Clothing product sales drop at Men's Wearhouse

11 Mar '10

5 min read

The Men's Wearhouse announced its consolidated financial results for the fourth quarter ended January 30, 2010.

Diluted loss per share was $0.36 for the fourth quarter ended January 30, 2010. Adjusted loss per share was $0.11. This excludes a $13.1 million (net of tax) or $0.25 per diluted share non-cash asset impairment charge. This compares to diluted loss per share guidance given December 8, 2009 of $0.15 to $0.19. Prior year fourth quarter GAAP diluted earnings per share were $0.03 and adjusted loss per share was $0.06 excluding $5.8 million (net of tax) or $0.11 per diluted share gain from an asset sale and $1.2 million (net of tax) or $0.02 per diluted share for a non-cash asset impairment charge.

Diluted earnings per share were $0.86 for fiscal year 2009. Adjusted diluted earnings per share were $1.11. This excludes a $13.1 million (net of tax) or $0.25 per diluted share non-cash asset impairment charge.

Fourth Quarter Review

• Total Company sales decreased 4.0% for the quarter.
o Clothing product sales, representing 85.3% of fiscal fourth quarter 2009 total net sales, decreased 4.1% due to decreases in the Company's comparable store sales primarily driven by a reduction in store traffic levels and a lower domestic average ticket.
o Tuxedo rental sales, representing 7.7% of fiscal fourth quarter 2009 total net sales, decreased 1.2%.
• Gross margin before occupancy costs, as a percentage of total net sales, decreased 105 basis points from 53.7% to 52.7%. Clothing product margins, as a percentage of related sales, decreased 127 basis points primarily due to increased promotional activities.
• Occupancy costs increased, as a percentage of total net sales, by 35 basis points from 15.3% to 15.7%. On an absolute dollar basis, occupancy costs decreased 1.9% from $73.0 million in the prior year to $71.6 million.
• In the fourth quarter, the Company incurred a pretax non-cash asset impairment charge related to 157 stores (145 Men's Wearhouse and Tux stores and 12 K&G stores) in the amount of $19.5 million. Selling, general, and administrative expenses, excluding this charge, were $184.3 million in the current year and decreased 4.3% from the prior year's adjusted SG&A of $192.6 million which excludes an $8.8 million pretax gain from an asset sale and a $1.8 million pretax non-cash asset impairment charge. As a percentage of total net sales, adjusted SG&A decreased 10 basis points from 40.4% to 40.3%. Adjusted SG&A excluding advertising decreased 3.8% from the adjusted prior year quarter.
• Operating loss excluding the $19.5 million pretax non-cash asset impairment charge was $15.1 million or negative 3.3% of total net sales compared to adjusted operating loss of $9.6 million or negative 2.0% of total net sales for the same period last year, which excludes an $8.8 million pretax gain from an asset sale and a $1.8 million pretax non-cash asset impairment charge.
• Cash andcash equivalent balances as of the end of the fourth quarter of 2009 were $186.0 million, an increase of $81.5 million over the cash and cash equivalent balances plus amounts held in short-term investments as of the same period last year.

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