You’re Going to Like the Way Men’s Wearhouse Looks in Your Portfolio

Source: Thinkstock

Source: Thinkstock

The Men’s Wearhouse Inc (NYSE:MW) is a well-known company. You may be familiar with its commercials featuring the founder of the company discussing the latest suits and inventory and finishing with his famous tagline: “You’re going to like the way you look. I guarantee it.”

The company operates through two segments, Retail and Corporate Apparel. It provides suits, suit separates, sport coats, slacks, sportswear, outerwear, dress shirts, shoes, and accessories for men, as well as offers tuxedo rentals. The company also provides ladiescareer apparel, sportswear, and accessories; and children’s apparel. As of February 1, 2014, it operated 1,124 retail stores under the brand names of Men’s Wearhouse, Men’s Wearhouse and Tux, K&G, and Moore’s Clothing for Men. The company also sells its products through the internet at menswearhouse.com. In addition, it provides corporate clothing uniforms and workwear to workforces under the Dimensions, Alexandra, and Yaffy brands through managed corporate accounts, catalogs, and the Internet in the United Kingdom. The company is also involved in the retail dry cleaning, laundry, and heirlooming operations.

The stock has rewarded shareholders, rising 86 percent in the last two years. But can the stock’s momentum continue? To do so, the company will have to keep delivering strong results.

The company appears to be on the path to deliver successful quarters. Total net sales for fiscal first-quarter 2014 increased 2.3 percent to $630.5 million, and total Men’s Wearhouse brand revenues were up 4.8 percent over fiscal first-quarter 2013. GAAP diluted earnings per share for fiscal first-quarter 2014 was $0.34 and adjusted earnings per share was $0.69 excluding one-time costs. Total net sales for the fiscal 2014 first-quarter increased 2.3 percent or $13.9 million to $630.5 million from $616.5 million.

Retail segment sales for the quarter increased by 2.4 percent or $13.5 million and corporate apparel sales increased by 0.8 percent or $0.5 million as compared to the prior year quarter. The consolidated total gross margin was up $5.4 million or 2.0 percent to the prior year quarter. The total gross margin rate decreased 13 basis points primarily due to promotional events and a decrease in the tuxedo rental services gross margin rate as a result of increased royalty expenses. The retail segment total gross margin was up 2.2 percent and the corporate apparel gross margin decreased 1.9 percent.