Sales rise marginally at Men's Wearhouse in Q1 FY'12

07 Jun '12

5 min read

2012 Financial Guidance
For the fiscal year, the Company expects GAAP diluted earnings per share in a range of $2.70 to $2.78, an increase of 13% to 17% over the prior year adjusted diluted earnings per share. For the second quarter, GAAP diluted earnings per share is expected to be in a range of $1.12 to $1.13, a 1% to 2% increase over the prior year adjusted diluted earnings per share.

Updated forecasted operating highlights for the year include the following:
• Several seasonal shifts in the fiscal year calendar are expected to impact the quarterly sales results of the Company's tuxedo rental business. Specifically, the calendar shift of the Easter Holiday favorably impacted the first quarter and is expected to negatively impact the second quarter.
• The anniversary of the calendar driven peak rental period that occurred in November 2011 (11-11-11) is expected to favorably impact third quarter 2012 and negatively impact fourth quarter 2012.
• Corporate apparel sales declined in the first quarter and are expected to decline in the second quarter largely offset by increases in the third and fourth quarters as the Company's UK operations anniversary customer new uniform programs in fiscal 2011 and initiation of new customer programs in fiscal 2012.
• The full year decrease is primarily the result of a net reduction in customer new uniform programs compared to fiscal 2011 and a weaker currency conversion rate of the pound sterling to the US dollar.
• Gross margins are planned to continue to increase and result largely from higher average unit selling prices and continued occupancy cost leverage.
• On a 52-week basis, SG&A expense is expected to increase in the 3.1% to 3.6% range over prior year adjusted SG&A representing modest leverage, as a percent of sales. The seasonality of that cost increase throughout the year will vary significantly by quarter.
• The annual increase was more heavily weighted in the first quarter driven by increased investments in payroll put in place during the second half of the prior fiscal year as well as increased marketing expenses in fiscal 2012.
• The rate of SG&A growth will diminish to the low single digit range for the second and third quarter stemming from 1) a moderation of payroll cost increases and 2) realization of cost synergies from the integration of the Alexandra and Dimension businesses in the UK in the prior year.
• Lastly, SG&A increases in the fourth quarter on a 13-week basis are expected to be flat to up 1% as the Company anniversaries higher incentive compensation expenses in the prior year.
• New store growth includes up to 29 new Men's Wearhouse stores, three new Moores stores and one new K&G store. We also expect to close up to 47 Men's Wearhouse and Tux stores and two K&G stores.
• Capital expenditures are anticipated to be in the range of $113.0 to $120.0 million for 2012. This amount includes the cost of new and remodeled stores, the purchase of office space to be used to consolidate our California office locations and investment in other corporate assets.

Men's Wearhouse is one of North America's largest specialty retailers of men's apparel with 1,162 stores. The Men's Wearhouse, Moores and K&G stores carry a full selection of men's designer, brand name and private label suits, sport coats, furnishings and accessories and Men's Wearhouse and Tux stores carry a limited selection.

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