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Men's Wearhouse Reports Fiscal 2011 First Quarter Results

- Q1 2011 GAAP diluted earnings per share was $0.52 and adjusted diluted earnings per share was $0.53

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

- Conference call at 5:00 pm Eastern today

HOUSTON, June 8, 2011 /PRNewswire/ -- The Men's Wearhouse (NYSE: MW) today announced its consolidated financial results for the first quarter ended April 30, 2011.




First Quarter Net Sales Summary – Fiscal 2011

                                        Total Net Sales Comparable Store Sales
              U.S. dollars, in millions Change %        Change % (c)

              Current Year Prior Year                   Current Year Prior Year

Total Company $ 580.4(a)   $ 473.5(a)   22.6%

Total Retail
Segment       $ 520.7      $ 469.8      10.8%

MW            354.7        318.3        11.4%           10.8%        2.4%

K&G           106.7        98.3         8.6%            9.3%         - 4.9%

Moores Canada 53.2         47.4         12.2%           6.0% (b)     0.2% (b)

Corporate
Apparel
Segment       $ 59.7       $ 3.7        1,521.1%








(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 earnings per share were $0.52 for the first quarter ended April 30, 2011.  Adjusted diluted earnings per share were $0.53 after excluding $0.7 million ($0.4 million after tax or $0.01 per diluted share outstanding) in acquisition integration expenses.  This compares to adjusted diluted earnings per share updated guidance given May 5, 2011 of $0.47 to $0.50 and original guidance given March 9, 2011 of $0.27 to $0.30.  In first quarter of 2010, GAAP diluted earnings per share were $0.26.

FIRST Quarter REVIEW

Total Company net sales increased 22.6% for the quarter.  

In our retail segment, comparable store sales increased at each of our brands due to increased units per transaction, higher average ticket and, at K&G and Moores, an increase in customer traffic.  There was also a 3.9% comparable store sales increase in tuxedo rental services revenues.  

Corporate apparel segment net sales increased $56.0 million to $59.7 million for the quarter compared to the same prior year quarter.  The increase was primarily due to US$54.0 million in revenues from our acquisitions of Dimensions and Alexandra in the UK on August 6, 2010.

Total gross margin, as a percentage of total net sales, was flat at 42.5%.  Occupancy costs as a percent of sales decreased, alteration margin as a percent of sales increased and tuxedo rental margins increased.  These increases were offset by a decrease in retail segment clothing margin as a percent of sales, which resulted mainly from increased promotions, and the increased mix of the lower margin corporate apparel segment.  

Selling, general and administrative expenses were $203.0 million for the first quarter and increased 13.0% from the prior year's SG&A of $179.7 million.  Excluding $0.7 million in acquisition integration costs, first quarter SG&A expenses were $202.3 million or an increase of 12.6% to the prior year quarter.  Adjusted SG&A related to the acquired UK operations resulted in an 8.0% increase.  The remaining 4.6% adjusted increase was primarily due to increased payroll related costs and increased expenses associated with increased sales.  As a percentage of total net sales, adjusted SG&A decreased 308 basis points from 37.9% to 34.9%.  

Operating income was $43.6 million.  Excluding $0.7 million in acquisition integration costs, operating income was $44.3 million or 7.6% of total net sales.  This compares with the prior year operating income of $21.4 million or 4.5% of total net sales.

The financial results of the combined UK operations, excluding acquisition integration costs, were $0.01 accretive to the Company's first quarter diluted earnings per share.  Integration costs were $0.7 million ($0.4 million after tax or $0.01 per diluted share outstanding).

Total inventories of $521.1 million increased 18.8% from the prior year first quarter of $438.7 million.  Excluding inventory from the acquired UK operations, inventories decreased 1.1%.  

The Company had no borrowings under its bank credit facility at the end of first quarter fiscal 2011.

During the quarter, the Company repurchased 1.8 million shares for a total of $49.0 million.  

2011 GUIDANCE

For the fiscal year, GAAP diluted earnings per share is expected to be in a range of $2.00 to $2.08.  Adjusted diluted earnings per share are expected to be in a range of $2.04 to $2.12.  Adjusted earnings per share exclude acquisition integration expenses of $3.5 million ($2.2 million after tax or $0.04 per diluted share outstanding).

For the second quarter of the fiscal year, GAAP diluted earnings per share is expected to be in a range of $1.01 to $1.04.  Adjusted diluted earnings per share are expected to be in a range of $1.02 to $1.05.  Adjusted earnings per share exclude acquisition integration expenses of $0.9 million ($0.6 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 second quarter diluted earnings per share.




                                     Guidance             Guidance

                                     FY 2011              2Q FY 2011



Total Sales Increase                 12% to 13% (1)       20% to 21% (1)

Comparable Store Sales Growth (2)

MW                                   +5% to +7%           +8% to +9%

K&G                                  +3% to +4%           +2% to +3%

Moores                               +2% to +3%           +6% to +7%

Gross Profit Margin                  43.05% to 43.25% (3) 46.65% to 46.80% (3)

S G & A (as % of Sales)              36.00% to 36.20% (4) 33.65% to 33.80% (4)

Effective Tax Rate                   35.7%                35.9%

Weighted Average Shares Outstanding
(millions)                           52.0                 51.8

GAAP EPS                             $2.00 to $2.08       $1.01 to $1.04

Adjusted EPS                         $2.04 to $2.12 (4)   $1.02 to $1.05 (4)

Foreign Exchange Conversion (avg.)

US Dollar to GBP                     1.60                 1.59

US Dollar to Canadian Dollar         1.03                 1.03








Footnotes to Guidance:

1. Includes US$224 million for full year FY 2011 and US$63 million for 2Q
   FY2011 of sales from acquired operations of Dimensions and Alexandra.

2. Includes an assumed U.S. comparable store increase in tuxedo rental revenues
   of 7% to 8% for the full year FY 2011 and a 6% to 7% increase in 2Q FY 2011.

3. Occupancy costs are expected to be flat for full year FY 2011 and decrease
   low single digit for 2Q FY 2011.

4. Excludes acquisition integration costs.





CONFERENCE CALL AND WEBCAST INFORMATION

At 5:00 p.m. Eastern time on Wednesday, June 8, 2011, Company management will host a conference call and real time webcast to review the first quarter of fiscal 2011 and its outlook for the second quarter and full year of fiscal 2011.    

To access the conference call, dial 480-629-9819.  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 June 15, 2011 by calling 303-590-3030 and entering the access code of 4444587#, or a webcast archive will be available free on the website for approximately 90 days.


STORE INFORMATION

                         April 30, 2011    May 1, 2010       January 29, 2011



                         Number    Sq. Ft. Number    Sq. Ft. Number    Sq. Ft.

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



Men's Wearhouse          587       3,340.0 582       3,292.7 585       3,319.0



Men's Wearhouse and Tux  382       528.4   447       614.1   388       535.7



Moores, Clothing for Men 117       737.4   117       735.5   117       737.8



K&G (a)                  101       2,392.4 106       2,465.6 102       2,394.1



Total                    1,187     6,998.2 1,252     7,107.9 1,192     6,986.6








(a) 91, 95 and 91 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 1,187 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 29, 2011.

For additional information on Men's Wearhouse, please visit the company's website at www.menswearhouse.com.  The website for K&G is www.kgstores.com.  The website for Moores is www.mooresclothing.com.  The website for Dimensions is www.dimensions.co.uk, the website for Alexandra is www.alexandra.co.uk and the website for TwinHill is www.twinhill.com.  

Contacts:

Neill Davis, Men's Wearhouse
(281) 776-7000
Ken Dennard, DRG&L
(713) 529-6600


THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

In thousands, except per share data

(Unaudited)

FOR THE THREE MONTHS ENDED

April 30, 2011 AND May 1, 2010

(In thousands, except per share data)



               Three Months Ended                     Variance

                         % of               % of                         Basis

               2011      Sales    2010      Sales     Dollar   %         Points



Net sales:

Retail
clothing
product        $ 410,261 70.69%   $ 364,690 77.03%    $ 45,571 12.50%    (6.34)

Tuxedo rental
services       73,141    12.60%   72,154    15.24%    987      1.37%     (2.64)

Alteration and
other services 37,309    6.43%    32,941    6.96%     4,368    13.26%    (0.53)

Total retail
sales          520,711   89.72%   469,785   99.22%    50,926   10.84%    (9.50)

Corporate
apparel
clothing
product sales  59,673    10.28%   3,681     0.78%     55,992   1,521.11% 9.50

Total net
sales          580,384   100.00%  473,466   100.00%   106,918  22.58%    0.00



Total cost of
sales          333,751   57.51%   272,463   57.55%    61,288   22.49%    (0.04)



Gross margin
(a):

Retail
clothing
product        222,888   54.33%   200,100   54.87%    22,788   11.39%    (0.54)

Tuxedo rental
services       63,334    86.59%   60,828    84.30%    2,506    4.12%     2.29

Alteration and
other services 11,008    29.50%   8,877     26.95%    2,131    24.01%    2.56

Occupancy
costs          (67,171)  (12.90%) (69,691)  (14.83%)  2,520    3.62%     1.93

Total retail
gross margin   230,059   44.18%   200,114   42.60%    29,945   14.96%    1.58

Corporate
apparel
clothing
product margin 16,574    27.77%   889       24.15%    15,685   1,764.34% 3.62

Total gross
margin         246,633   42.49%   201,003   42.45%    45,630   22.70%    0.04



Selling,
general and
administrative
expenses       202,996   34.98%   179,650   37.94%    23,346   13.00%    (2.97)



Operating
income         43,637    7.52%    21,353    4.51%     22,284   104.36%   3.01



Net interest   (268)     (0.05%)  (225)     (0.05%)   (43)     (19.11%)  0.00

Earnings
before income
taxes          43,369    7.47%    21,128    4.46%     22,241   105.27%   3.01



Provision for
income taxes   16,177    2.79%    7,566     1.60%     8,611    113.81%   1.19



Net earnings
including
noncontrolling
interest       27,192    4.69%    13,562    2.86%     13,630   100.50%   1.82



Net loss
attributable
to
noncontrolling
interest       233       0.04%    -         0.00%     233      100.00%   0.04



Net earnings
attributable
to common
shareholders   $ 27,425  4.73%    $ 13,562  2.86%     $ 13,863 102.22%   1.86



Net earnings
per diluted
common share
attributable
to common
shareholders   $ 0.52             $ 0.26



Weighted
average
diluted common
shares
outstanding:   52,197             52,628



(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)

                                                  April 30,    May 1,

                                                  2011         2010



ASSETS

Current assets:

 Cash and cash equivalents                        $ 145,657    $ 219,562

 Accounts receivable, net                         72,004       24,640

 Inventories                                      521,082      438,671

 Other current assets                             67,911       67,510

 Total current assets                             806,654      750,383



Property and equipment, net                       329,592      336,771

Tuxedo rental product, net                        95,180       101,731

Goodwill                                          91,021       60,780

Intangible assets, net                            38,343       3,225

Other assets                                      7,642        13,465



 Total assets                                     $ 1,368,432  $ 1,266,355



LIABILITIES AND EQUITY

Current liabilities:

 Accounts payable                                 $ 153,144    $ 99,720

 Accrued expenses and other current liabilities   170,847      136,183

 Income taxes payable                             597          2,826

 Current maturities of long-term debt             -            45,780

 Total current liabilities                        324,588      284,509

Deferred taxes and other liabilities              70,736       62,741



 Total liabilities                                395,324      347,250



Equity:

 Preferred stock                                  -            -

 Common stock                                     714          707

 Capital in excess of par                         343,846      329,030

 Retained earnings                                1,024,168    964,834

 Accumulated other comprehensive income           52,793       37,304

 Treasury stock, at cost                          (461,760)    (412,770)



 Total equity attributable to common shareholders 959,761      919,105



 Noncontrolling interest                          13,347       -



 Total equity                                     973,108      919,105



 Total liabilities and equity                     $ 1,368,432  $ 1,266,355








THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

FOR THE THREE MONTHS ENDED

April 30, 2011 AND May 1, 2010

(In thousands)



                                                     Three Months Ended

                                                     2011       2010



CASH FLOWS FROM OPERATING ACTIVITIES:



 Net earnings including noncontrolling interest      $ 27,192   $ 13,562

 Non-cash adjustments to net earnings:

 Depreciation and amortization                       18,652     18,690

 Tuxedo rental product amortization                  5,546      6,978

 Other                                               9,823      9,312

 Changes in assets and liabilities                   17,821     732



 Net cash provided by operating activities           79,034     49,274



CASH FLOWS FROM INVESTING ACTIVITIES:

 Capital expenditures                                (14,284)   (11,099)

 Proceeds from sales of property and equipment       22         -



 Net cash used in investing activities               (14,262)   (11,099)



CASH FLOWS FROM FINANCING ACTIVITIES:

 Proceeds from issuance of common stock              1,539      783

 Cash dividends paid                                 (6,409)    (4,756)

 Tax payments related to vested deferred stock units (2,955)    (2,656)

 Excess tax benefits from share-based plans          691        763

 Purchase of treasury stock                          (48,999)   (144)



 Net cash used in financing activities               (56,133)   (6,010)



 Effect of exchange rate changes                     647        1,379



INCREASE IN CASH AND CASH EQUIVALENTS                9,286      33,544



 Balance at beginning of period                      136,371    186,018

 Balance at end of period                            $ 145,657  $ 219,562







SOURCE The Men's Wearhouse