12,368 |
1.54% |
35,411 |
286.31% |
3.65 |
|
| Net earnings attributable to non-controlling interest |
- |
0.00% |
(112) |
(0.01%) |
112 |
100.00% |
0.01 |
|
| Net earnings attributable to common shareholders |
$ 47,779 |
5.19% |
$ 12,256 |
1.53% |
$ 35,523 |
289.84% |
3.67 |
|
| Net earnings per diluted common share allocated to common shareholders |
$ 0.98 |
$ 0.25 |
||||||
| Weighted-average diluted common shares outstanding: |
48,544 |
48,143 |
||||||
| (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 August 1, 2015 and August 2, 2014 |
||||||||
| (In thousands, except per share data) |
||||||||
| Six Months Ended |
Variance |
|||||||
| % of |
% of |
Basis |
||||||
| 2015 |
Sales |
2014 |
Sales |
Dollar |
% |
Points |
||
| Net sales: |
||||||||
| Retail clothing product |
$1,316,052 |
72.90% |
$963,752 |
67.23% |
$352,300 |
36.56% |
5.68 |
|
| Rental services |
260,178 |
14.41% |
262,759 |
18.33% |
(2,581) |
(0.98%) |
(3.92) |
|
| Alteration and other services |
106,954 |
5.92% |
83,560 |
5.83% |
23,394 |
28.00% |
0.10 |
|
| Total retail sales |
1,683,184 |
93.24% |
1,310,071 |
91.39% |
373,113 |
28.48% |
1.86 |
|
| Corporate apparel clothing product |
121,979 |
6.76% |
123,481 |
8.61% |
(1,502) |
(1.22%) |
(1.86) |
|
| Total net sales |
1,805,163 |
100.00% |
1,433,552 |
100.00% |
371,611 |
25.92% |
0.00 |
|
| Total cost of sales |
1,004,930 |
55.67% |
791,646 |
55.22% |
213,284 |
26.94% |
0.45 |
|
| Gross margin (a): |
||||||||
| Retail clothing product |
739,618 |
56.20% |
528,921 |
54.88% |
210,697 |
39.84% |
1.32 |
|
| Rental services |
218,743 |
84.07% |
221,214 |
84.19% |
(2,471) |
(1.12%) |
(0.11) |
|
| Alteration and other services |
33,686 |
31.50% |
22,939 |
27.45% |
10,747 |
46.85% |
4.04 |
|
| Occupancy costs |
(227,351) |
(13.51%) |
(168,270) |
(12.84%) |
(59,081) |
(35.11%) |
(0.66) |
|
| Total retail gross margin |
764,696 |
45.43% |
604,804 |
46.17% |
159,892 |
26.44% |
(0.73) |
|
| Corporate apparel clothing product |
35,537 |
29.13% |
37,102 |
30.05% |
(1,565) |
(4.22%) |
(0.91) |
|
| Total gross margin |
800,233 |
44.33% |
641,906 |
44.78% |
158,327 |
24.67% |
(0.45) |
|
| Advertising expense |
95,637 |
5.30% |
66,997 |
4.67% |
28,640 |
42.75% |
0.62 |
|
| Selling, general and administrative expenses |
551,184 |
30.53% |
504,924 |
35.22% |
46,260 |
9.16% |
(4.69) |
|
| Operating income |
153,412 |
8.50% |
69,985 |
4.88% |
83,427 |
119.21% |
3.62 |
|
| Net interest |
(52,928) |
(2.93%) |
(14,148) |
(0.99%) |
(38,780) |
274.10% |
(1.95) |
|
| Loss on extinguishment of debt |
(12,675) |
(0.70%) |
(2,158) |
(0.15%) |
(10,517) |
487.35% |
(0.55) |
|
| Earnings before income taxes |
87,809 |
4.86% |
53,679 |
3.74% |
34,130 |
63.58% |
1.12 |
|
| Provision for income taxes |
29,661 |
1.64% |
24,853 |
1.73% |
4,808 |
19.35% |
(0.09) |
|
| Net earnings including non-controlling interest |
58,148 |
3.22% |
28,826 |
2.01% |
29,322 |
101.72% |
1.21 |
|
| Net earnings attributable to non-controlling interest |
- |
0.00% |
(84) |
(0.01%) |
84 |
100.00% |
0.01 |
|
| Net earnings attributable to common shareholders |
$ 58,148 |
3.22% |
$ 28,742 |
2.00% |
$ 29,406 |
102.31% |
1.22 |
|
| Net earnings per diluted common share allocated to common shareholders |
$ 1.20 |
$ 0.60 |
||||||
| Weighted-average diluted common shares outstanding: |
48,487 |
48,059 |
||||||
| (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) |
||||
| August 1, |
August 2, |
|||
| 2015 |
2014 |
|||
| ASSETS |
||||
| Current assets: |
||||
| Cash and cash equivalents |
$ 73,403 |
$ 67,235 |
||
| Accounts receivable, net |
70,392 |
89,195 |
||
| Inventories |
956,976 |
1,044,520 |
||
| Other current assets |
153,350 |
99,744 |
||
| Total current assets |
1,254,121 |
1,300,694 |
||
| Property and equipment, net |
551,920 |
573,911 |
||
| Rental product, net |
148,037 |
146,464 |
||
| Goodwill |
891,316 |
874,955 |
||
| Intangible assets, net |
661,973 |
676,861 |
||
| Other assets |
8,985 |
10,349 |
||
| Total assets |
$ 3,516,352 |
$ 3,583,234 |
||
| LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
| Current liabilities: |
||||
| Accounts payable |
$ 176,560 |
$ 214,766 |
||
| Accrued expenses and other current liabilities |
268,376 |
273,974 |
||
| Income taxes payable |
2,326 |
1,201 |
||
| Current maturities of long-term debt |
7,000 |
11,000 |
||
| Total current liabilities |
454,262 |
500,941 |
||
| Long-term debt, net |
1,649,487 |
1,636,831 |
||
| Deferred taxes and other liabilities |
393,628 |
393,413 |
||
| Total liabilities |
2,497,377 |
2,531,185 |
||
| Shareholders' equity: |
||||
| Preferred stock |
- |
- |
||
| Common stock |
485 |
481 |
||
| Capital in excess of par |
448,036 |
423,169 |
||
| Retained earnings |
577,648 |
583,903 |
||
| Accumulated other comprehensive (loss) income |
(4,110) |
33,380 |
||
| Treasury stock, at cost |
(3,084) |
(3,303) |
||
| Total equity attributable to common shareholders |
1,018,975 |
1,037,630 |
||
| Non-controlling interest |
- |
14,419 |
||
| Total shareholders' equity |
1,018,975 |
1,052,049 |
||
| Total liabilities and shareholders' equity |
$ 3,516,352 |
$ 3,583,234 |
||
| THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES |
||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
| (Unaudited) |
||||
| For the Six Months Ended August 1, 2015 and August 2, 2014 |
||||
| (In thousands) |
||||
| Six Months Ended |
||||
| 2015 |
2014 |
|||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||
| Net earnings including non-controlling interest |
$ 58,148 |
$ 28,826 |
||
| Non-cash adjustments to net earnings: |
||||
| Depreciation and amortization |
65,213 |
49,778 |
||
| Rental product amortization |
19,995 |
19,961 |
||
| Amortization of deferred financing costs |
3,485 |
1,121 |
||
| Amortization of discount on long-term debt |
598 |
196 |
||
| Loss on extinguishment of debt |
12,675 |
2,158 |
||
| Loss on disposition of assets |
886 |
1,641 |
||
| Other |
(2,547) |
(3,295) |
||
| Changes in operating assets and liabilities |
(63,539) |
(86,507) |
||
| Net cash provided by operating activities |
94,914 |
13,879 |
||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||
| Capital expenditures |
(56,764) |
(40,837) |
||
| Acquisition of business, net of cash |
- |
(1,491,393) |
||
| Net cash used in investing activities |
(56,764) |
(1,532,230) |
||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||
| Proceeds from new term loan |
- |
1,089,000 |
||
| Payments on new term loan |
(4,500) |
- |
||
| Payments on previous term loan |
- |
(97,500) |
||
| Proceeds from asset-based revolving credit facility |
5,500 |
340,000 |
||
| Payments on asset-based revolving credit facility |
(5,500) |
(340,000) |
||
| Proceeds from issuance of senior notes |
- |
600,000 |
||
| Deferred financing costs |
(3,566) |
(50,938) |
||
| Cash dividends paid |
(17,561) |
(17,460) |
||
| Proceeds from issuance of common stock |
1,961 |
6,167 |
||
| Tax payments related to vested deferred stock units |
(4,506) |
(6,869) |
||
| Excess tax benefits from share-based plans |
1,094 |
3,687 |
||
| Repurchases of common stock |
(277) |
(251) |
||
| Net cash (used in) provided by financing activities |
(27,355) |
1,525,836 |
||
| Effect of exchange rate changes |
347 |
498 |
||
| INCREASE IN CASH AND CASH EQUIVALENTS |
11,142 |
7,983 |
||
| Balance at beginning of period |
62,261 |
59,252 |
||
| Balance at end of period |
$ 73,403 |
$ 67,235 |
||
| THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES |
| UNAUDITED NON-GAAP FINANCIAL MEASURES |
| (In thousands, except per share amounts) |
| Use of Non-GAAP Financial Measures |
| In addition to providing financial results in accordance with GAAP, we have provided adjusted information for fiscal second quarter and six months of 2015 and a historical consolidated baseline for fiscal second quarter and six months of 2014 which includes Jos. A. Bank results. This non-GAAP financial information is provided to enhance the user's overall understanding of the Company's current financial performance. Specifically, we believe the adjusted and baseline results provide useful information by excluding items we believe are not indicative of our core operating results as well as certain items related to the acquisition and integration of Jos. A. Bank. |
| The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of this non-GAAP information to our actual results follows and may not sum due to rounded numbers. |
| GAAP to Adjusted Statements of Earnings Information |
|||||||
| GAAP to Non-GAAP Adjusted - Three Months Ended August 1, 2015 |
|||||||
| GAAP |
Acquisition |
Purchase |
Adjusted |
||||
| Results |
& Integration (1) |
Acctg Allocation (2) |
Results |
||||
| Net sales |
$ 920,074 |
$ - |
$ - |
$ 920,074 |
|||
| Total retail gross margin |
400,139 |
521 |
575 |
401,235 |
|||
| Corporate apparel clothing product |
18,542 |
- |
- |
18,542 |
|||
| Total gross margin |
418,681 |
521 |
575 |
419,777 |
|||
| - |
|||||||
| Advertising expense |
44,981 |
- |
- |
44,981 |
|||
| Selling, general and administrative expenses |
275,577 |
(4,589) |
(1,882) |
269,106 |
|||
| Operating income |
98,123 |
5,110 |
2,457 |
105,690 |
|||
| - |
|||||||
| Net interest |
(26,473) |
- |
- |
(26,473) |
|||
| Loss on extinguishment of debt |
- |
- |
- |
- |
|||
| Provision for income taxes |
23,871 |
2,328 |
839 |
27,038 |
|||
| Net earnings including non-controlling interest |
47,779 |
2,782 |
1,618 |
52,179 |
|||
| Net earnings attributable to non-controlling interest |
- |
- |
- |
- |
|||
| Net earnings attributable to common shareholders |
$ 47,779 |
$ 2,782 |
$ 1,618 |
$ 52,179 |
|||
| Net earnings per diluted common share allocated to common shareholders |
$ 0.98 |
$ 0.06 |
$ 0.03 |
$ 1.07 |
|||
| (1) Acquisition & integration primarily relates to Jos. A. Bank. |
|||||||
| (2) Includes inventory and depreciation step up amounts in cost of sales and amortization of intangibles and depreciation step up amounts in SG&A. |
| GAAP to Non-GAAP Adjusted - Six Months Ended August 1, 2015 |
|||||||||
| GAAP |
Acquisition |
Purchase |
Other (3) |
Adjusted |
|||||
| Results |
& Integration (1) |
Acctg Allocation (2) |
Results |
||||||
| Net sales |
$ 1,805,163 |
$ - |
$ - |
$ - |
$ 1,805,163 |
||||
| Total retail gross margin |
764,696 |
521 |
1,601 |
- |
766,818 |
||||
| Corporate apparel clothing product |
35,537 |
- |
- |
- |
35,537 |
||||
| Total gross margin |
800,233 |
521 |
1,601 |
- |
802,355 |
||||
| Advertising expense |
95,637 |
- |
- |
- |
95,637 |
||||
| Selling, general and administrative expenses |
551,184 |
(10,538) |
(3,951) |
(3,604) |
533,091 |
||||
| Operating income |
153,412 |
11,059 |
5,552 |
3,604 |
173,627 |
||||
| Net interest |
(52,928) |
- |
- |
- |
(52,928) |
||||
| Loss on extinguishment of debt |
(12,675) |
12,675 |
- |
- |
- |
||||
| Provision for income taxes |
29,661 |
9,625 |
1,955 |
1,269 |
42,511 |
||||
| Net earnings including non-controlling interest |
58,148 |
14,109 |
3,597 |
2,335 |
78,189 |
||||
| Net earnings attributable to non-controlling interest |
- |
- |
- |
- |
- |
||||
| Net earnings attributable to common shareholders |
$ 58,148 |
$ 14,109 |
$ 3,597 |
$ 2,335 |
$ 78,189 |
||||
| Net earnings per diluted common share allocated to common shareholders |
$ 1.20 |
$ 0.29 |
$ 0.07 |
$ 0.05 |
$ 1.61 |
||||
| (1) Acquisition & integration primarily relates to Jos. A. Bank. |
|||||||||
| (2) Includes inventory and depreciation step up amounts in cost of sales and amortization of intangibles and depreciation step up amounts in SG&A. |
|||||||||
| (3) Other relates to separation costs with former executives. |
| GAAP to Historical Baselines of Operating Results – Second Quarter Fiscal Year 2014 |
|||||||||
| Historical Consolidated Baseline Second Quarter FY 2014 - Three Months Ended August 2, 2014 |
|||||||||
| GAAP |
JOSB Results |
Purchase |
Acquisition, |
Historical |
|||||
| Results |
5/4 - 6/17/14 (1) |
Accounting |
Integration & |
Baseline |
|||||
| Net sales: |
Allocation (2) |
Other (3) |
|||||||
| Retail clothing product |
$ 530,728 |
$ 115,461 |
$ - |
$ - |
$ 646,189 |
||||
| Rental services |
161,096 |
4,034 |
- |
- |
165,130 |
||||
| Alteration and other services |
44,598 |
7,355 |
- |
- |
51,953 |
||||
| Total retail sales |
736,422 |
126,850 |
- |
- |
863,272 |
||||
| Corporate apparel clothing product |
66,656 |
- |
- |
- |
66,656 |
||||
| Total net sales |
803,078 |
126,850 |
- |
- |
929,928 |
||||
| Gross margin: |
|||||||||
| Retail clothing product |
287,374 |
64,038 |
7,549 |
- |
358,961 |
||||
| Rental services |
134,868 |
2,366 |
- |
- |
137,234 |
||||
| Alteration and other services |
11,699 |
3,074 |
- |
- |
14,773 |
||||
| Occupancy costs |
(95,423) |
(17,450) |
(778) |
- |
(113,651) |
||||
| Total retail gross margin |
338,518 |
52,028 |
6,771 |
- |
397,317 |
||||
| Corporate apparel clothing product |
20,024 |
- |
- |
20,024 |
|||||
| Total gross margin |
358,542 |
52,028 |
6,771 |
- |
417,341 |
||||
| Advertising expense |
38,226 |
8,904 |
- |
- |
47,130 |
||||
| Selling, general and administrative expenses |
277,612 |
33,946 |
(906) |
(42,924) |
267,728 |
||||
| Operating income |
$ 42,704 |
$ 9,178 |
$ 7,677 |
$ 42,924 |
$ 102,483 |
||||
| (1) Reclassified to be consistent with Men's Wearhouse reporting. |
| (2) Adjustments to 10-Q reported balances primarily for inventory write-up elimination, change from FIFO to weighted average cost and elimination of tenant improvement allowance credits. |
| (3) Other relates primarily to strategic alternative review and SG&A reduction program costs. |
| Historical Consolidated Baseline FY 2014 - Six Months Ended August 2, 2014 |
|||||||||
| GAAP |
JOSB Results |
Purchase |
Acquisition, |
Historical |
|||||
| Results |
2/2 - 6/17/14 (1) |
Accounting |
Integration & |
Baseline |
|||||
| Net sales: |
Adjustments (2) |
Other (3) |
|||||||
| Retail clothing product |
$ 963,752 |
$ 314,573 |
$ - |
$ - |
$ 1,278,325 |
||||
| Rental services |
262,759 |
8,518 |
- |
- |
271,277 |
||||
| Alteration and other services |
83,560 |
21,181 |
- |
- |
104,741 |
||||
| Total retail sales |
1,310,071 |
344,272 |
- |
- |
1,654,343 |
||||
| Corporate apparel clothing product |
123,481 |
- |
- |
- |
123,481 |
||||
| Total net sales |
1,433,552 |
344,272 |
- |
- |
1,777,824 |
||||
| Gross margin: |
|||||||||
| Retail clothing product |
528,921 |
180,173 |
7,558 |
- |
716,652 |
||||
| Rental services |
221,214 |
5,103 |
- |
- |
226,317 |
||||
| Alteration and other services |
22,939 |
7,817 |
- |
- |
30,756 |
||||
| Occupancy costs |
(168,270) |
(51,924) |
(1,862) |
- |
(222,056) |
||||
| Total retail gross margin |
604,804 |
141,169 |
5,696 |
- |
751,669 |
||||
| Corporate apparel clothing product |
37,102 |
- |
- |
- |
37,102 |
||||
| Total gross margin |
641,906 |
141,169 |
5,696 |
- |
788,771 |
||||
| Advertising expense |
66,997 |
22,120 |
- |
- |
89,117 |
||||
| Selling, general and administrative expenses |
504,924 |
170,576 |
(906) |
(144,767) |
529,827 |
||||
| Operating income (loss) |
$ 69,985 |
$ (51,527) |
$ 6,602 |
$ 144,767 |
$ 169,827 |
||||
| (1) Reclassified to be consistent with Men's Wearhouse reporting. |
| (2) Adjustments to 10-Q reported balances primarily for inventory write-up elimination, change from FIFO to weighted average cost and elimination of tenant improvement allowance credits. |
| (3) Other relates primarily to strategic alternative review and SG&A reduction program costs. |
SOURCE Men's Wearhouse
Related Links
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article