Men's Wearhouse Reports Fiscal 2007 Fourth Quarter and Year End Results
- Q4 2007 GAAP diluted EPS was $0.28 versus $0.95 in 2006
- Fiscal 2007 GAAP diluted EPS was $2.73 versus $2.71 in 2006
- Company estimates Fiscal 2008 GAAP diluted EPS in a range of $1.80 to $2.00
- Estimated Fiscal 2008 GAAP diluted EPS includes $0.10 in non-recurring charges
- Conference call at 5:00 pm eastern today
HOUSTON, March 12 /PRNewswire-FirstCall/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the fourth quarter and fiscal year ended February 2, 2008.
Fourth Quarter Sales Summary - Fiscal 2007 Total Sales Comparable Store Sales U.S. dollars, in millions Change % Change % Current Year Prior Year(d) Current Year Prior Year Total Company $535.0 $556.8 - 3.9% MW $318.4(a) $349.7(a) - 9.0% - 5.4% + 0.0% MW Tux (b) $21.9 K&G $109.0 $130.1 - 16.2% - 17.2% - 6.1% United States $463.9 $486.7 - 4.7% - 8.6% - 1.5% Moores $71.1 $70.1 + 1.4% - 7.3%(c) + 9.8%(c) Year-To-Date Sales Summary - Fiscal 2007 Total Sales Comparable Store Sales U.S. dollars, in millions Change % Change % Current Year Prior Year(d) Current Year Prior Year Total Company $2,112.6 $1,882.1 + 12.2% MW $1,214.1(a) $1,209.2(a) + 0.4% - 0.4% + 3.1% MW Tux (b) $199.2 K&G 407.8 $418.3 - 2.5% - 10.9% - 1.8% United States $1,862.9 $ 1,653.5 + 12.7% - 3.0% + 1.9% Moores $249.7 $228.6 + 9.2% + 1.5%(c) + 8.7%(c) (a) Includes retail stores and ecommerce. (b) MW Tux stores resulting from the acquisition of After Hours on April 9, 2007. They will be excluded from comparable store sales reporting until Q2 of fiscal 2008. (c) Comparable store sales change is based on the Canadian dollar. (d) The company follows the retail 4-5-4 reporting calendar which includes an extra week in fiscal 2006. Thus, fourth quarter includes 14 weeks and full year includes 53 weeks.
This year's 13 week fourth quarter operating income was $21.5 million compared to $73.2 million for last year's 14 week quarter and net income was $14.8 million compared to $52.3 million last year. Diluted earnings per share were $0.28 for the fourth quarter ended February 2, 2008 compared to $0.95 last year. MW Tux (formerly After Hours), after acquisition funding costs, decreased the diluted earnings per share for the fourth quarter by $0.37.
Fiscal year 2007's 52 week operating income was $228.7 million compared to $223.9 million for last year's 53 week period and net income was $147.0 million compared to $148.6 million last year. Diluted earnings per share were $2.73 for the full year compared to $2.71 last year. MW Tux (formerly After Hours), after acquisition funding costs, increased the diluted earnings per share for fiscal year 2007 by $0.02.
It should be noted that the seasonality of MW Tux (formerly After Hours) revenues is heavily concentrated in April, May and June. Second quarter, followed by third quarter, is the highest revenue quarter and first and fourth quarters are considered off season. As a result, MW Tux (formerly After Hours) typically has income in the second and third quarters and losses in the first and fourth quarters.
FOURTH QUARTER HIGHLIGHTS -- Total company sales decreased 3.9% for the 13 week 2007 quarter as compared to the 14 week 2006 quarter. Apparel sales, representing 87.2% of total sales, decreased 7.8%. Tuxedo rental revenues, representing 6.5% of total sales, increased 130.3%. Tuxedo rental revenues excluding MW Tux (formerly After Hours) increased 3.9%. - Comparable store sales decreased 8.6% for the Company's United States based stores, below the Company's guidance of negative low single digit range. This under plan performance was primarily related to weaker traffic trends at both TMW and K&G. - Comparable store sales decreased 7.3% for the Company's Canadian based stores, below the Company's guidance of flat to +2%. This decline in comparable store sales is also a result of weaker traffic trends. -- Gross margin, as a percentage of sales, decreased 183 basis points from 44.60% to 42.77% primarily due to the inclusion of the MW Tux (formerly After Hours) operations which deleveraged occupancy costs due to the seasonality of the tuxedo business. -- Selling, general, and administrative expenses as a percentage of sales increased 728 basis points from 31.46% to 38.74%. This increase is due to the inclusion of the MW Tux (formerly After Hours) operations, amplified during the tuxedo off season, as well as the decrease in apparel sales. -- The effective tax rate for the quarter was 30.6%. -- During the quarter, the Company repurchased 1,218,900 shares for a total of $27.7 million.
2008 GUIDANCE AND HIGHLIGHTS
In the summer of 2008, the Company expects to close its Canadian based manufacturing facility, operated by its subsidiary, Golden Brand. The company estimates the pre tax cost to close the facility to be approximately $8.5 million or the equivalent of $0.10 per diluted share outstanding for the fiscal year. The estimated pre tax cost for first quarter is $5.5 million or the equivalent of $0.06 per diluted share outstanding, for second quarter is $1.3 million or the equivalent of $0.02 per diluted share outstanding and for third quarter is $1.7 million or the equivalent of $0.02 per diluted share outstanding.
For the fiscal year, the Company expects adjusted diluted earnings per share to be $1.90 to $2.10 excluding the Golden Brand closure costs. Including these costs, diluted earnings per share are expected to be $1.80 to $2.00. This guidance assumes same store sales in the U.S. to decrease in the mid single digit range and in Canada to be flat.
For the first quarter, the Company expects adjusted diluted earnings per share to be $0.20 to $0.24 excluding the Golden Brand closure costs. Including these costs, diluted earnings per share are expected to be $0.14 to $0.18. This guidance assumes same store sales in the U.S. to decrease in the high single digit range and in Canada to decrease in the low single digit range. MW Tux (formerly After Hours) was acquired at the beginning of April 2007. Thus February and March, which are considered off season, were not included in first quarter fiscal 2007 results. The February and March diluted earnings per share impact on first quarter is estimated to be dilutive by $0.22.
For the second quarter, the Company expects adjusted diluted earnings per share to be $0.80 to $0.86 excluding the Golden Brand closure costs. Including these costs, diluted earnings per share are expected to be $0.78 to $0.84. This guidance assumes same store sales in the U.S., including MW Tux (formerly After Hours) stores, to decrease in the mid to high single digit range and in Canada to increase in the low single digit range.
The guidance includes an estimated effective tax rate of approximately 38.3% for the first and second quarters and approximately 37.9% for the full year. The fully diluted shares outstanding are estimated to be 52.1 million.
CONFERENCE CALL AND WEBCAST INFORMATION
At 5:00 p.m. Eastern time today, company management will host a conference call and real time web cast to review the results for the fiscal fourth quarter and full year 2007 and provide an outlook for fiscal 2008.
To access the conference call, dial 303-262-2130. To access the live webcast presentation, visit the Investor Relations section of the company's website at http://www.tmw.com. A telephonic replay will be available through March 19, 2008 and by calling 303-590-3000 and entering the access code of 11106658#, or a webcast archive will be available free on the website for approximately 90 days. STORE INFORMATION February 2, 2008 February 3, 2007 Number Sq. Ft. Number Sq. Ft. of Stores (000's) of Stores (000's) Men's Wearhouse 563 3,152.6 543 3,014.8 MW Tux (a) 489 652.0 Moores, Clothing for Men 116 719.8 116 722.7 K&G (b) 105 2,428.8 93 2,201.6 Total 1,273 6,953.2 752 5,939.1 (a) MW Tux stores resulting from the acquisition of After Hours on April 9, 2007. (b) 89 and 73 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 1,273 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 the MW Tux (formerly After Hours) stores carry a limited selection. Tuxedo rentals are available in the Men's Wearhouse, Moores and MW Tux (formerly After Hours) 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 unfavorable local, regional and national economic developments, disruption in retail buying trends due to homeland security concerns, severe weather conditions, aggressive advertising or marketing activities of competitors, governmental actions and other factors described herein and in the Company's annual report on Form 10-K for the year ended February 3, 2007 and subsequent Forms 10-Q.
For additional information on Men's Wearhouse, please visit the Company's website at http://www.tmw.com.
CONTACT: Neill Davis, EVP & CFO, Men's Wearhouse (281) 776-7200 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 February 2, 2008 and February 3, 2007 (In thousands, except per share data) Three Months Ended % of % of 2007 Sales 2006 Sales Net sales $534,958 100.00% $556,845 100.00% Cost of goods sold, including buying, distribution and occupancy costs 306,143 57.23% 308,470 55.40% Gross margin 228,815 42.77% 248,375 44.60% Selling, general and administrative expenses 207,266 38.74% 175,187 31.46% Operating income 21,549 4.03% 73,188 13.14% Interest income (1,332) -0.25% (2,537) -0.46% Interest expense 1,533 0.29% 2,390 0.43% Earnings before income taxes 21,348 3.99% 73,335 13.17% Provision for income taxes 6,533 1.22% 21,011 3.77% Net earnings $14,815 2.77% $52,324 9.40% Net earnings per share: Basic $0.28 $0.99 Diluted $0.28 $0.95 Weighted average common shares outstanding: Basic 52,187 52,965 Diluted 52,708 54,843 THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) FOR THE TWELVE MONTHS ENDED February 2, 2008 and February 3, 2007 (In thousands, except per share data) Twelve Months Ended % of % of 2007 Sales 2006 Sales Net sales $2,112,558 100.00% $1,882,064 100.00% Cost of goods sold, including buying, distribution and occupancy costs 1,142,501 54.08% 1,066,359 56.66% Gross margin 970,057 45.92% 815,705 43.34% Selling, general and administrative expenses 741,405 35.10% 591,767 31.44% Operating income 228,652 10.82% 223,938 11.90% Interest income (5,987) -0.28% (9,786) -0.52% Interest expense 5,046 0.24% 9,216 0.49% Earnings before income taxes 229,593 10.87% 224,508 11.93% Provision for income taxes 82,552 3.91% 75,933 4.03% Net earnings $147,041 6.96% $148,575 7.89% Net earnings per share: Basic $2.76 $2.80 Diluted $2.73 $2.71 Weighted average common shares outstanding: Basic 53,258 53,111 Diluted 53,890 54,749 THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) February 2, February 3, 2008 2007 ASSETS Current assets: Cash and cash equivalents $39,446 $179,694 Short-term investments 59,921 - Inventories 492,423 448,586 Other current assets 79,205 52,549 Total current assets 670,995 680,829 Property and equipment, net 410,167 289,640 Tuxedo rental product, net 84,089 57,565 Goodwill 65,309 56,867 Other assets, net 25,907 12,051 Total assets $1,256,467 $1,096,952 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities $277,255 $226,138 Long-term debt 92,399 72,967 Deferred taxes and other liabilities 70,876 44,075 Shareholders' equity 815,937 753,772 Total liabilities and equity $1,256,467 $1,096,952 THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) FOR THE TWELVE MONTHS ENDED February 2, 2008 and February 3, 2007 (In thousands) Twelve Months Ended 2007 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $147,041 $148,575 Non-cash adjustments to net earnings: Depreciation and amortization 80,296 61,387 Tuxedo rental product amortization 42,067 16,858 Other 15,073 10,144 Changes in assets and liabilities (79,600) (76,170) Net cash provided by operating activities 204,877 160,794 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (126,076) (72,904) Net non-cash assets acquired (68,232) - Net purchases and proceeds from the sales of available-for-sale investments (59,921) 62,775 Other (40) (1,506) Net cash used in investing activities (254,269) (11,635) CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends paid (12,353) (10,830) Proceeds from revolving credit facility 5,375 - Principal payments on debt - (130,000) Proceeds from issuance of common stock 7,132 10,823 Purchase of treasury stock (106,106) (40,289) Other 1,538 2,052 Net cash used in financing activities (104,414) (168,244) Effect of exchange rate changes 13,558 (1,447) DECREASE IN CASH AND CASH EQUIVALENTS (140,248) (20,532) Balance at beginning of period 179,694 200,226 Balance at end of period $39,446 $179,694
SOURCE The Men's Wearhouse, Inc.
Released March 12, 2008