– Q1 2007 GAAP diluted EPS was $0.75 versus $0.53 in 2006
– Company estimates Q2 2007 GAAP diluted EPS in a range of $0.88 to $0.92
– Conference call at 5:00 pm eastern today
HOUSTON, May 22 /PRNewswire-FirstCall/ — The Men’s Wearhouse (NYSE: MW)
today announced its consolidated financial results for the first quarter ended
May 5, 2007.
George Zimmer, Chairman and Chief Executive Officer, commented, “During
the quarter we completed the acquisition of After Hours Formalwear (AH) from
Federated Department Stores. With the combination of 509 AH stores and MW’s
existing stores, we are now the leading retailer for the rental of men’s
formalwear with over 1,100 stores in the United States and Canada. We are
sharply focused on capturing the synergistic potential of this acquisition and
thereby enhancing shareholder value. Our current priority for the balance of
this fiscal year is to complete the operational integration of AH with MW by
the end of December 2007 in order to realize maximum synergies in our business
model beginning in fiscal 2008. The principal elements of the integration
plan involve the formulation of a branding strategy, developing a common
inventory assortment, and the assimilation of store support services.”
FIRST QUARTER RESULTS
First Quarter Sales Summary - Fiscal 2007
U.S. dollars, in Total Sales Comparable Store
millions Change % Sales Change %
Current Prior Year Current Prior
Year Year Year
Total Company $496.1 $434.6 + 14.2%
TMW $303.8(a) $288.1(a) + 5.4% + 0.3% + 4.5%
After Hours $28.5 (b) (b) (b) (b)
K&G $110.0 $100.0 + 9.9% - 6.2% - 2.5%
United States $450.9 $394.4 + 14.3% - 1.3% + 2.7%
Moores $45.3 $40.2 + 12.6% 5.8%(c) + 3.9%(c)
(a) Includes retail stores and ecommerce.
(b) After Hours was acquired on April 9, 2007 and will be excluded from
comparable store sales reporting until Q2 of fiscal 2008.
(c) Comparable store sales change is based on the Canadian dollar.
First quarter 2007 operating income was $65.3 million compared to
$46.4 million last year and net income was $40.9 million compared to
$28.9 million last year. GAAP diluted earnings per share were $0.75 for the
first quarter ended May 5, 2007 compared to $0.53 last year. After Hours,
after acquisition funding costs, contributed $0.08 to the GAAP diluted
earnings per share for the first quarter.
First Quarter Highlights
-- Total company sales increased 14.2% for the quarter. Apparel sales,
representing 81.3% of total sales, increased 5.5%. Tuxedo rental
revenues, representing 12.1% of total sales, increased 137.6%. Tuxedo
rental revenues excluding After Hours increased 34.2%.
-- Comparable store sales declined 1.3% for the company's United States
based stores, below the company's guidance of +1% to +2%. The
decline in comparable store sales is primarily due to soft traffic
levels resulting in lower tailored clothing sales at both TMW and
K&G.
-- Comparable store sales increased 5.8% for the company's Canadian
based stores, in-line with the company's guidance. This on plan
performance is a reflection of continued gains in both traffic
levels and average ticket.
-- Gross profit, as a percentage of sales, increased 354 basis points from
42.07% to 45.61%. This improvement is due to both organic and acquired
growth in tuxedo rental revenues as well as continued gains in
merchandise margins.
-- Selling, general, and administrative expenses as a percentage of sales
increased 105 basis points from 31.40% to 32.45%. Most of this
increase is due to the AH acquisition.
-- Operating Income increased 248 basis points from 10.67% to 13.15%
-- During the quarter the company repurchased 444,100 shares for a total
of $19.3 million.
SECOND QUARTER 2007 GUIDANCE AND UPDATED FISCAL 2007 OUTLOOK
For the second quarter of 2007, the company expects same store sales
growth in the U.S. to be in a range of flat to +1% and in Canada to be in a
range of +4% to +6%. GAAP diluted earnings per share are expected to be in
the range of $0.88 to $0.92.
AH revenues for the second quarter are estimated in a range of $80 million
to $85 million. After consideration of acquisition funding costs, AH is
expected to be accretive to fiscal second quarter 2007 in a range of $0.15 to
$0.17 per diluted share outstanding.
For the fiscal year ending February 2, 2008, the company expects GAAP
diluted earnings per share in a range of $2.84 to $2.94. Same store sales
changes in the U.S. for fiscal 2007 are expected to be in a range of -1% to
flat and in Canada are expected to be in a range of an +3% to +5%. This
represents a reduction from previous expectations in the U.S. of an increase
of 1% to 2% which is reflective of continued soft tailored clothing sales at
both Men’s Wearhouse and K&G and principally driven by slower traffic levels.
AH revenues for fiscal 2007 are estimated in a range of $212.0 million to
$217.0 million. After consideration of acquisition funding costs, AH is
expected to be accretive to fiscal 2007 in a range of $0.03 to $0.05 per
diluted share outstanding. It should be noted that the seasonality of AH
revenues is heavily concentrated in April, May and June. Second quarter,
followed by third quarter, is the highest revenue quarter for AH and first and
fourth quarters are considered off season. Therefore, the profitability in
the second and third quarters is mostly offset by losses in the first and
fourth quarters.
This guidance includes an estimated effective tax rate of approximately
37.6% and fully diluted shares outstanding of 54.5 million.
CONFERENCE CALL AND WEBCAST INFORMATION
At 5:00 p.m. Eastern time today, company management will host a conference
call and real time web cast to review the results for the fiscal first quarter
2007.
To access the conference call, dial 303-262-2142. To access the live
webcast presentation, visit the Investor Relations section of the company’s
website at http://www.tmw.com. A telephonic replay will be available through
May 29th by calling 303-590-3000 and entering the access code of 11088182#, or
a webcast archive will be available free on the website for approximately 90
days.
STORE INFORMATION
May 5, 2007 April 29, 2006 February 3, 2007
Number Sq. Ft. Number Sq. Ft. Number Sq. Ft.
of (000's) of (000's) of (000's)
Stores Stores Stores
Men's Wearhouse 544 3,034.1 529 2,921.6 543 3,014.8
After Hours 509 647.3 (a) (a) (a) (a)
Moores, Clothing
for Men 116 722.6 116 719.8 116 722.7
K&G (b) 98 2,278.7 80 1,901.0 93 2,201.6
Total 1,267 6,682.7 725 5,542.4 752 5,939.1
(a) After Hours was acquired on April 9th, 2007.
(b) 80, 56 and 73 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 1,267 stores. The stores carry a
full selection of designer, brand name and private label suits, sport coats,
furnishings and accessories, including tuxedo rentals available in the Men’s
Wearhouse, Moores, After Hours, and select K&G stores.
This press release contains forward-looking information. The
forward-looking statements are made pursuant to the Safe Harbor provisions of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements may be significantly impacted by various factors, including
unfavorable local, regional and national economic developments, disruption in
retail buying trends due to homeland security concerns, severe weather
conditions, aggressive advertising or marketing activities of competitors,
governmental actions and other factors described herein and in the company’s
annual report on Form 10-K for the year ended February 3, 2007.
For additional information on Men’s Wearhouse, please visit the company’s
website at http://www.tmw.com.
CONTACT: Neill Davis, EVP & CFO, Men's Wearhouse (713) 592-7200
Ken Dennard, DRG&E (713) 529-6600
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
FOR THE THREE MONTHS ENDED
May 5, 2007 AND April 29, 2006
(In thousands, except per share data)
Three Months Ended
% of % of
2007 Sales 2006 Sales
Net sales $496,118 100.00% $434,564 100.00%
Cost of goods sold, including
buying, distribution and
occupancy costs 269,845 54.39% 251,735 57.93%
Gross margin 226,273 45.61% 182,829 42.07%
Selling, general and
administrative expenses 161,010 32.45% 136,441 31.40%
Operating income 65,263 13.15% 46,388 10.67%
Interest income (1,632) (0.33%) (1,995) (0.46%)
Interest expense 1,086 0.22% 2,191 0.50%
Earnings before income taxes 65,809 13.26% 46,192 10.63%
Provision for income taxes 24,876 5.01% 17,336 3.99%
Net earnings $40,933 8.25% $28,856 6.64%
Net earnings per share:
Basic $0.76 $0.54
Diluted $0.75 $0.53
Weighted average common shares
outstanding:
Basic 53,963 53,132
Diluted 54,709 54,719
Note: As a result of the acquisition of After Hours Formalwear on April 9,
2007, earnings for the three months ended May 5, 2007 include the results
of operations of After Hours for the 26 days beginning April 10, 2007.
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
May 5, April 29,
2007 2006
ASSETS
Current assets:
Cash and cash equivalents $87,031 $112,572
Short-term investments 38,500 151,525
Inventories 474,413 432,445
Other current assets 93,938 54,049
Total current assets 693,882 750,591
Property and equipment, net 364,256 268,083
Goodwill 58,517 58,284
Other assets, net 103,550 74,690
Total assets $1,220,205 $1,151,648
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $295,182 $227,626
Long-term debt 78,105 207,379
Deferred taxes and other liabilities 64,680 51,690
Shareholders' equity 782,238 664,953
Total liabilities and equity $1,220,205 $1,151,648
Note: As a result of the acquisition of After Hours Formalwear on April 9,
2007, the consolidated balance sheet as of May 5, 2007 includes
preliminary estimates of the fair values of the assets acquired and
liabilities assumed as of the acquisition date.
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THREE MONTHS ENDED
May 5, 2007 AND April 29, 2006
(In thousands)
Three Months Ended
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $40,933 $28,856
Non-cash adjustments to net earnings:
Depreciation and amortization 17,006 15,019
Other 9,239 4,822
Changes in assets and liabilities (26,909) (37,915)
Net cash provided by operating activities 40,269 10,782
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (11,661) (12,295)
Net non-cash assets acquired (69,747) -
Purchases of available-for-sale investments (137,955) (103,475)
Proceeds from sales of available-for-sale
investments 99,455 14,725
Other 1,191 (16)
Net cash used in investing activities (118,717) (101,061)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid (2,729) (2,686)
Proceeds from issuance of common stock 3,670 4,237
Purchase of treasury stock (19,290) -
Other 378 440
Net cash provided by (used in) financing
activities (17,971) 1,991
Effect of exchange rate changes 3,756 634
DECREASE IN CASH AND CASH EQUIVALENTS (92,663) (87,654)
Balance at beginning of period 179,694 200,226
Balance at end of period $87,031 $112,572
Note: As a result of the acquisition of After Hours Formalwear on April 9,
2007, cash flows for the three months ended May 5, 2007 include the cash
flows of After Hours for the 26 days beginning April 10, 2007.
SOURCE Men’s Wearhouse
Released May 22, 2007