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Men's Wearhouse Reports Fiscal 2014 Third Quarter And Nine Month Results

- Jos. A. Bank integration ahead of schedule

- Legacy business continues to be strong

- K&G's strategic alternatives review completed

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

FREMONT, Calif., Dec. 10, 2014 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced consolidated financial results for the fiscal third quarter and nine months ended November 1, 2014. 

GAAP diluted EPS for fiscal third quarter 2014 was $0.14 and adjusted diluted EPS was $0.83 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 chief executive officer, commented, "We continue to be pleased with the progress we are making on the Jos. A. Bank integration.  In addition, we are pleased with the overwhelmingly positive reaction of the Jos. A. Bank employees to our culture and are very optimistic about our opportunities to expand consolidated sales and margins as we complete the integration.  We remain confident in our 2017 guidance and our cost synergy run-rate at the end of the third quarter is well ahead of our original $15 million projection for the end of the 2014 fiscal year and our systems conversions are on target. 

"During the quarter, Jos. A. Bank's comparable sales were slightly below our internal expectations but, as part of our operating strategy for the brand, we are very encouraged by the positive increase of 123 basis points in the maintained product margin rate," added Ewert.  "We also completed our review of Jos. A. Bank's inventory and concluded we will dispose of approximately $50 million of product which will be recorded as a reduction in the inventory value at the date of acquisition; a purchase price accounting adjustment.  This product will be pulled from the stores as part of our regular physical inventory process in January.  Additionally, we wrote off approximately $10 million of slower renting tuxedo inventory to make room for more productive inventory in anticipation of the tuxedo rollout.  As a reminder, we will begin renting tuxedos from our existing rental inventory in Jos. A. Bank beginning in January 2015.  The in-store training has begun and we are excited about this revenue synergy opportunity.

"Excluding Jos. A. Bank results, the third quarter adjusted operating income increased low double digits driven by strong performances at Men's Wearhouse, Moores and K&G, posting comparable sales increases of 2.2%, 8.8% and 4.4%, respectively.  We are also excited about our recent announcements of in-home wedding consultations beginning early next year, the premiere of the Joseph Abboud website and the future Joseph Abboud flagship store in New York City.

"We have completed our strategic review of K&G.  As part of the review, we considered offers to acquire the business, none of which were acceptable.  We concluded that continuing to operate K&G as a part of the Company's overall portfolio will provide the most value to our shareholders.  We would like to thank K&G's management and employees for continuing to work diligently, which has led to the strong results that have been posted this year," concluded Ewert.

FISCAL THIRD QUARTER SALES REVIEW

The tables that follow are a summary of net sales for fiscal 2014 third quarter and fiscal nine months ended November 1, 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. 


Third Quarter Net Sales Summary – Fiscal 2014



Net Sales

Comparable Sales Change


Net Sales Change

Current Quarter

Current Quarter

Prior Year Quarter

Total Retail Segment

42.3%

$243.6

$819.2



       Men's Wearhouse

2.0%

$8.5

$436.1

2.2%

2.6%

       Jos. A. Bank

       n/a

$233.3

$233.3

(8.1%)

2.4%

       Moores

1.9%

$1.3

$68.7

8.8%

(2.4%)

       K&G

0.1%

$0.0

$72.8

4.4%

(4.4%)

       MW Cleaners

7.0%

$0.5

$8.2









Corporate Apparel Segment

(2.6%)

($1.9)

$71.5









Total Company

37.3%

$241.7

$890.6











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

23.1%

$400.1

$2,129.2



       Men's Wearhouse

4.1%

$51.4

$1,307.4

3.1%

1.6%

       Jos. A. Bank

n/a

$347.0

$347.0

(0.2%)

(6.4%)

       Moores

1.8%

$3.5

$199.3

8.6%

(4.6%)

       K&G

(1.4%)

($3.5)

$251.5

2.7%

(4.8%)

       MW Cleaners

7.7%

$1.7

$24.0









Corporate Apparel Segment

6.2%

$11.4

$195.0









Total Company

21.5%

$411.5

$2,324.2










 

Net sales at our largest brand, Men's Wearhouse, which represented 49% of total third quarter sales, were up 2.0% from last year's third quarter and comparable sales increased 2.2%.  On a comparable basis, an increase in clothing product average unit retails (or the net selling price per unit) more than offset decreases in units sold per transaction and average transactions per store. The higher margin tuxedo rental revenues comparable sales increased 5.3% in the third quarter of 2014. 

Jos. A. Bank was 26% of the Company's total third quarter sales.  Comparable sales for the third quarter decreased 8.1% with flat units sold per transaction and flat clothing product average unit retails offset by a decrease in average transactions per store.  Moores, our Canadian retail brand, was 8% of the total third quarter sales and had a comparable sales increase of 8.8% due to an increase in clothing product average unit retails that more than offset a decrease in units sold per transaction while average transactions per store were flat.  However, net sales for Moores only increased 1.9% due to an unfavorable change in the currency translation rate.  K&G was 8% of the Company's total third quarter sales with a comparable sales increase of 4.4% 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 third quarter sales, had a sales decrease of 2.6%.

FISCAL THIRD QUARTER CONSOLIDATED RESULTS REVIEW

Sales
Total net sales increased 37.3% or $241.7 million to $890.6 million from $648.9 million. 

Retail segment sales for the quarter increased by 42.3% or $243.6 million due to $233.3 million in sales at Jos. A. Bank and an increase in comparable sales at all other retail brands. 

Corporate apparel sales decreased by 2.6% or $1.9 million.

Gross Margin
Total GAAP gross margin was $369.2 million.  Adjusted consolidated gross margin of $390.0 million increased $96.5 million or 32.9% compared to the prior year quarter.  The total adjusted gross margin rate decreased 145 basis points primarily due to lower margins at Jos. A. Bank.

Adjusted retail segment gross margin increased $94.7 million or 34.7%.  The adjusted retail segment gross margin rate decreased 254 basis points including Jos. A. Bank and increased 63 basis points excluding Jos. A. Bank. 

Corporate apparel gross margin increased $1.8 million or 8.7% and increased 324 basis points.

Advertising
Advertising expenses increased $19.4 million to $42.1 million, an increase of 85.9% or 124 basis points compared to the prior quarter primarily due to Jos. A. Bank advertising expenses.

SG&A
GAAP SG&A expenses increased $71.1 million to $282.0 million, an increase of 33.7% but a decrease of 84 basis points.  Adjusted SG&A expenses were 190 basis points favorable to the prior year.  On an absolute dollar basis, adjusted SG&A increased by $58.8 million or 28.9% primarily due to the addition of Jos. A. Bank SG&A. 

Operating Income
GAAP operating income was $45.2 million compared to GAAP operating income of $60.0 million last year.  Adjusted operating income was $85.7 million, an increase of $18.2 million or 26.9% over the prior year adjusted operating income of $67.5 million.

Interest and Taxes
Net interest expense for the third quarter was $25.0 million. 

The effective tax rate for the third quarter was 65.3%.  Excluding the impact of non-deductible transaction costs, the adjusted effective tax rate was 33.6%.

Net Earnings
GAAP net earnings were $6.8 million compared to GAAP net earnings of $38.2 million last year.  GAAP diluted earnings per share was $0.14 compared to $0.79 in the prior year quarter.  Adjusted net earnings were $40.1 million, or $0.83 adjusted diluted earnings per share compared to adjusted net earnings of $43.1 million, or $0.90 adjusted diluted earnings per share last year.

Balance Sheet
In connection with the acquisition of Jos. A. Bank, debt at the end of the third quarter was approximately $1.7 billion.  Inventories increased $442.2 million to $1,082.4 million from $640.2 million due primarily to Jos. A. Bank and inventory related to Joseph Abboud.  This increase is net of the $50 million decrease in inventory associated with the review of Jos. A. Bank's inventory at the date of acquisition.  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.

JOS. A. BANK STANDALONE FISCAL THIRD QUARTER HIGHLIGHTS(2) 

Clothing sales decreased 5.2% to $214.2 million from prior year third quarter.  Maintained product margin increased 123 basis points and total clothing margin excluding occupancy increased 54 basis points to 55.6%. 

Occupancy costs increased from $35.7 million in the prior year, or 14.4% of total sales, to $40.5 million, or 17.3% of total sales in the current period primarily due to deleveraging caused by the decrease in Jos. A. Bank comparable sales and the impact of new stores.

FISCAL NINE MONTH CONSOLIDATED RESULTS REVIEW

Sales
Total net sales increased 21.5% or $411.5 million to $2,324.2 million, up from $1,912.7 million. 

Year-to-date retail segment sales increased by 23.1%, or $400.1 million, due to $347.0 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 6.2%, or $11.4 million.

Gross Margin
Total GAAP gross margin was $1,011.1 million.  Adjusted consolidated gross margin of $1,038.7 million was an increase of $158.4 million, or 18.0%, compared to the prior year quarter.  The total adjusted gross margin rate decreased 133 basis points primarily due to lower margins at Jos. A. Bank.

Adjusted retail segment gross margin increased $154.2 million, or 18.7%.  The adjusted retail segment gross margin rate decreased 172 basis points including Jos. A. Bank and increased 23 basis points excluding Jos. A. Bank. 

Corporate apparel gross margin increased $4.3 million, or 7.7%, and increased 42 basis points.

Advertising
Advertising expenses increased $40.5 million to $109.1 million, an increase of 59.0% or 111 basis points primarily due to the Jos. A. Bank advertising expenses and the brand advertising associated with the rollout of Joseph Abboud.

SG&A
GAAP SG&A expenses increased $164.1 million to $786.9 million, an increase of 26.4% or 130 basis points.  Adjusted SG&A expenses were 203 basis points favorable to the prior year.  On an absolute dollar basis adjusted SG&A increased by $84.5 million, or 13.8%, primarily due to the addition of Jos. A. Bank SG&A. 

Operating Income
GAAP operating income was $115.2 million compared to GAAP operating income of $179.3 million last year.  Adjusted operating income was $232.7 million, an increase of $33.5 million, or 16.8%, over the prior year adjusted operating income of $199.2 million.

Interest and Taxes
Net interest expense for the nine months was $39.2 million.

The effective tax rate for the nine months was 51.5%.  Excluding the impact of non-deductible transaction costs, the adjusted effective tax rate was 34.7%.

Net Earnings
GAAP net earnings were $35.5 million compared to GAAP net earnings of $114.2 million last year.  GAAP diluted earnings per share was $0.74 compared to $2.29 last year.  Adjusted net earnings were $126.1 million, or $2.61 adjusted diluted earnings per share, compared to adjusted net earnings of $127.2 million, or $2.55 adjusted diluted earnings per share last year.

CONFERENCE CALL AND WEBCAST INFORMATION

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

To access the conference call, dial 913-312-1485.  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 December 18, 2014 by calling 719-457-0820 and entering the access code of 5527190#, or a webcast archive will be available free on the website for approximately 90 days.

STORE INFORMATION


November 1, 2014

November 2, 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

686

3,903.9

658

3,752.2

661

3,774.3








Jos. A. Bank (a)

637

2,891.0

-

-

-

-








Men's Wearhouse and Tux

223

309.6

261

360.5

248

344.0








Moores, Clothing for Men

122

774.4

120

764.4

121

769.3








K&G (b)

92

2,184.4

94

2,228.7

94

2,228.8








Total

1,760

10,063.3

1,133

7,105.8

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 1,760 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.    

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, including Jos. A. Bank, 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 our 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 Jos. A. Bank transaction to our business and operations, including 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.josephabboud.com, www.mooresclothing.com, www.kgstores.com, www.twinhill.com, www.dimensions.co.uk and www.alexandra.co.uk.

Contact:
Investor Relations
(281) 776-7575
ir@tmw.com

Kelly Dilts
Men's Wearhouse, SVP, Finance & IR

Ken Dennard
Dennard ▪ Lascar Associates

(1) Adjusted information 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.

(2) Based on adjusted information provided to enhance the user's overall understanding of Jos. A. Bank's current financial performance and includes reclassifications to conform Jos. A. Bank's historical results with the Company's current external reporting presentation.

 

 

THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


For the Three Months Ended November 1, 2014 and November 2, 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

$  634,447

71.24%

$415,985

64.11%


$ 218,462

52.52%

7.13

          Tuxedo rental services

132,690

14.90%

122,177

18.83%


10,513

8.60%

(3.93)

          Alteration and other services   

52,025

5.84%

37,363

5.76%


14,662

39.24%

0.08

               Total retail sales

819,162

91.97%

575,525

88.69%


243,637

42.33%

3.28

          Corporate apparel clothing product

71,475

8.03%

73,365

11.31%


(1,890)

(2.58%)

(3.28)

                    Total net sales

890,637

100.00%

648,890

100.00%


241,747

37.26%

0.00










                   Total cost of sales

521,432

58.55%

355,388

54.77%


166,044

46.72%

3.78










Gross margin (a):









        Retail clothing product

347,138

54.72%

234,543

56.38%


112,595

48.01%

(1.67)

        Tuxedo rental services

99,152

74.72%

102,864

84.19%


(3,712)

(3.61%)

(9.47)

        Alteration and other services

14,852

28.55%

8,951

23.96%


5,901

65.93%

4.59

        Occupancy costs

(114,325)

(13.96%)

(73,456)

(12.76%)


(40,869)

(55.64%)

(1.19)

               Total retail gross margin

346,817

42.34%

272,902

47.42%


73,915

27.08%

(5.08)

        Corporate apparel clothing product

22,388

31.32%

20,600

28.08%


1,788

8.68%

3.24

                   Total gross margin

369,205

41.45%

293,502

45.23%


75,703

25.79%

(3.78)










Advertising expenses

42,075

4.72%

22,630

3.49%


19,445

85.93%

1.24

Selling, general and administrative expenses

281,955

31.66%

210,867

32.50%


71,088

33.71%

(0.84)










Operating income

45,175

5.07%

60,005

9.25%


(14,830)

(24.71%)

(4.18)










Net interest

(25,006)

(2.81%)

(1,190)

(0.18%)


(23,816)

2001.34%

(2.62)










Earnings before income taxes

20,169

2.26%

58,815

9.06%


(38,646)

(65.71%)

(6.80)










Provision for income taxes

13,168

1.48%

20,337

3.13%


(7,169)

(35.25%)

(1.66)










Net earnings including non-controlling interest

7,001

0.79%

38,478

5.93%


(31,477)

(81.81%)

(5.14)










Net earnings attributable to non-controlling interest

(208)

(0.02%)

(274)

(0.04%)


66

24.09%

0.02










Net earnings attributable to common shareholders

$       6,793

0.76%

$  38,204

5.89%


$  (31,411)

(82.22%)

(5.12)










Net earnings per diluted common share attributable to common shareholders

$         0.14


$      0.79















Weighted-average diluted common shares outstanding:

48,254


47,873















(a)  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 Nine Months Ended November 1, 2014 and November 2, 2013

(In thousands, except per share data)



Nine Months Ended


Variance



% of


% of




Basis


2014

Sales

2013

Sales


Dollar

%

Points










Net sales:









          Retail clothing product

$1,598,199

68.76%

$1,248,405

65.27%


$349,794

28.02%

3.49

          Tuxedo rental services

395,449

17.01%

368,360

19.26%


27,089

7.35%

(2.24)

          Alteration and other services   

135,585

5.83%

112,381

5.88%


23,204

20.65%

(0.04)

               Total retail sales

2,129,233

91.61%

1,729,146

90.40%


400,087

23.14%

1.21

          Corporate apparel clothing product

194,956

8.39%

183,535

9.60%


11,421

6.22%

(1.21)

                    Total net sales

2,324,189

100.00%

1,912,681

100.00%


411,508

21.51%

0.00










                    Total cost of sales

1,313,078

56.50%

1,032,465

53.98%


280,613

27.18%

2.52










Gross margin (a):









        Retail clothing product

876,059

54.82%

703,902

56.38%


172,157

24.46%

(1.57)

        Tuxedo rental services

320,366

81.01%

311,971

84.69%


8,395

2.69%

(3.68)

        Alteration and other services

37,791

27.87%

26,625

23.69%


11,166

41.94%

4.18

        Occupancy costs

(282,595)

(13.27%)

(217,521)

(12.58%)


(65,074)

(29.92%)

(0.69)

               Total retail gross margin

951,621

44.69%

824,977

47.71%


126,644

15.35%

(3.02)

        Corporate apparel clothing product

59,490

30.51%

55,239

30.10%


4,251

7.70%

0.42

                   Total gross margin

1,011,111

43.50%

880,216

46.02%


130,895

14.87%

(2.52)










Advertising expenses

109,072

4.69%

68,584

3.59%


40,488

59.03%

1.11

Selling, general and administrative expenses

786,879

33.86%

622,785

32.56%


164,094

26.35%

1.30

Goodwill impairment charge

-

0.00%

9,501

0.50%


(9,501)

NM

(0.50)










Operating income

115,160

4.95%

179,346

9.38%


(64,186)

(35.79%)

(4.42)










Net interest

(39,154)

(1.68%)

(1,772)

(0.09%)


(37,382)

2109.59%

(1.59)

Loss on extinguishment of debt

(2,158)

(0.09%)

-

0.00%


(2,158)

NM

(0.09)










Earnings before income taxes

73,848

3.18%

177,574

9.28%


(103,726)

(58.41%)

(6.11)










Provision for income taxes

38,021

1.64%

63,162

3.30%


(25,141)

(39.80%)

(1.67)










Net earnings including non-controlling interest

35,827

1.54%

114,412

5.98%


(78,585)

(68.69%)

(4.44)










Net earnings attributable to non-controlling interest

(292)

(0.01%)

(174)

(0.01%)


(118)

(67.82%)

0.00










Net earnings attributable to common shareholders

$     35,535

1.53%

$  114,238

5.97%


$(78,703)

(68.89%)

(4.44)



















Net earnings per diluted common share attributable to common shareholders

$         0.74


$        2.29















Weighted-average diluted common shares outstanding:

48,124


49,598















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





 

 

THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)




November 1,


November 2,



2014


2013






ASSETS









Current assets:





Cash and cash equivalents

$             64,716


$              64,764


Accounts receivable, net

84,054


80,180


Inventories

1,082,354


640,197


Other current assets

112,872


77,918







   Total current assets

1,343,996


863,059

Property and equipment, net

569,779


407,261

Tuxedo rental product, net

129,579


142,272

Goodwill

892,766


128,597

Intangible assets, net

673,057


60,325

Other assets

44,250


4,937







   Total assets

$         3,653,427


$         1,606,451






LIABILITIES AND SHAREHOLDERS' EQUITY









Current liabilities:





Accounts payable

$           263,645


$            165,596


Accrued expenses and other current liabilities

283,271


168,120


Income taxes payable

13,590


10,034


Current maturities of long-term debt

11,000


10,000







   Total current liabilities

571,506


353,750






Long-term debt

1,678,589


90,000

Deferred taxes and other liabilities

367,612


104,950







   Total liabilities

2,617,707


548,700






Shareholders' equity:





Preferred stock

-


-


Common stock

481


704


Capital in excess of par

435,755


404,506


Retained earnings

581,956


1,177,945


Accumulated other comprehensive income

20,829


31,060


Treasury stock, at cost

(3,301)


(569,792)







   Total equity attributable to common shareholders

1,035,720


1,044,423







Non-controlling interest

-


13,328







   Total shareholders' equity

1,035,720


1,057,751







   Total liabilities and shareholders' equity

$         3,653,427


$         1,606,451

 

 

THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Nine Months Ended November 1, 2014 and November 2, 2013

(In thousands)




Nine Months Ended



2014


2013






CASH FLOWS FROM OPERATING ACTIVITIES:










Net earnings including non-controlling interest

$            35,827


$         114,412


Non-cash adjustments to net earnings:





   Depreciation and amortization

80,622


65,672


   Tuxedo rental product amortization

30,038


28,712


Amortization of deferred financing costs

3,014


383


Amortization of discount on long-term debt

589


-


Loss on extinguishment of debt

2,158


-


Loss (gain) on disposition of assets

12,247


(992)


Goodwill impairment charge

-


9,501


   Other

(14,029)


13,984


Changes in operating assets and liabilities

(91,449)


(72,289)







        Net cash provided by operating activities

59,017


159,383






CASH FLOWS FROM INVESTING ACTIVITIES:





Capital expenditures

(72,397)


(81,521)


Acquisition of businesses, net of cash

(1,491,393)


(95,693)


Proceeds from sales of property and equipment

160


4,127







        Net cash used in investing activities

(1,563,630)


(173,087)






CASH FLOWS FROM FINANCING ACTIVITIES:





Proceeds from new term loan

1,089,000


-


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

(51,072)


(1,776)


Proceeds from previous term loan

-


100,000


Payments on previous term loan

(97,500)


-


Cash dividends paid

(26,119)


(26,979)


Purchase of non-controlling interest

(6,651)


-


Proceeds from issuance of common stock

7,115


8,291


Tax payments related to vested deferred stock units

(6,907)


(3,865)


Excess tax benefits from share-based plans

3,736


1,532


Repurchases of common stock

(251)


(152,129)







        Net cash provided by (used in) financing activities

1,511,351


(74,926)







Effect of exchange rate changes

(1,274)


(2,669)






INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

5,464


(91,299)







Balance at beginning of period

59,252


156,063


Balance at end of period

$            64,716


$           64,764

 

 

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 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:



Total Company - Three Months Ended November 1, 2014



GAAP


Acquisition


Purchase Price


Other (1)


Adjusted


Results


& Integration


Acctg Items




Results











Net sales

$ 890,637


$                   -


$                       -


$           -


$ 890,637











Gross margin:










     Retail clothing product

347,138


-


11,428


-


358,566

     Tuxedo rental services

99,152


10,552


-


-


109,704

     Alteration and other services

14,852


-


-


-


14,852

     Occupancy costs

(114,325)


-


(1,211)


-


(115,536)

Total retail gross margin

346,817


10,552


10,217


-


367,586

Corporate apparel clothing product

22,388






-


22,388

Total gross margin

369,205


10,552


10,217


-


389,974











Advertising expense

42,075


-


-


-


42,075

Selling, general and administrative expenses

281,955


(18,646)


(2,733)


1,638


262,214

Goodwill impairment charge

-


-


-


-


-











Operating income

45,175


29,198


12,950


(1,638)


85,685











Net interest

(25,006)


-


-


-


(25,006)

Loss on extinguishment of debt

-


-


-


-


-











Earnings before income taxes 

20,169


29,198


12,950


(1,638)


60,679











Provision for income taxes

13,168


3,422


4,352


(550)


20,391











Net earnings including non-controlling interest

7,001


25,776


8,598


(1,088)


40,288











Net earnings attributable to non-controlling interest

(208)


-


-


-


(208)











Net earnings attributable to common shareholders

$     6,793


$         25,776


$               8,598


$  (1,088)


$   40,080











Net earnings per diluted common share attributable to common shareholders

$       0.14


$             0.53


$                 0.18


$    (0.02)


$       0.83











(1) Other relates to adjustments to prior estimates of costs related to store closure and separation costs with executives offset by costs related to K&G strategic alternative review.





















Total Company - Three Months Ended November 2, 2013



GAAP


Acquisition


Purchase Price


Other (2)


Adjusted


Results


& Integration


Acctg Items




Results











Net sales

$ 648,890


$                   -


$                       -


$           -


$ 648,890











Gross margin:










     Retail clothing product

234,543


-


-


-


234,543

     Tuxedo rental services

102,864


-


-


-


102,864

     Alteration and other services

8,951


-


-


-


8,951

     Occupancy costs

(73,456)


-


-


-


(73,456)

Total retail gross margin

272,902


-


-


-


272,902

Corporate apparel clothing product

20,600


-


-


-


20,600

Total gross margin

293,502


-


-


-


293,502











Advertising expense

22,630


-


-


-


22,630

Selling, general and administrative expenses

210,867


(3,786)


-


(3,711)


203,370

Goodwill impairment charge

-


-


-


-


-











Operating income

60,005


3,786


-


3,711


67,502











Net interest

(1,190)


-


-


-


(1,190)

Loss on extinguishment of debt

-


-


-


-


-











Earnings before income taxes 

58,815


3,786


-


3,711


66,312











Provision for income taxes

20,337


1,311


-


1,283


22,931











Net earnings including non-controlling interest

38,478


2,475


-


2,428


43,381











Net earnings attributable to non-controlling interest

(274)


-


-


-


(274)











Net earnings attributable to common shareholders

$   38,204


$           2,475


$                       -


$   2,428


$   43,107











Net earnings per diluted common share attributable to common shareholders

$       0.79


$             0.05


$                       -


$     0.05


$       0.90











(2) Other includes costs related to various strategic projects, separation costs associated with former executives, and store closure costs offset by a gain on the sale of an office building.











 

 

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








Total Company - Nine Months Ended November 1, 2014


GAAP


Acquisition


Purchase Price


Other (1)


Adjusted


Results


& Integration


Acctg Items




Results











Net sales

$ 2,324,189


$                   -


$                       -


$           -


$ 2,324,189











Gross margin:










     Retail clothing product

876,059


-


17,251


-


893,310

     Tuxedo rental services

320,366


10,552


-


-


330,918

     Alteration and other services

37,791


-


-


-


37,791

     Occupancy costs

(282,595)


-


(262)


-


(282,857)

Total retail gross margin

951,621


10,552


16,988


-


979,161

Corporate apparel clothing product

59,490


-


-


-


59,490

Total gross margin

1,011,111


10,552


16,988


-


1,038,651











Advertising expense

109,072


-


-


-


109,072

Selling, general and administrative expenses

786,879


(81,243)


(3,639)


(5,141)


696,856

Goodwill impairment charge

-


-


-


-


-











Operating income

115,160


91,795


20,627


5,141


232,723











Net interest

(39,154)


-


-


-


(39,154)

Loss on extinguishment of debt

(2,158)


2,158


-


-


-











Earnings before income taxes 

73,848


93,953


20,627


5,141


193,569











Provision for income taxes

38,021


20,206


7,157


1,784


67,168











Net earnings including non-controlling interest

35,827


73,747


13,469


3,357


126,401











Net earnings attributable to non-controlling interest

(292)


-


-


-


(292)











Net earnings attributable to common shareholders

$      35,535


$         73,747


$             13,469


$   3,357


$    126,109











Net earnings per diluted common share attributable to common shareholders

$          0.74


$             1.53


$                 0.28


$     0.07


$          2.61











(1) Other relates to K&G strategic alternative review and cost reduction initiatives partially offset by adjustments to prior estimates of costs related to store closure and separation costs with executives.




















Total Company - Nine Months Ended November 2, 2013


GAAP


Acquisition


Purchase Price


Other (2)


Adjusted


Results


& Integration


Acctg Items




Results











Net sales

$ 1,912,681


$                   -


$                       -


$           -


$ 1,912,681











Gross margin:










     Retail clothing product

703,902


-


-


-


703,902

     Tuxedo rental services

311,971


-


-


-


311,971

     Alteration and other services

26,625


-


-


-


26,625

     Occupancy costs

(217,521)


-


-


-


(217,521)

Total retail gross margin

824,977


-


-


-


824,977

Corporate apparel clothing product

55,239


-


-


-


55,239

Total gross margin

880,216


-


-


-


880,216











Advertising expense

68,584


-


-


-


68,584

Selling, general and administrative expenses

622,785


(4,430)


-


(5,957)


612,398

Goodwill impairment charge

9,501


-


-


(9,501)


-











Operating income

179,346


4,430


-


15,458


199,234











Net interest

(1,772)


-


-


-


(1,772)

Loss on extinguishment of debt

-


-


-


-


-











Earnings before income taxes 

177,574


4,430


-


15,458


197,462











Provision for income taxes

63,162


1,478


-


5,490


70,130











Net earnings including non-controlling interest

114,412


2,952


-


9,968


127,332











Net loss attributable to non-controlling interest

(174)


-


-


-


(174)











Net earnings attributable to common shareholders

$    114,238


$           2,952


$                       -


$   9,968


$    127,158











Net earnings per diluted common share attributable to common shareholders

$          2.29


$             0.06


$                       -


$     0.20


$          2.55











(2) Other includes the non-cash write-off of K&G goodwill, costs related to various strategic projects, separation costs associated with former executives, and store closure costs offset by a gain on the sale of an office building.






 

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


Jos. A. Bank Selected Metrics - Three Months Ended November 2, 2013 and November 1, 2014



Q3 FY 2013


Adjustments (2)


Q3 FY 2013


Q3 FY 2014


Adjustments (4)


Q3 FY 2014


as Reported (1)




Selected Metrics


GAAP




Selected Metrics






$

% (3)






$

% (3)

Net sales:














     Retail clothing product

$            225,969


$                         -


$ 225,969

91.3%


$  214,162


$                         -


$ 214,162

91.8%

     Other sales

21,499




21,499

8.7%


19,151




19,151

8.2%

Total retail net sales

247,468


-


247,468

100.0%


233,313


-


233,313

100.0%















Gross margin:














     Retail clothing product

123,548


861


124,409

55.1%


107,635


11,428


119,063

55.6%

     Other margin

9,599


-


9,599

44.7%


7,510


0


7,510

39.2%

     Occupancy costs

(33,920)


(1,746)


(35,666)

-14.4%


(39,243)


(1,211)


(40,454)

-17.3%

Total retail gross margin

99,227


(885)


98,342

39.7%


75,902


10,218


86,120

36.9%















Maintained product margin (net sales of retail clothing product less landed cost of goods)


$ 135,333

59.9%






$ 130,894

61.1%





























(1) As filed in Jos. A. Bank's 10-Q reclassified to be consistent with Men's Wearhouse reporting.

(2) Primarily reflects converting the FIFO method used by Jos. A. Bank to weighted average cost and the resetting of the straight-line rent and tenant improvement amounts.

(3) Percent of related sales.

(4) Adjusted for impact of purchase price accounting items.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mens-wearhouse-reports-fiscal-2014-third-quarter-and-nine-month-results-300008052.html

SOURCE Men's Wearhouse