Men’s Wearhouse Reports Fiscal 2014 Results

Brands

/

3.11.2015

MARCH 11, 2015

– Legacy business continued strong performance

– Integration synergy run-rate ahead of schedule

– Company increases fiscal year 2017 EPS guidance to include K&G

– Conference call scheduled for Thursday, March 12th at 9:00 a.m. Eastern time

FREMONT, Calif., March 11, 2015 /PRNewswire/ — The Men’s Wearhouse (NYSE: MW) today announced consolidated financial results for the fiscal fourth quarter and year ended January 31, 2015.

GAAP loss per share for fiscal fourth quarter 2014 was $0.75 and adjusted loss per share was $0.03 excluding non-operating items(1).

GAAP loss per share for fiscal year 2014 was $0.01 and adjusted EPS was $2.58 excluding non-operating items(1).  Results for Jos. A. Bank are included in our financial statements beginning June 18, 2014, the date of the closing of the acquisition.

Doug Ewert, Men’s Wearhouse chief executive officer, commented, “We continue to be pleased with the robust earnings performance of our legacy brands.  Fueling this performance in the fourth quarter are comparable sales increases of 6.8% at Men’s Wearhouse, 8.6% at Moores and 6.8% at K&G.  And while Jos. A. Bank’s comparable sales were negative 6.6%, they were above our expectations.”

Ewert added, “We are extremely proud of the work done to date to incorporate Jos. A. Bank.  We have made significant progress on integrating Jos. A. Bank into the infrastructure of Men’s Wearhouse and have developed a robust process around synergy identification and realization.  In the nine months since the acquisition, Jos. A. Bank has transitioned many of the back office functions, began store training programs, began the work to instill its employees with the Men’s Wearhouse culture, and launched tuxedo rental in all its Jos. A. Bank locations.  All of this progress was made while exceeding our initial synergy run-rate target of $15 million as we ended the year with run-rate synergies of $35 million.

“Fiscal year 2015 will be the year of strategic transition for Jos. A. Bank as we work on unlocking customer facing opportunities.  Much of this work lies in systems conversions which will be completed in the second half of 2015.  As such, we are looking forward to the growth in sales and gross margins that we anticipate achieving in late 2015 and into 2016.

“We continue to be confident in our 2017 EPS guidance which has now been increased to include K&G. We expect profits to accelerate in 2016 with rebounding sales after three consecutive years of negative comps at Jos. A. Bank, realized cost synergies and modest growth in the legacy business. With the stable platform our legacy brands provide, we are able to focus on this transitional year for Jos. A. Bank as we complete the transition and integration of all the key areas during the year,” concluded Ewert.

FOURTH QUARTER AND FISCAL YEAR SALES REVIEW

The tables that follow are a summary of net sales for fiscal 2014 fourth quarter and full year ended January 31, 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 full periods, not a comparison of the acquisition period since June 18, 2014. Comparable sales exclude the net sales of a store for any month of one period if the store was not owned or open throughout the same month of the prior period and include e-commerce net sales.

 

Fourth Quarter Net Sales Summary – Fiscal 2014

Net Sales

Comparable Sales Change

Net Sales Change

Current Quarter

Current Quarter

Prior Year Quarter

Total Retail Segment

74.1%

$368.7

$865.9

       Men’s Wearhouse

8.4%

$29.3

$379.4

6.8%

(2.5%)

       Jos. A. Bank

        n/a

$337.0

$337.0

(6.6%)

1.8%

       Moores

0.8%

$0.5

$59.0

8.6%

(2.3%)

       K&G

1.6%

$1.3

$82.6

6.8%

(7.7%)

       MW Cleaners

8.0%

$0.6

$7.9

Corporate Apparel Segment

(1.4%)

($0.9)

$62.4

Total Company

65.6%

$367.8

$928.4

Full Year Net Sales Summary – Fiscal 2014

Net Sales

Comparable Sales Change

Net Sales Change

Current Year

Current Year

Prior Year

Total Retail Segment

34.5%

$768.8

$2,995.2

       Men’s Wearhouse

5.0%

$80.6

$1,686.9

3.9%

0.7%

       Jos. A. Bank

n/a

$684.0

$684.0

(2.5%)

(3.7%)

       Moores

1.6%

$4.0

$258.3

8.6%

(4.1%)

       K&G

(0.6%)

($2.2)

$334.0

3.7%

(5.5%)

       MW Cleaners

7.8%

$2.3

$31.9

Corporate Apparel Segment

4.3%

$10.6

$257.4

Total Company

31.5%

$779.3

$3,252.5

 

Net sales at our largest brand, Men’s Wearhouse, which represented 41% of total fourth quarter sales, were up 8.4% from last year’s fourth quarter and comparable sales increased 6.8%.  On a comparable basis, increases in clothing product average unit retails (or the net selling price per unit) and average transactions per store more than offset a decrease in units sold per transaction. The higher margin tuxedo rental revenues comparable sales increased 5.7% in the fourth quarter of 2014.

Jos. A. Bank was 36% of the Company’s total fourth quarter sales.  Comparable sales for the fourth quarter decreased 6.6% with decreases in clothing product average unit retails and average transactions per store offset somewhat by an increase in units sold per transaction.  Moores, our Canadian retail brand, was 6% of the total fourth quarter sales and had a comparable sales increase of 8.6% due to an increase in clothing product average unit retails that more than offset a decrease in average transactions per store.  However, net sales for Moores only increased 0.8% due to an unfavorable change in the currency translation rate.  K&G was 9% of the Company’s total fourth quarter sales with a comparable sales increase of 6.8% due to an increase in average transactions per store which more than offset a decrease in average unit retails.  The Corporate Apparel segment, which represented 7% of total fourth quarter sales, had a sales decrease of 1.4%.

FISCAL FOURTH QUARTER CONSOLIDATED RESULTS REVIEW

Sales
Total net sales increased 65.6%, or $367.8 million, to $928.4 million from $560.6 million.

Retail segment sales for the quarter increased by 74.1%, or $368.7 million, due to $337.0 million in sales at Jos. A. Bank and an increase in comparable sales at all other retail brands.

Corporate apparel sales decreased by 1.4%, or $0.9 million.

Gross Margin
Total GAAP gross margin was $347.5 million.  Adjusted consolidated gross margin of $363.3 million increased $154.5 million or 74.0% compared to the prior year quarter.  The total adjusted gross margin rate increased 188 basis points primarily due to increased margin rates in all of our legacy retail brands.

Adjusted retail segment gross margin increased $155.5 million, or 81.6%.  The adjusted retail segment gross margin rate increased 164 basis points including Jos. A. Bank and increased 158 basis points excluding Jos. A. Bank.

Corporate apparel gross margin decreased $1.0 million, or 5.5%, and decreased 122 basis points.

Advertising
Advertising expenses increased $26.7 million to $59.2 million, an increase of 82.1%, or 58 basis points, compared to the prior quarter primarily due to Jos. A. Bank advertising expenses.

SG&A
GAAP SG&A expenses increased $104.2 million, including the $42.6 million arbitration settlement, to $330.3 million, an increase of 46.1% but a decrease of 475 basis points.  Adjusted SG&A expenses were 687 basis points favorable to the prior year with the leverage of Jos. A. Bank SG&A primarily achieved from the higher mix of retail clothing sales in the fourth quarter.  Additionally, all legacy retail brands had favorable basis point decreases.  On an absolute dollar basis, adjusted SG&A increased by $72.1 million, or 34.8%, primarily due to the addition of Jos. A. Bank SG&A and payroll related costs at Men’s Wearhouse.

Operating Income/Loss
GAAP operating loss was $42.0 million compared to GAAP operating loss of $49.7 million last year.  Adjusted operating income was $24.9 million, an increase of $55.7 million, or 180.9%, over the prior year adjusted operating loss of $30.8 million.

Interest and Taxes
Net interest expense for the fourth quarter was $26.5 million.

The effective tax rate for the fourth quarter was 47.5%.  Excluding the impact of acquisition and integration costs, the adjusted effective tax rate was 19.4%.  The 19.4% rate is a benefit as the fourth quarter is a loss.

Net Loss
GAAP net loss was $35.9 million compared to GAAP net loss of $30.4 million last year.  GAAP loss per share was $0.75 compared to $0.64 in the prior year quarter.  Adjusted net loss was $1.3 million, or $0.03 adjusted loss per share, compared to adjusted net loss of $17.9 million, or $0.38 adjusted loss per share last year.

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

Total sales decreased 5.4% to $337.0 million from prior year fourth quarter.  Total clothing margin excluding occupancy costs decreased 165 basis points to 51.6%.

Occupancy costs increased from $35.7 million in the prior year, or 10.0% of total sales, to $37.1 million, or 11.0% of total sales in the current period primarily due to deleveraging caused by the decrease in Jos. A. Bank comparable sales and the impact of new stores.

FISCAL YEAR RESULTS REVIEW

Sales
Total net sales increased 31.5%, or $779.3 million, to $3,252.5 million, up from $2,473.2 million.

Year-to-date retail segment sales increased by 34.5%, or $768.8 million, due to $684.0 million in sales at Jos. A. Bank since the closing of the acquisition and an increase in comparable sales at all other retail brands.

Corporate apparel sales increased by 4.3%, or $10.6 million.

Gross Margin
Total GAAP gross margin was $1,358.6 million.  Adjusted consolidated gross margin of $1,401.9 million was an increase of $312.9 million, or 28.7%, compared to the prior year.  The total adjusted gross margin rate decreased 93 basis points primarily due to lower margins at Jos. A. Bank.

Adjusted retail segment gross margin increased $309.7 million, or 30.5%.  The adjusted retail segment gross margin rate decreased 137 basis points including Jos. A. Bank and increased 49 basis points excluding Jos. A. Bank.

Corporate apparel gross margin increased $3.2 million, or 4.4%, and increased 4 basis points.

Advertising
Advertising expenses increased $67.2 million to $168.3 million, an increase of 66.5% or 109 basis points, primarily due to the Jos. A. Bank advertising expenses and the brand advertising associated with the rollout of Joseph Abboud.

SG&A
GAAP SG&A expenses increased $268.3 million to $1,117.1 million, an increase of 31.6% and 3 basis points.  Adjusted SG&A expenses were 312 basis points favorable to the prior year.  On an absolute dollar basis adjusted SG&A increased by $156.6 million, or 19.1%, primarily due to the addition of Jos. A. Bank SG&A.

Operating Income
GAAP operating income was $73.2 million compared to GAAP operating income of $129.6 million last year.  Adjusted operating income was $257.6 million, an increase of $89.1 million, or 52.9%, over the prior year adjusted operating income of $168.5 million.

Interest and Taxes
Net interest expense for the year was $65.7 million.

The effective tax rate for the year was 101.8%.  Excluding the impact of non-deductible transaction costs, the adjusted effective tax rate was 34.8%.

Net Earnings/Loss
GAAP net loss was $0.4 million compared to GAAP net earnings of $83.8 million last year.  GAAP loss per share was $0.01 compared to a GAAP diluted earnings of $1.70 last year.  Adjusted net earnings were $124.8 million, or $2.58 adjusted diluted earnings per share, compared to adjusted net earnings of $109.3 million, or $2.21 adjusted diluted earnings per share last year.

BALANCE SHEET

In connection with the acquisition of Jos. A. Bank, debt at the end of the fourth quarter was approximately $1.7 billion.

Inventories increased $338.9 million to $938.3 million from $599.5 million due primarily to Jos. A. Bank and inventory related to Joseph Abboud.  The remaining increase was primarily driven by new store openings at Men’s Wearhouse.

Capital expenditures for the fiscal year 2014 were $96.4 million compared to $108.2 million in the prior year.

HISTORICAL CONSOLIDATED BASELINES OF OPERATING RESULTS

We are providing historical baselines of operating results for fiscal year 2014.  These baselines include Jos. A. Bank operations for the 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.  We plan to evaluate future results against this historical baseline.

Historical Consolidated Baseline for Fiscal Year 2014 by Quarter (1)

Q1

Q2

Q3

Q4

Fiscal Year

2014 Baseline

Net sales:

     Retail clothing product

$ 632,136

$ 646,189

$  634,447

$  767,264

$  2,680,036

     Tuxedo rental services

106,147

165,130

132,690

47,417

451,384

     Alteration and other services

52,788

51,953

52,025

51,258

208,024

Total retail sales

791,071

863,272

819,162

865,939

3,339,444

Corporate apparel clothing product sales

56,825

66,656

71,475

62,420

257,376

Total net sales

847,896

929,928

890,637

928,359

3,596,820

Gross margin:

     Retail clothing product

357,691

358,961

358,566

406,502

1,481,720

     Tuxedo rental services

89,083

137,234

109,704

37,522

373,543

     Alteration and other services

15,983

14,773

14,852

14,825

60,433

     Occupancy costs

(108,405)

(113,651)

(115,536)

(112,816)

(450,408)

Total retail gross margin

354,352

397,317

367,586

346,033

1,465,288

Corporate apparel clothing product

17,078

20,024

22,388

17,228

76,718

Total gross margin

371,430

417,341

389,974

363,261

1,542,006

Advertising expense

41,987

47,130

42,075

59,194

190,386

Selling, general and administrative expenses

262,099

267,728

262,214

279,173

1,071,215

Operating income

$   67,344

$ 102,483

$    85,685

$    24,894

$     280,405

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

 

 

 

FINANCIAL GUIDANCE

The Company has increased its 2017 guidance to include K&G operations and now expects adjusted EPS to be in the range of $5.75 to $6.25.

For fiscal year 2015, the Company expects adjusted diluted earnings per share in a range of $2.70 to $2.90, an increase of 13.9% to 22.4% over the prior year historical baseline diluted earnings per share of $2.37.  The historical baseline diluted earnings per share is calculated using adjusted weighted average diluted shares of 48.2 million, adjusted tax rate of 34.8% and the expected fiscal year 2015 net interest expense of approximately $105 million.

The Company expects Jos. A. Bank comparable sales to continue to be down throughout the first half of the year with improvement in the second half and gross margin to increase for the year but follow a similar pattern to sales.

CALL AND WEBCAST INFORMATION

At 9:00 a.m. Eastern time on Thursday, March 12, 2015, management will host a conference call and real time webcast to discuss fiscal 2014 fourth quarter and full year 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 March 19, 2015 by calling 201-612-7415 and entering the access code of 13602155#, or a webcast archive will be available free on the website for approximately 90 days.

STORE INFORMATION

January 31, 2015

February 1, 2014

Number of
Stores

Sq. Ft.

(000’s)

Number of
Stores

Sq. Ft.

(000’s)

Men’s Wearhouse

698

3,955.7

661

3,774.3

Jos. A. Bank (a)

636

2,922.2

Men’s Wearhouse and Tux

210

291.2

248

344.0

Moores, Clothing for Men

123

779.0

121

769.3

K&G (b)

91

2,164.4

94

2,228.8

Total

1,758

10,112.5

1,124

7,116.4

(a)

Excludes 15 franchise stores.

(b)

83 and 85 stores, respectively, offering women’s apparel.

Founded in 1973, Men’s Wearhouse is one of North America’s largest specialty retailers of men’s apparel with 1,758 stores.  The Men’s Wearhouse, Jos. A. Bank, Moores and K&G stores carry a full selection of suits, sport coats, furnishings and accessories in exclusive and non-exclusive merchandise brands and Men’s Wearhouse and Tux stores carry a limited selection.  Most K&G stores carry a full selection of women’s apparel.  Tuxedo rentals are available in the Men’s Wearhouse, Jos. A. Bank, Moores and Men’s Wearhouse and Tux stores.  Additionally, Men’s Wearhouse operates a global corporate apparel and workwear group consisting of Twin Hill in the United States and Dimensions, Alexandra and Yaffy in the United Kingdom.

This press release contains forward-looking information.  The forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are not guarantees of future performance and a variety of factors could cause actual results to differ materially from the anticipated or expected results expressed in or suggested by these forward-looking statements.  These forward-looking statements may be significantly impacted by various factors, including, but not limited to: actions by governmental entities, domestic and international economic activity and inflation, success, or lack thereof, in executing our internal operating plans and new store and new market expansion plans, including successful integration of acquisitions, including Jos. A. Bank, performance issues with key suppliers, disruption in buying trends due to homeland security concerns, severe weather, foreign currency fluctuations, government export and import policies, aggressive advertising or marketing activities of competitors, and legal proceedings. Future results will also be dependent upon our ability to continue to identify and complete successful expansions and penetrations into existing and new markets and our ability to integrate such expansions with our existing operations.

The forward-looking statements in this press release speak only as of the date hereof. Except for the ongoing obligations of Men’s Wearhouse to disclose material information under the federal securities laws, Men’s Wearhouse undertakes no obligation to revise or update publicly any forward-looking statement, except as required by law.  Other factors that may impact the forward-looking statements are described in Men’s Wearhouse’s annual report on Form 10-K for the fiscal year ended February 1, 2014 and quarterly reports on Form 10-Q.  For additional information on Men’s Wearhouse, please visit the Company’s websites at www.menswearhouse.comwww.josbank.comwww.josephabboud.comwww.mooresclothing.comwww.kgstores.comwww.twinhill.comwww.dimensions.co.uk and www.alexandra.co.uk.

Contact:
Investor Relations
(281) 776-7575
[email protected]

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

Ken Dennard
Dennard ▪ Lascar Associates

(1) Adjusted information is non-GAAP financial information provided to enhance the user’s overall understanding of the Company’s current financial performance. Reconciliations of adjusted financial information to GAAP results are included in the tables at the end of this release.

(2) Based on adjusted information provided to enhance the user’s overall understanding of Jos. A. Bank’s current financial performance and includes reclassifications to conform Jos. A. Bank’s historical results with the Company’s current external reporting presentation. A reconciliation of the Jos. A. Bank selected metrics is included in the table at the end of this release.

 

THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS

(Unaudited)

For the Three Months Ended January 31, 2015 and February 1, 2014

(In thousands, except per share data)

Three Months Ended

Variance

% of

% of

Basis

2014

Sales

2013

Sales

Dollar

%

Points

Net sales:

          Retail clothing product

$ 767,264

82.65%

$419,130

74.77%

$348,134

83.06%

7.88

          Tuxedo rental services

47,417

5.11%

43,504

7.76%

3,913

8.99%

(2.65)

          Alteration and other services   

51,258

5.52%

34,642

6.18%

16,616

47.96%

(0.66)

               Total retail sales

865,939

93.28%

497,276

88.71%

368,663

74.14%

4.56

               Corporate apparel clothing product

62,420

6.72%

63,276

11.29%

(856)

(1.35%)

(4.56)

                    Total net sales

928,359

100.00%

560,552

100.00%

367,807

65.62%

0.00

                   Total cost of sales

580,856

62.57%

351,758

62.75%

229,098

65.13%

(0.18)

Gross margin (a):

        Retail clothing product

390,854

50.94%

221,676

52.89%

169,178

76.32%

(1.95)

        Tuxedo rental services

37,522

79.13%

35,585

81.80%

1,937

5.44%

(2.67)

        Alteration and other services

14,825

28.92%

6,669

19.25%

8,156

122.30%

9.67

        Occupancy costs

(112,926)

(13.04%)

(73,375)

(14.76%)

(39,551)

(53.90%)

1.71

               Total retail gross margin

330,275

38.14%

190,555

38.32%

139,720

73.32%

(0.18)

               Corporate apparel clothing product

17,228

27.60%

18,239

28.82%

(1,011)

(5.54%)

(1.22)

                   Total gross margin

347,503

37.43%

208,794

37.25%

138,709

66.43%

0.18

Advertising expenses

59,194

6.38%

32,499

5.80%

26,695

82.14%

0.58

Selling, general and administrative expenses

330,259

35.57%

226,013

40.32%

104,246

46.12%

(4.75)

Operating loss

(41,950)

(4.52%)

(49,718)

(8.87%)

7,768

(15.62%)

4.35

Net interest

(26,522)

(2.86%)

(1,048)

(0.19%)

(25,474)

2430.73%

(2.67)

Loss before income taxes

(68,472)

(7.38%)

(50,766)

(9.06%)

(17,706)

34.88%

1.68

Benefit for income taxes

(32,550)

(3.51%)

(20,571)

(3.67%)

(11,979)

58.23%

0.16

Net loss including non-controlling interest

(35,922)

(3.87%)

(30,195)

(5.39%)

(5,727)

18.97%

1.52

Net earnings attributable to non-controlling interest

0.00%

(252)

(0.04%)

252

NM

0.04

Net loss attributable to common shareholders

$(35,922)

(3.87%)

$(30,447)

(5.43%)

$  (5,475)

17.98%

1.56

Net loss per diluted common share attributable to common shareholders

$    (0.75)

$    (0.64)

Weighted-average diluted common shares outstanding:

48,043

47,411

(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 (LOSS) EARNINGS

(Unaudited)

For the Twelve Months Ended January 31, 2015 and February 1, 2014

(In thousands, except per share data)

Twelve Months Ended

Variance

% of

% of

Basis

2014

Sales

2013

Sales

Dollar

%

Points

Net sales:

          Retail clothing product

$ 2,365,463

72.73%

$1,667,535

67.42%

$697,928

41.85%

5.30

          Tuxedo rental services

442,866

13.62%

411,864

16.65%

31,002

7.53%

(3.04)

          Alteration and other services   

186,843

5.74%

147,023

5.94%

39,820

27.08%

(0.20)

               Total retail sales

2,995,172

92.09%

2,226,422

90.02%

768,750

34.53%

2.07

               Corporate apparel clothing product

257,376

7.91%

246,811

9.98%

10,565

4.28%

(2.07)

                    Total net sales

3,252,548

100.00%

2,473,233

100.00%

779,315

31.51%

0.00

                    Total cost of sales

1,893,934

58.23%

1,384,223

55.97%

509,711

36.82%

2.26

Gross margin (a):

        Retail clothing product

1,266,913

53.56%

925,578

55.51%

341,335

36.88%

(1.95)

        Tuxedo rental services

357,888

80.81%

347,556

84.39%

10,332

2.97%

(3.57)

        Alteration and other services

52,616

28.16%

33,294

22.65%

19,322

58.03%

5.52

        Occupancy costs

(395,521)

(13.21%)

(290,896)

(13.07%)

(104,625)

(35.97%)

(0.14)

               Total retail gross margin

1,281,896

42.80%

1,015,532

45.61%

266,364

26.23%

(2.81)

               Corporate apparel clothing product

76,718

29.81%

73,478

29.77%

3,240

4.41%

0.04

                   Total gross margin

1,358,614

41.77%

1,089,010

44.03%

269,604

24.76%

(2.26)

Advertising expenses

168,266

5.17%

101,083

4.09%

67,183

66.46%

1.09

Selling, general and administrative expenses

1,117,138

34.35%

848,798

34.32%

268,340

31.61%

0.03

Goodwill impairment charge

0.00%

9,501

0.38%

(9,501)

NM

(0.38)

Operating income

73,210

2.25%

129,628

5.24%

(56,418)

(43.52%)

(2.99)

Net interest

(65,676)

(2.02%)

(2,820)

(0.11%)

(62,856)

2228.94%

(1.91)

Loss on extinguishment of debt

(2,158)

(0.07%)

0.00%

(2,158)

NM

(0.07)

Earnings before income taxes

5,376

0.17%

126,808

5.13%

(121,432)

(95.76%)

(4.96)

Provision for income taxes

5,471

0.17%

42,591

1.72%

(37,120)

(87.15%)

(1.55)

Net (loss) earnings including non-controlling interest

(95)

(0.00%)

84,217

3.41%

(84,312)

(100.11%)

(3.41)

Net earnings attributable to non-controlling interest

(292)

(0.01%)

(426)

(0.02%)

134

31.46%

0.01

Net (loss) earnings attributable to common shareholders

$        (387)

(0.01%)

$    83,791

3.39%

$(84,178)

(100.46%)

(3.40)

Net (loss) earnings per diluted common share attributable to common shareholders

$       (0.01)

$        1.70

Weighted-average diluted common shares outstanding:

47,899

49,162

(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)

January 31,

February 1,

2015

2014

ASSETS

Current assets:

Cash and cash equivalents

$            62,261

$             59,252

Accounts receivable, net

73,266

63,153

Inventories

938,336

599,486

Other current assets

175,574

93,206

   Total current assets

1,249,437

815,097

Property and equipment, net

566,074

408,162

Tuxedo rental product, net

132,672

142,816

Goodwill

887,936

126,003

Intangible assets, net

668,259

58,027

Other assets

42,380

5,125

   Total assets

$       3,546,758

$        1,555,230

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$          209,867

$           148,762

Accrued expenses and other current liabilities

268,935

175,797

Income taxes payable

1,609

730

Current maturities of long-term debt

11,000

10,000

   Total current liabilities

491,411

335,289

Long-term debt

1,676,232

87,500

Deferred taxes and other liabilities

409,326

109,292

   Total liabilities

2,576,969

532,081

Equity:

Preferred stock

Common stock

482

476

Capital in excess of par

440,907

412,043

Retained earnings

537,263

572,712

Accumulated other comprehensive (loss) income

(5,671)

27,311

Treasury stock, at cost

(3,192)

(3,407)

   Total equity attributable to common shareholders

969,789

1,009,135

Non-controlling interest

14,014

   Total equity

969,789

1,023,149

    Total liabilities and equity

$       3,546,758

$        1,555,230

 

 

THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Twelve Months Ended January 31, 2015 and February 1, 2014

(In thousands)

Twelve Months Ended

2014

2013

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) earnings including non-controlling interest

$                  (95)

$          84,217

Non-cash adjustments to net (loss) earnings:

   Depreciation and amortization

112,659

88,749

   Tuxedo rental product amortization

34,424

32,266

Deferred financing costs amortization

4,903

523

Discount on long-term debt amortization

982

Loss on extinguishment of debt

2,158

Loss on disposition of assets

12,328

158

Goodwill impairment charge

9,501

   Other

4,175

22,347

Changes in operating assets and liabilities

(76,770)

(48,831)

        Net cash provided by operating activities

94,764

188,930

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(96,420)

(108,200)

Acquisition of business, net of cash

(1,491,393)

(94,906)

Proceeds from sales of property and equipment

160

4,127

        Net cash used in investing activities

(1,587,653)

(198,979)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from new term loan

1,089,000

Payments on new term loan

(2,750)

Proceeds from asset-based revolving credit facility

348,000

Payments on asset-based revolving credit facility

(348,000)

Proceeds from bond issuance

600,000

Deferred financing costs

(51,080)

(1,776)

Proceeds from previous term loan

100,000

Payments on previous term loan

(97,500)

(2,500)

Cash dividends paid

(34,785)

(35,549)

Purchase of non-controlling interest

(6,651)

Proceeds from issuance of common stock

8,082

10,739

Tax payments related to vested deferred stock units

(6,940)

(3,865)

Excess tax benefits from share-based plans

3,766

2,145

Repurchases of common stock

(251)

(152,129)

        Net cash provided by (used in) financing activities

1,500,891

(82,935)

Effect of exchange rate changes

(4,993)

(3,827)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

3,009

(96,811)

Balance at beginning of period

59,252

156,063

Balance at end of period

$           62,261

$          59,252

 

 

THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES

UNAUDITED NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts)

Use of Non-GAAP Financial Measures

We have provided adjusted information in addition to providing financial results in accordance with GAAP.  This non-GAAP financial information is provided to enhance the user’s overall understanding of the Company’s current financial performance.  Specifically, we believe the adjusted results provide useful information by excluding items we believe are not indicative of our core operating results as well as certain items related to the acquisition of Jos. A. Bank.  The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. 

We have provided non-GAAP financial measures including adjusted statements of earnings information, historical consolidated baselines of operating results for fiscal year 2014 and Jos. A. Bank selected metrics.

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 Adjusted – Three Months Ended January 31, 2015

GAAP

Acquisition

Purchase

Other (2)

Adjusted

Results

& Integration (1)

Acctg Allocation

Results

Net sales

$  928,359

$           –

$           –

$            –

$  928,359

Total retail gross margin

330,275

15,758

346,033

Corporate apparel clothing product

17,228

17,228

Total gross margin

347,503

15,758

363,261

Advertising expense

59,194

59,194

Selling, general and administrative expenses

330,259

(6,922)

(2,469)

(41,695)

279,173

Operating (loss) income

(41,950)

6,922

18,227

41,695

24,894

Net interest

(26,522)

(26,522)

Loss on extinguishment of debt

(Benefit) provision for income taxes

(32,550)

14,007

3,529

14,699

(315)

Net (loss) earnings including non-controlling interest

(35,922)

(7,085)

14,698

26,996

(1,313)

Net earnings attributable to non-controlling interest

Net (loss) earnings attributable to common shareholders

$   (35,922)

$ (7,085)

$ 14,698

$  26,996

$     (1,313)

Net (loss) earnings per diluted common share attributable to common shareholders

$       (0.75)

$   (0.15)

$     0.30

$      0.56

$       (0.03)

(1) Acquisition & integration relates to Jos. A. Bank and Joseph Abboud.

(2) Other relates to a Joseph Abboud licensee arbitration settlement, K&G strategic alternative review, costs related to store closure and cost reduction initiatives offset by a settlement with Visa/Mastercard.

GAAP to Adjusted – Three Months Ended February 1, 2014

GAAP

Acquisition

Purchase

Other (2)

Adjusted

Results

& Integration (1)

Acctg Allocation

Results

Net sales

$  560,552

$           –

$           –

$            –

$  560,552

Total retail gross margin

190,555

190,555

Corporate apparel clothing product

18,239

18,239

Total gross margin

208,794

208,794

Advertising expense

32,499

32,499

Selling, general and administrative expenses

226,013

(2,316)

(16,643)

207,054

Operating (loss) income

(49,718)

2,316

16,643

(30,759)

Net interest

(1,048)

(1,048)

Loss on extinguishment of debt

(Benefit) provision for income taxes

(20,571)

(1,066)

7,433

(14,204)

Net (loss) earnings including non-controlling interest

(30,195)

3,382

9,211

(17,602)

Net earnings attributable to non-controlling interest

(252)

(252)

Net (loss) earnings attributable to common shareholders

$   (30,447)

$   3,382

$           –

$    9,211

$   (17,854)

Net (loss) earnings per diluted common share attributable to common shareholders

$       (0.64)

$     0.07

$         –

$      0.19

$       (0.38)

(1) Acquisition & integration relates to Joseph Abboud.

(2) Other includes costs associated with various strategic projects, the shut down of K&G e-commerce and separation costs with executives.

 

 

GAAP to Adjusted – Twelve Months Ended January 31, 2015

GAAP

Acquisition

Purchase

Other (2)

Adjusted

Results

& Integration (1)

Acctg Allocation

Results

Net sales

$  3,252,548

$           –

$           –

$           –

$  3,252,548

Total retail gross margin

1,281,896

10,552

32,747

1,325,194

Corporate apparel clothing product

76,718

76,718

Total gross margin

1,358,614

10,552

32,747

1,401,912

Advertising expense

168,266

168,266

Selling, general and administrative expenses

1,117,138

(88,165)

(6,107)

(46,836)

976,029

Operating income

73,210

98,717

38,854

46,836

257,617

Net interest

(65,676)

(65,676)

Loss on extinguishment of debt

(2,158)

2,158

Provision for income taxes

5,471

31,536

13,533

16,313

66,853

Net (loss) earnings including non-controlling interest

(95)

69,339

25,321

30,523

125,088

Net earnings attributable to non-controlling interest

(292)

(292)

Net (loss) earnings attributable to common shareholders

$          (387)

$  69,339

$ 25,321

$  30,523

$     124,796

Net (loss) earnings per diluted common share attributable to common shareholders

$         (0.01)

$      1.44

$     0.53

$      0.63

$           2.58

(1) Acquisition & integration relates to Jos. A. Bank and Joseph Abboud.

(2) Other relates to a Joseph Abboud licensee arbitration settlement, K&G strategic alternative review, costs related to store closure and cost reduction initiatives offset by a settlement with Visa/Mastercard.

GAAP to Adjusted – Twelve Months Ended February 1, 2014

GAAP

Acquisition

Purchase

Other (2)

Adjusted

Results

& Integration (1)

Acctg Allocation

Results

Net sales

$  2,473,233

$           –

$           –

$           –

$  2,473,233

Total retail gross margin

1,015,532

1,015,532

Corporate apparel clothing product

73,478

73,478

Total gross margin

1,089,010

1,089,010

Advertising expense

101,083

101,083

Selling, general and administrative expenses

858,299

(6,746)

(32,101)

819,452

Operating income

129,628

6,746

32,101

168,475

Net interest

(2,820)

(2,820)

Loss on extinguishment of debt

Provision for income taxes

42,591

2,497

10,837

55,926

Net earnings including non-controlling interest

84,217

4,249

21,264

109,730

Net loss attributable to non-controlling interest

(426)

(426)

Net earnings attributable to common shareholders

$       83,791

$    4,249

$           –

$  21,264

$     109,304

Net earnings per diluted common share attributable to common shareholders

$           1.70

$      0.09

$         –

$      0.43

$           2.21

(1) Acquisition & integration relates to Joseph Abboud.

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

 

 

GAAP to Historical Baselines of Operating Results – Fiscal Year 2014 by Quarter and Full Year

Historical Consolidated Baseline First Quarter FY 2014 – Three Months Ended May 3, 2014

MW GAAP

JOSB GAAP

Purchase

Acquisition,

Historical

Results

Results (1)

Accounting

Integration &

Baseline

Net sales:

Adjustments (2)

Other (3)

      Retail clothing product 

$  433,024

$ 199,112

$          –

$             –

$ 632,136

      Tuxedo rental services 

101,663

4,484

106,147

      Alteration and other services 

38,962

13,826

52,788

 Total retail sales 

573,649

217,422

791,071

 Corporate apparel clothing product 

56,825

56,825

 Total net sales 

630,474

217,422

847,896

 Gross margin: 

      Retail clothing product 

241,547

116,135

9

357,691

      Tuxedo rental services 

86,346

2,737

89,083

      Alteration and other services 

11,240

4,743

15,983

      Occupancy costs 

(72,847)

(34,474)

(1,084)

(108,405)

 Total retail gross margin 

266,286

89,141

(1,075)

354,352

 Corporate apparel clothing product 

17,078

17,078

 Total gross margin 

283,364

89,141

(1,075)

371,430

 Advertising expense 

28,771

13,216

41,987

 Selling, general and administrative expenses 

227,312

136,630

(101,843)

262,099

 Operating income (loss) 

$    27,281

$ (60,705)

$ (1,075)

$ 101,843

$   67,344

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

 (2) Adjustments to Jos. A. Bank’s 10-Q reported balances for change from FIFO to average weighted 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 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: 

Adjustments (2)

 Other (3) 

      Retail clothing product 

$  530,728

$ 115,461

$          –

$             –

$ 646,189

      Tuxedo 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

      Tuxedo 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 (loss) 

$    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 average weighted 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 Third Quarter FY 2014 – Three Months Ended November 1, 2014

GAAP

Purchase

Acquisition,

Historical

Results (1)

Accounting

Integration &

Baseline

Net sales:

Adjustments (2)

Other (3)

      Retail clothing product 

$ 634,447

$           –

$           –

$ 634,447

      Tuxedo rental services 

132,690

132,690

      Alteration and other services 

52,025

52,025

 Total retail sales 

819,162

819,162

 Corporate apparel clothing product 

71,475

71,475

 Total net sales 

890,637

890,637

 Gross margin: 

      Retail clothing product 

347,138

11,428

358,566

      Tuxedo rental services 

99,152

10,552

109,704

      Alteration and other services 

14,852

14,852

      Occupancy costs 

(114,325)

(1,211)

(115,536)

 Total retail gross margin 

346,817

10,217

10,552

367,586

 Corporate apparel clothing product 

22,388

22,388

 Total gross margin 

369,205

10,217

10,552

389,974

 Advertising expense 

42,075

42,075

 Selling, general and administrative expenses 

281,955

(2,733)

(17,008)

262,214

 Operating income 

$   45,175

$ 12,950

$ 27,560

$   85,685

(1) As filed in the 10-Q. 

(2) Adjustments to 10-Q reported balances primarily for inventory write-up elimination and elimination of tenant improvement allowance credits. 

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

 Historical Consolidated Baseline Fourth Quarter FY 2014 – Three Months Ended January 31, 2015 

 GAAP 

Purchase

 Acquisition, 

 Historical 

 Results 

Accounting

 Integration & 

 Baseline 

 Net sales: 

Adjustments (2)

 Other (3) 

      Retail clothing product 

$ 767,264

$           –

$           –

$ 767,264

      Tuxedo rental services 

47,417

47,417

      Alteration and other services 

51,258

51,258

 Total retail sales 

865,939

865,939

 Corporate apparel clothing product 

62,420

62,420

 Total net sales 

928,359

928,359

 Gross margin: 

      Retail clothing product 

390,854

15,648

406,502

      Tuxedo rental services 

37,522

37,522

      Alteration and other services 

14,825

14,825

      Occupancy costs 

(112,926)

110

(112,816)

 Total retail gross margin 

330,275

15,758

346,033

 Corporate apparel clothing product 

17,228

17,228

 Total gross margin 

347,503

15,758

363,261

 Advertising expense 

59,194

59,194

 Selling, general and administrative expenses 

330,259

(2,469)

(48,617)

279,173

 Operating (loss) income 

$ (41,950)

$ 18,227

$ 48,617

$   24,894

(1) As filed in the 10-Q. 

(2) Adjustments to 10-Q reported balances primarily for inventory write-up elimination and elimination of tenant improvement allowance credits. 

(3) Other relates primarily to a Joseph Abboud licensee arbitration settlement, acquisition and integration costs,  strategic alternative review, and SG&A reduction program costs. 

 

 

 

 Historical Consolidated Baseline Fiscal Year 2014 – Twelve Months Ended January 31, 2015 

 MW GAAP 

 JOSB Q1 GAAP 

 JOSB Results 

Purchase

 Acquisition, 

 Historical 

 Results 

 Results (1) 

 5/4 – 6/17/14 (1) 

Accounting

 Integration & 

 Baseline 

 Net sales: 

Adjustments (2)

 Other (3) 

      Retail clothing product 

$ 2,365,463

$ 199,112

$ 115,461

$           –

$             –

$ 2,680,036

      Tuxedo rental services 

442,866

4,484

4,034

451,384

      Alteration and other services 

186,843

13,826

7,355

208,024

 Total retail sales 

2,995,172

217,422

126,850

3,339,444

 Corporate apparel clothing product 

257,376

257,376

 Total net sales 

3,252,548

217,422

126,850

3,596,820

 Gross margin: 

      Retail clothing product 

1,266,913

116,135

64,038

34,634

1,481,720

      Tuxedo rental services 

357,888

2,737

2,366

10,552

373,543

      Alteration and other services 

52,616

4,743

3,074

60,433

      Occupancy costs 

(395,521)

(34,474)

(17,450)

(2,963)

(450,408)

 Total retail gross margin 

1,281,896

89,141

52,028

31,671

10,552

1,465,288

 Corporate apparel clothing product 

76,718

76,718

 Total gross margin 

1,358,614

89,141

52,028

31,671

10,552

1,542,006

 Advertising expense 

168,266

13,216

8,904

190,386

 Selling, general and administrative expenses 

1,117,138

136,630

33,946

(6,107)

(210,392)

1,071,215

 Operating income (loss) 

$      73,210

$ (60,705)

$     9,178

$ 37,778

$ 220,944

$    280,405

(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 average weighted cost and elimination of tenant improvement allowance credits.

(3) Other relates primarily to a Joseph Abboud licensee arbitration settlement, acquisition and integration costs, strategic alternative review, and SG&A reduction program costs.

 

 

Jos. A. Bank Selected Metrics

Jos. A. Bank Selected Metrics – Three Months Ended February 1, 2014 and January 31, 2015

Q4 FY 2013

Adjustments (2)

Q4 FY 2013

Q4 FY 2014

Adjustments (4)

Q4 FY 2014

as Reported (1)

Selected Metrics

GAAP

Selected Metrics

$

% (3)

$

% (3)

Net sales:

     Retail clothing product

$ 336,191

$         –

$ 336,191

94.4%

$  319,800

$         –

$  319,800

94.9%

     Tuxedo and Alteration sales

19,923

19,923

5.6%

17,218

17,218

5.1%

Total retail net sales

356,114

356,114

100.0%

337,018

337,018

100.0%

Gross margin:

     Retail clothing product

177,901

1,049

178,950

53.2%

149,300

15,649

164,949

51.6%

     Tuxedo and alteration margin

8,953

8,953

44.9%

7,190

7,190

41.8%

     Occupancy costs

(33,675)

(2,043)

(35,718)

-10.0%

(37,258)

110

(37,148)

-11.0%

Total retail gross margin

153,179

(994)

152,185

42.7%

119,232

15,759

134,991

40.1%

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

$ 192,060

57.7%

$  176,895

55.8%

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

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

(3) Percent of related sales.

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

 

 

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SOURCE Men’s Wearhouse