The Men's Wearhouse announced its consolidated financial results for the fourth quarter ended January 29, 2011.
During the third quarter of 2010, the Company changed the inventory valuation method used by its K&G brand from lower of cost or market, as determined by the retail inventory method, to lower of cost or market using the average cost method. This change was done to bring all retail operations of the Company to a common valuation methodology platform.
All financial statements in this press release have been revised to reflect this change and are therefore comparable. Prior year fourth quarter revised GAAP diluted loss per share was $0.36, unchanged from the previously reported GAAP diluted loss per share, and prior fiscal year revised GAAP diluted earnings per share was $0.88, an increase of $0.02 per share.
Fourth Quarter Review
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 a 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 previous Dimensions shareholders control 14%.
The financial results of the combined UK operations, excluding transaction and integration costs, were $0.03 accretive to the Company's fourth quarter diluted earnings per share. Transaction and integration costs were $2.3 million ($1.6 million after tax or $0.03 per diluted share outstanding). Total sales of the combined UK operations were US$54.2 million.
The financial results of the combined UK operations, excluding transaction and integration costs, were $0.06 accretive to the Company's fiscal 2010 diluted earnings per share. Transaction and integration costs were $6.4 million ($4.3 million after tax or $0.08 per diluted share outstanding). Total sales of the combined UK operations were US$104.8 million for fiscal 2010.
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 then eleven facilities that we used for tuxedo distribution. The operations at these four facilities were assumed by other tuxedo distribution facilities in our system allowing us to more effectively manage our tuxedo rental operations. In the fourth quarter, a charge of $1.1 million ($0.7 million after tax or $0.01 per diluted share outstanding) was incurred consisting primarily of labor costs associated with transferring and processing the tuxedo rental inventory from the closed facilities, severance payments and fixed asset write-offs.
The expected ongoing annual benefit, beginning in fiscal 2011, as a result of these closures will be a reduction in operating costs of approximately $4.0 million.
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