Men's Wearhouse Profit Rises 33%

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Men's Wearhouse, Inc. (MW) said Wednesday after the markets closed that its second quarter profit rose 33% from last year, as same-store sales improved across all retail segments and corporate apparel segment sales surged due to the company's August 2010 acquisitions of Dimensions and Alexandra in the UK.

The company's quarterly earnings per share, excluding items, also came in above analysts' as well as its own expectations. At the same time, the company once again raised its outlook for the full fiscal year.

The Houston, Texas-based men's apparel retailer reported GAAP net income for the second quarter of $57.1 million or $1.09 per share, compared to $43.0 million or $0.81 per share for the year-ago quarter.

The latest quarter results include $0.01 per share in acquisition integration expenses and a $0.01 per share non-cash asset impairment charge.

Excluding items, adjusted earnings for the second quarter were $1.11 per share, compared to $0.84 per share in the prior year quarter.

On average, 6 analysts polled by Thomson Reuters expected the company to earn $1.04 per share for the second quarter. Analysts' estimates typically exclude special items.

Total net sales for the second quarter rose 22% to $655.53 million from $536.99 million in the same quarter last year. Four analysts had a consensus revenue estimate of $643.63 million for the second quarter.

Clothing product retail sales for the quarter increased 12.4% year-over-year to $401.8 million, while Tuxedo rental sales grew 4.1% to $148.3 million.
Brand wise, second quarter sales at the company's namesake stores increased 10.8% to $407.0 million, while sales at off-price retail chain K&G Superstores grew 5.7% to $92.5 million. Revenue from Canadian store chain Moores, Clothing for Men rose 12.3% to $80.3 million.

For the second quarter, same-store sales increased 10.9% at Men's Wearhouse, 5.4% at K&G Superstores and 4.4% at Moores Canada.

Corporate apparel segment sales increased $64.9 million from last year to $69.5 million in the second quarter, due to the company's August 2010 acquisitions of Dimensions and Alexandra in the UK.

At the end of the second quarter, the company operated 1,178 stores under the Men's Wearhouse, Moores, K&G and Men's Wearhouse and Tux brands, compared to 1,239 stores a year ago.

The company said it did not repurchase any shares of its common stock during the second quarter; however, it did repurchase 500,000 shares at an average cost of $29.98 per share subsequent to quarter end.

Looking forward to the third quarter, the company forecast GAAP earnings of $0.62 to $0.64 per share and adjusted earnings of $0.64 to $0.66 per share, which excludes acquisition integration costs. Analysts currently expect the company to earn $0.64 per share for the third quarter.

The company said it expects total sales for the second quarter to increase 3% to 4%. Analysts currently expect third quarter sales to increase 3.8% to $570.88 million.

For the full fiscal year, the company said it now expects GAAP earnings of $2.07 to $2.14 per share and adjusted earnings of $2.13 to $2.20 per share. Previously, the company expected GAAP earnings of $2.00 to $2.08 per share and adjusted earnings of $2.04 to $2.12 per share. Analysts currently expect the company to earn $2.11 per share for the fiscal year.

The company said it now expects full fiscal year total sales to increase 12.5% to 13.5%, compared to its prior forecast of a 12% to 13% growth. Analysts currently expect full fiscal year total sales to grow 12.4% to $2.36 billion.

Men's Wearhouse shares, which have traded in a range of $17.66 to $34.78 over the past year, closed Wednesday's regular trading session at $29.52, up $1.31 or 4.64%. The stock is currently losing 42 cents or 1.42% in after hours trading.

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