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Men's Wearhouse to cease tuxedo distribution operations
09 Sep '10
5 min read
Cash and cash equivalent balances as of the end of the second quarter of 2010 were $281.5 million.
Total inventories of $416.4 million declined 3.3% from the prior year second quarter of $430.8 million.
Current maturities of long-term debt were $45.2 million as of the end of the second quarter of 2010.
Third Quarter 2010 highlights and guidance
Dimensions and Alexandra Acquisitions
On August 6, 2010, the Company acquired Dimensions and certain assets of Alexandra, two leading providers of corporate clothing uniforms and workwear in the United Kingdom, for total cash consideration of approximately 61 million pounds Sterling (US$97.8 million). The combined businesses are organized under a UK-based holding company of which Men's Wearhouse controls 86% and certain existing shareholders of Dimensions controls 14%.
The financial results of the combined operations, excluding integration and transaction costs, are expected to be neutral to $0.01 accretive to the Company's 3Q FY 2010 diluted earning per share. Total sales of the combined operations are expected in a range of US$49 million to US$51 million. Transaction costs and integration expenses for third quarter are expected to be $1.8 million ($1.1 million after tax and non-controlling interest or $0.02 per diluted share outstanding).
Tuxedo Distribution Closures
In late August 2010, a decision was made by the Company to cease tuxedo distribution operations in November 2010 at four of the eleven facilities that we currently use for tuxedo distribution. The operations at these four facilities will be assumed by other tuxedo distribution facilities in our system allowing us to more effectively manage our tuxedo rental operations.
In the third quarter, we expect a charge of approximately $2.2 million ($1.5 million after tax or $0.03 per diluted share outstanding) consisting primarily of severance payments and fixed asset write-offs. In the fourth quarter, we expect an additional charge of approximately $0.6 million consisting primarily of severance payments, fixed asset write-offs and facility remediation.
The expected benefit to fiscal 2011 as a result of these closures would be a reduction in operating costs of approximately $4.0 million.
Third Quarter Financial Guidance Summary
For the third quarter of the fiscal year, GAAP diluted earnings per share are expected to be in a range of $0.35 to $0.42. Adjusted diluted earnings per share are expected to be in a range of $0.40 to $0.47 excluding transaction costs and integration expenses of $1.8 million ($1.1 million after tax and non-controlling interest or $0.02 per diluted share outstanding) and $2.2 million in tuxedo distribution closure costs ($1.5 million after tax or $0.03 per diluted share outstanding).
Total inventories of $416.4 million declined 3.3% from the prior year second quarter of $430.8 million.
Current maturities of long-term debt were $45.2 million as of the end of the second quarter of 2010.
Third Quarter 2010 highlights and guidance
Dimensions and Alexandra Acquisitions
On August 6, 2010, the Company acquired Dimensions and certain assets of Alexandra, two leading providers of corporate clothing uniforms and workwear in the United Kingdom, for total cash consideration of approximately 61 million pounds Sterling (US$97.8 million). The combined businesses are organized under a UK-based holding company of which Men's Wearhouse controls 86% and certain existing shareholders of Dimensions controls 14%.
The financial results of the combined operations, excluding integration and transaction costs, are expected to be neutral to $0.01 accretive to the Company's 3Q FY 2010 diluted earning per share. Total sales of the combined operations are expected in a range of US$49 million to US$51 million. Transaction costs and integration expenses for third quarter are expected to be $1.8 million ($1.1 million after tax and non-controlling interest or $0.02 per diluted share outstanding).
Tuxedo Distribution Closures
In late August 2010, a decision was made by the Company to cease tuxedo distribution operations in November 2010 at four of the eleven facilities that we currently use for tuxedo distribution. The operations at these four facilities will be assumed by other tuxedo distribution facilities in our system allowing us to more effectively manage our tuxedo rental operations.
In the third quarter, we expect a charge of approximately $2.2 million ($1.5 million after tax or $0.03 per diluted share outstanding) consisting primarily of severance payments and fixed asset write-offs. In the fourth quarter, we expect an additional charge of approximately $0.6 million consisting primarily of severance payments, fixed asset write-offs and facility remediation.
The expected benefit to fiscal 2011 as a result of these closures would be a reduction in operating costs of approximately $4.0 million.
Third Quarter Financial Guidance Summary
For the third quarter of the fiscal year, GAAP diluted earnings per share are expected to be in a range of $0.35 to $0.42. Adjusted diluted earnings per share are expected to be in a range of $0.40 to $0.47 excluding transaction costs and integration expenses of $1.8 million ($1.1 million after tax and non-controlling interest or $0.02 per diluted share outstanding) and $2.2 million in tuxedo distribution closure costs ($1.5 million after tax or $0.03 per diluted share outstanding).
Men's Wearhouse
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