Men's Wearhouse Reports Fiscal 2007 Second Quarter Results
BOARD OF DIRECTORS APPROVES $100 MILLION SHARE REPURCHASE PROGRAM
- Q2 2007 GAAP diluted EPS was $1.00 versus $0.65 in 2006 - Company estimates Q3 2007 GAAP diluted EPS in a range of $0.70 to $0.73 - Conference call at 5:00 pm eastern today
HOUSTON, Aug. 22 /PRNewswire-FirstCall/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the second quarter ended August 4, 2007.
SECOND QUARTER RESULTS Second Quarter Sales Summary - Fiscal 2007 Total U.S. dollars, in Sales Comparable Store Sales millions Change % Change % Current Prior Year Current Prior Year Year Year Total Company $569.3 $460.6 +23.6 % MW $299.1(a) $291.0(a) +2.8 % + 3.7 % + 4.2 % After Hours $87.6 (b) (b) (b) (b) K&G $101.2 $98.3 +3.0 % - 6.9 % + 2.3 % United States $496.5 $395.6 +25.5 % + 1.1 % + 3.7 % Moores $72.8 $65.0 +12.2 % +8.4%(c) +7.3%(c) (a) Includes retail stores and ecommerce. (b) After Hours was acquired on April 9, 2007 and will be excluded from comparable store sales reporting until Q2 of fiscal 2008. (c) Comparable store sales change is based on the Canadian dollar.
Second quarter 2007 operating income was $82.7 million compared to $55.6 million last year and net income was $54.2 million compared to $35.6 million last year. GAAP diluted earnings per share were $1.00 for the second quarter ended August 4, 2007 compared to $0.65 last year. After Hours, after acquisition funding costs, contributed $0.24 to the GAAP diluted earnings per share for the second quarter.
Additionally, Men's Wearhouse announced today its Board of Directors has approved a replenishment of the Company's share repurchase program up to $100 million by authorizing $90.3 million to be added to the remaining $9.7 million of the current program.
"The decision of an additional share repurchase program was based on the Company's continuing financial success and reflects our confidence in our long-term growth outlook," stated George Zimmer, Chairman and Chief Executive Officer of Men's Wearhouse.
SECOND Quarter Highlights -- Total company sales increased 23.6% for the quarter. Apparel sales, representing 70.7% of total sales, increased 4.0%. Tuxedo rental revenues, representing 23.6% of total sales, increased 200.9%. Tuxedo rental revenues excluding After Hours increased 16.4%. -- Comparable store sales increased 1.1% for the Company's United States based stores, at the high end of the Company's guidance of flat to +1%. The increase in comparable store sales is primarily due to growth of the Company's tuxedo rental business and increases in traffic levels resulting in higher clothing sales at TMW; both of which offset traffic weakness at K&G. -- Comparable store sales increased 8.4% for the Company's Canadian based stores, ahead of the Company's guidance of +4% to +6%, and is a reflection of gains in both traffic levels and average ticket. -- Gross margin, as a percentage of sales, increased 498 basis points from 43.23% to 48.21%. This improvement is due to both organic and acquired growth in tuxedo rental revenues as well as continued gains in merchandise margins. -- Selling, general, and administrative expenses as a percentage of sales increased 253 basis points from 31.16% to 33.69%. This increase is due to the inclusion of the operations of After Hours. -- Operating Income increased 245 basis points from 12.07% to 14.52%. -- The effective tax rate for the quarter of 34.8% was lower than the Company's guidance of 37.6%. This was due to favorable developments on certain outstanding income tax matters. -- During the quarter the Company repurchased 495,900 shares for a total of $24.7 million.
THIRD QUARTER 2007 GUIDANCE AND UPDATED FISCAL 2007 OUTLOOK
For the third quarter of 2007, the Company expects same store sales growth in the U.S. to be in a range of flat to +1% and in Canada to be in a range of +2% to +4%. GAAP diluted earnings per share are expected to be in the range of $0.70 to $0.73.
After Hours revenues for the third quarter are estimated in a range of $64 million to $66 million. After consideration of acquisition funding costs, AH is expected to be accretive to fiscal third quarter 2007 in a range of $0.06 to $0.07 per diluted share outstanding.
For the fiscal year ending February 2, 2008, the Company expects GAAP diluted earnings per share in a range of $2.98 to $3.02. Same store sales changes in the U.S. for fiscal 2007 are expected to be flat to +1% and in Canada are expected to be in a range of +4% to +5%.
After Hours revenues for fiscal 2007 are estimated in a range of $208 million to $212 million. After consideration of acquisition funding costs, AH is expected to be accretive to fiscal 2007 in a range of $0.10 to $0.12 per diluted share outstanding. It should be noted that the seasonality of AH revenues is heavily concentrated in April, May and June. Second quarter, followed by third quarter, is the highest revenue quarter for AH and first and fourth quarters are considered off season. As a result, AH typically has income in the second and third quarters and losses in the first and fourth quarters.
For the third quarter, the guidance includes an estimated effective tax rate of approximately 37.4% and fully diluted shares outstanding of 53.9 million. For the full year, the estimated effective tax rate is 36.6% and the fully diluted shares outstanding are estimated to be 54.2 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 second quarter 2007.
To access the conference call, dial 303-262-2142. 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 August 29th by calling 303-590-3000 and entering the access code of 11093425#, or a webcast archive will be available free on the website for approximately 90 days.
STORE INFORMATION August 4, 2007 July 29, 2006 February 3, 2007 Number Number Number of Sq. Ft. of Sq. Ft. of Sq. Ft. Stores (000's) Stores (000's) Stores (000's) Men's Wearhouse 553 3,091.8 534 2,952.5 543 3,014.8 After Hours 500 639.5 (a) (a) (a) (a) Moores, Clothing for Men 116 722.6 116 719.8 116 722.7 K&G (b) 100 2,326.8 85 2,045.5 93 2,201.6 Total 1,269 6,780.7 735 5,717.8 752 5,939.1 (a) After Hours was acquired on April 9th, 2007. (b) 83, 63 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 1,269 stores. The stores carry a full selection of designer, brand name and private label suits, sport coats, furnishings and accessories, including tuxedo rentals available in the Men's Wearhouse, Moores, After Hours, and select K&G 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 Form 10-Q for the quarter ended May 5, 2007.
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 (713) 592-7200 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 August 4, 2007 AND July 29, 2006 (In thousands, except per share data) Three Months Ended % of % of 2007 Sales 2006 Sales Net sales $569,346 100.00% $460,587 100.00% Cost of goods sold, including buying, distribution and occupancy costs 294,848 51.79% 261,464 56.77% Gross margin 274,498 48.21% 199,123 43.23% Selling, general and administrative expenses 191,822 33.69% 143,529 31.16% Operating income 82,676 14.52% 55,594 12.07% Interest income (1,671) -0.29% (2,793) -0.61% Interest expense 1,123 0.20% 2,289 0.50% Earnings before income taxes 83,224 14.62% 56,098 12.18% Provision for income taxes 28,998 5.09% 20,477 4.45% Net earnings $54,226 9.52% $35,621 7.73% Net earnings per share: Basic $1.01 $0.67 Diluted $1.00 $0.65 Weighted average common shares outstanding: Basic 53,739 53,260 Diluted 54,366 54,524 THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) FOR THE SIX MONTHS ENDED August 4, 2007 AND July 29, 2006 (In thousands, except per share data) Six Months Ended % of % of 2007 Sales 2006 Sales Net sales $1,065,464 100.00% $895,151 100.00% Cost of goods sold, including buying, distribution and occupancy costs 564,693 53.00% 513,199 57.33% Gross margin 500,771 47.00% 381,952 42.67% Selling, general and administrative expenses 352,832 33.12% 279,970 31.28% Operating income 147,939 13.88% 101,982 11.39% Interest income (3,303) -0.31% (4,788) -0.53% Interest expense 2,209 0.21% 4,480 0.50% Earnings before income taxes 149,033 13.99% 102,290 11.43% Provision for income taxes 53,874 5.06% 37,813 4.22% Net earnings $95,159 8.93% $64,477 7.20% Net earnings per share: Basic $1.77 $1.21 Diluted $1.74 $1.18 Weighted average common shares outstanding: Basic 53,851 53,196 Diluted 54,538 54,622 THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) August 4, July 29, 2007 2006 ASSETS Current assets: Cash and cash equivalents $85,260 $79,511 Short-term investments 49,675 169,900 Inventories 460,800 429,882 Other current assets 88,473 51,264 Total current assets 684,208 730,557 Property and equipment, net 370,066 266,650 Goodwill 62,769 57,978 Other assets, net 97,041 76,616 Total assets $1,214,084 $1,131,801 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities $251,131 $187,469 Long-term debt 82,033 206,427 Deferred taxes and other liabilities 61,811 49,762 Shareholders' equity 819,109 688,143 Total liabilities and equity $1,214,084 $1,131,801 THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) FOR THE SIX MONTHS ENDED August 4, 2007 AND July 29, 2006 (In thousands) Six Months Ended 2007 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $95,159 $64,477 Non-cash adjustments to net earnings: Depreciation and amortization 36,757 30,297 Tuxedo rental product amortization 25,646 9,792 Other (1,128) 1,704 Changes in assets and liabilities (44,765) (83,698) Net cash provided by operating activities 111,669 22,572 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (52,712) (24,821) Net non-cash assets acquired (69,738) - Purchases of available-for-sale investments (267,530) (179,920) Proceeds from sales of available-for-sale investments 217,855 72,795 Other 1,544 (588) Net cash used in investing activities (170,581) (132,534) CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends paid (6,015) (5,380) Proceeds from issuance of common stock 5,622 5,160 Purchase of treasury stock (43,965) (11,512) Other 1,120 578 Net cash used in financing activities (43,238) (11,154) Effect of exchange rate changes 7,716 401 DECREASE IN CASH AND CASH EQUIVALENTS (94,434) (120,715) Balance at beginning of period 179,694 200,226 Balance at end of period $85,260 $79,511
SOURCE The Men's Wearhouse
Released August 22, 2007