Men’s Wearhouse reports positive Q2 results
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GAAP diluted EPS at Men’s Wearhouse was 0.98 dollars and adjusted EPS was 1.07 dollars excluding non-operating items.
Commenting on the company’s performance, Doug Ewert, Men's Wearhouse Chief Executive Officer, stated, “We continue to be pleased with the performance of our legacy brands. Comparable sales increased 3.1 percent at Men's Wearhouse, 0.7 percent at Moores and 6.7 percent at K&G. Excluding rental revenue, Men's Wearhouse clothing comps were 6.5 percent driven by higher average unit retails. Men's Wearhouse comparable rental revenue decreased 3.3 percent which was slightly better than internal expectations.”
“We are focused on rebuilding the Jos. A. Bank profit model. In doing so, we expect top-line volatility as we establish a promotional model with broader customer appeal and strengthen the margin profile. Taking this into consideration, as well as the impact of the second quarter results, we still expect to be within our EPS guidance range of 2.70 dollars to 2.90 dollars and continue to be confident in our 2017 guidance,” added Ewert.
Second quarter financial highlights
Net sales at Men's Wearhouse, were up 4.4 percent from last year's second quarter and comparable sales increased 3.1 percent due primarily to an increase in clothing product average unit retails. The higher margin rental revenues comparable sales decreased 3.3 percent.
Jos. A. Bank comparable sales decreased 9.4 percent with decreases in both units sold per transaction and average transactions per store. Moores, Canadian retail brand, had a comparable sales increase of 0.7 percent. However, net sales for Moores decreased 10.5 percent due to an unfavorable change in the currency translation rate. K&G comparable sales increased 6.7 percent due to an increase in average transactions per store. The Corporate Apparel segment had a sales decrease of 8.2 percent primarily driven by an unfavorable change in the currency translation rate.
On a GAAP basis, total net sales increased 14.6 percent, or 117 million dollars, to 920.1 million dollars. Retail segment net sales increased by 16.6 percent, or 122.5 million dollars and Corporate apparel sales decreased by 8.2 percent or 5.5 million dollars.
Total net sales on an adjusted basis decreased 1.1 percent, or 9.9 million dollars from 929.9 million dollars baseline net sales. Retail segment net sales for the quarter decreased by 0.5 percent, or 4.4 million dollars, to 858.9 million dollars and Corporate apparel sales decreased by 8.2 percent, or 5.5 million dollars.
Total gross margin was 418.7 million dollars, an increase of 60.1 million dollars, or 16.8 percent. As a percent of sales, total gross margin increased 86 basis points to 45.5 percent of net sales. Operating income increased 55.4 million dollars to 98.1 million dollars, representing 10.7 percent of net sales compared to 5.3 percent in the prior year.
Net sales in H1 improve 25.9 percent
In the first half, total net sales on GAAP basis increased 25.9 percent, or 371.6 million dollars, to 1,805.2 million dollars. Retail segment net sales increased by 28.5 percent, or 373.1 million dollars and corporate apparel sales decreased by 1.2 percent or 1.5 million dollars. Total gross margin was 800.2 million, an increase of 158.3 million dollars, or 24.7 percent. As a percent of sales, total gross margin decreased 45 basis points to 44.3 percent of net sales.
Total net sales on an adjusted basis during the first six months increased 1.5 percent, or 27.3 million dollars from 1,777.8 million dollars baseline net sales. Retail segment net sales for the six months increased by 1.7 percent, or 28.8 million dollars, to 1,683.2 million dollars due primarily to an increase in clothing sales at Men's Wearhouse. Corporate apparel sales decreased by 1.2 percent, or 1.5 million dollars.