– Q4 2010 GAAP diluted loss per share was $0.27 and adjusted diluted loss per share was $0.19.
– Fiscal 2010 GAAP diluted earnings per share were $1.27 and adjusted diluted earnings per share were $1.47.
– Company provides guidance for first quarter and full year of fiscal 2011
– Conference call at 5:00 pm Eastern today
HOUSTON, March 9, 2011 /PRNewswire/ — The Men’s Wearhouse (NYSE: MW) today announced its consolidated financial results for the fourth quarter ended January 29, 2011.
Fourth Quarter Sales Summary – Fiscal 2010
Total Sales Comparable Store Sales
U.S. dollars, in millions Change % Change %
Current Year Prior Year Current Year Prior Year
Total Company $ 542.1(a) $ 457.2 (a) 18.6%
Total Retail
Segment $ 479.7 $ 454.2 5.6%
MW $ 311.1 $ 294.3 5.7% 4.3% (c) - 7.1% (c)
K&G $ 96.4 $ 92.7 4.0% 4.5% - 5.0%
Moores Canada $ 66.3 $ 61.7 7.3% 2.3% (b) 1.9% (b)
Corporate
Apparel Segment $ 62.5 $ 3.1 1,943.7%
Year-To-Date Sales Summary – Fiscal 2010
Total Sales Comparable Store Sales
U.S. dollars, in millions Change % Change %
Current Year Prior Year Current Year Prior Year
Total Company $ 2,102.7(a) $ 1,909.6 (a) 10.1%
Total Retail
Segment $ 1,976.4 $ 1,896.1 4.2%
MW $ 1,345.9 $ 1,281.8 5.0% 4.7% (c) - 4.0% (c)
K&G $ 360.3 $ 370.1 - 2.7% - 1.5% - 1.9%
Moores Canada $ 246.7 $ 222.1 11.1% 2.2% (b) - 0.9% (b)
Corporate
Apparel Segment $ 126.3 $ 13.5 837.4%
(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.
GAAP diluted loss per share was $0.27 for the fourth quarter ended January 29, 2011. Adjusted diluted loss per share was $0.19 after excluding $2.3 million ($1.6 million after tax or $0.03 per diluted share outstanding) in acquisition transaction and integration expenses, $1.1 million ($0.7 million after tax or $0.01 per diluted share outstanding) in tuxedo distribution closure costs and $2.5 million ($1.7 million after tax or $0.03 per diluted share outstanding) for a non-cash fixed asset impairment charge. Due to rounded numbers, the adjusted loss per share may not sum. This compares to adjusted diluted loss per share guidance given December 7, 2010 of $0.19 to $0.22. InQ4 2009, revised GAAP diluted loss per share was $0.36 and adjusted diluted loss per share was $0.11.
GAAP diluted earnings per share was $1.27 for the fiscal year ended January 29, 2011. Adjusted diluted earnings per share was $1.47 after excluding $6.4 million ($4.3 million after tax or $0.08 per diluted share outstanding) in acquisition transaction and integration expenses, $3.1 million ($2.1 million after tax or $0.04 per diluted share outstanding) in tuxedo distribution closure costs and $5.9 million ($3.9 million after tax or $0.07 per diluted share outstanding) for a non-cash asset impairment charge. Due to rounded numbers, the adjusted earnings per share may not sum. Infiscal 2009, revised GAAP diluted earnings per share was $0.88 and adjusted diluted earnings per share was $1.12.
During the third quarter of 2010, the Company changed the inventory valuation method used by its K&G brand from lower of cost or market, as determined by the retail inventory method, to lower of cost or market using the average cost method. This change was done to bring all retail operations of the Company to a common valuation methodology platform. All financial statements in this press release have been revised to reflect this change and are therefore comparable. Prior year fourth quarter revised GAAP diluted loss per share was $0.36, unchanged from the previously reported GAAP diluted loss per share, and prior fiscal year revised GAAP diluted earnings per share was $0.88, an increase of $0.02 per share.
FOURTH QUARTER REVIEW
Dimensions and Alexandra Acquisitions
On August 6, 2010, the Company acquired Dimensions and certain assets of Alexandra, two leading providers of corporate clothing uniforms and workwear in the United Kingdom, for a total cash consideration of approximately 61 million pounds Sterling (US$97.8 million). The combined businesses are organized under a UK-based holding company of which Men’s Wearhouse controls 86% and previous Dimensions shareholders control 14%.
The financial results of the combined UK operations, excluding transaction and integration costs, were $0.03 accretive to the Company’s fourth quarter diluted earnings per share. Transaction and integration costs were $2.3 million ($1.6 million after tax or $0.03 per diluted share outstanding). Total sales of the combined UK operations were US$54.2 million.
The financial results of the combined UK operations, excluding transaction and integration costs, were $0.06 accretive to the Company’s fiscal 2010 diluted earnings per share. Transaction and integration costs were $6.4 million ($4.3 million after tax or $0.08 per diluted share outstanding). Total sales of the combined UK operations were US$104.8 million for fiscal 2010.
Tuxedo Distribution Closures
In late August 2010, a decision was made by the Company to cease tuxedo distribution operations in November 2010 at four of the then eleven facilities that we used for tuxedo distribution. The operations at these four facilities were assumed by other tuxedo distribution facilities in our system allowing us to more effectively manage our tuxedo rental operations. In the fourth quarter, a charge of $1.1 million ($0.7 million after tax or $0.01 per diluted share outstanding) was incurred consisting primarily of labor costs associated with transferring and processing the tuxedo rental inventory from the closed facilities, severance payments and fixed asset write-offs.
The expected ongoing annual benefit, beginning in fiscal 2011, as a result of these closures will be a reduction in operating costs of approximately $4.0 million.
Review of Fourth Quarter Results
Total Company net sales increased 18.6% for the quarter.
At Men’s Wearhouse/Men’s Wearhouse and Tux, the increase of 4.3% in comparable store sales was due to increased units per transaction, higher store traffic levels and an 11.1% comparable store increase in tuxedo rental services revenues.
At Moores, the increase of 2.3% in comparable store sales was due to increased units per transaction and higher net sales price per unit which offset a decline in store traffic.
At K&G, the increase of 4.5% in comparable store sales was due mainly to an increase in units per transaction and higher store traffic levels.
Corporate apparel segment net sales increased $59.4 million to $62.5 million for the quarter compared to the same prior year quarter. The increase was primarily due to our acquisitions of Dimensions and Alexandra in the UK on August 6, 2010.
Gross margin, as a percentage of total net sales, increased 21 basis points from 37.1% to 37.3% due to an increase in tuxedo rental margins and a decrease in occupancy costs as a percent of sales offset by a decrease in retail merchandise margins and the increased mix of the lower margin corporate apparel business.
Selling, general and administrative expenses were $225.4 million in the current year and increased 10.6% from the prior year’s SG&A of $203.8 million. The prior year quarter included $19.5 million in non-cash fixed asset impairment charges. Excluding these charges, prior year SG&A expense was $184.3 million. During the current quarter, the Company incurred $2.3 million in acquisition transaction and integration costs, $1.1 million in tuxedo distribution closure costs and $2.5 million for non-cash fixed asset impairment charges related primarily to K&G and Men’s Wearhouse and Tux stores. Excluding these costs, fourth quarter SG&A expenses were $219.4 million or an increase of 19.0% to the adjusted prior year quarter. SG&A related to the acquired UK operations resulted in a 7.5% increase. The remaining 11.5% increase is primarily due to increased payroll related costs and increased marketing costs. As a percentage of total net sales, adjusted SG&A increased 16 basis points from 40.3% to 40.5%.
Operating loss was $23.2 million. Excluding $2.3 million in acquisition and integration costs, $1.1 million in tuxedo distribution closure costs and the $2.5 million non-cash fixed asset impairment charge; operating loss was $17.3 million or negative 3.2% of total net sales. This compares with the adjusted prior year operating loss of $14.8 million or negative 3.2% of total net sales, which exclude $19.5 million in pretax non-cash fixed asset impairment charges.
Total inventories of $486.5 million increased 11.9% from the prior year fourth quarter of $434.9 million. Excluding the inventory related to the acquisitions of Dimensions and Alexandra in the UK, inventories decreased 5.7%.
The Company had no bank debt at the end of the fourth quarter of 2010 as all debt was paid off during the quarter.
2011 GUIDANCE
For the fiscal year, GAAP diluted earnings per share is expected to be in a range of $1.71 to $1.81. Adjusted diluted earnings per share are expected to be in a range of $1.75 to $1.85. Adjusted earnings per share exclude acquisition integration expenses of $3.3 million ($2.2 million after tax or $0.04 per diluted share outstanding).
For the first quarter of the fiscal year, GAAP diluted earnings per share is expected to be in a range of $0.26 to $0.29. Adjusted diluted earnings per share are expected to be in a range of $0.27 to $0.30. Adjusted earnings per share exclude acquisition integration expenses of $0.6 million ($0.4 million after tax or $0.01 per diluted share outstanding).
The financial results of the combined UK acquisitions, excluding acquisition integration expenses, are expected to be accretive to the Company’s full year and first quarter diluted earnings per share.
Guidance Guidance
FY 2011 1Q FY 2011
Total Sales Increase 8% to 9% (1) 14% to15% (1)
Comparable Store Sales Growth (2)
MW +2% to +4% +4% to +5%
K&G (1%) to (2%) (1%) to (2%)
Moores Flat to +1% (2%) to (3%)
Gross Profit Margin 42.25% to 42.45% (3) 40.60% to 40.75% (3)
S G & A (as % of Sales) 35.75% to 35.95% (4) 36.15% to 36.30% (4)
Effective Tax Rate 35.25% 37.00%
Weighted Average Shares Outstanding
(millions) 52.6 52.6
GAAP EPS $1.71 to $1.81 $0.26 to $0.29
Adjusted EPS $1.75 to $1.85 (4) $0.27 to $0.30 (4)
Foreign Exchange Conversion (avg.)
US Dollar to GBP 1.59 1.59
US Dollar to Canadian Dollar 1.00 1.00
Footnotes to Guidance:
1. Includes US$220 million for full year FY 2011 and US$55 million for 1Q
FY2011 of sales from acquired operations of Dimensions and Alexandra.
2. Includes an assumed comparable store increase in tuxedo rental revenues of
7% to 8% for the full year FY 2011 and a 1% to 2% increase in 1Q FY 2011.
3. Occupancy costs are expected to be flat for full year FY 2011 and decrease
low single digit for 1Q FY 2011.
4. Excludes acquisition integration costs.
CONFERENCE CALL AND WEBCAST INFORMATION
At 5:00 p.m. Eastern time on Wednesday, March 9, 2011, Company management will host a conference call and real time webcast to review the fourth quarter of fiscal 2010 and its outlook for the first quarter and full year of fiscal 2011.
To access the conference call, dial 480-629-9772. 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 March 16, 2011 by calling 303-590-3030 and entering the access code of 4418605#, or a webcast archive will be available free on the website for approximately 90 days.
STORE INFORMATION
January 29, 2011 January 30, 2010
Sq. Ft. Sq. Ft.
Number of Stores (000's) Number of Stores (000's)
Men's Wearhouse 585 3,319.0 581 3,284.4
Men's Wearhouse and Tux 388 535.7 454 623.4
Moores, Clothing for Men 117 737.8 117 734.6
K&G (a) 102 2,394.1 107 2,475.6
Total 1,192 6,986.6 1,259 7,118.0
(a) 91 and 94 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 1,192 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. Additionally, Men’s Wearhouse operates a global corporate apparel and workwear group consisting of TwinHill in the United States and Dimensions and Alexandra 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. 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 30, 2010 and subsequent Forms 10-Q.
For additional information on Men’s Wearhouse, please visit the Company’s website at www.menswearhouse.com. The website for Dimensions is www.dimensions.co.uk and the website for Alexandra is www.alexandra.co.uk.
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
In thousands, except per share data
(Unaudited)
FOR THE THREE MONTHS ENDED
January 29, 2011 AND January 30, 2010
(In thousands, except per share data)
Three Months Ended Variance
% of % of Basis
2010 Sales 2009 Sales Dollar % Points
(as adjusted) (a)
Net sales:
Clothing $
product 407,953 75.25% $ 387,084 84.66% $ 20,869 5.39% (9.41)
Tuxedo rental
services 38,356 7.08% 35,380 7.74% 2,976 8.41% (0.66)
Alteration and
other services 33,343 6.15% 31,698 6.93% 1,645 5.19% (0.78)
Retail segment
sales 479,652 88.48% 454,162 99.33% 25,490 5.61% (10.85)
Corporate
apparel
segment sales 62,454 11.52% 3,056 0.67% 59,398 1,943.65% 10.85
Total net
sales 542,106 100.00% 457,218 100.00% 84,888 18.57% 0.00
Total cost of
sales 339,947 62.71% 287,688 62.92% 52,259 18.17% (0.21)
Gross margin
(b):
Clothing
margin 211,049 51.73% 204,995 52.96% 6,054 2.95% (1.23)
Tuxedo margin 33,135 86.39% 27,967 79.05% 5,168 18.48% 7.34
Alteration and
other services
margin 8,325 24.97% 7,985 25.19% 340 4.26% (0.22)
Occupancy
costs (68,216) (14.22%) (71,644) (15.77%) 3,428 4.78% 1.55
Retail segment
margin 184,293 38.42% 169,303 37.28% 14,990 8.85% 1.14
Corporate
apparel
segment margin 17,866 28.61% 227 7.43% 17,639 7,770.48% 21.18
Gross margin 202,159 37.29% 169,530 37.08% 32,629 19.25% 0.21
Selling,
general and
administrative
expenses 225,356 41.57% 203,818 44.58% 21,538 10.57% (3.01)
Operating loss (23,197) (4.28%) (34,288) (7.50%) 11,091 32.35% 3.22
Net interest (367) (0.07%) (153) (0.03%) (214) (139.87%) 0.03
Loss before
income taxes (23,564) (4.35%) (34,441) (7.53%) 10,877 31.58% 3.19
Benefit from
income taxes (9,370) (1.73%) (15,688) (3.43%) 6,318 40.27% 1.70
Net loss
including
noncontrolling
interest (14,194) (2.62%) (18,753) (4.10%) 4,559 24.31% 1.48
Less: Net loss
attributable
to
noncontrolling
interest (108) (0.02%) - 0.00% (108) 100.00% (0.02)
Net loss
attributable
to common $ $
shareholders (14,086) (2.60%) (18,753) (4.10%) $ 4,667 24.89% 1.50
Net loss per
diluted common
share
attributable
to common
shareholders $ (0.27) $ (0.36)
Weighted
average
diluted common
shares
outstanding: 52,819 52,297
(a) Results have been adjusted for the change in inventory valuation method
used by our K&G brand from the retail inventory method to the average cost
method during the third quarter of fiscal 2010. The cumulative effect of this
change in accounting principle was recorded retrospectively as of February 1,
2009.
(b) 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 TWELVE MONTHS ENDED
January 29, 2011 AND January 30, 2010
(In thousands, except per share data)
Twelve Months Ended Variance
% of % of Basis
2010 Sales 2009 Sales Dollar % Points
(as adjusted) (a)
Net sales:
Clothing
product $1,480,492 70.41% $1,433,913 75.09% $46,579 3.25% (4.68)
Tuxedo rental
services 364,269 17.32% 334,068 17.49% 30,201 9.04% (0.17)
Alteration and
other services 131,605 6.26% 128,121 6.71% 3,484 2.72% (0.45)
Retail segment
sales 1,976,366 93.99% 1,896,102 99.29% 80,264 4.23% (5.30)
Corporate
apparel
segment sales 126,298 6.01% 13,473 0.71% 112,825 837.42% 5.30
Total net
sales 2,102,664 100.00% 1,909,575 100.00% 193,089 10.11% 0.00
Total cost of
sales 1,204,231 57.27% 1,110,677 58.16% 93,554 8.42% (0.89)
Gross margin
(b):
Clothing
margin 798,675 53.95% 775,882 54.11% 22,793 2.94% (0.16)
Tuxedo margin 308,202 84.61% 276,651 82.81% 31,551 11.40% 1.80
Alteration and
other services
margin 33,479 25.44% 33,532 26.17% (53) (0.16%) (0.73)
Occupancy
costs (276,688) (14.00%) (289,672) (15.28%) 12,984 4.48% 1.28
Retail segment
margin 863,668 43.70% 796,393 42.00% 67,275 8.45% 1.70
Corporate
apparel
segment margin 34,765 27.53% 2,505 18.59% 32,260 1,287.82% 8.93
Gross margin 898,433 42.73% 798,898 41.84% 99,535 12.46% 0.89
Selling,
general and
administrative
expenses 796,762 37.89% 729,522 38.20% 67,240 9.22% (0.31)
Operating
income 101,671 4.84% 69,376 3.63% 32,295 46.55% 1.20
Net interest (1,141) (0.05%) (332) (0.02%) (809) (243.67%) 0.04
Earnings
before income
taxes 100,530 4.78% 69,044 3.62% 31,486 45.60% 1.17
Provision for
income taxes 32,852 1.56% 22,829 1.20% 10,023 43.90% 0.37
Net earnings
including
noncontrolling
interest 67,678 3.22% 46,215 2.42% 21,463 46.44% 0.80
Less: Net loss
attributable
to
noncontrolling
interest (19) 0.00% - 0.00% (19) 100.00% 0.00
Net earnings
attributable
to common
shareholders $ 67,697 3.22% $ 46,215 2.42% $21,482 46.48% 0.80
Net earnings
per diluted
common share
attributable
to common
shareholders
(c) $ 1.27 $ 0.88
Weighted
average
diluted common
shares
outstanding: 52,853 52,280
(a) Results have been adjusted for the change in inventory valuation method used
by our K&G brand from the retail inventory method to the average cost method
during the third quarter of fiscal 2010. The cumulative effect of this change in
accounting principle was recorded retrospectively as of February 1, 2009.
(b) Gross margin percent of sales is calculated as a percentage of related
sales.
(c) Calculated based on net earnings less net earnings allocated to
participating securities.
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
January 29, January 30,
2011 2010
(as adjusted) (a)
ASSETS
Current assets:
Cash and cash equivalents $ 136,371 $ 186,018
Accounts receivable, net 60,607 16,745
Inventories 486,499 434,881
Other current assets 80,531 72,732
Total current assets 764,008 710,376
Property and equipment, net 332,611 344,746
Tuxedo rental product, net 89,465 102,479
Goodwill 87,994 59,414
Intangible assets, net 37,348 4,287
Other assets 8,892 12,850
Total assets $ 1,320,318 $ 1,234,152
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 123,881 $ 83,052
Accrued expenses and other current liabilities 139,640 117,047
Income taxes payable 3,135 23,936
Total current liabilities 266,656 224,035
Long-term debt - 43,491
Deferred taxes and other liabilities 69,809 62,236
Total liabilities 336,465 329,762
Equity:
Preferred stock - -
Common stock 710 705
Capital in excess of par 341,663 327,742
Retained earnings 1,002,975 956,032
Accumulated other comprehensive income 38,366 32,537
Treasury stock, at cost (412,761) (412,626)
Total equity attributable to common
shareholders 970,953 904,390
Noncontrolling interest 12,900 -
Total equity 983,853 904,390
Total liabilities and equity $ 1,320,318 $ 1,234,152
(a) Results have been adjusted for the change in inventory valuation method
used by our K&G brand from the retail inventory method to the average cost
method during the third quarter of fiscal 2010. The cumulative effect of this
change in accounting principle was recorded retrospectively as of February 1,
2009.
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE TWELVE MONTHS ENDED
January 29, 2011 AND January 30, 2010
(In thousands)
Twelve Months Ended
2010 2009
(as adjusted) (a)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings including noncontrolling interest $ 67,678 $ 46,215
Non-cash adjustments to net earnings:
Depreciation and amortization 75,998 86,090
Tuxedo rental product amortization 33,485 37,184
Other 28,074 3,167
Changes in assets and liabilities (35,288) (9,501)
Net cash provided by operating activities 169,947 163,155
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (58,868) (56,912)
Acquisition of businesses, net of cash (97,786) -
Proceeds from sales of available-for-sale
investments - 19,410
Proceeds from sales of property and equipment 76 797
Net cash used in investing activities (156,578) (36,705)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 3,900 4,106
Payments on revolving credit facility - (25,000)
Payments on Canadian term loan (46,738) -
Cash dividends paid (19,111) (14,722)
Deferred financing costs (1,577) -
Tax payments related to vested deferred stock
units (2,748) (1,634)
Excess tax benefits from share-based plans 1,107 392
Purchase of treasury stock (144) (90)
Net cash used in financing activities (65,311) (36,948)
Effect of exchange rate changes 2,295 9,104
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (49,647) 98,606
Balance at beginning of period 186,018 87,412
Balance at end of period $ 136,371 $ 186,018
(a) Results have been adjusted for the change in inventory valuation method
used by our K&G brand from the retail inventory method to the average cost
method during the third quarter of fiscal 2010. The cumulative effect of this
change in accounting principle was recorded retrospectively as of February 1,
2009.
Contacts: Neill Davis, Men’s Wearhouse (281) 776-7000 Ken Dennard, DRG&L (713) 529-6600
SOURCE The Men’s Wearhouse
Released March 9, 2011