EX-99.1 2 h57248exv99w1.htm PRESS RELEASE exv99w1
Exhibit 99.1

(MEN'S WEARHOUSE LOGO)
The Men’s Wearhouse, Inc.
News Release
For Immediate Release
MEN’S WEARHOUSE REPORTS
FISCAL 2008 FIRST QUARTER RESULTS
  Q1 2008 GAAP diluted EPS was $0.19 and adjusted diluted EPS was $0.20, compared with Q1 2007 GAAP diluted EPS of $0.75 and pro forma diluted EPS of $0.59
 
  Company estimates Q2 2008 GAAP diluted EPS in a range of $0.69 to $0.73 and adjusted diluted EPS in a range of $0.75 to $0.79
 
  Company estimates fiscal 2008 GAAP diluted EPS in a range of $1.65 to $1.75 and adjusted diluted EPS in a range of $1.75 to $1.85
 
  Conference call at 5:00 pm eastern today
HOUSTON – May 28, 2008 – The Men’s Wearhouse (NYSE: MW) today announced its consolidated financial results for the first quarter ended May 3, 2008.
                                         
First Quarter Sales Summary – Fiscal 2008
                            Comparable Store Sales
    U.S. dollars, in millions   Total Sales   Change %
    Current Year   Prior Year   Change %   Current Year   Prior Year
 
Total Company
  $ 491.1     $ 496.1       - 1.0 %                
MW
  $ 327.9 (a)   $ 332.3 (a)     - 1.3 %     - 6.4 %(b)     + 0.3 %(b)
K&G
  $ 100.6     $ 110.0       - 8.5 %     - 14.1 %     - 6.2 %
United States
  $ 441.3     $ 450.8       - 2.1 %     - 8.5 %     - 1.3 %
 
Moores
  $ 49.8     $ 45.3       + 10.1 %     - 4.2 %(c)     + 5.8 %(c)
 
     
(a)   Includes retail stores and ecommerce as well as the MW Tux stores resulting from the acquisition of After Hours on April 9, 2007.
 
(b)   Comparable store sales do not include ecommerce or MW Tux stores. MW Tux stores will be included in Q2 of fiscal 2008.
 
(c)   Comparable store sales change is based on the Canadian dollar.
Diluted earnings per share were $0.19 for the first quarter ended May 3, 2008. Adjusted diluted earnings per share were $0.20 after excluding $0.9 million of closure costs incurred in connection with the Company’s previously announced planned closure of the Canadian based manufacturing facility operated by its subsidiary, Golden Brand. This compares to adjusted diluted earnings per share guidance given March 12, 2008 of $0.20 to $0.24. Diluted earnings per share for the prior year first quarter, after pro forma adjustments for the April 9, 2007 After Hours acquisition as if it had occurred on January 29, 2006, were $0.59 (refer to the Company’s first quarter fiscal 2007 quarterly report on Form 10-Q and comments below). Prior year first quarter GAAP diluted earnings per share were $0.75.

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FIRST QUARTER HIGHLIGHTS
The condensed consolidated statements of earnings attached to this press release reflect the Company’s GAAP results of operations for the three months ended May 3, 2008 and May 5, 2007, as well as pro forma results of operations for the three months ended May 5, 2007. Since the acquisition of After Hours occurred on April 9, 2007, the inclusion of its off-season operations as if the acquisition had occurred prior to the beginning of the 2007 first quarter reduces that quarter’s diluted earnings per share from $0.75 on a GAAP basis to $0.59 on a pro forma basis and allows for a comparison of the first quarter results on a comparable operations basis. Accordingly, the following highlights of the Company’s operating results are based on a comparison of the pro forma results for the 2007 first quarter with the GAAP results for the 2008 first quarter.
    Total company sales decreased 6.7% for the quarter.
  o   Apparel sales, representing 79.11% of 2008 total net sales, decreased 4.6% due primarily to decreases in the Company’s comparable store sales driven by a reduction in store traffic levels.
 
  o   Tuxedo rental revenues, representing 14.29% of 2008 total net sales, decreased 18.6%. This decline was primarily driven by reduced tuxedo rental sales at the Company’s stores acquired from After Hours as well as the sale of the acquired wholesale tuxedo rental operations in July 2007. These declines were partially offset by increases at the Company’s Men’s Wearhouse stores.
    Gross margin before occupancy costs, as a percentage of total net sales, decreased 28 basis points from pro forma 58.38% to 58.10%. Increases in clothing product margins, as a percentage of related sales, of 97 basis points were offset by a reduction in the percentage of total net sales derived from tuxedo rentals from 16.38% to 14.29% as well as deleveraging of fixed costs related to alteration and other services.
 
    Occupancy costs increased, as a percentage of total net sales, by 271 basis points from pro forma 12.27% to 14.98% primarily due to the deleveraging effect of reduced comparable store sales, increased rental rates for new and renewed leases and increased depreciation expense from the rebranding of After Hours stores to MW Tux.
 
    Selling, general, and administrative expenses, as a percentage of total net sales, increased 378 basis points from pro forma 36.26% to 40.04%. This increase was primarily due to the deleveraging effect of reduced net sales.
 
    Operating income was $15.1 million compared to pro forma $51.8 million for the same period last year and net income was $9.9 million compared to pro forma $32.1 million.
 
    The effective tax rate for the 2008 first quarter was 30.6%.

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SECOND QUARTER 2008 GUIDANCE
In the summer of 2008, the Company expects to close the Canadian based manufacturing facility operated by its subsidiary, Golden Brand. The company estimates the pre tax cost to close the facility will be approximately $8.1 million or the equivalent of $0.10 per diluted share outstanding for the fiscal year. The pre tax cost for the first quarter was $0.9 million or the equivalent of $0.01 per diluted share outstanding. The pre tax cost for the second quarter is estimated at $5.2 million or the equivalent of $0.06 per diluted share outstanding and the pre tax cost for the third quarter is estimated at $2.0 million or the equivalent of $0.02 per diluted share outstanding. Due to the effect of rounding, the sum of the quarterly per share amounts does not equal the full year.
Excluding the Golden Brand closure costs for the second quarter, the Company expects adjusted diluted earnings per share to be $0.75 to $0.79. Including these costs, GAAP diluted earnings per share are expected to be $0.69 to $0.73. This guidance assumes same store sales at MW, including MW Tux stores, to decrease in the mid to high single digit range, at K&G to decrease in the low teens digit range and at Moores to decrease in the low single digit range.
The guidance includes an estimated effective tax rate of approximately 38.8% for the second quarter. The fully diluted shares outstanding are estimated to be 51.4 million.
FISCAL 2008 GUIDANCE
Based on its actual results for the first quarter, the Company believes achieving a level of operating performance for the second half of the fiscal year anticipated in its initial annual guidance provided on March 12, 2008 will be challenging under current market conditions.
The Company, therefore, is updating its adjusted diluted earnings per share outlook for the year to a range of $1.75 to $1.85 excluding the Golden Brand closure costs. Including these costs, GAAP diluted earnings per share are expected to be $1.65 to $1.75. This annual guidance reflects a comparable store sales decrease in the mid single digits for TMW, a low double digit decrease at K&G, and a low single digit decrease for Moores.
CONFERENCE CALL AND WEBCAST INFORMATION
At 5:00 p.m. Eastern time on Wednesday, May 28, 2008, company management will host a conference call and real time web cast to review the fiscal first quarter and its outlook for fiscal 2008.
To access the conference call, dial 303-262-2137. To access the live webcast presentation, visit the Investor Relations section of the Company’s website at www.tmw.com. A telephonic replay will be available through June 4, 2008 by calling 303-590-3000 and entering the access code of 11112683# or a webcast archive will be available free on the website for approximately 90 days.

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STORE INFORMATION
                                 
    May 3, 2008   May 5, 2007
    Number   Sq. Ft.   Number   Sq. Ft.
    of Stores   (000’s)   of Stores   (000’s)
 
Men’s Wearhouse
     571       3,203.1        544       3,034.1  
MW Tux (a)
     492       662.0       509       647.3  
Moores, Clothing for Men
     116       721.2       116       722.6  
K&G (b)
    106       2,451.2       98       2,278.7  
 
Total
    1,285       7,037.5       1,267       6,682.7  
 
(a)   MW Tux stores resulting from the acquisition of After Hours on April 9, 2007.
 
(b)   90 and 80 stores, respectively, offering women’s apparel.
Founded in 1973, Men’s Wearhouse is one of North America’s largest specialty retailers of men’s apparel with 1,285 stores. The Men’s Wearhouse, Moores and K&G stores carry a full selection of designer, brand name and private label suits, sport coats, furnishings and accessories and the MW Tux (formerly After Hours) stores carry a limited selection. Tuxedo rentals are available in the Men’s Wearhouse, Moores and MW Tux stores.
This press release contains forward-looking information. The forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be significantly impacted by various factors, including sensitivity to economic conditions and consumer confidence, possibility of limited ability to expand Men’s Wearhouse stores, possibility that certain of our expansion strategies may present greater risks and other factors described in the company’s annual report on Form 10-K for the year ended February 2, 2008.
For additional information on Men’s Wearhouse, please visit the Company’s website at www.tmw.com.
           CONTACT:   Neill Davis, EVP & CFO, Men’s Wearhouse (281) 776-7200
Ken Dennard, DRG&E (713) 529-6600

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(THE MEN'S WEARHOUSE LOGO)
  THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)
FOR THE THREE MONTHS ENDED
May 3, 2008, May 5, 2007 AND PRO FORMA May 5, 2007

(In thousands, except per share data)
                                                 
    Three Months Ended  
                                    Pro        
            % of             % of     Forma     % of  
    2008     Sales     2007     Sales     2007     Sales  
     
Net sales:
                                               
Clothing product
  $ 388,491       79.11 %   $ 403,500       81.33 %   $ 407,018       77.37 %
Tuxedo rental services
    70,194       14.29 %     59,860       12.07 %     86,194       16.38 %
Alteration and other services
    32,411       6.60 %     32,758       6.60 %     32,886       6.25 %
     
Total net sales
    491,096       100.00 %     496,118       100.00 %     526,098       100.00 %
 
                                               
Cost of sales:
                                               
Clothing product including buying and distribution costs
    168,491       34.31 %     177,843       35.85 %     180,457       34.30 %
Tuxedo rental services
    12,565       2.56 %     9,669       1.95 %     14,345       2.73 %
Alteration and other services
    24,731       5.04 %     24,156       4.87 %     24,156       4.59 %
Occupancy costs
    73,554       14.98 %     58,177       11.73 %     64,571       12.27 %
     
Total cost of sales
    279,341       56.88 %     269,845       54.39 %     283,529       53.89 %
 
                                               
Gross margin
    211,755       43.12 %     226,273       45.61 %     242,569       46.11 %
 
                                               
Selling, general and administrative expenses
    196,650       40.04 %     161,010       32.45 %     190,789       36.26 %
     
 
                                               
Operating income
    15,105       3.08 %     65,263       13.15 %     51,780       9.84 %
 
                                               
Interest income
    (821 )     -0.17 %     (1,632 )     -0.33 %     (1,154 )     -0.22 %
Interest expense
    1,599       0.33 %     1,086       0.22 %     1,297       0.25 %
     
 
                                               
Earnings before income taxes
    14,327       2.92 %     65,809       13.26 %     51,637       9.82 %
 
                                               
Provision for income taxes
    4,384       0.89 %     24,876       5.01 %     19,570       3.72 %
     
 
                                               
Net earnings
  $ 9,943       2.02 %   $ 40,933       8.25 %   $ 32,067       6.10 %
     
 
                                               
Net earnings per share:
                                               
Basic
  $ 0.19             $ 0.76             $ 0.59          
 
                                         
Diluted
  $ 0.19             $ 0.75             $ 0.59          
 
                                         
 
                                               
Weighted average common shares outstanding:
                                               
Basic
    51,470               53,963               53,963          
 
                                         
Diluted
    51,864               54,709               54,709          
 
                                         
Note: The pro forma condensed consolidated statement of earnings presents the Company’s results of operations as if the After Hours acquisition had occurred on January 29, 2006, after giving effect to certain purchase accounting adjustments. The pro forma information is not necessarily indicative of actual results had the acquisition occurred on January 29, 2006.

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(THE MEN'S WEARHOUSE LOGO)
  THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)
(Unaudited)
                 
    May 3,     May 5,  
    2008     2007  
ASSETS                
Current assets:
               
Cash and cash equivalents
  $ 76,660     $ 87,031  
Short-term investments
    9,668       38,500  
Accounts receivable, net
    26,858       30,171  
Inventories
    488,137       474,413  
Other current assets
    58,007       63,767  
 
           
 
               
Total current assets
    659,330       693,882  
Property and equipment, net
    406,944       364,256  
Tuxedo rental product, net
    92,405       83,824  
Goodwill
    62,481       58,517  
Other assets, net
    26,182       19,726  
 
           
 
               
Total assets
  $ 1,247,342     $ 1,220,205  
 
           
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY                
 
               
Current liabilities:
               
Accounts payable
  $ 121,193     $ 121,162  
Accrued expenses and other current liabilities
    131,436       152,885  
Income taxes payable
          21,135  
 
           
 
               
Total current liabilities
  $ 252,629     $ 295,182  
Long-term debt
    106,870       78,105  
Deferred taxes and other liabilities
    67,498       64,680  
 
           
 
               
Total liabilities
    426,997       437,967  
 
           
 
               
Shareholders’ equity:
               
Preferred stock
           
Common stock
    697       694  
Capital in excess of par
    305,601       293,874  
Retained earnings
    886,386       784,053  
Accumulated other comprehensive income
    40,198       30,481  
 
           
Total
    1,232,882       1,109,102  
 
               
Treasury stock, at cost
    (412,537 )     (326,864 )
 
           
 
               
Total shareholders equity
    820,345       782,238  
 
           
 
               
Total liabilities and equity
  $ 1,247,342     $ 1,220,205  
 
           

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(THE MEN'S WEARHOUSE LOGO)
  THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
     
    FOR THE THREE MONTHS ENDED
    May 3, 2008 AND May 5, 2007
    (In thousands)
                 
    Three Months Ended  
    2008     2007  
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net earnings
  $ 9,943     $ 40,933  
Non-cash adjustments to net earnings:
               
Depreciation and amortization
    23,698       17,006  
Tuxedo rental product amortization
    8,066       6,926  
Other
    2,126       2,313  
Changes in assets and liabilities
    (36,577 )     (26,909 )
 
           
 
               
Net cash provided by operating activities
    7,256       40,269  
 
           
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Capital expenditures
    (29,860 )     (11,661 )
Net non-cash assets acquired
          (69,747 )
Purchases of available-for-sale investments
          (137,955 )
Proceeds from sales of available-for-sale investments
    50,254       99,455  
Other
          1,191  
 
           
 
               
 
               
Net cash provided by (used in) investing activities
    20,394       (118,717 )
 
           
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Cash dividends paid
    (3,632 )     (2,729 )
Proceeds from revolving credit facility
    100,600        
Payments on revolving credit facility
    (83,975 )      
Proceeds from issuance of common stock
    609       3,670  
Purchase of treasury stock
    (156 )     (19,290 )
Other
    (1,336 )     378  
 
           
 
               
Net cash provided by (used in) financing activities
    12,110       (17,971 )
 
           
 
               
 
               
Effect of exchange rate changes
    (2,546 )     3,756  
 
           
 
               
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    37,214       (92,663 )
Balance at beginning of period
    39,446       179,694  
 
           
Balance at end of period
  $ 76,660     $ 87,031  
 
           

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