Key questions and answers from the second quarter earnings call conducted by Men’s Wearhouse Inc. (MW: chart) on August 27, 2008.

Betty Chen (Wedbush Morgan Securities): Comment on the implied guidance?

Neill Davis: As it relates to the third quarter and fourth quarter guidance and my comments concerning a more conservative posture with our clothing business, its not a reflection of any deepening trend that we have seen develop its just that there’s a belief that with the economic backdrop that exists and its just taking a more conservative posture, its not significant but its just slightly more conservative.

We have before going into the second half of the year, been considering a currency on parody that is Canadian dollar to the US dollar, and we have taken that down 6%. That can have close to a 3 cents to 4 cents impact on the bottom line on an annualized basis.

Richard Jaffe (Stifel Nicolaus): Is there still some initial margin opportunity or is the sourcing opportunity nearly maximized both for tuxedos and for suits?

George Zimmer: The way you have to think about that is that we make a choice. Its not that the opportunity maxes out but we choose to have a mix of designer and branded goods along with our private label and so that mix is what really determines the margin.
I would not say we are maxing out on our margin opportunity, but we are making a choice to level off our margin. And yes, we are playing defense for the most part, but as I sort of hinted at in my remarks, we are working on some strategic initiatives that we are not prepared to talk about now.

Janet Kloppenburg (JJK Research): Comment on the tuxedo business?

Neill Davis: Second quarter was down 5.3%, low single-digit declines expectation for the third quarter and turning to a positive increase in the fourth quarter. The margin compression that we anticipate we may experience is just simply the fact that the customer comes in the store and when they buy they seem to be buying more heavily of the items we have already marked down.

As it relates to our inventory position, yes, the second quarter end we were only down 1.3%, however we have adjusted our buy plans some time ago to put us in a position by the end of the is year to be down on a per store basis of roughly 5% which we believe is very much in line with our same store sales or comp sales expectations.

Brian Tunick (JP Morgan): Can you give us a little more color on the metrics behind the comp decline at core TMW?

Neill Davis: Relative to the composition and character of our same store sales rates of change, it continued to be led by traffic however I will tell you that our average ticket is also, has been under pressure for this year.

But within average ticket it relates primarily to units per transaction. It’s just reflective of our customer becoming slightly more conservative in their buying when they do come into the store.

Instead of multiple items, multiple shirts, multiple ties, they are narrowing it down so they are being a little more conservative and that’s being manifested in terms of the lower units sold per transaction.

However it continues to be predominantly a traffic issue. As it relates to the questions concerning leads, are we getting business shifting from MW Tux to the Men’s Wearhouse, absolutely.

We have a unique opportunity right now in terms of offering our customers a choice when we do begin to make calls from our centralized call center in Houston on those leads across 1,000 touch points in this country as opposed to previous choices; 500.

David Mann (Johnson Rice & Company): In terms of the second quarter semi annual sale, can you just review the performance?

George Zimmer: The performance was excellent at K&G and Moores and mediocre at Men’s Wearhouse. We made a mistake in our Men’s Wearhouse television and used an announcer’s voice instead of mine. That will not happen again.

Tommy Halloran (Unspecified Company): Could you give us a little more detail on your capital spending plans going forward and what portion of that you feel is absolutely mandatory to maintain your competitive position?

Neill Davis: Components of the $70 million-ish range that we have for this year, about two-thirds of it is store related and the balance is technology and distribution center related.

I would offer to you an estimate of somewhere in the $25 million to $35 million range that needs to be spent on an ongoing basis either to continue to upgrade our stores, maintain a fresh brand and perspective for our customers as also in terms of upgrading and enhancing and changing our technology platform and distribution centers as necessary.

Janet Kloppenburg (JJK Research): Could you talk a bit about Canada and the currency discrepancy now going on?

Neill Davis: The same store sales forecast is on a Canadian dollar basis so it’s not being impacted by the currency. It’s the translation to US dollars that’s impacting our numbers. It’s only a translation affect, it’s not a cash flow affect.

George Zimmer: In terms of the competition, we only hear through the grapevine but Macy’s overall business is not good and their men’s business is worse then their overall business.