EX-99.1 2 h75984exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
     
The Men’s Wearhouse, Inc.

News Release
  (MEN’S WEARHOUSE LOGO)
For Immediate Release
MEN’S WEARHOUSE REPORTS
FISCAL 2010 SECOND QUARTER RESULTS
  Q2 2010 GAAP diluted EPS was $0.80 and adjusted diluted EPS was $0.83 compared with Q2 2009 GAAP diluted EPS of $0.75
 
  Company provides guidance for third quarter of fiscal 2010
 
  Conference call at 5:00 pm Eastern today
HOUSTON — September 8, 2010 — The Men’s Wearhouse (NYSE: MW) today announced its consolidated financial results for the second quarter ended July 31, 2010.
Second 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
  $ 537.0 (a)   $ 526.2 (a)     2.0 %                
MW
  $ 367.4 (b)   $ 359.0 (b)     2.3 %     2.7 %(c)     -2.0 %(c)
K&G
  $ 87.6     $ 93.6       -6.4 %     -4.6 %     -3.6 %
United States
  $ 465.4     $ 461.0       1.0 %     1.2 %     -2.4 %
Moores
  $ 71.6     $ 65.2       9.7 %     0.6 %(d)     -3.4 %(d)
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
  $ 1,010.5 (a)   $ 990.3 (a)     2.0 %                
MW
  $ 685.7 (b)   $ 670.0 (b)     2.3 %     2.6 %(c)     -4.4 %(c)
K&G
  $ 185.8     $ 198.1       -6.2 %     -4.8 %     -0.6 %
United States
  $ 891.5     $ 886.0       0.6 %     0.9 %     -3.5 %
Moores
  $ 118.9     $ 104.3       14.0 %     0.5 %(d)     -3.7 %(d)
 
(a)   Due to rounded numbers total company may not sum.
 
(b)   Total sales from retail stores and ecommerce.
 
(c)   Comparable store sales do not include ecommerce.
 
(d)   Comparable store sales change is based on the Canadian dollar.

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GAAP diluted earnings per share were $0.80 for the second quarter ended July 31, 2010. Adjusted diluted earnings per share were $0.83 after excluding $2.7 million ($1.7 million after tax or $0.03 per diluted share outstanding) in acquisition costs related to the Company’s acquisition of Dimensions Clothing Limited (“Dimensions”) and certain assets of Alexandra plc (“Alexandra”) on August 6, 2010. This compares to diluted earnings per share guidance given June 9, 2010 of $0.75 to $0.78. Prior year second quarter GAAP diluted earnings per share were $0.75.
SECOND QUARTER REVIEW
Total Company sales increased 2.0% for the quarter.
    Clothing product sales, representing 67.5% of fiscal second quarter 2010 total net sales, decreased 0.6% due mainly to a decrease in store traffic levels at Men’s Wearhouse and a decrease in the average transaction value at K&G.
 
    Tuxedo rental sales, representing 26.5% of fiscal second quarter 2010 total net sales, increased 10.0% due mainly to an increase in units rented.
Gross margin before occupancy costs, as a percentage of total net sales, increased 226 basis points from 59.1% to 61.3%. Clothing product margins, as a percentage of related sales, increased 224 basis points due primarily to different promotional offerings, as well as the mix of products on promotion, in 2010 compared to 2009 and lower product costs. Tuxedo rental margins, as a percentage of related sales, increased 111 basis points due primarily to a decrease in rental product retirement costs in 2010.
Occupancy costs decreased, as a percentage of total net sales, by 89 basis points from 13.9% to 13.0%. On an absolute dollar basis, occupancy costs decreased 4.5% from $73.1 million in the prior year to $69.8 million due primarily to lower depreciation costs.
Selling, general and administrative expenses were $191.2 million. The prior year quarter included a cumulative adjustment of $3.1 million for gift card breakage income. Excluding this other income, SG&A expense was $177.0 million in the prior year quarter. During the current quarter, the Company incurred $2.7 million in costs associated with the August 6, 2010 acquisition of Dimensions and certain assets of Alexandra. Excluding these costs, second quarter SG&A expenses were $188.5 million or an increase of 6.5% to the adjusted prior year quarter. The increase is primarily due to increased marketing costs and increased employee benefit costs. As a percentage of total net sales, adjusted SG&A increased 146 basis points from 33.6% to 35.1%.
Operating income was $68.4 million. Excluding $2.7 million in costs associated with the acquisitions, operating income was $71.1 million or 13.2% of total net sales compared to operating income of $63.9 million or 12.1% of total net sales for the same period last year.
The effective tax rate for second quarter fiscal 2010 was 37.6%.
Cash and cash equivalent balances as of the end of the second quarter of 2010 were $281.5 million.

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Total inventories of $416.4 million declined 3.3% from the prior year second quarter of $430.8 million.
Current maturities of long-term debt were $45.2 million as of the end of the second quarter of 2010.
THIRD QUARTER 2010 HIGHLIGHTS AND GUIDANCE
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 total cash consideration of approximately £61 million (US$97.8 million). The combined businesses are organized under a UK-based holding company of which Men’s Wearhouse controls 86% and certain existing shareholders of Dimensions controls 14%.
The financial results of the combined operations, excluding integration and transaction costs, are expected to be neutral to $0.01 accretive to the Company’s 3Q FY 2010 diluted earning per share. Total sales of the combined operations are expected in a range of US$49 million to US$51 million. Transaction costs and integration expenses for third quarter are expected to be $1.8 million ($1.1 million after tax and non-controlling interest or $0.02 per diluted share outstanding).
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 eleven facilities that we currently use for tuxedo distribution. The operations at these four facilities will be assumed by other tuxedo distribution facilities in our system allowing us to more effectively manage our tuxedo rental operations.
In the third quarter, we expect a charge of approximately $2.2 million ($1.5 million after tax or $0.03 per diluted share outstanding) consisting primarily of severance payments and fixed asset write-offs. In the fourth quarter, we expect an additional charge of approximately $0.6 million consisting primarily of severance payments, fixed asset write-offs and facility remediation.
The expected benefit to fiscal 2011 as a result of these closures would be a reduction in operating costs of approximately $4.0 million.

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Third Quarter Financial Guidance Summary
For the third quarter of the fiscal year, GAAP diluted earnings per share are expected to be in a range of $0.35 to $0.42. Adjusted diluted earnings per share are expected to be in a range of $0.40 to $0.47 excluding transaction costs and integration expenses of $1.8 million ($1.1 million after tax and non-controlling interest or $0.02 per diluted share outstanding) and $2.2 million in tuxedo distribution closure costs ($1.5 million after tax or $0.03 per diluted share outstanding).
         
    Historical    
    Actual   Guidance
    3Q FY 2009   3Q FY 2010
Total Sales
  +0.5%   + low double digits (1)
Comparable Store Sales (2)
       
MW
  -0.2%   + low to mid single digit
K&G
  -1.1%   - mid single digit
Moores
  +1.9%   Flat
Gross Profit Growth Rate
  -0.0%   + low double digits (3)
S G & A Expense Growth Rate
  -2.6% (4)   + low double digits (5)
Effective Tax Rate
  34.51%   31.30% (6)
Shares Outstanding (millions)
  52.442   52.811
GAAP Diluted EPS
  $0.37   $0.35 to $0.42
Adjusted Diluted EPS
      $0.40 to $0.47 (5)
Foreign Exchange Conversion (avg.)
       
US Dollar to GBP
  n/a   1.53
US Dollar to Canadian Dollar
  0.93   0.96
 
1.   Includes US$49 million to US$51 million of sales from acquired operations of Dimensions and Alexandra in the 3Q of FY 2010.
 
2.   Includes an assumed increase in tuxedo rental revenues of + low double digits in the 3Q of FY 2010 compared to the prior year quarter increase of 2.1%.
 
3.   Occupancy costs are expected to decrease in the low single digit range in the 3Q of FY 2010 from the prior year quarter.
 
4.   Excludes $1.8 million in costs in the 3Q 2008 from the closing of Golden Brand.
 
5.   Excludes acquisition transaction and integration costs and costs associated with the closure of four tuxedo distribution centers in the 3Q of FY 2010.
 
6.   Includes a $1.4 million benefit in the 3Q 2010 from reduction of tax valuation reserves.

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UPDATED CONFERENCE CALL AND WEBCAST INFORMATION
At 5:00 p.m. Eastern time on Wednesday, September 8, 2010, Company management will host a conference call and real time web cast to review the fiscal second quarter and its outlook for the third quarter of fiscal 2010.
To access the conference call, dial 480-629-9770. 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 September 15, 2010 by calling 303-590-3030 and entering the access code of 4355146#, or a webcast archive will be available free on the website for approximately 90 days.
STORE INFORMATION
                                                 
    July 31, 2010   August 1, 2009   January 30, 2010
    Number   Sq. Ft.   Number   Sq. Ft.   Number   Sq. Ft.
    of Stores   (000’s)   of Stores   (000’s)   of Stores   (000’s)
 
Men’s Wearhouse
    584       3,307.0       580       3,274.1       581       3,284.4  
 
Men’s Wearhouse and Tux
    434       596.4       473       644.4       454       623.4  
 
Moores, Clothing for Men
    117       735.7       117       732.7       117       734.6  
 
K&G (a)
    104       2,426.7       108       2,488.4       107       2,475.6  
 
Total
    1,239       7,065.8       1,278       7,139.6       1,259       7,118.0  
 
(a)   95, 94 and 94 stores, respectively, offering women’s apparel.

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Founded in 1973, Men’s Wearhouse is one of North America’s largest specialty retailers of men’s apparel with 1,239 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, Form 10-Q for the quarter ended May 1, 2010 and Current Report on Form 8-K/A filed on August 16, 2010.
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

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(MW LOGO)
  THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)
FOR THE THREE MONTHS ENDED
July 31, 2010 AND August 1, 2009

(In thousands, except per share data)
                                                         
    Three Months Ended     Variance  
            % of             % of                     Basis  
    2010     Sales     2009     Sales     Dollar     %     Points  
                   
Net sales:
                                                       
Clothing product
  $ 362,228       67.46 %   $ 364,302       69.23 %   $ (2,074 )     (0.57 %)     (1.78 )
Tuxedo rental services
    142,462       26.53 %     129,567       24.62 %     12,895       9.95 %     1.91  
Alteration and other services
    32,299       6.01 %     32,339       6.15 %     (40 )     (0.12 %)     (0.13 )
                   
Total net sales
    536,989       100.00 %     526,208       100.00 %     10,781       2.05 %     0.00  
 
                                                       
Total cost of sales
    277,406       51.66 %     288,420       54.81 %     (11,014 )     (3.82 %)     (3.15 )
                   
 
                                                       
Gross margin (a)
    259,583       48.34 %     237,788       45.19 %     21,795       9.17 %     3.15  
 
                                                       
Selling, general and administrative expenses
    191,168       35.60 %     173,896       33.05 %     17,272       9.93 %     2.55  
                   
 
                                                       
Operating income
    68,415       12.74 %     63,892       12.14 %     4,523       7.08 %     0.60  
 
                                                       
Net interest
    (275 )     (0.05 %)           0.00 %     (275 )     100.00 %     0.05  
                   
 
                                                       
Earnings before income taxes
    68,140       12.69 %     63,892       12.14 %     4,248       6.65 %     0.55  
 
                                                       
Provision for income taxes
    25,620       4.77 %     24,407       4.64 %     1,213       4.97 %     0.13  
                   
 
                                                       
Net earnings
  $ 42,520       7.92 %   $ 39,485       7.50 %   $ 3,035       7.69 %     0.41  
                   
 
                                                       
Net earnings per diluted common share (b)
  $ 0.80             $ 0.75                                  
 
                                                   
 
                                                       
Weighted average diluted common shares outstanding:
    52,806               52,255                                  
 
                                                   
 
(a)   Gross margin as a percentage of related sales:
                                                         
    Three Months Ended   Variance
            % of           % of                   Basis
    2010   Related Sales   2009   Related Sales   Dollar   %   Points
         
Clothing margin
  $ 201,107       55.52 %   $ 194,115       53.28 %   $ 6,992       3.60 %     2.24  
Tuxedo margin
    120,426       84.53 %     108,092       83.43 %     12,334       11.41 %     1.11  
Alteration and other services margin
    7,853       24.31 %     8,649       26.74 %     (796 )     (9.20 %)     (2.43 )
Occupancy costs
    (69,803 )     (13.00 %)     (73,068 )     (13.89 %)     3,265       4.47 %     0.89  
         
Gross margin
  $ 259,583       48.34 %   $ 237,788       45.19 %   $ 21,795       9.17 %     3.15  
                   
 
(b)   Calculated based on net earnings less net earnings allocated to participating securities.

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(MW LOGO)
  THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)
FOR THE SIX MONTHS ENDED
July 31, 2010 AND August 1, 2009

(In thousands, except per share data)
                                                         
    Six Months Ended     Variance  
            % of             % of                     Basis  
    2010     Sales     2009     Sales     Dollar     %     Points  
                   
Net sales:
                                                       
Clothing product
  $ 730,599       72.30 %   $ 723,364       73.04 %   $ 7,235       1.00 %     (0.74 )
Tuxedo rental services
    214,616       21.24 %     200,986       20.29 %     13,630       6.78 %     0.94  
Alteration and other services
    65,240       6.46 %     65,992       6.66 %     (752 )     (1.14 %)     (0.21 )
                   
Total net sales
    1,010,455       100.00 %     990,342       100.00 %     20,113       2.03 %     0.00  
 
                                                       
Total cost of sales
    549,800       54.41 %     564,565       57.01 %     (14,765 )     (2.62 %)     (2.60 )
                   
 
                                                       
Gross margin (a)
    460,655       45.59 %     425,777       42.99 %     34,878       8.19 %     2.60  
 
                                                       
Selling, general and administrative expenses
    370,818       36.70 %     353,109       35.66 %     17,709       5.02 %     1.04  
                   
 
                                                       
Operating income
    89,837       8.89 %     72,668       7.34 %     17,169       23.63 %     1.55  
 
                                                       
Net interest
    (500 )     (0.05 %)     (160 )     (0.02 %)     (340 )     212.50 %     0.03  
                   
 
                                                       
Earnings before income taxes
    89,337       8.84 %     72,508       7.32 %     16,829       23.21 %     1.52  
 
                                                       
Provision for income taxes
    33,209       3.29 %     27,767       2.80 %     5,442       19.60 %     0.48  
                   
 
                                                       
Net earnings
  $ 56,128       5.55 %   $ 44,741       4.52 %   $ 11,387       25.45 %     1.04  
                   
 
                                                       
Net earnings per diluted common share (b)
  $ 1.05             $ 0.85                                  
 
                                                   
 
                                                       
Weighted average diluted common shares outstanding:
    52,717               52,105                                  
 
                                                   
 
(a)   Gross margin as a percentage of related sales:
                                                         
    Six Months Ended   Variance
            % of           % of                   Basis
    2010   Related Sales   2009   Related Sales   Dollar   %   Points
         
Clothing margin
  $ 402,165       55.05 %   $ 385,720       53.32 %   $ 16,445       4.26 %     1.72  
Tuxedo margin
    181,254       84.46 %     167,479       83.33 %     13,775       8.22 %     1.13  
Alteration and other services margin
    16,730       25.64 %     18,212       27.60 %     (1,482 )     (8.14 %)     (1.95 )
Occupancy costs
    (139,494 )     (13.81 %)     (145,634 )     (14.71 %)     6,140       4.22 %     0.90  
         
Gross margin
  $ 460,655       45.59 %   $ 425,777       42.99 %   $ 34,878       8.19 %     2.60  
                   
 
(b)   Calculated based on net earnings less net earnings allocated to participating securities.

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(MW LOGO)
  THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)
(Unaudited)
                 
    July 31,     August 1,  
    2010     2009  
ASSETS
               
 
               
Current assets:
               
Cash and cash equivalents
  $ 281,500     $ 144,449  
Short-term investments
          19,490  
Accounts receivable, net
    19,066       17,129  
Inventories
    416,377       430,777  
Other current assets
    61,762       51,876  
 
           
 
               
Total current assets
    778,705       663,721  
Property and equipment, net
    333,133       375,595  
Tuxedo rental product, net
    91,690       107,848  
Goodwill
    60,449       59,266  
Other assets, net
    22,850       16,466  
 
           
 
               
Total assets
  $ 1,286,827     $ 1,222,896  
 
           
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
 
               
Current liabilities:
               
Accounts payable
  $ 82,163     $ 78,918  
Accrued expenses and other current liabilities
    129,971       115,488  
Income taxes payable
    7,589       19,276  
Current maturities of long-term debt
    45,226        
 
           
 
               
Total current liabilities
    264,949       213,682  
Long-term debt
          43,161  
Deferred taxes and other liabilities
    64,402       63,289  
 
           
 
               
Total liabilities
    329,351       320,132  
 
           
 
               
Shareholders’ equity:
               
Preferred stock
           
Common stock
    708       703  
Capital in excess of par
    332,677       319,029  
Retained earnings
    1,000,553       961,670  
Accumulated other comprehensive income
    36,308       33,988  
Treasury stock, at cost
    (412,770 )     (412,626 )
 
           
 
               
Total shareholders’ equity
    957,476       902,764  
 
           
 
               
Total liabilities and equity
  $ 1,286,827     $ 1,222,896  
 
           

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(MW LOGO)
  THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
FOR THE SIX MONTHS ENDED
July 31, 2010 AND August 1, 2009

(In thousands)
                 
    Six Months Ended  
    2010     2009  
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net earnings
  $ 56,128     $ 44,741  
Non-cash adjustments to net earnings:
               
Depreciation and amortization
    36,885       43,881  
Tuxedo rental product amortization
    20,812       22,089  
Other
    10,953       (376 )
Changes in assets and liabilities
    5,510       (206 )
 
           
 
               
Net cash provided by operating activities
    130,288       110,129  
 
           
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Capital expenditures
    (25,865 )     (28,757 )
Other investing activities
    23        
 
           
 
               
Net cash used in investing activities
    (25,842 )     (28,757 )
 
           
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from issuance of common stock
    1,321       1,051  
Payments on revolving credit facility
          (25,000 )
Cash dividends paid
    (9,535 )     (7,344 )
Other financing activities
    (2,020 )     (1,678 )
 
           
 
               
Net cash used in financing activities
    (10,234 )     (32,971 )
 
           
 
               
Effect of exchange rate changes
    1,270       8,636  
 
           
 
               
INCREASE IN CASH AND CASH EQUIVALENTS
    95,482       57,037  
Balance at beginning of period
    186,018       87,412  
 
           
Balance at end of period
  $ 281,500     $ 144,449  
 
           

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