UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 5, 2015
The Mens Wearhouse, Inc.
(Exact name of registrant as specified in its charter)
Texas |
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1-16097 |
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74-1790172 |
(State or other jurisdiction |
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(Commission File Number) |
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(IRS Employer Identification No.) |
6380 Rogerdale Road |
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77072 |
(Address of principal executive offices) |
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(Zip Code) |
281-776-7000
(Registrants telephone number,
including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On November 5, 2015, The Mens Wearhouse, Inc. (the Company) issued a press release providing its preliminary third quarter results for the quarter ended October 31, 2015 and its updated fiscal 2015 outlook. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
In addition, prepared remarks by Company management regarding its preliminary results for the quarter ended October 31, 2015 and its updated fiscal 2015 outlook is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in this Item 2.02 and Exhibits 99.1 and 99.2 attached hereto is intended to be furnished under Item 2.02 and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Act, except as expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are included in this Form 8-K.
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99.1 |
Press Release of the Company dated November 5, 2015. |
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99.2 |
Prepared Remarks by Company management dated November 5, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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THE MENS WEARHOUSE, INC. | |
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Date: November 5, 2015 |
By: |
/s/ Brian T. Vaclavik |
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Brian T. Vaclavik | |
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Senior Vice President and Chief Accounting Officer |
Exhibit 99.1
For Immediate Release |
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News Release |
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Contact: | |
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Investor Relations | |
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(281) 776-7575 | |
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ir@tmw.com | |
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Kelly Dilts | |
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Mens Wearhouse, SVP, Finance & IR | |
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Ken Dennard | |
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Dennard · Lascar Associates |
MENS WEARHOUSE PROVIDES PRELIMINARY THIRD QUARTER RESULTS
AND UPDATED FISCAL YEAR 2015 OUTLOOK
· Q3 2015 preliminary comparable sales and non-GAAP adjusted EPS(1) outlook
· Q4 2015 estimated comparable sales and updated full year adjusted EPS outlook
· Conference call scheduled for today, Thursday, November 5th at 5:15 p.m. Eastern time to review updates
FREMONT, CA November 5, 2015 The Mens Wearhouse (NYSE: MW) today provided preliminary comparable sales results and an adjusted EPS outlook for the fiscal third quarter ended October 31, 2015 as well as estimated comparable sales ranges for fourth quarter and an updated adjusted EPS outlook for fiscal year 2015. These results are based on information available to the Company as of the date of this release and are subject to revision upon finalization of the quarterly accounting and financial reporting procedures. Actual fiscal third quarter results will be reported on December 9, 2015 with a conference call the next morning, December 10, 2015.
The Company is providing an update today to reflect significant comparable sales weakness at Jos. A. Bank. During the third quarter comparable sales decreased 14.6% at Jos. A. Bank, far below the Companys earlier expectations. This decrease was primarily driven by a decline in traffic as the Company began the transition away from the Buy-One-Get-Three promotional events.
Third quarter comparable sales increased 5.3% at Mens Wearhouse with clothing comps of 7.2% driven by higher transactions per store and tuxedo comps of 0.7%. K&G comparable sales for the quarter increased 3.7% driven by higher transactions per store. Moores comparable sales decreased 5.4% primarily driven by weakening macro-economic conditions in Canada.
Based on these preliminary results, the Company now expects adjusted EPS to be in the range of $0.46 to $0.51 for the third quarter, down from the Companys previous expectation of $0.87.
Fourth quarter comparable sales at Jos. A. Bank are now expected to decrease between 20% and 25% resulting from both a decline in traffic continuing from the third quarter trend and a previously expected decline in units per transaction as customers adapt to the shift in the promotional strategy. The Company expects its legacy retail brands to average a comparable sales increase of 3% to 4%.
Jos. A. Bank gross margin rates for the fourth quarter are still expected to improve significantly. Clothing margin before occupancy is expected to increase approximately 500 basis points over the prior year and, including occupancy, to increase approximately 200 basis points. The gross margin dollars, however, are now expected to be well below last years fourth quarter given the anticipated traffic declines.
(1) See Use of Non-GAAP Financial Measures for additional information. Non-GAAP adjusted EPS is referred to as adjusted EPS for simplicity.
With the updated outlook, the Company now believes adjusted EPS for fiscal 2015 will be between $1.75 and $2.00. This compares to our previous guidance of $2.70 to $2.90 for adjusted EPS. Synergies remain on target for the quarter and the year. The Company will discuss both fiscal 2016 and fiscal 2017 guidance when fiscal 2015 results are reported.
Doug Ewert, Mens Wearhouse chief executive officer, stated, We are obviously disappointed by the third quarter results at Jos. A. Bank. Toward the end of the quarter, we reduced the number of Buy-One-Get-Two Free and Buy-One-Get-Three Free days in anticipation of our final Buy-One-Get-Three Free event. While we expected top-line volatility, as we previously stated, we did not anticipate that the impact from the traffic decline would occur to this degree, primarily because the prior year comparisons got progressively easier as the quarter progressed. We also believed the timing of the final Buy-One-Get-Three Free event in October would do more to offset earlier traffic declines than it did.
Despite these results, we continue to believe that transitioning away from the unsustainable promotional strategy we inherited from Jos. A. Bank and accelerating our new promotional strategy is the right thing to do for the long-term success of the Jos. A. Bank business.
We have already begun to strategically rebuild Jos. A. Bank for consistent and profitable long-term growth. We implemented several strategies that we believe are potentially offsetting variables to the expected traffic and unit declines including new, updated and expanded assortments, higher average unit retail prices to go along with our new promotional strategy, additional investments in new promotional and brand building marketing, a new rewards-based customer loyalty program, and better selling behaviors, supported with extensive training and an updated incentive compensation structure for the Jos. A. Bank store employees.
We are focused on and committed to rebuilding the Jos. A. Bank profit model and remain confident our long-term strategy is the right one despite the disappointing short-term results. We will report actual third quarter results and update you on our strategies on our third quarter conference call, concluded Ewert.
Comparable Sales Summary Fiscal 2015 (1)
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Comparable Sales Change |
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Current |
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Prior Year |
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Preliminary Third Quarter |
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Mens Wearhouse |
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5.3 |
% |
2.2 |
% |
Jos. A. Bank |
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(14.6 |
)% |
(8.1 |
)% |
K&G |
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3.7 |
% |
4.4 |
% |
Moores |
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(5.4 |
)% |
8.8 |
% |
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Preliminary Year-To-Date Third Quarter |
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Mens Wearhouse |
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5.0 |
% |
3.1 |
% |
Jos. A. Bank |
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(8.6 |
)% |
(0.2 |
)% |
K&G |
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6.0 |
% |
2.7 |
% |
Moores |
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(1.4 |
)% |
8.6 |
% |
(1) The tables are a summary of preliminary comparable sales for the third quarter and year-to-date period ended October 31, 2015. The Moores comparable sales change is based on the Canadian dollar. The comparable year-to-date sales shown above for Jos. A. Bank are a comparison to the Jos. A. Bank year-to-date period, a portion of which was prior to the acquisition on June 18, 2014. Comparable sales exclude the net sales of a store for any month of one period if the store was not owned or open throughout the same month of the prior period and include e-commerce net sales.
USE OF NON-GAAP FINANCIAL MEASURES
This press release contains references to adjusted EPS, a non-GAAP financial measure. Adjusted EPS excludes items we believe are not indicative of our core operating results as well as certain items related to the acquisition and integration of Jos. A. Bank. This non-GAAP financial information is provided to enhance the users overall understanding of the Companys financial performance. The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to financial information prepared in accordance with GAAP. Please see our second quarter earnings release for additional information on the use of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP information.
CALL AND WEBCAST INFORMATION
At 5:15 p.m. Eastern time on Thursday, November 5, 2015, management will host a conference call and real time webcast to discuss fiscal year 2015 updates.
To access the conference call, dial 412-902-1023. To access the live webcast presentation, visit the Investor Relations section of the Companys website at http://ir.menswearhouse.com. A telephonic replay will be available through November 19, 2015 by calling 201-612-7415 and entering the access code of 13624545#, or a webcast archive will be available free on the website for approximately 90 days.
The Mens Wearhouse, Inc. is the largest specialty retailer of mens suits and the largest provider of tuxedo rental product in the U.S. and Canada with 1,754 stores. The Mens 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 Mens Wearhouse and Tux stores carry a limited selection. Most K&G stores carry a full selection of womens apparel. Tuxedo and suit rentals are available in the Mens Wearhouse, Jos. A. Bank, Moores, and Mens Wearhouse and Tux stores. Additionally, Mens 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.
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, as well as integration of acquisitions, including Jos. A. Bank, performance issues with key suppliers, disruptions in our supply chain, severe weather, foreign currency fluctuations, government export and import policies, 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.
The forward-looking statements in this press release speak only as of the date hereof. Except for the ongoing obligations of Mens Wearhouse to disclose material information under the federal securities laws, Mens 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 our latest annual report on Form 10-K and our filings on Form 10-Q. For additional information on Mens Wearhouse, please visit the Companys websites at www.menswearhouse.com, www.josbank.com, www.josephabboud.com, www.mooresclothing.com, www.kgstores.com, www.twinhill.com, www.dimensions.co.uk and www.alexandra.co.uk.
Exhibit 99.2
Prepared Remarks by Company Management, dated November 5, 2015
Set forth below are prepared remarks by management of The Mens Wearhouse, Inc. (the Company) relating to the Companys press release issued on November 5, 2015 providing its preliminary third quarter results for the quarter ended October 31, 2015 and its updated fiscal 2015 outlook. Please note the information on forward looking statements and the use of non-GAAP financial measures, which precedes the prepared remarks.
Forward Looking Statements
The prepared remarks contain 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, as well as integration of acquisitions, including Jos. A. Bank, performance issues with key suppliers, disruptions in our supply chain, severe weather, foreign currency fluctuations, government export and import policies, 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.
The forward-looking statements in the prepared remarks speak only as of the date hereof. Except for the ongoing obligations of Mens Wearhouse to disclose material information under the federal securities laws, Mens 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 our latest annual report on Form 10-K and our filings on Form 10-Q. For additional information on Mens Wearhouse, please visit the Companys websites at www.menswearhouse.com, www.josbank.com, www.josephabboud.com, www.mooresclothing.com, www.kgstores.com, www.twinhill.com, www.dimensions.co.uk and www.alexandra.co.uk.
Use of Non-GAAP Financial Measures
The prepared remarks contain references to adjusted EPS, a non-GAAP financial measure. Adjusted EPS excludes items we believe are not indicative of our core operating results as well as certain items related to the acquisition and integration of Jos. A. Bank. This non-GAAP financial information is provided to enhance the users overall understanding of the Companys financial performance. The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to financial information prepared in accordance with GAAP. Please see our second quarter earnings release for additional information on the use of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP information.
Beginning of Prepared Remarks:
Kelly Dilts, Senior Vice President- Finance and Investor Relations
Thanks everyone for joining us. Mens Wearhouse issued a press release today providing preliminary third quarter estimated results and an updated outlook for fiscal year 2015. Doug Ewert, Mens Wearhouse CEO, will provide some additional color regarding the information contained in this release. Please note that we will not be conducting a Q&A session at the end of this call.
There will be a replay of todays call via webcast on the Companys investor relations website, which is accessible at ir.menswearhouse.com. Additionally, the transcript of this call has been filed with our 8-K today and a recorded, telephonic replay will be available until November 19th. The information for the dial-in is in the press release.
The estimated results including any non-GAAP financial measures discussed today are based on information available to the Company as of today, November 5, 2015 and are subject to revision upon finalization of the quarterly accounting and financial reporting procedures. Additionally, the information on this call speaks only as of today, and therefore you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening or transcript reading.
Finally, the comments made during the conference call contain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of management. However, various risks, uncertainties and contingencies could cause actual results, performance or achievements to differ materially from those expressed in the statements made by management. The listener or reader is encouraged to read the Companys annual report on Form 10-K and quarterly reports on Forms 10-Q to understand these risks, uncertainties and contingencies. You can access all of these reports on the Mens Wearhouse website.
And now Id like to turn the call over to Doug Ewert.
Doug Ewert, Chief Executive Officer
Thanks Kelly.
Today we provided our preliminary view on the third quarter and an update to our fourth quarter and fiscal 2015 outlook.
Based on our preliminary sales results for the third quarter, we expect adjusted EPS for the quarter to be between $0.46 and $0.51. This is down from our previous internal expectation of $0.87.
These preliminary results reflect the impact of a comp sales decrease of 14.6% at Joseph Bank. While we expected top-line volatility at Joseph Bank, as we discussed on our second quarter earnings call, we did not anticipate a comp sales decrease of this magnitude.
Third quarter comps at Mens Wearhouse increased 5.3% with clothing comps of 7.2% driven by higher traffic. Tuxedo comps increased 0.7%. K&G comp sales increased 3.7% also driven by higher traffic. Moores comps decreased 5.4% primarily due to weakening macro-economic conditions in Canada.
Were disappointed by the third quarter results at Joseph Bank. As we have discussed, we believe that the historical promotional pricing strategies, specifically the buy-one-get-three or more free events, are toxic to the business and have caused the business to struggle for some time. This adverse impact became much more pronounced as the third quarter progressed in spite of prior year comps that became progressively easier, and provided further evidence that change is needed, and needed now.
Our customer research indicates that while our existing customers appreciate our quality and value, many dislike being forced to buy in quantity. Additionally, many of our prospective customers found our promotional offers confusing, and questioned the quality of our products. We believe that deploying these promotional strategies over time has resulted in the pull forward of volume with existing customers, while limiting new customer acquisition.
Given the deteriorating results, and the clear customer feedback, weve introduced new strategies to begin building a sustainable model and restore the brand to health. During the third week of October, we held the final Buy-One-Get-Three Free event, signaling an end to the historical promotional practices. We are following that with new promotional offers that dont require unnatural quantity purchases, and are better aligned with how our customers have told us they want to shop. Supporting the promotional messaging, were making investments in customer acquisition. We have launched new branding messaging that speaks to a quality promise, and introduces the new 1905 collection that targets a younger customer. In addition, we have introduced a loyalty program that will reward our customers and encourage more frequent purchases. Along with the changes to our marketing strategies, we have introduced new selling techniques, and a new store compensation program that aligns incentives with the improved selling behaviors.
At this time, its too early to report any results on this new strategy, but well update everyone in December with what we have learned to date when we report actual third quarter results.
Lets turn now to the remainder of the year. Fourth quarter comparable sales at Joseph Bank are now expected to decrease between 20% and 25% resulting from both a decline in traffic, continuing from the third quarter trend, and a previously expected decline in units per transaction.
Joseph Bank gross margin rates for the fourth quarter are still expected to improve significantly. Clothing margin before occupancy is expected to increase approximately 500 basis points over the prior year and, including occupancy, to increase approximately 200 basis points. That said, the gross margin dollars are now expected to be well below last years fourth quarter.
Additionally, we expect the legacy retail brands to average a 3% to 4% comp sales increase.
Adjusted EPS for fiscal 2015 is now estimated to be in the range of $1.75 to $2.00. Well be prepared to discuss both 2016 and 2017 guidance when full year results are reported in March.
In summary, when we acquired Joseph Bank, we knew we were buying a business that had struggled under strategies that may have worked for a time, but in our opinion were not aligned with best practices and modern consumer preferences.
We identified many significant opportunities to improve the health of the business by leveraging our experience, scale, and shared services platform. Our work to date has deepened our understanding of the challenges and opportunities, unlocked considerable cost efficiencies, and set a foundation to begin restoring the brand to health. We have recently introduced many significant improvements to the business, and while were confident that were on the right course, we are mindful that changing brand perception and customer buying patterns will take time.
We are disappointed that we will miss our current year guidance. Please know that we remain focused on restoring Joseph Bank to healthy growth, and building on the strengths in all of our businesses to deliver value to our customers and shareholders.
We will report actual third quarter results and update you on our strategies in our December 9thearnings release and December 10th conference call. Thank you for joining us on such quick notice for this preliminary results call.