Men's Wearhouse Reports Fiscal 2009 First Quarter Results
- Q1 2009 GAAP diluted EPS was $0.10 compared with Q1 2008 GAAP diluted EPS of $0.19 and adjusted diluted EPS of $0.20
- Company provides guidance for the second quarter of fiscal 2009
- Company moves its scheduled Conference call to 5:00 pm Eastern Thursday, June 11, 2009
HOUSTON, June 8 /PRNewswire-FirstCall/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the first quarter ended May 2, 2009.
First Quarter Sales Summary - Fiscal 2009 Total Sales Comparable Store Sales U.S. dollars, in millions Change % Change % Current Year Prior Year Current Year Prior Year Total Company $464.1 $491.1 -5.5% MW $310.9 (a) $327.9 (a) -5.2% -7.0% (b) -6.4% (b) K&G $104.5 $100.6 3.9% 2.3% -14.1% United States $425.0 $441.3 -3.7% -4.7% -8.5% Moores $39.1 $49.8 -21.5% -4.3% (c) -4.2% (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 $0.10 for the first quarter ended May 2, 2009. This compares to diluted earnings per common share guidance given March 11, 2009 of break even to a mid single digit loss range. Prior year first quarter GAAP diluted earnings per common share were $0.19 and adjusted diluted earnings per common share were $0.20 excluding costs incurred in connection with the closure of the Canadian based manufacturing facility operated by the Company's subsidiary, Golden Brand.
FIRST QUARTER REVIEW
-- Total Company sales decreased 5.5% for the quarter. -- Clothing product sales, representing 77.4% of fiscal first quarter 2009 total net sales, decreased 7.6% due to decreases in the Company's comparable store sales primarily driven by a reduction in store traffic levels. -- Tuxedo rental sales, representing 15.4% of fiscal first quarter 2009 total net sales, increased 1.7%. -- Gross margin before occupancy costs, as a percentage of total net sales, decreased 196 basis points from 58.10% to 56.14%. Clothing product margins, as a percentage of related sales, decreased 327 basis points but were modestly offset by the impact of the higher margin tuxedo rental revenues that increased as a mix of total sales from 14.3% to 15.4%. -- Occupancy costs increased, as a percentage of total net sales, by 65 basis points from 14.98% to 15.63% primarily due to the deleveraging effect of reduced comparable store sales. On an absolute dollar basis, occupancy costs decreased 1.3% from $73.6 million in the prior year to $72.6 million. -- Selling, general, and administrative expenses decreased 8.9% from the prior year quarter of $196.7 million to $179.2 million due primarily to cost-cutting measures and operational efficiencies. As a percentage of total net sales, SG&A decreased 143 basis points from 40.04% to 38.61%. SG&A excluding advertising decreased 10.7% from the prior year quarter. -- Operating income was $8.8 million or 1.9% of total net sales compared to $15.1 million or 3.1% of total net sales for the same period last year. Net income was $5.3 million or 1.1% of total net sales compared to $9.9 million or 2.0% of total net sales for the same period last year. -- The effective tax rate for first quarter was 39.0%.
FISCAL 2009 GUIDANCE
Due primarily to the lack of forward visibility as to macro economic conditions, the Company has implemented modifications to its forward guidance practices beginning with fiscal 2009. The Company previously provided specific financial related guidance for the first half of the current fiscal year. This guidance is being updated below. The Company has also provided below additional guidance around certain elements which management believes will influence the Company's annual results.
For the second quarter, the Company expects GAAP diluted earnings per common share to be in a range of $0.56 to $0.60.
The Company anticipates comparable store sales of its retail apparel business to decline in a range of 4% to 6% and comparable store sales of its tuxedo rental revenues to increase in a range of 3% to 5% for the second quarter. Total Company sales are expected to decrease in the 3% to 5% range for the second quarter.
Gross margins before occupancy costs for the second quarter are expected to be below 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 second quarter in absolute dollar terms; however, as a percentage of revenues, these costs will deleverage from the prior year rate.
The Company has implemented a variety of cost containment and operational changes that have resulted in immediate cost reductions for fiscal 2009. These actions are expected to drive second quarter selling, general and administrative expenses down by 6% to 8% from the prior year, excluding advertising costs and $7.3 million in prior year costs associated with the closing of Golden Brand. This expected rate of reduction will enable the Company to realize pre-advertising expense leverage for the second quarter.
Net interest expense is expected to decline for the second quarter and full year due to positive increases in free cash flow.
This guidance includes an estimated annual effective tax rate of approximately 37.2%; however, the Company expects continuing variability in quarterly tax rates.
Fully diluted common shares outstanding of 52.6 million are estimated for the year. The Company's share repurchase program will be influenced by several factors including business and market conditions.
The Company anticipates opening new stores throughout the year. Currently the aggregate number of new openings is now expected to be up to eight; however, the Company remains flexible to take advantage of real estate opportunities that may arise.
Capital expenditures for the full year are targeted in a range of $50.0 million to $55.0 million and depreciation and amortization expense is now estimated at approximately $87.0 million.
UPDATED CONFERENCE CALL AND WEBCAST INFORMATION
Due to the fact that Men's Wearhouse has made a bid for Filene's Basement in Federal Bankruptcy Court in Wilmington, Delaware and is expecting a ruling on the matter on Wednesday, June 10, 2009, the Company has moved its fiscal first quarter 2009 conference call and real time web cast to Thursday, June 11, 2009, at 5:00 pm Eastern time.
To access the conference call, dial 480-629-9722. 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 18, 2009 by calling 303-590-3030 and entering the access code of 4094764#, or a webcast archive will be available free on the website for approximately 90 days.
May 2, 2009 May 3, 2008 January 31, 2009 Number Sq. Ft. Number Sq. Ft. Number Sq. Ft. of Stores (000's) of Stores (000's) of Stores (000's) Men's Wearhouse 581 3,276.7 571 3,203.1 580 3,263.1 Men's Wearhouse and Tux 478 651.9 492 662.0 489 665.0 Moores, Clothing for Men 117 732.7 116 721.2 117 729.3 K&G (a) 108 2,488.4 106 2,451.2 108 2,493.4 Total 1,284 7,149.7 1,285 7,037.5 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 1,284 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.
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 May 2, 2009 AND May 3, 2008 (In thousands, except per share data) Three Months Ended % of % of 2009 Sales 2008 Sales Net sales: Clothing product $ 359,062 77.36 % $ 388,491 79.11 % Tuxedo rental services 71,419 15.39 % 70,194 14.29 % Alteration and other services 33,653 7.25 % 32,411 6.60 % Total net sales 464,134 100.00 % 491,096 100.00 % Cost of sales: Clothing product including buying and distribution costs 167,457 36.08 % 168,491 34.31 % Tuxedo rental services 12,032 2.59 % 12,565 2.56 % Alteration and other services 24,090 5.19 % 24,731 5.04 % Occupancy costs 72,566 15.63 % 73,554 14.98 % Total cost of sales 276,145 59.50 % 279,341 56.88 % Gross margin 187,989 40.50 % 211,755 43.12 % Selling, general and administrative expenses 179,213 38.61 % 196,650 40.04 % Operating income 8,776 1.89 % 15,105 3.08 % Interest income 258 0.06 % 821 0.17 % Interest expense (418) (0.09)% (1,599) (0.33)% Earnings before income taxes 8,616 1.86 % 14,327 2.92 % Provision for income taxes 3,360 0.72 % 4,384 0.89 % Net earnings $ 5,256 1.13 % $ 9,943 2.02 % Net earnings per common share (a): Basic $ 0.10 $ 0.19 Diluted $ 0.10 $ 0.19 Weighted average common shares outstanding: Basic 51,895 51,470 Diluted 51,955 51,864 (a) Calculated based on net earnings less net earnings allocated to participating securities of $51 thousand for the quarter ended May 2, 2009.
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) May 2, May 3, 2009 2008 ASSETS Current assets: Cash and cash equivalents $ 107,538 $ 76,660 Short-term investments 17,707 9,668 Accounts receivable, net 24,858 26,858 Inventories 448,018 488,137 Other current assets 59,752 58,007 Total current assets 657,873 659,330 Property and equipment, net 378,510 406,944 Tuxedo rental product, net 120,083 92,405 Goodwill 57,622 62,481 Other assets, net 12,439 26,182 Total assets $ 1,226,527 $ 1,247,342 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 142,984 $ 121,193 Accrued expenses and other current liabilities 127,868 131,436 Income taxes payable 3,461 - Total current liabilities $ 274,313 $ 252,629 Long-term debt 39,213 106,870 Deferred taxes and other liabilities 63,955 67,498 Total liabilities 377,481 426,997 Shareholders' equity: Preferred stock - - Common stock 702 697 Capital in excess of par 316,034 305,601 Retained earnings 925,881 886,386 Accumulated other comprehensive income 19,055 40,198 Total 1,261,672 1,232,882 Treasury stock, at cost (412,626) (412,537) Total shareholders' equity 849,046 820,345 Total liabilities and equity $ 1,226,527 $ 1,247,342
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) FOR THE THREE MONTHS ENDED May 2, 2009 AND May 3, 2008 (In thousands) Three Months Ended 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 5,256 $ 9,943 Non-cash adjustments to net earnings: Depreciation and amortization 22,222 23,698 Tuxedo rental product amortization 7,644 8,066 Other 7,887 2,126 Changes in assets and liabilities 20,293 (36,577) Net cash provided by operating activities 63,302 7,256 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (15,035) (29,860) Proceeds from sales of available-for-sale investments - 50,254 Net cash provided by (used in) investing activities (15,035) 20,394 CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends paid (3,664) (3,632) Proceeds from revolving credit facility - 100,600 Payments on revolving credit facility (25,000) (83,975) Proceeds from issuance of common stock 506 609 Purchase of treasury stock (90) (156) Other financing activities (1,607) (1,336) Net cash provided by (used in) financing activities (29,855) 12,110 Effect of exchange rate changes 1,714 (2,546) INCREASE IN CASH AND CASH EQUIVALENTS 20,126 37,214 Balance at beginning of period 87,412 39,446 Balance at end of period $ 107,538 $ 76,660
SOURCE Men's Wearhouse
Released June 8, 2009