Shares of The Men's Wearhouse, Inc. MW plunged over 19% during aftermarket trading session yesterday, as the company’s third quarter of fiscal 2015 bottom line performance raised investors’ concern. Although this specialty retailer of menswear in the U.S. and Canada reported in-line earnings of 50 cents a share, it declined almost 40% from the year-ago quarter. On a GAAP basis, the company reported loss of 56 cents a share, sharply down from the prior-year quarter earnings of 14 cents.
The company reported net loss on account of the non-cash impairment charge of $90.1 million resulting from an interim valuation of the Jos. A. Bank tradename due to decline in its sales. Net sales during the quarter decreased 2.8% year over year to $865.4 million and also fell short of the Zacks Consensus Estimate of $869 million. Comparable-store sales (comps) increased 5.3% at Men's Wearhouse and 3.7% at K&G, whereas comps declined 5.4% at Moores, and 14.6% at Jos. A. Bank. Comps at Jos. A. Bank were well below the company’s expectation mainly due to fall in traffic.
The Retail segment’s total revenue decreased 2.2% year over year to $801.4 million. Decline in sales were mostly due to lower comps at Jos. A. Bank. The Corporate Apparel segment’s revenues declined 10.4% to $64.1 million.
Adjusted gross profit decreased 4.4% to $372.9 million and gross margin contracted 70 basis points to 43.1%.
Other Financial Aspects
Men’s Wearhouse ended the quarter with cash and cash equivalents of $53.7 million, long-term debt of $1,649.2 million and total shareholders’ equity of $985.4 million. The company incurred capital expenditure of $86.4 million in the reported quarter compared with $72.4 million in the prior-year quarter.
Stores
As of Oct 31, 2015, Men’s Wearhouse had 1,748 stores including tuxedo shops within Macy’s, Inc. M stores in comparison to 1,760 stores at the end of Nov 1, 2014.
Earlier, Men’s Wearhouse had signed an agreement with Macy’s to open licensed tuxedo rental shops with an aim to attract new customers. The shops are planned to be integrated within 300 Macy’s stores nationwide.
Zacks Rank
The Men's Wearhouse currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in this sector include Abercrombie & Fitch Co. ANF and American Eagle Outfitters, Inc. AEO. Both these stocks sport a Zacks Rank #1 (Strong Buy).
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