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Men's Wearhouse Reports Fiscal 2015 Second Quarter And Six Month Results

- Strong performance continues at legacy brands

- Q2 2015 GAAP adjusted diluted earnings per share was $1.07

- Conference call scheduled for Wednesday, September 9th at 9:00 a.m. Eastern time

FREMONT, Calif., Sept. 8, 2015 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced consolidated financial results for the fiscal second quarter ended August 1, 2015.

GAAP diluted EPS for fiscal second quarter 2015 was $0.98 and adjusted EPS was $1.07 excluding non-operating items(1).

Doug Ewert, Men's Wearhouse chief executive officer, stated, "We continue to be pleased with the performance of our legacy brands.  Comparable sales increased 3.1% at Men's Wearhouse, 0.7% at Moores and 6.7% at K&G.  Excluding rental revenue, Men's Wearhouse clothing comps were 6.5% driven by higher average unit retails.  Men's Wearhouse comparable rental revenue decreased 3.3% which was slightly better than internal expectations.     

"The Jos. A. Bank business struggled in the second quarter with comparable sales decreasing 9.4%," added Ewert.  "Now that we have a full year under our belt, we have become even more convinced that changing the promotional messages to be clear and compelling without unusual quantity requirements, like buy one get three free offers, will broaden the appeal of the Joseph A. Bank brand.  This fall we will be well positioned to fully implement our strategy as all systems will be integrated, new products will be introduced, the new customer rewards program will be available, we will have new sales force incentives supported with extensive training and we will have new marketing strategies in place.   

"We are focused on rebuilding the Jos. A. Bank profit model.  In doing so, we expect top-line volatility as we establish a promotional model with broader customer appeal and strengthen the margin profile.  Taking this into consideration, as well as the impact of the second quarter results, we still expect to be within our EPS guidance range of $2.70 to $2.90 and continue to be confident in our 2017 guidance," concluded Ewert.

SECOND QUARTER SALES REVIEW

The table that follows is a summary of net sales for the fiscal 2015 second quarter ended August 1, 2015.  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 Jos. A. Bank second quarter, 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. 

 

Second Quarter Net Sales Summary – Fiscal 2015



Net Sales

Comparable Sales Change


Net Sales Change

 

Current

Quarter

% of Total
Sales

Current
Quarter

Prior Year
Quarter

Total Retail Segment

 

16.6%

 

$122.5

 

$858.9

 

93%



       Men's Wearhouse

4.4%

$19.7

$470.0

51%

3.1%

4.4%

       Jos. A. Bank

95.0%

$108.0

$221.7

24%

(9.4%)

1.0%

       Moores

(10.5%)

($8.2)

$69.9

8%

0.7%

10.2%

       K&G

2.9%

$2.5

$88.7

10%

6.7%

5.6%

       MW Cleaners

5.8%

$0.5

$8.6

1%










Corporate Apparel Segment

(8.2%)

($5.5)

$61.2

7%










Total Company

14.6%

$117.0

$920.1




 

Year-To-Date Net Sales Summary – Fiscal 2015



Net Sales

Comparable Sales Change


Net Sales Change

 

Current
Year

% of Total
Sales

Current Year

 

Prior Year

 

Total Retail Segment

 

28.5%

 

$373.1

 

$1,683.2

 

93%



       Men's Wearhouse

6.3%

$55.1

$926.4

51%

4.9%

3.6%

       Jos. A. Bank

285.0%

$324.1

$437.8

24%

(5.6%)

4.4%

       Moores

(10.1%)

($13.2)

$117.4

7%

0.7%

8.4%

       K&G

3.4%

$6.1

$184.7

10%

7.0%

2.0%

       MW Cleaners

6.6%

$1.0

$16.9

1%










Corporate Apparel Segment

(1.2%)

($1.5)

$122.0

7%










Total Company

25.9%

$371.6

$1,805.2




 

Net sales at our largest brand, Men's Wearhouse, were up 4.4% from last year's second quarter.  Comparable sales increased 3.1% due primarily to an increase in clothing product average unit retails. The higher margin rental revenues comparable sales decreased 3.3% in the second quarter of 2015. 

Jos. A. Bank comparable sales for the second quarter decreased 9.4% with decreases in both units sold per transaction and average transactions per store.  Moores, our Canadian retail brand, had a comparable sales increase of 0.7% due to an increase in clothing product average unit retails slightly offset by a decrease in average transactions per store.  However, net sales for Moores decreased 10.5% due to an unfavorable change in the currency translation rate.  K&G comparable sales increased 6.7% due to an increase in average transactions per store.  The Corporate Apparel segment had a sales decrease of 8.2% primarily driven by an unfavorable change in the currency translation rate.

SECOND QUARTER GAAP OPERATING RESULTS

Total net sales increased 14.6%, or $117.0 million, to $920.1 million.  Retail segment net sales increased by 16.6%, or $122.5 million.  Corporate apparel sales decreased by 8.2% or $5.5 million.

Total gross margin was $418.7 million, an increase of $60.1 million, or 16.8%.  As a percent of sales, total gross margin increased 86 basis points to 45.5% of net sales.

Advertising expense increased $6.8 million to $45.0 million.  This increase represented a 13 basis point increase in expense. 

Selling, general and administrative expenses ("SG&A") decreased $2.0 million to $275.6 million, a 462 basis points decrease.

Operating income increased $55.4 million to $98.1 million, representing 10.7% of net sales compared to 5.3% in the prior year.

SIX MONTH GAAP OPERATING RESULTS

Total net sales increased 25.9%, or $371.6 million, to $1,805.2 million.  Retail segment net sales increased by 28.5%, or $373.1 million.  Corporate apparel sales decreased by 1.2% or $1.5 million.

Total gross margin was $800.2 million, an increase of $158.3 million, or 24.7%.  As a percent of sales, total gross margin decreased 45 basis points to 44.3% of net sales.

Advertising expense increased $28.6 million to $95.6 million.  This increase represented a 62 basis point increase in expense. 

SG&A increased $46.3 million to $551.2 million, a 469 basis points decrease.

Operating income increased $83.4 million to $153.4 million, representing 8.5% of net sales compared to 4.9% in the prior year.

SECOND QUARTER ADJUSTED OPERATING RESULTS (1)

In our fourth quarter earnings release we provided historical baselines of operating results for fiscal year 2014 in order to provide comparable results to fiscal year 2015.  These baselines include Jos. A. Bank operations for the 2014 full year and exclude items we believe are not indicative of our core operating results as well as certain items related to the acquisition of Jos. A. Bank.  Below is a comparison of the consolidated second quarter FY 2015 adjusted operating results to second quarter FY 2014 baseline.

 



Q2 FY15


Q2 FY15


Q2 FY14


Q2 FY14


Variance


$


% of Sales


$


% of Sales


Dollar

%

Basis Points

Net sales:












     Retail clothing product

$    649,190


70.56%


$    646,189


69.49%


$        3,001

0.46%

1.07

     Rental services

157,049


17.07%


165,130


17.76%


(8,081)

-4.89%

(0.69)

     Alteration and other services

52,674


5.72%


51,953


5.59%


721

1.39%

0.14

Total retail sales

858,913


93.35%


863,272


92.83%


(4,359)

-0.50%

0.52

Corporate apparel clothing product

61,161


6.65%


66,656


7.17%


(5,495)

-8.24%

(0.52)

Total net sales

920,074


100.00%


929,928


100.00%


(9,854)

-1.06%

-













Gross margin: (2)












     Retail clothing product

367,336


56.58%


358,961


55.55%


8,375

2.33%

1.03

     Rental services

131,698


83.86%


137,234


83.11%


(5,536)

-4.03%

0.75

     Alteration and other services

15,556


29.53%


14,773


28.44%


783

5.30%

1.10

     Occupancy costs

(113,355)


-13.20%


(113,651)


-13.17%


296

-0.26%

(0.03)

Total retail gross margin

401,235


46.71%


397,317


46.02%


3,918

0.99%

0.69

Corporate apparel clothing product

18,542


30.32%


20,024


30.04%


(1,482)

-7.40%

0.28

Total gross margin

419,777


45.62%


417,341


44.88%


2,436

0.58%

0.75













Advertising expense

44,981


4.89%


47,130


5.07%


(2,149)

-4.56%

(0.18)

Selling, general and administrative expenses

269,106


29.25%


267,728


28.79%


1,378

0.51%

0.46

























Operating income

$    105,690


11.49%


$    102,483


11.02%


$        3,207

3.13%

0.47













(1) See Use of Non-GAAP Financial Measures for reconciliation to GAAP.

(2) Gross margin percent of related sales.

 

Total net sales decreased 1.1%, or $9.9 million from $929.9 million baseline net sales.  Retail segment net sales for the quarter decreased by 0.5%, or $4.4 million, to $858.9 million due primarily to a decrease in rental volume.  Corporate apparel sales decreased by 8.2%, or $5.5 million.

Total adjusted gross margin of $419.8 million increased $2.4 million or 0.6% and increased 75 basis points compared to baseline total gross margin.  Excluding Jos. A. Bank, total adjusted gross margin increased 37 basis points.  Adjusted retail segment gross margin increased $3.9 million, or 1.0%, and increased 69 basis points from prior year baseline primarily due to higher retail clothing margin offset somewhat by lower rental margin.  The adjusted retail segment gross margin rate increased 18 basis points excluding Jos. A. Bank.  Corporate apparel gross margin decreased $1.5 million, or 7.4%, and increased 28 basis points.

On a stand-alone basis, total Jos. A. Bank adjusted retail gross margin (including rental margin, alteration margin and occupancy) increased 123 basis points from 37.7% to 39.0%.  Jos. A. Bank adjusted retail clothing margin increased 177 basis points from 54.4% to 56.2%. 

Advertising expense was $45.0 million.  This represents a decrease of $2.1 million or 18 basis points, compared to the prior year baseline primarily due to the anniversary of the rollout of Joseph Abboud.

Adjusted SG&A expenses of $269.1 million were 46 basis points unfavorable to the prior year baseline primarily due to higher payroll related costs.  On an absolute dollar basis, adjusted SG&A increased by $1.4 million, or 0.5%, to prior year baseline. 

Adjusted operating income was $105.7 million, an increase of $3.2 million, or 3.1%, over the prior year baseline operating results of $102.5 million.

INTEREST AND TAXES

GAAP net interest expense for the second quarter was $26.5 million.

The effective tax rate for the second quarter was 33.3%.  Excluding the impact of integration and acquisition costs, the adjusted effective tax rate was 34.1%.

NET EARNINGS

GAAP net earnings were $47.8 million compared to GAAP net earnings of $12.3 million last year.  GAAP EPS was $0.98 compared to $0.25 in the prior year quarter.  Adjusted net earnings were $52.2 million, or $1.07 adjusted EPS.

FISCAL SIX MONTH ADJUSTED OPERATING RESULTS (1)

In our fourth quarter earnings release we provided historical baselines of operating results for fiscal year 2014 in order to provide comparable results to fiscal year 2015.  These baselines include Jos. A. Bank operations for the 2014 full year and exclude items we believe are not indicative of our core operating results as well as certain items related to the acquisition of Jos. A. Bank.  Below is a comparison of the consolidated six month FY 2015 adjusted operating results to six month FY 2014 baseline.

 



YTD FY15


YTD FY15


YTD FY14


YTD FY14


Variance


$


% of Sales


$


% of Sales


Dollar

%

Basis Points

Net sales:












     Retail clothing product

$ 1,316,052


72.90%


$ 1,278,325


71.90%


$      37,727

2.95%

1.00

     Rental services

260,178


14.41%


271,277


15.26%


(11,099)

-4.09%

(0.85)

     Alteration and other services

106,954


5.92%


104,741


5.89%


2,213

2.11%

0.03

Total retail sales

1,683,184


93.24%


1,654,343


93.05%


28,841

1.74%

0.19

Corporate apparel clothing product

121,979


6.76%


123,481


6.95%


(1,502)

-1.22%

(0.19)

Total net sales

1,805,163


100.00%


1,777,824


100.00%


27,339

1.54%

-













Gross margin: (2)












     Retail clothing product

740,553


56.27%


716,652


56.06%


23,901

3.34%

0.21

     Rental services

218,743


84.07%


226,317


83.43%


(7,574)

-3.35%

0.65

     Alteration and other services

33,686


31.50%


30,756


29.36%


2,930

9.53%

2.13

     Occupancy costs

(226,164)


-13.44%


(222,056)


-13.42%


(4,108)

1.85%

(0.01)

Total retail gross margin

766,818


45.56%


751,669


45.44%


15,149

2.02%

0.12

Corporate apparel clothing product

35,537


29.13%


37,102


30.05%


(1,565)

-4.22%

(0.91)

Total gross margin

802,355


44.45%


788,771


44.37%


13,584

1.72%

0.08













Advertising expense

95,637


5.30%


89,117


5.01%


6,520

7.32%

0.29

Selling, general and administrative expenses

533,091


29.53%


529,827


29.80%


3,264

0.62%

(0.27)

























Operating income

$    173,627


9.62%


$    169,827


9.55%


$        3,800

2.24%

0.07













(1) See Use of Non-GAAP Financial Measures for reconciliation to GAAP.

(2) Gross margin percent of related sales.

 

Total net sales increased 1.5%, or $27.3 million from $1,777.8 million baseline net sales.  Retail segment net sales for the six months increased by 1.7%, or $28.8 million, to $1,683.2 million due primarily to an increase in clothing sales at Men's Wearhouse.  Corporate apparel sales decreased by 1.2%, or $1.5 million.

Total adjusted gross margin of $802.4 million increased $13.6 million, or 1.7%, and increased 8 basis points compared to baseline total gross margin.  Excluding Jos. A. Bank, total adjusted gross margin increased 1 basis point.  Adjusted retail segment gross margin increased $15.1 million, or 2.0%, and increased 12 basis points from prior year baseline primarily due to higher retail clothing margin.  The adjusted retail segment gross margin rate increased 2 basis points excluding Jos. A. Bank.  Corporate apparel gross margin decreased $1.6 million, or 4.2%, and decreased 91 basis points.

On a stand-alone basis, total Jos. A. Bank adjusted retail gross margin (including rental margin, alteration margin and occupancy) decreased 15 basis points from 39.0% to 38.9%.  Jos. A. Bank adjusted retail clothing margin increased 45 basis points from 56.3% to 56.7%. 

Advertising expense was $95.6 million.  This represents an increase of $6.5 million, or 29 basis points, compared to the prior year baseline primarily due to increased advertising expense to support branding initiatives.

Adjusted SG&A expenses of $533.1 million were 27 basis points favorable to the prior year baseline primarily due to lower payroll related costs and other synergies.  On an absolute dollar basis, adjusted SG&A increased by $3.3 million, or 0.6%, to prior year baseline. 

Adjusted operating income was $173.6 million, an increase of $3.8 million, or 2.2%, over the prior year baseline operating results of $169.8 million.

INTEREST AND TAXES

GAAP net interest expense for the six months was $52.9 million.  Loss on extinguishment of debt was $12.7 million and was adjusted for as a non-operating item.  The loss was a result of the $400 million partial refinancing of our term loan to a fixed rate of 5.0%.

The effective tax rate for the six months was 33.8%.  Excluding the impact of acquisition, integration and other costs, the adjusted effective tax rate was 35.2%.

NET EARNINGS

GAAP net earnings for the six months were $58.1 million compared to GAAP net earnings of $28.7 million last year.  GAAP EPS was $1.20 compared to $0.60 in the prior year six months.  Adjusted net earnings were $78.2 million, or $1.61 adjusted EPS.

BALANCE SHEET

As a result of the acquisition of Jos. A. Bank, total debt at the end of the second quarter 2015 was approximately $1.7 billion.  The Company did not make any pre-payments on its debt during the quarter.

Inventories decreased $87.5 million to $957.0 million at the end of the second quarter 2015 from $1,044.5 million at prior year second quarter due primarily to purchase price accounting related adjustments at Jos. A. Bank.

Capital expenditures through the second quarter of fiscal year 2015 were $56.8 million compared to $40.8 million in the prior year.

CALL AND WEBCAST INFORMATION

At 9:00 a.m. Eastern time on Wednesday, September 9, 2015, management will host a conference call and real time webcast to discuss fiscal 2015 second quarter and six month results.

To access the conference call, dial 412-902-0030.  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 15, 2015 by calling 201-612-7415 and entering the access code of 13616094#, or a webcast archive will be available free on the website for approximately 90 days.

 

STORE INFORMATION



August 1, 2015

August 2, 2014

January 31, 2015


Number of
Stores

Sq. Ft.
(000's)

Number of
Stores

Sq. Ft.
(000's)

Number of
Stores

Sq. Ft.
(000's)








Men's Wearhouse (a)

704

3,974.3

679

3,867.0

698

3,955.7








Jos. A. Bank (b)

636

2,925.0

629

2,861.8

636

2,922.2








Men's Wearhouse and Tux

201

280.8

233

322.2

210

291.2








Moores, Clothing for Men

124

781.0

121

769.1

123

779.0








K&G (c)

89

2,109.0

94

2,228.8

91

2,164.4








Total

1,754

10,070.1

1,756

10,048.9

1,758

10,112.5



(a)

Includes one Joseph Abboud store.

(b) 

Excludes 14, 15 and 15 franchise stores, respectively.

(c) 

81, 85 and 83 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 1,754 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 and suit 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, 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 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 our latest annual report on Form 10-K and our filings 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 GAAP to adjusted financial information are included in the tables at the end of this release.

 


THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


For the Three Months Ended August 1, 2015 and August 2, 2014

(In thousands, except per share data)



Three Months Ended


Variance



% of


% of




Basis


2015

Sales

2014

Sales


Dollar

%

Points










Net sales:









          Retail clothing product

$    649,190

70.56%

$  530,728

66.09%


$118,462

22.32%

4.47

          Rental services

157,049

17.07%

161,096

20.06%


(4,047)

(2.51%)

(2.99)

          Alteration and other services   

52,674

5.72%

44,598

5.55%


8,076

18.11%

0.17

               Total retail sales

858,913

93.35%

736,422

91.70%


122,491

16.63%

1.65

               Corporate apparel clothing product

61,161

6.65%

66,656

8.30%


(5,495)

(8.24%)

(1.65)

                    Total net sales

920,074

100.00%

803,078

100.00%


116,996

14.57%

0.00










                   Total cost of sales

501,393

54.49%

444,536

55.35%


56,857

12.79%

(0.86)










Gross margin (a):









        Retail clothing product

367,140

56.55%

287,374

54.15%


79,766

27.76%

2.41

        Rental services

131,698

83.86%

134,868

83.72%


(3,170)

(2.35%)

0.14

        Alteration and other services

15,556

29.53%

11,699

26.23%


3,857

32.97%

3.30

        Occupancy costs

(114,255)

(13.30%)

(95,423)

(12.96%)


(18,832)

(19.74%)

(0.34)

               Total retail gross margin

400,139

46.59%

338,518

45.97%


61,621

18.20%

0.62

               Corporate apparel clothing product

18,542

30.32%

20,024

30.04%


(1,482)

(7.40%)

0.28

                   Total gross margin

418,681

45.51%

358,542

44.65%


60,139

16.77%

0.86










Advertising expense

44,981

4.89%

38,226

4.76%


6,755

17.67%

0.13

Selling, general and administrative expenses

275,577

29.95%

277,612

34.57%


(2,035)

(0.73%)

(4.62)










Operating income

98,123

10.66%

42,704

5.32%


55,419

129.77%

5.35










Net interest

(26,473)

(2.88%)

(13,074)

(1.63%)


(13,399)

102.49%

(1.25)

Loss on extinguishment of debt

-

0.00%

(2,158)

(0.27%)


2,158

(100.00%)

0.27










Earnings before income taxes

71,650

7.79%

27,472

3.42%


44,178

160.81%

4.37










Provision for income taxes

23,871

2.59%

15,104

1.88%


8,767

58.04%

0.71










Net earnings including non-controlling interest

47,779

5.19%

12,368

1.54%


35,411

286.31%

3.65










Net earnings attributable to non-controlling interest

-

0.00%

(112)

(0.01%)


112

100.00%

0.01










Net earnings attributable to common shareholders

$      47,779

5.19%

$    12,256

1.53%


$   35,523

289.84%

3.67










Net earnings per diluted common share allocated to common shareholders

$          0.98


$        0.25















Weighted-average diluted common shares outstanding:

48,544


48,143















(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 Six Months Ended August 1, 2015 and August 2, 2014

(In thousands, except per share data)



Six Months Ended


Variance



% of


% of




Basis


2015

Sales

2014

Sales


Dollar

%

Points










Net sales:









          Retail clothing product

$1,316,052

72.90%

$963,752

67.23%


$352,300

36.56%

5.68

          Rental services

260,178

14.41%

262,759

18.33%


(2,581)

(0.98%)

(3.92)

          Alteration and other services   

106,954

5.92%

83,560

5.83%


23,394

28.00%

0.10

               Total retail sales

1,683,184

93.24%

1,310,071

91.39%


373,113

28.48%

1.86

               Corporate apparel clothing product

121,979

6.76%

123,481

8.61%


(1,502)

(1.22%)

(1.86)

                    Total net sales

1,805,163

100.00%

1,433,552

100.00%


371,611

25.92%

0.00










                    Total cost of sales

1,004,930

55.67%

791,646

55.22%


213,284

26.94%

0.45










Gross margin (a):









        Retail clothing product

739,618

56.20%

528,921

54.88%


210,697

39.84%

1.32

        Rental services

218,743

84.07%

221,214

84.19%


(2,471)

(1.12%)

(0.11)

        Alteration and other services

33,686

31.50%

22,939

27.45%


10,747

46.85%

4.04

        Occupancy costs

(227,351)

(13.51%)

(168,270)

(12.84%)


(59,081)

(35.11%)

(0.66)

               Total retail gross margin

764,696

45.43%

604,804

46.17%


159,892

26.44%

(0.73)

               Corporate apparel clothing product

35,537

29.13%

37,102

30.05%


(1,565)

(4.22%)

(0.91)

                   Total gross margin

800,233

44.33%

641,906

44.78%


158,327

24.67%

(0.45)










Advertising expense

95,637

5.30%

66,997

4.67%


28,640

42.75%

0.62

Selling, general and administrative expenses

551,184

30.53%

504,924

35.22%


46,260

9.16%

(4.69)










Operating income

153,412

8.50%

69,985

4.88%


83,427

119.21%

3.62










Net interest

(52,928)

(2.93%)

(14,148)

(0.99%)


(38,780)

274.10%

(1.95)

Loss on extinguishment of debt

(12,675)

(0.70%)

(2,158)

(0.15%)


(10,517)

487.35%

(0.55)










Earnings before income taxes

87,809

4.86%

53,679

3.74%


34,130

63.58%

1.12










Provision for income taxes

29,661

1.64%

24,853

1.73%


4,808

19.35%

(0.09)










Net earnings including non-controlling interest

58,148

3.22%

28,826

2.01%


29,322

101.72%

1.21










Net earnings attributable to non-controlling interest

-

0.00%

(84)

(0.01%)


84

100.00%

0.01










Net earnings attributable to common shareholders

$    58,148

3.22%

$  28,742

2.00%


$ 29,406

102.31%

1.22



















Net earnings per diluted common share allocated to common shareholders

$        1.20


$      0.60















Weighted-average diluted common shares outstanding:

48,487


48,059















(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)




August 1,


August 2,



2015


2014






ASSETS









Current assets:





Cash and cash equivalents

$             73,403


$             67,235


Accounts receivable, net

70,392


89,195


Inventories

956,976


1,044,520


Other current assets

153,350


99,744







   Total current assets

1,254,121


1,300,694

Property and equipment, net

551,920


573,911

Rental product, net

148,037


146,464

Goodwill

891,316


874,955

Intangible assets, net

661,973


676,861

Other assets

8,985


10,349







   Total assets

$         3,516,352


$         3,583,234






LIABILITIES AND SHAREHOLDERS' EQUITY









Current liabilities:





Accounts payable

$           176,560


$            214,766


Accrued expenses and other current liabilities

268,376


273,974


Income taxes payable

2,326


1,201


Current maturities of long-term debt

7,000


11,000







   Total current liabilities

454,262


500,941






Long-term debt, net

1,649,487


1,636,831

Deferred taxes and other liabilities

393,628


393,413







   Total liabilities

2,497,377


2,531,185






Shareholders' equity:





Preferred stock

-


-


Common stock

485


481


Capital in excess of par

448,036


423,169


Retained earnings

577,648


583,903


Accumulated other comprehensive (loss) income

(4,110)


33,380


Treasury stock, at cost

(3,084)


(3,303)







   Total equity attributable to common shareholders

1,018,975


1,037,630







Non-controlling interest

-


14,419







   Total shareholders' equity

1,018,975


1,052,049







    Total liabilities and shareholders' equity

$         3,516,352


$         3,583,234

 


THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Six Months Ended August 1, 2015 and August 2, 2014

(In thousands)




Six Months Ended



2015


2014






CASH FLOWS FROM OPERATING ACTIVITIES:










Net earnings including non-controlling interest

$            58,148


$          28,826


Non-cash adjustments to net earnings:





   Depreciation and amortization

65,213


49,778


   Rental product amortization

19,995


19,961


Amortization of deferred financing costs

3,485


1,121


Amortization of discount on long-term debt

598


196


Loss on extinguishment of debt

12,675


2,158


Loss on disposition of assets

886


1,641


   Other

(2,547)


(3,295)


Changes in operating assets and liabilities

(63,539)


(86,507)







        Net cash provided by operating activities

94,914


13,879






CASH FLOWS FROM INVESTING ACTIVITIES:





Capital expenditures

(56,764)


(40,837)


Acquisition of business, net of cash

-


(1,491,393)







        Net cash used in investing activities

(56,764)


(1,532,230)






CASH FLOWS FROM FINANCING ACTIVITIES:





Proceeds from new term loan

-


1,089,000


Payments on new term loan

(4,500)


-


Payments on previous term loan

-


(97,500)


Proceeds from asset-based revolving credit facility

5,500


340,000


Payments on asset-based revolving credit facility

(5,500)


(340,000)


Proceeds from issuance of senior notes

-


600,000


Deferred financing costs

(3,566)


(50,938)


Cash dividends paid

(17,561)


(17,460)


Proceeds from issuance of common stock

1,961


6,167


Tax payments related to vested deferred stock units

(4,506)


(6,869)


Excess tax benefits from share-based plans

1,094


3,687


Repurchases of common stock

(277)


(251)







        Net cash (used in) provided by financing activities

(27,355)


1,525,836







Effect of exchange rate changes

347


498






INCREASE IN CASH AND CASH EQUIVALENTS

11,142


7,983







Balance at beginning of period

62,261


59,252


Balance at end of period

$            73,403


$           67,235

 

THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

UNAUDITED NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts)


Use of Non-GAAP Financial Measures


In addition to providing financial results in accordance with GAAP, we have provided adjusted information for fiscal second quarter and six months of 2015 and a historical consolidated baseline for fiscal second quarter and six months of 2014 which includes Jos. A. Bank results.  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 and baseline 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 and integration 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 follows and may not sum due to rounded numbers.

 

GAAP to Adjusted Statements of Earnings Information


GAAP to Non-GAAP Adjusted - Three Months Ended August 1, 2015


GAAP


Acquisition


Purchase


Adjusted


Results


& Integration (1)


Acctg Allocation (2) 


Results

Net sales

$       920,074


$                      -


$                            -


$       920,074









Total retail gross margin

400,139


521


575


401,235

Corporate apparel clothing product

18,542


-


-


18,542

Total gross margin

418,681


521


575


419,777






-



Advertising expense

44,981


-


-


44,981

Selling, general and administrative expenses

275,577


(4,589)


(1,882)


269,106

Operating income

98,123


5,110


2,457


105,690






-



Net interest

(26,473)


-


-


(26,473)

Loss on extinguishment of debt

-


-


-


-

Provision for income taxes

23,871


2,328


839


27,038









Net earnings including non-controlling interest

47,779


2,782


1,618


52,179









Net earnings attributable to non-controlling interest

-


-


-


-









Net earnings attributable to common shareholders

$         47,779


$              2,782


$                    1,618


$         52,179









Net earnings per diluted common share allocated to common shareholders

$             0.98


$                0.06


$                      0.03


$             1.07


(1) Acquisition & integration primarily relates to Jos. A. Bank.

(2) Includes inventory and depreciation step up amounts in cost of sales and amortization of intangibles and depreciation step up amounts in SG&A.

 

GAAP to Non-GAAP Adjusted - Six Months Ended August 1, 2015


GAAP


Acquisition


Purchase


Other (3)


Adjusted


Results


& Integration (1)


Acctg Allocation (2) 




Results

Net sales

$    1,805,163


$                     -


$                             -


$                   -


$       1,805,163











Total retail gross margin

764,696


521


1,601


-


766,818

Corporate apparel clothing product

35,537


-


-


-


35,537

Total gross margin

800,233


521


1,601


-


802,355











Advertising expense

95,637


-


-


-


95,637

Selling, general and administrative expenses

551,184


(10,538)


(3,951)


(3,604)


533,091

Operating income

153,412


11,059


5,552


3,604


173,627











Net interest

(52,928)


-


-


-


(52,928)

Loss on extinguishment of debt

(12,675)


12,675


-


-


-

Provision for income taxes

29,661


9,625


1,955


1,269


42,511











Net earnings including non-controlling interest

58,148


14,109


3,597


2,335


78,189











Net earnings attributable to non-controlling interest

-


-


-


-


-











Net earnings attributable to common shareholders

$         58,148


$            14,109


$                     3,597


$           2,335


$            78,189











Net earnings per diluted common share allocated to common shareholders

$             1.20


$                0.29


$                       0.07


$             0.05


$                1.61


(1) Acquisition & integration primarily relates to Jos. A. Bank.

(2) Includes inventory and depreciation step up amounts in cost of sales and amortization of intangibles and depreciation step up amounts in SG&A.

(3) Other relates to separation costs with former executives.

 

GAAP to Historical Baselines of Operating Results – Second Quarter Fiscal Year 2014


 Historical Consolidated Baseline Second Quarter FY 2014 - Three Months Ended August 2, 2014 


 GAAP 


 JOSB Results 


Purchase


 Acquisition, 


 Historical 


 Results 


 5/4 - 6/17/14 (1) 


Accounting


 Integration & 


 Baseline 

 Net sales: 





Allocation (2)


 Other (3) 



      Retail clothing product 

$       530,728


$       115,461


$                     -


$                   -


$         646,189

      Rental services 

161,096


4,034


-


-


165,130

      Alteration and other services 

44,598


7,355


-


-


51,953

 Total retail sales 

736,422


126,850


-


-


863,272

 Corporate apparel clothing product 

66,656


-


-


-


66,656

 Total net sales 

803,078


126,850


-


-


929,928











 Gross margin: 










      Retail clothing product 

287,374


64,038


7,549


-


358,961

      Rental services 

134,868


2,366


-


-


137,234

      Alteration and other services 

11,699


3,074


-


-


14,773

      Occupancy costs 

(95,423)


(17,450)


(778)


-


(113,651)

 Total retail gross margin 

338,518


52,028


6,771


-


397,317

 Corporate apparel clothing product 

20,024


-




-


20,024

 Total gross margin 

358,542


52,028


6,771


-


417,341











 Advertising expense 

38,226


8,904


-


-


47,130

 Selling, general and administrative expenses 

277,612


33,946


(906)


(42,924)


267,728





















 Operating income 

$         42,704


$           9,178


$              7,677


$         42,924


$         102,483


(1) Reclassified to be consistent with Men's Wearhouse reporting. 

(2) Adjustments to 10-Q reported balances primarily for inventory write-up elimination, change from FIFO to weighted average cost and elimination of tenant improvement allowance credits. 

(3) Other relates primarily to strategic alternative review and SG&A reduction program costs. 

 

 Historical Consolidated Baseline FY 2014 - Six Months Ended August 2, 2014 


 GAAP 


 JOSB Results 


Purchase


 Acquisition, 


 Historical 


 Results 


 2/2 - 6/17/14 (1) 


Accounting


 Integration & 


 Baseline 

 Net sales: 





Adjustments (2)


 Other (3) 



      Retail clothing product 

$       963,752


$       314,573


$                     -


$                   -


$      1,278,325

      Rental services 

262,759


8,518


-


-


271,277

      Alteration and other services 

83,560


21,181


-


-


104,741

 Total retail sales 

1,310,071


344,272


-


-


1,654,343

 Corporate apparel clothing product 

123,481


-


-


-


123,481

 Total net sales 

1,433,552


344,272


-


-


1,777,824











 Gross margin: 










      Retail clothing product 

528,921


180,173


7,558


-


716,652

      Rental services 

221,214


5,103


-


-


226,317

      Alteration and other services 

22,939


7,817


-


-


30,756

      Occupancy costs 

(168,270)


(51,924)


(1,862)


-


(222,056)

 Total retail gross margin 

604,804


141,169


5,696


-


751,669

 Corporate apparel clothing product 

37,102


-


-


-


37,102

 Total gross margin 

641,906


141,169


5,696


-


788,771











 Advertising expense 

66,997


22,120


-


-


89,117

 Selling, general and administrative expenses 

504,924


170,576


(906)


(144,767)


529,827





















 Operating income (loss) 

$         69,985


$       (51,527)


$              6,602


$       144,767


$         169,827


(1) Reclassified to be consistent with Men's Wearhouse reporting.

(2) Adjustments to 10-Q reported balances primarily for inventory write-up elimination, change from FIFO to weighted average cost and elimination of tenant improvement allowance credits.

(3) Other relates primarily to strategic alternative review and SG&A reduction program costs. 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mens-wearhouse-reports-fiscal-2015-second-quarter-and-six-month-results-300139277.html

SOURCE Men's Wearhouse