EX-99.1 2 a14-17235_4ex99d1.htm EX-99.1

Exhibit 99.1

 

GRAPHIC

News Release

 

 

 

Contact:

 

Kelly Dilts, SVP, Finance & IR

 

(281) 776-7239

For Immediate Release

 

 

Ken Dennard

 

Dennard · Lascar Associates

 

(713) 529-6600

 

MEN’S WEARHOUSE REPORTS

FISCAL 2014 SECOND QUARTER AND SIX MONTH RESULTS

 

·                  Q2 2014 GAAP diluted earnings per share were $0.25 compared to $0.85 Q2 2013 GAAP diluted earnings per share primarily due to acquisition and integration costs

 

·                  Q2 2014 adjusted diluted earnings per share were $1.10 compared to $1.01 Q2 2013 adjusted diluted earnings per share (see attached non-GAAP reconciliations)

 

·                  Men’s Wearhouse second quarter comparable sales increased 4.4%

 

·                  Jos. A. Bank second quarter comparable sales increased 1.0%

 

·                  Moores second quarter comparable sales increased 10.2%

 

·                  Conference call scheduled for Thursday, September 11th at 9:00 a.m. Eastern time

 

FREMONT, CA — September 10, 2014 — The Men’s Wearhouse (NYSE: MW) today announced consolidated financial results for the fiscal second quarter and six months ended August 2, 2014.

 

GAAP diluted EPS for fiscal second quarter 2014 was $0.25 and adjusted EPS was $1.10 excluding non-operating items(1).  Results for Jos. A. Bank are included in our financial statements beginning June 18, 2014, the date of the closing of the acquisition.

 

Doug Ewert, Men’s Wearhouse president and chief executive officer, commented, “During the second quarter, we closed the Jos. A. Bank acquisition and we are pleased with the progress we are making on the integration.

 

“Second quarter adjusted earnings per share of $1.10 were driven by strong performances at Men’s Wearhouse, Moores and K&G, posting comparable sales increases of 4.4%, 10.2% and 5.6%, respectively.  Additional highlights include excellent results in tuxedo rental, with a U.S. comparable sales increase of 9.1%, and from our Joseph Abboud roll out, which will be complete in the coming weeks.

 

“While we are very early in the Jos. A. Bank integration process, we look forward to communicating our progress and continue to expect between $100 million to $150 million in synergies.  Subsequent to the end of the second quarter, we secured the early termination of the Jim’s Formal Wear contract to supply tuxedo rental inventory to Jos. A. Bank.  We will begin leveraging our tuxedo rental inventory and logistics to serve the Jos. A. Bank rental customers for the 2015 wedding season,” concluded Ewert.

 

(1) Adjusted EPS is non-GAAP financial information provided to enhance the user’s overall understanding of the Company’s current financial performance.  Reconciliations of adjusted financial information to GAAP results are included in the tables at the end of this release.

 

1


 

FISCAL SECOND QUARTER SALES REVIEW

 

The tables that follow are a summary of net sales for fiscal 2014 second quarter and fiscal six months ended August 2, 2014.  The dollars shown are U.S. dollars in millions and due to rounded numbers may not sum.  The Moores comparable sales change is based on the Canadian dollar.  The comparable sales shown below for Jos. A. Bank are a comparison to the full periods, not a comparison of the acquisition period since June 18, 2014. Comparable sales exclude the net sales of a store for any month of one period if the store was not open throughout the same month of the prior period and include e-commerce net sales.

 

Second Quarter Net Sales Summary — Fiscal 2014

 

 

 

 

 

 

 

Net Sales

 

Comparable Sales Change

 

 

 

Net Sales Change

 

Current
Quarter

 

Current
Quarter

 

Prior Year
Quarter

 

Total Retail Segment

 

24.1

%

$

143.0

 

$

736.4

 

 

 

 

 

Men’s Wearhouse

 

5.6

%

$

23.7

 

$

450.3

 

4.4

%

0.7

%

Jos. A. Bank

 

n/a

 

$

113.7

 

$

113.7

 

1.0

%

(15.5

)%

Moores

 

4.7

%

$

3.5

 

$

78.1

 

10.2

%

(4.9

)%

K&G

 

1.6

%

$

1.4

 

$

86.2

 

5.6

%

(3.0

)%

MW Cleaners

 

9.0

%

$

0.7

 

$

8.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Apparel Segment

 

23.9

%

$

12.8

 

$

66.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

24.1

%

$

155.8

 

$

803.1

 

 

 

 

 

 

Year-To-Date Net Sales Summary — Fiscal 2014

 

 

 

 

 

 

 

Net Sales

 

Comparable Sales Change

 

 

 

Net Sales Change

 

Current Year

 

Current Year

 

Prior Year

 

Total Retail Segment

 

13.6

%

$

156.5

 

$

1,310.1

 

 

 

 

 

Men’s Wearhouse

 

5.2

%

$

42.9

 

$

871.3

 

3.6

%

1.2

%

Jos. A. Bank

 

n/a

 

$

113.7

 

$

113.7

 

4.4

%

(11.9

)%

Moores

 

1.8

%

$

2.3

 

$

130.6

 

8.4

%

(5.8

)%

K&G

 

(2.0

)%

$

(3.6

)

$

178.6

 

2.0

%

(5.0

)%

MW Cleaners

 

8.0

%

$

1.2

 

$

15.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Apparel Segment

 

12.1

%

$

13.3

 

$

123.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

13.4

%

$

169.8

 

$

1,433.6

 

 

 

 

 

 

Net sales at our largest brand, Men’s Wearhouse stores, which represented 56% of total second quarter sales, were up 5.6% from last year’s second quarter and comparable sales increased 4.4%.  On a comparable basis an increase in average transactions per store more than offset a decrease in clothing product average unit retails (or the net selling price per unit). The higher margin tuxedo rental revenues comparable sales increased 9.1% in the second quarter of 2014.

 

2


 

Jos. A. Bank was 14% of the Company’s total second quarter sales reflecting sales since June 18, 2014, the acquisition date.  Comparable sales for the full second quarter increased 1.0% with increases in units sold per transaction which offset decreases in clothing product average unit retails and transactions per store.  Moores, our Canadian retail brand, was 10% of the total second quarter sales and had a comparable sales increase of 10.2% due to increases in units sold per transaction, average transactions per store and clothing product average unit retails.  Net sales change for Moores only increased 4.7% due to an unfavorable change in the currency translation rate.  K&G was 11% of the Company’s total second quarter sales with a comparable sales increase of 5.6% due to increases in average transactions per store and units sold per transaction which more than offset a decrease in average unit retails.  The Corporate Apparel segment, which represented 8% of total second quarter sales, had a sales increase of 23.9%.

 

FISCAL SECOND QUARTER CONSOLIDATED RESULTS REVIEW

 

Sales

 

Total net sales increased 24.1% or $155.8 million to $803.1 million from $647.3 million.

 

Retail segment sales for the quarter increased by 24.1% or $143.0 million due to $113.7 million in sales at Jos. A. Bank since the closing of the acquisition and an increase in comparable sales at all other retail brands.

 

Corporate apparel sales increased by 23.9% or $12.8 million.

 

Gross Margin

 

Total GAAP gross margin was $358.5 million.  Adjusted consolidated gross margin of $365.3 million increased $56.5 million or 18.3% compared to the prior year quarter.  The total adjusted gross margin rate decreased 222 basis points primarily due to lower retail margin related to the Jos. A. Bank acquisition.

 

Adjusted retail segment gross margin increased $53.7 million or 18.4%.  The adjusted retail segment gross margin rate decreased 224 basis points including Jos. A. Bank and increased 10 basis points excluding Jos. A. Bank.

 

Corporate apparel gross margin increased $2.8 million or 16.2% yet decreased 197 basis points.

 

SG&A

 

GAAP SG&A expenses increased $83.3 million to $315.8 million, an increase of 35.8% or 341 basis points.  Adjusted SG&A expenses were 160 basis points favorable to the prior year.  On an absolute dollar basis adjusted SG&A increased by $42.4 million or 18.5% primarily due to the addition of Jos. A. Bank SG&A and an increase in advertising expense primarily related to the rollout of Joseph Abboud.

 

Operating Income

 

GAAP operating income was $42.7 million compared to GAAP operating income of $66.8 million last year.  Adjusted operating income was $93.3 million, an increase of $14.1 million or 17.8% over the prior year adjusted operating income of $79.2 million.

 

Interest and Taxes

 

Net interest expense for the second quarter was $13.1 million, impacting adjusted diluted EPS by $0.18.  The effective tax rate for the second quarter was 55.0%.  Excluding the impact of non-deductible transaction costs, the adjusted effective tax rate was 33.9%.

 

3


 

Net Earnings

 

GAAP net earnings were $12.3 million compared to GAAP net earnings of $42.9 million last year.  Adjusted net earnings were $52.9 million, or $1.10 adjusted earnings per share compared to adjusted net earnings of $51.0 million, or $1.01 adjusted diluted earnings per share last year.

 

Balance Sheet

 

In connection with the acquisition of Jos. A. Bank, debt at the end of the second quarter was $1.7 billion.  Inventories increased $444.7 million to $1,044.5 million from $599.8 million.  Approximately $425 million is due to the Jos. A. Bank acquisition and inventory at the Joseph Abboud factory.  Additionally, approximately $10 million of the increase was related to an inventory build for our corporate apparel business to service existing customers and the remaining increase was primarily driven by new store openings at Men’s Wearhouse.

 

FISCAL SIX MONTH CONSOLIDATED RESULTS REVIEW

 

Sales

 

Total net sales increased 13.4% or $169.8 million to $1,433.6 million from $1,263.8 million.

 

Year-to-date retail segment sales increased by 13.6% or $156.5 million due to $113.7 million in sales at Jos. A. Bank since the closing of the acquisition and an increase in comparable sales at all other retail brands.

 

Corporate apparel sales increased by 12.1%, or $13.3 million.

 

Gross Margin

 

Total GAAP gross margin was $641.9 million.  Adjusted consolidated gross margin of $648.7 million increased $62.0 million or 10.6% compared to the prior year quarter.  The total adjusted gross margin rate decreased 118 basis points primarily due to lower retail margin related to the Jos. A. Bank acquisition.

 

Adjusted retail segment gross margin increased $59.5 million or 10.8%.  The adjusted retail segment gross margin rate decreased 117 basis points including Jos. A. Bank and increased 3 basis points excluding Jos. A. Bank.

 

Corporate apparel gross margin increased $2.5 million or 7.1% yet decreased 139 basis points.

 

SG&A

 

GAAP SG&A expenses increased $114.0 million to $571.9 million, an increase of 24.9% or 367 basis points.  Adjusted SG&A expenses were 101 basis points favorable to the prior year.  On an absolute dollar basis adjusted SG&A increased by $46.7 million or 10.3% primarily due to the addition of Jos. A. Bank SG&A and an increase in advertising expense.

 

Operating Income

 

GAAP operating income was $70.0 million compared to GAAP operating income of $119.3 million last year.  Adjusted operating income was $147.0 million, an increase of $15.3 million or 11.6% over the prior year adjusted operating income of $131.7 million.

 

Interest and Taxes

 

Net interest expense for the six months was $14.1 million, impacting adjusted diluted EPS by $0.19.

 

The effective tax rate for the six months was 46.3%.  Excluding the impact of non-deductible transaction costs, the adjusted effective tax rate was 35.2%.

 

4


 

Net Earnings

 

GAAP net earnings were $28.7 million compared to GAAP net earnings of $76.0 million last year.  Adjusted net earnings were $86.0 million, or $1.78 adjusted earnings per share compared to adjusted net earnings of $84.1 million, or $1.66 adjusted diluted earnings per share last year.

 

CONFERENCE CALL AND WEBCAST INFORMATION

 

At 9:00 a.m. Eastern time on Thursday, September 11, 2014, Company management will host a conference call and real time webcast to review fiscal 2014 second quarter and six month results.

 

To access the conference call, dial 719-457-2604.  To access the live webcast presentation, visit the Investor Relations section of the Company’s website at http://ir.menswearhouse.com. A telephonic replay will be available through September 18, 2014 by calling 719-457-0820 and entering the access code of 7619322#, or a webcast archive will be available free on the website for approximately 90 days.

 

STORE INFORMATION

 

 

 

August 2, 2014

 

August 3, 2013

 

February 1, 2014

 

 

 

Number of
Stores

 

Sq. Ft.
(000’s)

 

Number of
Stores

 

Sq. Ft.
(000’s)

 

Number of
Stores

 

Sq. Ft.
(000’s)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Men’s Wearhouse

 

679

 

3,867.0

 

652

 

3,722.6

 

661

 

3,774.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jos. A. Bank (a)

 

629

 

2,861.8

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Men’s Wearhouse and Tux

 

233

 

322.2

 

269

 

370.1

 

248

 

344.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Moores, Clothing for Men

 

121

 

769.1

 

120

 

764.4

 

121

 

769.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

K&G (b)

 

94

 

2,228.8

 

96

 

2,271.7

 

94

 

2,228.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

1,756

 

10,048.9

 

1,137

 

7,128.8

 

1,124

 

7,116.4

 

 

(a)  Excludes 15 franchise stores.

(b)  85, 88 and 85 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 1,756 stores.  The Men’s Wearhouse, Jos. A. Bank, Moores and K&G stores carry a full selection of suits, sport coats, furnishings and accessories in exclusive and non-exclusive merchandise brands and Men’s Wearhouse and Tux stores carry a limited selection.  Most K&G stores carry a full selection of women’s apparel.  Tuxedo rentals are available in the Men’s Wearhouse, Jos. A. Bank, Moores and Men’s Wearhouse and Tux stores.  Additionally, Men’s Wearhouse operates a global corporate apparel and workwear group consisting of Twin Hill in the United States and Dimensions, Alexandra and Yaffy in the United Kingdom.

 

5


 

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.  Forward-looking statements are not guarantees of future performance and a variety of factors could cause actual results to differ materially from the anticipated or expected results expressed in or suggested by these forward-looking statements.  These forward-looking statements may be significantly impacted by various factors, including, but not limited to: actions by governmental entities, domestic and international economic activity and inflation, success, or lack thereof, in executing our internal operating plans and new store and new market expansion plans, including successful integration of acquisitions, performance issues with key suppliers, disruption in buying trends due to homeland security concerns, severe weather, foreign currency fluctuations, government export and import policies, aggressive advertising or marketing activities of competitors; and legal proceedings. Future results will also be dependent upon our ability to continue to identify and complete successful expansions and penetrations into existing and new markets and our ability to integrate such expansions with our existing operations.

 

These forward-looking statements are based upon management’s current beliefs or expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. The following factors, among others, could cause actual results to differ materially from those expressed or implied in the forward-looking statements: (1) the possibility that the expected benefits from the Jos. A. Bank transaction will not be realized within the anticipated time period, (2) the risks related to the costs and difficulties related to the integration of Jos. A. Bank’s business and operations with Men’s Wearhouse’s business and operations, (3) the inability to obtain, or delays in obtaining, cost savings and synergies from the transaction, (4) unexpected costs, charges or expenses resulting from the transaction, (5) litigation relating to the transaction, (6) the inability to retain key personnel and (7) the possible disruption that may be caused by the transaction to the business and operations of Men’s Wearhouse and its relationships with customers, employees and other third parties.

 

The forward-looking statements in this press release speak only as of the date hereof. Except for the ongoing obligations of Men’s Wearhouse to disclose material information under the federal securities laws, Men’s Wearhouse undertakes no obligation to revise or update publicly any forward-looking statement, except as required by law.  Other factors that may impact the forward-looking statements are described in Men’s Wearhouse’s annual report on Form 10-K for the fiscal year ended February 1, 2014 and quarterly reports on Form 10-Q.  For additional information on Men’s Wearhouse, please visit the Company’s websites at www.menswearhouse.com, www.josbank.com, www.mooresclothing.com, www.kgstores.com, www.twinhill.com, www.dimensions.co.uk and www.alexandra.co.uk.

 

6


 

THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

 

For the Three Months Ended August 2, 2014 and August 3, 2013

(In thousands, except per share data)

 

 

 

Three Months Ended

 

Variance

 

 

 

 

 

% of

 

 

 

% of

 

 

 

 

 

Basis

 

 

 

2014

 

Sales

 

2013

 

Sales

 

Dollar

 

%

 

Points

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

$

530,728

 

66.09

%

$

408,683

 

63.14

%

$

122,045

 

29.86

%

2.95

 

Tuxedo rental services

 

161,096

 

20.06

%

147,701

 

22.82

%

13,395

 

9.07

%

(2.76

)

Alteration and other services

 

44,598

 

5.55

%

37,056

 

5.73

%

7,542

 

20.35

%

(0.17

)

Total retail sales

 

736,422

 

91.70

%

593,440

 

91.69

%

142,982

 

24.09

%

0.01

 

Corporate apparel clothing product sales

 

66,656

 

8.30

%

53,815

 

8.31

%

12,841

 

23.86

%

(0.01

)

Total net sales

 

803,078

 

100.00

%

647,255

 

100.00

%

155,823

 

24.07

%

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cost of sales

 

444,536

 

55.35

%

338,461

 

52.29

%

106,075

 

31.34

%

3.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin (a):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

287,374

 

54.15

%

231,105

 

56.55

%

56,269

 

24.35

%

(2.40

)

Tuxedo rental services

 

134,868

 

83.72

%

125,123

 

84.71

%

9,745

 

7.79

%

(0.99

)

Alteration and other services

 

11,699

 

26.23

%

8,130

 

21.94

%

3,569

 

43.90

%

4.29

 

Occupancy costs

 

(95,423

)

(12.96

)%

(72,791

)

(12.27

)%

(22,632

)

(31.09

)%

(0.69

)

Total retail gross margin

 

338,518

 

45.97

%

291,567

 

49.13

%

46,951

 

16.10

%

(3.16

)

Corporate apparel clothing product margin

 

20,024

 

30.04

%

17,227

 

32.01

%

2,797

 

16.24

%

(1.97

)

Total gross margin

 

358,542

 

44.65

%

308,794

 

47.71

%

49,748

 

16.11

%

(3.06

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

315,838

 

39.33

%

232,505

 

35.92

%

83,333

 

35.84

%

3.41

 

Goodwill impairment charge

 

—

 

0.00

%

9,501

 

1.47

%

(9,501

)

NM

 

(1.47

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

42,704

 

5.32

%

66,788

 

10.32

%

(24,084

)

(36.06

)%

(5.00

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest

 

(13,074

)

(1.63

)%

(359

)

(0.06

)%

(12,715

)

3541.78

%

(1.57

)

Loss on extinguishment of debt

 

(2,158

)

(0.27

)%

—

 

0.00

%

(2,158

)

NM

 

(0.27

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

27,472

 

3.42

%

66,429

 

10.26

%

(38,957

)

(58.64

)%

(6.84

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

15,104

 

1.88

%

23,451

 

3.62

%

(8,347

)

(35.59

)%

(1.74

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings including non-controlling interest

 

12,368

 

1.54

%

42,978

 

6.64

%

(30,610

)

(71.22

)%

(5.10

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to non-controlling interest

 

(112

)

(0.01

)%

(35

)

(0.01

)%

(77

)

(220.00

)%

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to common shareholders

 

$

12,256

 

1.53

%

$

42,943

 

6.63

%

$

(30,687

)

(71.46

)%

(5.11

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per diluted common share attributable to common shareholders

 

$

0.25

 

 

 

$

0.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted common shares outstanding:

 

48,143

 

 

 

50,133

 

 

 

 

 

 

 

 

 

 

(a)  Gross margin percent of sales is calculated as a percentage of related sales.

 

7


 

THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

 

For the Six Months Ended August 2, 2014 and August 3, 2013

(In thousands, except per share data)

 

 

 

Six Months Ended

 

Variance

 

 

 

 

 

% of

 

 

 

% of

 

 

 

 

 

Basis

 

 

 

2014

 

Sales

 

2013

 

Sales

 

Dollar

 

%

 

Points

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

$

963,752

 

67.23

%

$

832,420

 

65.87

%

$

131,332

 

15.78

%

1.36

 

Tuxedo rental services

 

262,759

 

18.33

%

246,183

 

19.48

%

16,576

 

6.73

%

(1.15

)

Alteration and other services

 

83,560

 

5.83

%

75,018

 

5.94

%

8,542

 

11.39

%

(0.11

)

Total retail sales

 

1,310,071

 

91.39

%

1,153,621

 

91.28

%

156,450

 

13.56

%

0.10

 

Corporate apparel clothing product sales

 

123,481

 

8.61

%

110,170

 

8.72

%

13,311

 

12.08

%

(0.10

)

Total net sales

 

1,433,552

 

100.00

%

1,263,791

 

100.00

%

169,761

 

13.43

%

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cost of sales

 

791,646

 

55.22

%

677,077

 

53.58

%

114,569

 

16.92

%

1.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin (a):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

528,921

 

54.88

%

469,359

 

56.38

%

59,562

 

12.69

%

(1.50

)

Tuxedo rental services

 

221,214

 

84.19

%

209,107

 

84.94

%

12,107

 

5.79

%

(0.75

)

Alteration and other services

 

22,939

 

27.45

%

17,674

 

23.56

%

5,265

 

29.79

%

3.89

 

Occupancy costs

 

(168,270

)

(12.84

)%

(144,065

)

(12.49

)%

(24,205

)

(16.80

)%

(0.36

)

Total retail gross margin

 

604,804

 

46.17

%

552,075

 

47.86

%

52,729

 

9.55

%

(1.69

)

Corporate apparel clothing product margin

 

37,102

 

30.05

%

34,639

 

31.44

%

2,463

 

7.11

%

(1.39

)

Total gross margin

 

641,906

 

44.78

%

586,714

 

46.42

%

55,192

 

9.41

%

(1.65

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

571,921

 

39.90

%

457,872

 

36.23

%

114,049

 

24.91

%

3.67

 

Goodwill impairment charge

 

—

 

0.00

%

9,501

 

0.75

%

(9,501

)

NM

 

(0.75

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

69,985

 

4.88

%

119,341

 

9.44

%

(49,356

)

(41.36

)%

(4.56

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest

 

(14,148

)

(0.99

)%

(582

)

(0.05

)%

(13,566

)

2330.93

%

(0.94

)

Loss on extinguishment of debt

 

(2,158

)

(0.15

)%

—

 

0.00

%

(2,158

)

NM

 

(0.15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

53,679

 

3.74

%

118,759

 

9.40

%

(65,080

)

(54.80

)%

(5.65

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

24,853

 

1.73

%

42,825

 

3.39

%

(17,972

)

(41.97

)%

(1.65

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings including non-controlling interest

 

28,826

 

2.01

%

75,934

 

6.01

%

(47,108

)

(62.04

)%

(4.00

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (earnings) loss attributable to non-controlling interest

 

(84

)

(0.01

)%

100

 

0.01

%

(184

)

NM

 

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to common shareholders

 

$

28,742

 

2.00

%

$

76,034

 

6.02

%

$

(47,292

)

(62.20

)%

(4.01

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per diluted common share attributable to common shareholders

 

$

0.60

 

 

 

$

1.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted common shares outstanding:

 

48,059

 

 

 

50,460

 

 

 

 

 

 

 

 

 

 

(a)  Gross margin percent of sales is calculated as a percentage of related sales.

 

8


 

THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

 

August 2,

 

August 3,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

67,235

 

$

32,488

 

Accounts receivable, net

 

89,195

 

56,083

 

Inventories

 

1,044,520

 

599,811

 

Other current assets

 

105,475

 

71,835

 

 

 

 

 

 

 

Total current assets

 

1,306,425

 

760,217

 

Property and equipment, net

 

573,911

 

397,129

 

Tuxedo rental product, net

 

146,464

 

144,171

 

Goodwill

 

874,955

 

76,510

 

Intangible assets, net

 

676,861

 

30,022

 

Other assets

 

45,983

 

6,485

 

 

 

 

 

 

 

Total assets

 

$

3,624,599

 

$

1,414,534

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

214,766

 

$

136,629

 

Accrued expenses and other current liabilities

 

273,974

 

172,446

 

Income taxes payable

 

1,201

 

3,554

 

Current maturities of long-term debt

 

11,000

 

—

 

 

 

 

 

 

 

Total current liabilities

 

500,941

 

312,629

 

 

 

 

 

 

 

Long-term debt

 

1,678,196

 

—

 

Deferred taxes and other liabilities

 

393,413

 

86,836

 

 

 

 

 

 

 

Total liabilities

 

2,572,550

 

399,465

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Preferred stock

 

—

 

—

 

Common stock

 

481

 

708

 

Capital in excess of par

 

423,169

 

382,519

 

Retained earnings

 

583,903

 

1,162,933

 

Accumulated other comprehensive income

 

33,380

 

26,234

 

Treasury stock, at cost

 

(3,303

)

(569,860

)

 

 

 

 

 

 

Total equity attributable to common shareholders

 

1,037,630

 

1,002,534

 

 

 

 

 

 

 

Non-controlling interest

 

14,419

 

12,535

 

 

 

 

 

 

 

Total equity

 

1,052,049

 

1,015,069

 

 

 

 

 

 

 

Total liabilities and equity

 

$

3,624,599

 

$

1,414,534

 

 

9


 

THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

For the Six Months Ended August 2, 2014 and August 3, 2013

(In thousands)

 

 

 

Six Months Ended

 

 

 

2014

 

2013

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Net earnings including non-controlling interest

 

$

28,826

 

$

75,934

 

Non-cash adjustments to net earnings:

 

 

 

 

 

Depreciation and amortization

 

49,778

 

43,450

 

Tuxedo rental product amortization

 

19,961

 

19,004

 

Deferred financing costs amortization

 

1,121

 

243

 

Discount on long-term debt amortization

 

196

 

—

 

Loss on extinguishment of debt

 

2,158

 

—

 

Goodwill impairment charge

 

—

 

9,501

 

Other

 

(1,654

)

5,624

 

Changes in operating assets and liabilities

 

(86,507

)

(52,514

)

 

 

 

 

 

 

Net cash provided by operating activities

 

13,879

 

101,242

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(40,837

)

(52,261

)

Acquisition of business, net of cash

 

(1,491,393

)

—

 

Proceeds from sales of property and equipment

 

—

 

191

 

 

 

 

 

 

 

Net cash used in investing activities

 

(1,532,230

)

(52,070

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Proceeds from new term loan

 

1,089,000

 

—

 

Payments on previous term loan

 

(97,500

)

—

 

Proceeds from asset-based revolving credit facility

 

340,000

 

—

 

Payments on asset-based revolving credit facility

 

(340,000

)

—

 

Proceeds from bond issuance

 

600,000

 

—

 

Deferred financing costs

 

(50,938

)

(1,776

)

Proceeds from issuance of common stock

 

6,167

 

5,409

 

Cash dividends paid

 

(17,460

)

(18,350

)

Tax payments related to vested deferred stock units

 

(6,869

)

(3,865

)

Excess tax benefits from share-based plans

 

3,687

 

1,114

 

Repurchases of common stock

 

(251

)

(152,129

)

 

 

 

 

 

 

Net cash provided by (used in) financing activities

 

1,525,836

 

(169,597

)

 

 

 

 

 

 

Effect of exchange rate changes

 

498

 

(3,150

)

 

 

 

 

 

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

7,983

 

(123,575

)

 

 

 

 

 

 

Balance at beginning of period

 

59,252

 

156,063

 

Balance at end of period

 

$

67,235

 

$

32,488

 

 

10


 

THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS — NON-GAAP

(In thousands, except per share amounts)

 

Use of Non-GAAP Financial Measures

 

We have provided adjusted earnings per share information in addition to providing financial results in accordance with GAAP.  This non-GAAP financial information is provided to enhance the user’s overall understanding of the Company’s current financial performance.  Specifically, we believe the adjusted results provide useful information by excluding items we believe are not indicative of our core operating results as well as certain items related to the acquisition of Jos. A. Bank.  The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP.  A reconciliation of this non-GAAP information to our actual results is as follows and may not sum due to rounded numbers:

 

Three Months Ended August 2, 2014

 

 

 

GAAP

 

Acquisition

 

Purchase

 

 

 

Adjusted

 

 

 

Results

 

& Integration

 

Acctg Allocation

 

Other (1)

 

Results

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

803,078

 

$

—

 

$

—

 

$

—

 

$

803,078

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail gross margin

 

338,518

 

—

 

6,771

 

—

 

345,289

 

Corporate apparel product margin

 

20,024

 

—

 

—

 

—

 

20,024

 

Total gross margin

 

358,542

 

—

 

6,771

 

—

 

365,313

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

315,838

 

(41,812

)

(906

)

(1,111

)

272,009

 

Goodwill impairment charge

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

42,704

 

41,812

 

7,677

 

1,111

 

93,304

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest

 

(13,074

)

—

 

—

 

—

 

(13,074

)

Loss on extinguishment of debt

 

(2,158

)

2,158

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

27,472

 

43,970

 

7,677

 

1,111

 

80,230

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

15,104

 

9,106

 

2,601

 

377

 

27,188

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings including non-controlling interest

 

12,368

 

34,864

 

5,075

 

735

 

53,042

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to non-controlling interest

 

(112

)

—

 

—

 

—

 

(112

)

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to common shareholders

 

$

12,256

 

$

34,864

 

$

5,075

 

$

735

 

$

52,930

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per diluted common share attributable to common shareholders

 

$

0.25

 

$

0.72

 

$

0.11

 

$

0.02

 

$

1.10

 

 

(1) Other relates to K&G strategic alternative review.

 

Three Months Ended August 3, 2013

 

 

 

GAAP

 

Acquisition

 

Purchase

 

 

 

Adjusted

 

 

 

Results

 

& Integration

 

Acctg Allocation

 

Other (1)

 

Results

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

647,255

 

$

—

 

$

—

 

$

—

 

$

647,255

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail gross margin

 

291,567

 

—

 

—

 

—

 

291,567

 

Corporate apparel product margin

 

17,227

 

—

 

—

 

—

 

17,227

 

Total gross margin

 

308,794

 

—

 

—

 

—

 

308,794

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

232,505

 

(645

)

—

 

(2,246

)

229,615

 

Goodwill impairment charge

 

9,501

 

—

 

—

 

(9,501

)

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

66,788

 

645

 

—

 

11,747

 

79,179

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest

 

(359

)

—

 

—

 

—

 

(359

)

Loss on extinguishment of debt

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

66,429

 

645

 

—

 

11,747

 

78,820

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

23,451

 

227

 

—

 

4,147

 

27,825

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings including non-controlling interest

 

42,978

 

418

 

—

 

7,600

 

50,995

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to non-controlling interest

 

(35

)

—

 

—

 

—

 

(35

)

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to common shareholders

 

$

42,943

 

$

418

 

$

—

 

$

7,600

 

$

50,960

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per diluted common share attributable to common shareholders

 

$

0.85

 

$

0.01

 

$

—

 

$

0.15

 

$

1.01

 

 

(1) Other includes the non-cash write-off of K&G goodwill and separation costs associated with former executives.

 

11


 

Use of Non-GAAP Financial Measures (cont’d)

 

Six Months Ended August 2, 2014

 

 

 

GAAP

 

Acquisition

 

Purchase

 

 

 

Adjusted

 

 

 

Results

 

& Integration

 

Acctg Allocation

 

Other (1)

 

Results

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,433,552

 

$

—

 

$

—

 

$

—

 

$

1,433,552

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail gross margin

 

604,804

 

—

 

6,771

 

—

 

611,575

 

Corporate apparel product margin

 

37,102

 

—

 

—

 

—

 

37,102

 

Total gross margin

 

641,906

 

—

 

6,771

 

—

 

648,677

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

571,921

 

(62,597

)

(906

)

(6,779

)

501,639

 

Goodwill impairment charge

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

69,985

 

62,597

 

7,677

 

6,779

 

147,038

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest

 

(14,148

)

—

 

—

 

—

 

(14,148

)

Loss on extinguishment of debt

 

(2,158

)

2,158

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

53,679

 

64,755

 

7,677

 

6,779

 

132,890

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

24,853

 

16,836

 

2,702

 

2,386

 

46,777

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings including non-controlling interest

 

28,826

 

47,920

 

4,974

 

4,393

 

86,113

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to non-controlling interest

 

(84

)

—

 

—

 

—

 

(84

)

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to common shareholders

 

$

28,742

 

$

47,920

 

$

4,974

 

$

4,393

 

$

86,029

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per diluted common share attributable to common shareholders

 

$

0.60

 

$

1.00

 

$

0.10

 

$

0.09

 

$

1.78

 

 

(1) Other relates to K&G strategic alternative review and costs associated with cost reduction initiative.

 

Six Months Ended August 3, 2013

 

 

 

GAAP

 

Acquisition

 

Purchase

 

 

 

Adjusted

 

 

 

Results

 

& Integration

 

Acctg Allocation

 

Other (1)

 

Results

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,263,791

 

$

—

 

$

—

 

$

—

 

$

1,263,791

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail gross margin

 

552,075

 

—

 

—

 

—

 

552,075

 

Corporate apparel product margin

 

34,639

 

—

 

—

 

—

 

34,639

 

Total gross margin

 

586,714

 

—

 

—

 

—

 

586,714

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

457,872

 

(645

)

—

 

(2,246

)

454,982

 

Goodwill impairment charge

 

9,501

 

—

 

—

 

(9,501

)

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

119,341

 

645

 

—

 

11,747

 

131,732

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest

 

(582

)

—

 

—

 

—

 

(582

)

Loss on extinguishment of debt

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

118,759

 

645

 

—

 

11,747

 

131,150

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

42,825

 

147

 

—

 

4,228

 

47,200

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings including non-controlling interest

 

75,934

 

497

 

—

 

7,519

 

83,950

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to non-controlling interest

 

100

 

—

 

—

 

—

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to common shareholders

 

$

76,034

 

$

497

 

$

—

 

$

7,519

 

$

84,050

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per diluted common share attributable to common shareholders

 

$

1.50

 

$

0.01

 

$

—

 

$

0.15

 

$

1.66

 

 

(1) Other includes the non-cash write-off of K&G goodwill and separation costs associated with former executives.

 

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