Recently, specialty retailer
The Men's Wearhouse, Inc.
) extended its partnership with the country's biggest bridal
retailer, David's Bridal for another five year tenure. The new
contract has a provision to extend the deal for another five
years following the expiry of the extended tenure.
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Since 2007, David's Bridal has been an integral part of Men's
Wearhouse's tuxedo marketing strategy. The latter has a strong
rental tuxedos supply business.
In Oct 2012, Men's Wearhouse had signed a deal to supply tuxedos
to The Knot.com, an online subsidiary of
XO Group Inc
Men's Wearhouse's tuxedo business is strong and can significantly
impact earnings, as evident in the last quarterly results. On Sep
11, the company posted fiscal second-quarter 2013 adjusted
earnings of $1.01 per share that missed the Zacks Consensus
Estimate of $1.15 and decreased 12.2% year over year. The decline
was primarily due to lower tuxedo rental revenues and certain
The company's top line decreased 2.3% year over year to $647.3
million and missed the Zacks Consensus Estimate of $675 million.
This was due to a decline in retail clothing sales owing to lower
consumer traffic. Men's Wearhouse also stated that the shift in
tuxedo revenues and the deleveraging of occupancy costs dented
margins during the quarter.
Houston-based Men's Wearhouse is one of the largest specialty
retailers in the United States and Canada, and has nearly 1,137
stores as of Sep 24, 2013.
Currently, Men's Wearhouse carries a Zacks Rank #5 (Strong Sell).
We do not recommend this stock until we see signs of improvement.
However, other stocks worth considering in the same sector
Christopher & Banks Corp.
Citi Trends, Inc.
). Both these carry a Zacks Rank #1 (Strong Buy).