Unable to recover from a slow start to the fourth quarter, Men’s Wearhouse reported a 1% same store sales increase and a worse than expected loss of 7 cents a share.
Men’s Wearhouse had previously lowered its fourth quarter expectation in early December 2012 when it report third quarter results and noticed that November sales were not trending well. Weakness was blamed on Hurricane Sandy in the Northeast, the distraction of a presidential election and debate over national fiscal matters, all of which were said to depress traffic to Men’s Wearhouse stores. Accordingly, the company’s original fourth quarter guidance for earnings in the range of 12 cents to 15 cents a share was lowered to a range that envisioned a profit of 1 cent to a loss of 5 cents a share. However, even the low end of that range wasn’t low enough as Men’s Wearhouse president and CEO, Doug Ewert said unprecedented volume declines at the start of the fourth quarter weren’t overcome by improvement during the remainder of the period, resulting a per share profit that was two cents below the low end of the forecast range.
Total net sales for the fourth quarter increased 8.2% to $608.4 million from $562.2 million for the same period a year ago.
"Net sales at our core flagship brand Men's Wearhouse stores, which represented 61% of our total fourth quarter sales, were up 9.1% over last year's fourth quarter, and comparable store sales increased 1.0%, at the low end of our guidance range for the quarter," Ewert said. "Our higher margin tuxedo rental revenues had an above guidance U.S. comparable store sales increase of 9.4% in the fourth quarter, driven by increased unit rental rates and unit rentals."
The company’s Canadian brand, Moores, accounts for 11% of our total company sales and produced a worse than expected same store sales decrease of 5.5%. The K&G unit accounted for 16% of our total fourth quarter sales and had a comp decline of 5.7%.
The company is now looking to unload the K&G division to focus on its core Men’s Wearhouse and Moores brands and has retained Jefferies & Co. to evaluate strategic alternatives.
For the full 2012 fiscal year, net sales increased by 4.4% to nearly $2.5 billion and profits increase to $131.7 million, or $2.55 a share, from $120.6 million, or $2.30 a share.
The company ended the year with 1,143 stores consisting of 928 Men’s Wearhouse stores, 120 Moores stores and 97 K&G stores.