Yesterday, after the market closed,
The Men's Wearhouse, Inc.
) announced that it has entered into an agreement with JPMorgan
Chase Bank, NA to repurchase its $100 million worth of common
stock under an accelerated share repurchase program.
One of the largest specialty retailers of menswear in the
United States and Canada will buy these shares under its ongoing
$200 million share repurchase program announced on Mar 13 this
year. Furthermore, Men's Wearhouse expects to close the
transaction by the end of fourth-quarter
Under the accelerated share repurchase program, a company buys
back its shares from an investment bank. The investment bank
sells these shares to the company after borrowing from clients or
Thereafter, the bank returns the shares borrowed from clients
or share lenders by purchasing shares from the open market over a
certain time period. This type of share repurchase program allows
companies to acquire shares at a faster pace and immediately
reduce the shares outstanding.
Initially, the menswear retailer will get nearly 2,197,000
shares from JPMorgan, approximately 85% of the total number of
shares projected to be repurchased. The price at which Men's
Wearhouse will acquire these shares will be calculated on the
basis of volume-weighted average share price.
The company intends to fund this accelerated share repurchase
program with cash in hand and/or by utilizing its existing credit
facility. Men's Wearhouse's strong balance sheet and cash flows
provide financial flexibility and facilitate shareholder friendly
During fiscal 2012, the company shelled out $41.3 million on
share repurchases and $37.1 million on cash dividends.
Furthermore, last week, the company signed an agreement to
acquire JA Holding, Inc. for a sum of $97.5 million in cash.
Men's Wearhouse currently carries a Zacks Rank #4 (Sell).
Other well-performing stocks in the apparel industry that are
worth a look include
The Gap, Inc.
Citi Trends, inc.
). All of them have a Zacks Rank #2 (Buy).
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MENS WEARHOUSE (MW): Free Stock Analysis
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