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Men's Wearhouse Reports Fiscal 2010 Fourth Quarter Results

- Q4 2010 GAAP diluted loss per share was $0.27 and adjusted diluted loss per share was $0.19.

- Fiscal 2010 GAAP diluted earnings per share were $1.27 and adjusted diluted earnings per share were $1.47.

- Company provides guidance for first quarter and full year of fiscal 2011

- Conference call at 5:00 pm Eastern today

HOUSTON, March 9, 2011 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the fourth quarter ended January 29, 2011.




Fourth Quarter Sales Summary – Fiscal 2010


                                          Total Sales Comparable Store Sales
                U.S. dollars, in millions Change %    Change %

                Current Year Prior Year               Current Year Prior Year

Total Company   $ 542.1(a)   $ 457.2 (a)  18.6%

Total Retail
Segment         $ 479.7      $ 454.2      5.6%

MW              $ 311.1      $ 294.3      5.7%        4.3% (c)     - 7.1% (c)

K&G             $ 96.4       $ 92.7       4.0%        4.5%         - 5.0%

Moores Canada   $ 66.3       $ 61.7       7.3%        2.3% (b)     1.9% (b)

Corporate
Apparel Segment $ 62.5       $ 3.1        1,943.7%










Year-To-Date Sales Summary – Fiscal 2010


                                           Total Sales Comparable Store Sales
                U.S. dollars, in millions  Change %    Change %

                Current Year Prior Year                Current Year Prior Year

Total Company   $ 2,102.7(a) $ 1,909.6 (a) 10.1%

Total Retail
Segment         $ 1,976.4    $ 1,896.1     4.2%

MW              $ 1,345.9    $ 1,281.8     5.0%        4.7% (c)     - 4.0% (c)

K&G             $ 360.3      $ 370.1       - 2.7%      - 1.5%       - 1.9%

Moores Canada   $ 246.7      $ 222.1       11.1%       2.2% (b)     - 0.9% (b)

Corporate
Apparel Segment $ 126.3      $ 13.5        837.4%







(a)  Due to rounded numbers, total Company may not sum.

(b)  Comparable store sales change is based on the Canadian dollar.

(c)  Does not include ecommerce sales.  

GAAP diluted loss per share was $0.27 for the fourth quarter ended January 29, 2011.  Adjusted diluted loss per share was $0.19 after excluding $2.3 million ($1.6 million after tax or $0.03 per diluted share outstanding) in acquisition transaction and integration expenses, $1.1 million ($0.7 million after tax or $0.01 per diluted share outstanding) in tuxedo distribution closure costs and $2.5 million ($1.7 million after tax or $0.03 per diluted share outstanding) for a non-cash fixed asset impairment charge.  Due to rounded numbers, the adjusted loss per share may not sum. This compares to adjusted diluted loss per share guidance given December 7, 2010 of $0.19 to $0.22. In Q4 2009, revised GAAP diluted loss per share was $0.36 and adjusted diluted loss per share was $0.11.

GAAP diluted earnings per share was $1.27 for the fiscal year ended January 29, 2011.  Adjusted diluted earnings per share was $1.47 after excluding $6.4 million ($4.3 million after tax or $0.08 per diluted share outstanding) in acquisition transaction and integration expenses, $3.1 million ($2.1 million after tax or $0.04 per diluted share outstanding) in tuxedo distribution closure costs and $5.9 million ($3.9 million after tax or $0.07 per diluted share outstanding) for a non-cash asset impairment charge.  Due to rounded numbers, the adjusted earnings per share may not sum.  In fiscal 2009, revised GAAP diluted earnings per share was $0.88 and adjusted diluted earnings per share was $1.12.

During the third quarter of 2010, the Company changed the inventory valuation method used by its K&G brand from lower of cost or market, as determined by the retail inventory method, to lower of cost or market using the average cost method.  This change was done to bring all retail operations of the Company to a common valuation methodology platform.  All financial statements in this press release have been revised to reflect this change and are therefore comparable.  Prior year fourth quarter revised GAAP diluted loss per share was $0.36, unchanged from the previously reported GAAP diluted loss per share, and prior fiscal year revised GAAP diluted earnings per share was $0.88, an increase of $0.02 per share.

FOURTH QUARTER REVIEW

Dimensions and Alexandra Acquisitions

On August 6, 2010, the Company acquired Dimensions and certain assets of Alexandra, two leading providers of corporate clothing uniforms and workwear in the United Kingdom, for a total cash consideration of approximately 61 million pounds Sterling (US$97.8 million).  The combined businesses are organized under a UK-based holding company of which Men's Wearhouse controls 86% and previous Dimensions shareholders control 14%.

The financial results of the combined UK operations, excluding transaction and integration costs, were $0.03 accretive to the Company's fourth quarter diluted earnings per share.  Transaction and integration costs were $2.3 million ($1.6 million after tax or $0.03 per diluted share outstanding).  Total sales of the combined UK operations were US$54.2 million.  

The financial results of the combined UK operations, excluding transaction and integration costs, were $0.06 accretive to the Company's fiscal 2010 diluted earnings per share.  Transaction and integration costs were $6.4 million ($4.3 million after tax or $0.08 per diluted share outstanding).  Total sales of the combined UK operations were US$104.8 million for fiscal 2010.  

Tuxedo Distribution Closures

In late August 2010, a decision was made by the Company to cease tuxedo distribution operations in November 2010 at four of the then eleven facilities that we used for tuxedo distribution.  The operations at these four facilities were assumed by other tuxedo distribution facilities in our system allowing us to more effectively manage our tuxedo rental operations.  In the fourth quarter, a charge of $1.1 million ($0.7 million after tax or $0.01 per diluted share outstanding) was incurred consisting primarily of labor costs associated with transferring and processing the tuxedo rental inventory from the closed facilities, severance payments and fixed asset write-offs.

The expected ongoing annual benefit, beginning in fiscal 2011, as a result of these closures will be a reduction in operating costs of approximately $4.0 million.

Review of Fourth Quarter Results

Total Company net sales increased 18.6% for the quarter.  

At Men's Wearhouse/Men's Wearhouse and Tux, the increase of 4.3% in comparable store sales was due to increased units per transaction, higher store traffic levels and an 11.1% comparable store increase in tuxedo rental services revenues.  

At Moores, the increase of 2.3% in comparable store sales was due to increased units per transaction and higher net sales price per unit which offset a decline in store traffic.  

At K&G, the increase of 4.5% in comparable store sales was due mainly to an increase in units per transaction and higher store traffic levels.

Corporate apparel segment net sales increased $59.4 million to $62.5 million for the quarter compared to the same prior year quarter.  The increase was primarily due to our acquisitions of Dimensions and Alexandra in the UK on August 6, 2010.

Gross margin, as a percentage of total net sales, increased 21 basis points from 37.1% to 37.3% due to an increase in tuxedo rental margins and a decrease in occupancy costs as a percent of sales offset by a decrease in retail merchandise margins and the increased mix of the lower margin corporate apparel business.  

Selling, general and administrative expenses were $225.4 million in the current year and increased 10.6% from the prior year's SG&A of $203.8 million.  The prior year quarter included $19.5 million in non-cash fixed asset impairment charges.  Excluding these charges, prior year SG&A expense was $184.3 million.  During the current quarter, the Company incurred $2.3 million in acquisition transaction and integration costs, $1.1 million in tuxedo distribution closure costs and $2.5 million for non-cash fixed asset impairment charges related primarily to K&G and Men's Wearhouse and Tux stores.  Excluding these costs, fourth quarter SG&A expenses were $219.4 million or an increase of 19.0% to the adjusted prior year quarter. SG&A related to the acquired UK operations resulted in a 7.5% increase.  The remaining 11.5% increase is primarily due to increased payroll related costs and increased marketing costs.  As a percentage of total net sales, adjusted SG&A increased 16 basis points from 40.3% to 40.5%.  

Operating loss was $23.2 million.  Excluding $2.3 million in acquisition and integration costs, $1.1 million in tuxedo distribution closure costs and the $2.5 million non-cash fixed asset impairment charge; operating loss was $17.3 million or negative 3.2% of total net sales.  This compares with the adjusted prior year operating loss of $14.8 million or negative 3.2% of total net sales, which exclude $19.5 million in pretax non-cash fixed asset impairment charges.

Total inventories of $486.5 million increased 11.9% from the prior year fourth quarter of $434.9 million.  Excluding the inventory related to the acquisitions of Dimensions and Alexandra in the UK, inventories decreased 5.7%.  

The Company had no bank debt at the end of the fourth quarter of 2010 as all debt was paid off during the quarter.

2011 GUIDANCE

For the fiscal year, GAAP diluted earnings per share is expected to be in a range of $1.71 to $1.81.  Adjusted diluted earnings per share are expected to be in a range of $1.75 to $1.85.  Adjusted earnings per share exclude acquisition integration expenses of $3.3 million ($2.2 million after tax or $0.04 per diluted share outstanding).

For the first quarter of the fiscal year, GAAP diluted earnings per share is expected to be in a range of $0.26 to $0.29.  Adjusted diluted earnings per share are expected to be in a range of $0.27 to $0.30.  Adjusted earnings per share exclude acquisition integration expenses of $0.6 million ($0.4 million after tax or $0.01 per diluted share outstanding).

The financial results of the combined UK acquisitions, excluding acquisition integration expenses, are expected to be accretive to the Company's full year and first quarter diluted earnings per share.




                                     Guidance             Guidance

                                     FY 2011              1Q FY 2011



Total Sales Increase                 8% to 9% (1)         14% to15% (1)

Comparable Store Sales Growth (2)

MW                                   +2% to +4%           +4% to +5%

K&G                                  (1%) to (2%)         (1%) to (2%)

Moores                               Flat to +1%          (2%) to (3%)

Gross Profit Margin                  42.25% to 42.45% (3) 40.60% to 40.75% (3)

S G & A (as % of Sales)              35.75% to 35.95% (4) 36.15% to 36.30% (4)

Effective Tax Rate                   35.25%               37.00%

Weighted Average Shares Outstanding
(millions)                           52.6                 52.6

GAAP EPS                             $1.71 to $1.81       $0.26 to $0.29

Adjusted EPS                         $1.75 to $1.85 (4)   $0.27 to $0.30 (4)

Foreign Exchange Conversion (avg.)

US Dollar to GBP                     1.59                 1.59

US Dollar to Canadian Dollar         1.00                 1.00







Footnotes to Guidance:

  1. Includes US$220 million for full year FY 2011 and US$55 million for 1Q
     FY2011 of sales from acquired operations of Dimensions and Alexandra.
  2. Includes an assumed comparable store increase in tuxedo rental revenues of
     7% to 8% for the full year FY 2011 and a 1% to 2% increase in 1Q FY 2011.
  3. Occupancy costs are expected to be flat for full year FY 2011 and decrease
     low single digit for 1Q FY 2011.
  4. Excludes acquisition integration costs.


CONFERENCE CALL AND WEBCAST INFORMATION

At 5:00 p.m. Eastern time on Wednesday, March 9, 2011, Company management will host a conference call and real time webcast to review the fourth quarter of fiscal 2010 and its outlook for the first quarter and full year of fiscal 2011.    

To access the conference call, dial 480-629-9772.  To access the live webcast presentation, visit the Investor Relations section of the Company's website at www.menswearhouse.com.  A telephonic replay will be available through March 16, 2011 by calling 303-590-3030 and entering the access code of 4418605#, or a webcast archive will be available free on the website for approximately 90 days.


STORE INFORMATION

                         January 29, 2011         January 30, 2010



                                          Sq. Ft.                  Sq. Ft.

                         Number of Stores (000's) Number of Stores (000's)



Men's Wearhouse          585              3,319.0 581              3,284.4



Men's Wearhouse and Tux  388              535.7   454              623.4



Moores, Clothing for Men 117              737.8   117              734.6



K&G (a)                  102              2,394.1 107              2,475.6



Total                    1,192            6,986.6 1,259            7,118.0







(a)  91 and 94 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 1,192 stores.  The Men's Wearhouse, Moores and K&G stores carry a full selection of designer, brand name and private label suits, sport coats, furnishings and accessories and Men's Wearhouse and Tux stores carry a limited selection.  Tuxedo rentals are available in the Men's Wearhouse, Moores and Men's Wearhouse and Tux stores.  Additionally, Men's Wearhouse operates a global corporate apparel and workwear group consisting of TwinHill in the United States and Dimensions and Alexandra 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.  These forward-looking statements may be significantly impacted by various factors, including sensitivity to economic conditions and consumer confidence, possibility of limited ability to expand Men's Wearhouse stores, possibility that certain of our expansion strategies may present greater risks, changes in foreign currency rates and other factors described in the Company's annual report on Form 10-K for the fiscal year ended January 30, 2010 and subsequent Forms 10-Q.

For additional information on Men's Wearhouse, please visit the Company's website at www.menswearhouse.com.  The website for Dimensions is www.dimensions.co.uk and the website for Alexandra is www.alexandra.co.uk.


THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

In thousands, except per share data

(Unaudited)





FOR THE THREE MONTHS ENDED

January 29, 2011 AND January 30, 2010

(In thousands, except per share data)



               Three Months Ended                    Variance

                        % of               % of                         Basis

               2010     Sales    2009      Sales     Dollar   %         Points

                        (as adjusted) (a)

Net sales:

Clothing       $
product        407,953  75.25%   $ 387,084 84.66%    $ 20,869 5.39%     (9.41)

Tuxedo rental
services       38,356   7.08%    35,380    7.74%     2,976    8.41%     (0.66)

Alteration and
other services 33,343   6.15%    31,698    6.93%     1,645    5.19%     (0.78)

Retail segment
sales          479,652  88.48%   454,162   99.33%    25,490   5.61%     (10.85)

Corporate
apparel
segment sales  62,454   11.52%   3,056     0.67%     59,398   1,943.65% 10.85

Total net
sales          542,106  100.00%  457,218   100.00%   84,888   18.57%    0.00



Total cost of
sales          339,947  62.71%   287,688   62.92%    52,259   18.17%    (0.21)



Gross margin
(b):

Clothing
margin         211,049  51.73%   204,995   52.96%    6,054    2.95%     (1.23)

Tuxedo margin  33,135   86.39%   27,967    79.05%    5,168    18.48%    7.34

Alteration and
other services
margin         8,325    24.97%   7,985     25.19%    340      4.26%     (0.22)

Occupancy
costs          (68,216) (14.22%) (71,644)  (15.77%)  3,428    4.78%     1.55

Retail segment
margin         184,293  38.42%   169,303   37.28%    14,990   8.85%     1.14

Corporate
apparel
segment margin 17,866   28.61%   227       7.43%     17,639   7,770.48% 21.18

Gross margin   202,159  37.29%   169,530   37.08%    32,629   19.25%    0.21



Selling,
general and
administrative
expenses       225,356  41.57%   203,818   44.58%    21,538   10.57%    (3.01)



Operating loss (23,197) (4.28%)  (34,288)  (7.50%)   11,091   32.35%    3.22



Net interest   (367)    (0.07%)  (153)     (0.03%)   (214)    (139.87%) 0.03

Loss before
income taxes   (23,564) (4.35%)  (34,441)  (7.53%)   10,877   31.58%    3.19



Benefit from
income taxes   (9,370)  (1.73%)  (15,688)  (3.43%)   6,318    40.27%    1.70



Net loss
including
noncontrolling
interest       (14,194) (2.62%)  (18,753)  (4.10%)   4,559    24.31%    1.48



Less: Net loss
attributable
to
noncontrolling
interest       (108)    (0.02%)  -         0.00%     (108)    100.00%   (0.02)



Net loss
attributable
to common      $                 $
shareholders   (14,086) (2.60%)  (18,753)  (4.10%)   $ 4,667  24.89%    1.50



Net loss per
diluted common
share
attributable
to common
shareholders   $ (0.27)          $ (0.36)



Weighted
average
diluted common
shares
outstanding:   52,819            52,297



(a) Results have been adjusted for the change in inventory valuation method
used by our K&G brand from the retail inventory method to the average cost
method during the third quarter of fiscal 2010. The cumulative effect of this
change in accounting principle was recorded retrospectively as of February 1,
2009.

(b) 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 TWELVE MONTHS ENDED

January 29, 2011 AND January 30, 2010

(In thousands, except per share data)



               Twelve Months Ended                      Variance

                          % of                % of                        Basis

               2010       Sales    2009       Sales     Dollar  %         Points

                          (as adjusted) (a)

Net sales:

Clothing
product        $1,480,492 70.41%   $1,433,913 75.09%    $46,579 3.25%     (4.68)

Tuxedo rental
services       364,269    17.32%   334,068    17.49%    30,201  9.04%     (0.17)

Alteration and
other services 131,605    6.26%    128,121    6.71%     3,484   2.72%     (0.45)

Retail segment
sales          1,976,366  93.99%   1,896,102  99.29%    80,264  4.23%     (5.30)

Corporate
apparel
segment sales  126,298    6.01%    13,473     0.71%     112,825 837.42%   5.30

Total net
sales          2,102,664  100.00%  1,909,575  100.00%   193,089 10.11%    0.00



Total cost of
sales          1,204,231  57.27%   1,110,677  58.16%    93,554  8.42%     (0.89)



Gross margin
(b):

Clothing
margin         798,675    53.95%   775,882    54.11%    22,793  2.94%     (0.16)

Tuxedo margin  308,202    84.61%   276,651    82.81%    31,551  11.40%    1.80

Alteration and
other services
margin         33,479     25.44%   33,532     26.17%    (53)    (0.16%)   (0.73)

Occupancy
costs          (276,688)  (14.00%) (289,672)  (15.28%)  12,984  4.48%     1.28

Retail segment
margin         863,668    43.70%   796,393    42.00%    67,275  8.45%     1.70

Corporate
apparel
segment margin 34,765     27.53%   2,505      18.59%    32,260  1,287.82% 8.93

Gross margin   898,433    42.73%   798,898    41.84%    99,535  12.46%    0.89



Selling,
general and
administrative
expenses       796,762    37.89%   729,522    38.20%    67,240  9.22%     (0.31)



Operating
income         101,671    4.84%    69,376     3.63%     32,295  46.55%    1.20



Net interest   (1,141)    (0.05%)  (332)      (0.02%)   (809)   (243.67%) 0.04

Earnings
before income
taxes          100,530    4.78%    69,044     3.62%     31,486  45.60%    1.17



Provision for
income taxes   32,852     1.56%    22,829     1.20%     10,023  43.90%    0.37



Net earnings
including
noncontrolling
interest       67,678     3.22%    46,215     2.42%     21,463  46.44%    0.80



Less: Net loss
attributable
to
noncontrolling
interest       (19)       0.00%    -          0.00%     (19)    100.00%   0.00



Net earnings
attributable
to common
shareholders   $ 67,697   3.22%    $ 46,215   2.42%     $21,482 46.48%    0.80



Net earnings
per diluted
common share
attributable
to common
shareholders
(c)            $ 1.27              $ 0.88



Weighted
average
diluted common
shares
outstanding:   52,853              52,280



(a) Results have been adjusted for the change in inventory valuation method used
by our K&G brand from the retail inventory method to the average cost method
during the third quarter of fiscal 2010. The cumulative effect of this change in
accounting principle was recorded retrospectively as of February 1, 2009.

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

(c) Calculated based on net earnings less net earnings allocated to
participating securities.










THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



                                                January 29,  January 30,

                                                2011         2010

                                                             (as adjusted) (a)

ASSETS

Current assets:

 Cash and cash equivalents                      $ 136,371    $ 186,018

 Accounts receivable, net                       60,607       16,745

 Inventories                                    486,499      434,881

 Other current assets                           80,531       72,732

 Total current assets                           764,008      710,376



Property and equipment, net                     332,611      344,746

Tuxedo rental product, net                      89,465       102,479

Goodwill                                        87,994       59,414

Intangible assets, net                          37,348       4,287

Other assets                                    8,892        12,850



 Total assets                                   $ 1,320,318  $ 1,234,152



LIABILITIES AND EQUITY

Current liabilities:

 Accounts payable                               $ 123,881    $ 83,052

 Accrued expenses and other current liabilities 139,640      117,047

 Income taxes payable                           3,135        23,936

 Total current liabilities                      266,656      224,035

Long-term debt                                  -            43,491

Deferred taxes and other liabilities            69,809       62,236



 Total liabilities                              336,465      329,762



Equity:

 Preferred stock                                -            -

 Common stock                                   710          705

 Capital in excess of par                       341,663      327,742

 Retained earnings                              1,002,975    956,032

 Accumulated other comprehensive income         38,366       32,537

 Treasury stock, at cost                        (412,761)    (412,626)



 Total equity attributable to common
 shareholders                                   970,953      904,390



 Noncontrolling interest                        12,900       -



 Total equity                                   983,853      904,390



 Total liabilities and equity                   $ 1,320,318  $ 1,234,152



(a) Results have been adjusted for the change in inventory valuation method
used by our K&G brand from the retail inventory method to the average cost
method during the third quarter of fiscal 2010. The cumulative effect of this
change in accounting principle was recorded retrospectively as of February 1,
2009.








THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



FOR THE TWELVE MONTHS ENDED

January 29, 2011 AND January 30, 2010

(In thousands)



                                                 Twelve Months Ended

                                                 2010       2009

                                                            (as adjusted) (a)

CASH FLOWS FROM OPERATING ACTIVITIES:



 Net earnings including noncontrolling interest  $ 67,678   $ 46,215

 Non-cash adjustments to net earnings:

 Depreciation and amortization                   75,998     86,090

 Tuxedo rental product amortization              33,485     37,184

 Other                                           28,074     3,167

 Changes in assets and liabilities               (35,288)   (9,501)



 Net cash provided by operating activities       169,947    163,155



CASH FLOWS FROM INVESTING ACTIVITIES:

 Capital expenditures                            (58,868)   (56,912)

 Acquisition of businesses, net of cash          (97,786)   -

 Proceeds from sales of available-for-sale
 investments                                     -          19,410

 Proceeds from sales of property and equipment   76         797



 Net cash used in investing activities           (156,578)  (36,705)



CASH FLOWS FROM FINANCING ACTIVITIES:

 Proceeds from issuance of common stock          3,900      4,106

 Payments on revolving credit facility           -          (25,000)

 Payments on Canadian term loan                  (46,738)   -

 Cash dividends paid                             (19,111)   (14,722)

 Deferred financing costs                        (1,577)    -

 Tax payments related to vested deferred stock
 units                                           (2,748)    (1,634)

 Excess tax benefits from share-based plans      1,107      392

 Purchase of treasury stock                      (144)      (90)



 Net cash used in financing activities           (65,311)   (36,948)



 Effect of exchange rate changes                 2,295      9,104



INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (49,647)   98,606



 Balance at beginning of period                  186,018    87,412

 Balance at end of period                        $ 136,371  $ 186,018



(a) Results have been adjusted for the change in inventory valuation method
used by our K&G brand from the retail inventory method to the average cost
method during the third quarter of fiscal 2010. The cumulative effect of this
change in accounting principle was recorded retrospectively as of February 1,
2009.








Contacts:



Neill Davis, Men’s Wearhouse

(281) 776-7000

Ken Dennard, DRG&L

(713) 529-6600





SOURCE The Men's Wearhouse