Men's Wearhouse Misses, Guides Low - Analyst Blog

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The Men's Wearhouse Inc. ( MW ) - one of the largest specialty retailers of menswear in the United States and Canada - recently reported its fiscal third-quarter 2012 (ended October 27, 2012) earnings of 95 cents a share that came below the Zacks Consensus Estimate of 97 cents. However, earnings soared 20.3% from 79 cents reported in the comparable prior-year quarter. Moreover, including one-time items, earnings surged 23.4% year over year.

Total net sales increased 7.9% year over year to $631 million and came in line with the Zacks Revenue Estimate. Retail Segment' s total revenue (representing 89.4% of total sales) increased 7.7% year over year to $564 million, reflecting a 6.5% increase in Retail Clothing Product to $401.7 million, coupled with 11.3% increase in Tuxedo Rental Services to $124.6 million.  Alteration and other services division's sales increased 9.3% to $37.7 million.

Corporate Apparel Segment' s (representing 10.6% of total sales) revenue improved 10.1% to $66.9 million compared with $60.8 million in the year-ago quarter.

Gross profit increased 8.4% to $290.7 million from $268.2 million, while gross profit margin expanded 20 basis points year over year to 46.1%, reflecting a decrease in cost of sales as a percentage of total revenue.

Operating income augmented 20.8% to $72.5 million, while operating margin expanded 122 basis points to 11.5% on the back of lower SG&A expenses as a percentage of sales.

Other Financial Aspects

As of October 27, 2012, Men's Wearhouse has a debt-free balance sheet with cash and cash equivalents of $138 million and shareholders' equity of $1,119.6 million. Capital expenditure, during the first nine months of fiscal 2012, stood at $90.1 million.

Guidance Lowered

Following the negative comparable store sales results in November 2012 and lingering macro concerns, Men's Wearhouse lowered its fiscal 2012 and fourth-quarter earnings guidance. The company now expects GAAP earnings per share in the range of $2.57-$2.63 for fiscal 2012, down from its earlier guidance range of $2.74-$2.80.

For the fourth quarter 2012, the company expects GAAP earnings to range within loss of 5 cents to one cent earnings, significantly down from its earlier guidance of 12-15 cents earnings.

At the end of the quarter, the company had 1,144 stores with 7,062.6 sq ft area compared with 1,175 stores with 7,020.6 sq ft area in the prior-year quarter.

Currently, Men's Wearhouse - a peer of Jos. A Bank Clothiers Inc . ( JOSB ) - retains a Zacks #2 Rank, which translates into a short-term Buy rating.



JOS A BANK CLTH (JOSB): Free Stock Analysis Report

MENS WEARHOUSE (MW): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: JOSB , MW

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