Men's Wearhouse, Inc. (MW: Quote) said Wednesday after the markets closed that its third quarter profit rose 22% from last year, helped by higher sales and improved margins.
However, the company's quarterly earnings per share came in below analysts' expectations.
At the same time, the Houston, Texas-based men's apparel retailer cut its fourth quarter and full year outlooks, citing lower than expected retail clothing sales in November and a more cautious outlook for the remainder of the fiscal year.
"We experienced negative November comparable store clothing sales in both the US and Canada as a result of lower traffic levels at our retail stores. We believe the storms in the northeast US at the start of the month, as well as consumer distractions caused by the presidential election, the "fiscal cliff" and other economic concerns, contributed to our reduced traffic levels. We further believe that a more cautious outlook for traffic trends and clothing sales through the fourth quarter is now warranted and have revised our guidance accordingly," said Doug Ewert, Men's Wearhouse president and chief executive officer.
Men's Wearhouse shares are currently losing 9.57% in after hours trading after closing the day's regular trading session at $31.35, down $1.02 or 3.15%. The shares trade in a 52-week range of $25.97 to $40.97.
For the third quarter ended October 27, 2012, the company reported net income of $48.8 million or $0.95 per share, compared to $39.9 million or $0.77 per share for the year-ago quarter.
The year-ago quarter results included $0.01 per share in acquisition related integration costs and a $0.01 per share non-cash asset impairment charge.
On average, 6 analysts polled by Thomson Reuters expected the company to earn $0.97 per share for the third quarter. Analysts' estimates typically exclude special items.
Total net sales for the third quarter rose 7.9% to $630.97 million from $584.60 million in the same quarter last year. Four analysts had a consensus revenue estimate of $631.30 million for the third quarter.
Total gross margin for the quarter improved to 46.07% from 45.87% a year earlier, while retail gross margin increased to 48.20% from 47.78% last year. Operating margin for the quarter grew to 11.49% from 10.27% a year ago.
Clothing product retail sales for the quarter increased 6.5% year-over-year to $401.7 million, while Tuxedo rental sales rose 11.3% to $124.6 million.
Brand wise, third quarter sales at the company's namesake stores increased 10.6% to $407.4 million, while sales at off-price retail chain K&G Superstores fell 3.5% to $77.3 million. Sales from Canadian store chain Moores, Clothing for Men rose 4.8% to $72.3 million.
For the third quarter, same-store sales increased 9.5% at Men's Wearhouse and 3.0% at Moores Canada., but fell 4.2% at K&G Superstores.
Corporate apparel segment sales for the third quarter increased 10.1% to $66.9 million.
At the end of the thirdd quarter, the company operated 1,144 stores under the Men's Wearhouse, Moores, K&G and Men's Wearhouse and Tux brands, compared to 1,175 stores a year ago.
Looking forward to the fourth quarter, the company now forecasts a loss of $0.05 per share to earnings of $0.01 per share and total sales growth of 9.5% to 10.5%. Previously, the company forecast earnings of $0.12 to $0.15 per share and total sales growth of 11.3% to 11.8% for the quarter. Analysts currently expect the company to earn $0.13 per share on sales growth of 10.9% for the fourth quarter.
For the full fiscal year 2012, the company now expects earnings of $2.57 to $2.63 per share and total sales growth of 4.7% to 5.0%. Previously, the company forecast earnings of $2.74 to $2.80 per share and total sales growth of 4.8% to 5.6%.
Analysts currently expect the company to earn $2.78 per share on sales growth of 4.8% for the fiscal year 2012.
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by RTT Staff Writer
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