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| Men's Wearhouse posts Q2 results | | September 10, 2009 (USA) |  |
 The Men's Wearhouse announced its consolidated financial results for the second quarter ended August 1, 2009.
Diluted earnings per common share were $0.75 for the second quarter ended August 1, 2009. This compares to diluted earnings per common share guidance given June 8, 2009 of $0.56 to $0.60. Prior year second quarter GAAP diluted earnings per common share were $0.63 and adjusted diluted earnings per common share were $0.72 excluding $7.3 million (pre tax) or $0.09 per diluted share outstanding in costs incurred in connection with the closure of the Canadian based manufacturing facility operated by the Company's subsidiary, Golden Brand.
SECOND Quarter REVIEW
- Total Company sales decreased 3.5% for the quarter.
-- Clothing product sales, representing 69.2% of fiscal second quarter 2009 total net sales, decreased 5.6% due to decreases in the Company's comparable store sales primarily driven by a reduction in store traffic levels.
-- Tuxedo rental sales, representing 24.6% of fiscal second quarter 2009 total net sales, increased 1.7%.
- Gross margin before occupancy costs, as a percentage of total net sales, decreased 86 basis points from 59.9% to 59.1%. Clothing product margins, as a percentage of related sales, decreased 205 basis points due to increased promotional activities and were modestly offset by higher alteration service margins and the impact of the higher margin tuxedo rental revenues that increased as a mix of total sales from 23.4% to 24.6%.
- Occupancy costs increased, as a percentage of total net sales, by 36 basis points from 13.5% to 13.9% due to the deleveraging effect of reduced comparable store sales. On an absolute dollar basis, occupancy costs decreased 0.9% from $73.8 million in the prior year to $73.1 million.
- Selling, general, and administrative expenses were $173.9 million in the current year and $198.9 million in the prior year. During the quarter, the Company entered into an agreement
with a third party vendor who assumed our unredeemed gift card liability, which resulted in the recognition of other income from gift card breakage of $3.2 million ($2.0 million after tax or $0.04 per diluted share outstanding). Excluding other income from gift card breakage, adjusted SG&A expenses of $177.1 million decreased 7.6% from the prior year's adjusted SG&A of $191.6 million which excludes $7.3 million in costs associated with the closing of Golden Brand. The decrease is primarily due to cost-cutting measures and operational efficiencies. As a percentage of total net sales, adjusted SG&A decreased 148 basis points from 35.1% to 33.7%. Adjusted SG&A excluding advertising decreased 9.5% from the prior year quarter.
- Operating income was $63.9 million or 12.1% of total net sales compared to adjusted operating income of $61.5 million or 11.3% of total net sales for the same period last year which excludes $7.3 million in Golden Brand closure costs. Net income was $39.5 million or 7.5% of total net sales compared to adjusted net income of $37.3 million or 6.8% of total net sales for the same period last year which excludes $4.5 million in Golden Brand closure costs (net of tax). Cash and cash equivalent balances plus amounts held in short-term investments as of the end of the second quarter of 2009 were $163.9 million, an increase of $44.7 million over the same period last year.
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