Corporate Apparel Segment sales up - Men's Wearhouse
The Men's Wearhouse announced its consolidated financial results for the third quarter ended October 29, 2011.
THIRD QUARTER HIGHLIGHTS
Total Company net sales increased 6.3% for the quarter.
• Retail segment sales increased 5.9%.
a) This increase was primarily attributable to increased retail clothing product sales driven by increases in average unit selling prices and units sold per transaction offsetting fewer transactions per store.
b) Tuxedo rental services revenues had U.S. comparable store sales of 1.9% driven by an increase in average rental price.
• Corporate apparel segment sales increased 9.5% primarily due to one additional week in the current year quarter of U.K. operations acquired on August 6, 2010 and increased catalog and internet sales at our U.K. operations and increased catalog sales at our U.S. operations.
Total Company gross margin increased 14.1% to $268.2 million and as a percentage of sales, increased 315 basis points.
• Retail segment total gross margin, as a percentage of related net sales, increased 324 basis points. This increase was primarily attributable to higher product margins driven by higher average net selling prices per unit at all brands and lower K&G product cost charge-offs.
• Corporate apparel segment gross margin, as a percentage of related sales, increased from 26.5% in the third quarter of 2010 to 29.4% in the third quarter of 2011 due mainly to an improved mix of higher margin UK customers in the 2011 results, partially offset by higher Twin Hill product costs.
Total Company adjusted SG&A expenses increased 6.4% to $206.4 million* and as a percentage of sales increased 5 basis points.
• The Company's corporate apparel segment drove 1.7% of the quarter over quarter increase and the balance, 4.7%, was related to payroll related costs and increased expenses associated with increased sales in the Company's retail segment.
Adjusted operating income increased 50.4% to $61.7 million* and as a percentage of sales, increased 310 basis points.
• The financial results of the U.K. operations, excluding acquisition integration costs, were $0.03 accretive to the Company's third quarter diluted earnings per share. Integration costs were $1.0 million ($0.7 million after tax or $0.01 per diluted share outstanding).
Total inventories increased 21.1% primarily to support increased retail sales and planned promotions in the fourth quarter as well as replenish comparatively oversold levels in the prior year as we embarked on a more aggressive promotional cadence.
The Company repurchased 500,000 shares of its common stock during the third quarter at an average cost of $29.98 per share.
Total cash and cash equivalents at quarter end were $138.5 million.
Adjusted SG&A and adjusted operating income for third quarter 2011 excludes $1.0 million in acquisition related integration costs and $0.7 million for non cash asset impairment charges. Adjusted SG&A and adjusted operating income for third quarter 2010 excludes $1.4 million in acquisition and acquisition related integration costs, $2.0 million in tuxedo distribution closure costs and $3.2 million in non cash asset impairment charges.