Key questions and answers from the third quarter fiscal 2008 earnings call conducted by The Men’s Wearhouse (MW: chart) on November 19, 2008.

Richard Jaffe (Stifel Nicolaus): You commented about the millennial initiative in terms of attracting and serving the younger customer. What is the time indication for this implementation?

George A. Zimmer: It takes quite a while to roll something out into 1,000 stores and so basically it’s beginning now and will go all of 2009 before it’s complete. We are beginning with Men's Wearhouse stores before MW Tux stores but we are testing various stores around the country. You might therefore see something some place that was other than what we have said.
There are some products in our stores right now but there will be more in the Men's Wearhouse stores in the spring.

Richard Jaffe (Stifel Nicolaus): Confirm therefore that we should look at the end of 2009 as a full implementation?

George A. Zimmer: To get a full year’s number, you will have to look at 2010; the 2009 will be the growing year but I’m real excited. I’m actually wearing the product myself and I’m going to be 60 years in two days.

Betty Chen (Wedbush Morgan): Could you tell us a little bit about the product? Is it a combination of private label and branded merchandise?

George A. Zimmer: It’s not 100% branded but it’s mostly branded. We are really focusing on designer jeans which represent in excess of $1 billion unto themselves. They are rapidly closing in on the size of the suit market in the United States.
We are also going to be carrying a line of t-shirts called Extreme Couture which is named after Randy Couture who is the former world UFC heavyweight champion fighter. We are excited about the way young people react to this stuff but you will still see Prontolomo private label mixed in with the branded stuff.

Janet Kloppenburg (JJK Research): You said that the sale event that you recently launched has had a good initial response. Is that true?

Neill P. Davis: That’s correct.

Janet Kloppenburg (JJK Research): The guidance range is very wide but at the break-even level. Is this based on the assumption that this sale event helps comps meaningfully and helps to offset some of the margin deterioration?

Neill P. Davis: To the degree that we are able to achieve the better end of the same-store sales guidance range, this obviously gets us to the better range of our earnings expectations. There will be margin compression but we are optimistic that the volume that is done can help mitigate and manage the margin compression to the degree that we are able to achieve the kind of potential results outlined in the range.

Brian Tunick (J.P. Morgan): You are currently running the BOGO promotion; if it’s successful, would you consider changing your everyday low price strategy and moving to one of your competitors that seem to be a lot more promotional to drive traffic?

George A. Zimmer: We hired a New York advertising agency by the name of DeVito/Verdi. Although it’s a new relationship, we are very excited about the relationship and one of the things that we both agree on is that we must resist at all costs the temptation to become another promotional story and therefore we need to be everyday low prices. We do have campaigns for next year in development that agrees with that philosophy.

Brian Tunick (J.P. Morgan): If 2009 continues to see these down mid- to high-single-digit comps, can we expect SG&A dollars to fall? Could you also be more specific about where the opportunities are on the SG&A side?

Neill P. Davis: We do expect SG&A dollars to fall next year. Unfortunately, I’m not in a position to get into further detail as to the particular sources of SG&A as those plans are being formulated but suffice it to say that most areas and potentially with the exception of marketing and advertising, we are looking to moderate our costs down. Those details will be more forthcoming as we begin to communicate what our full plans for 2009 are.

David Mann (Johnson Rice): We had heard some places in the channel that in this environment, there might have been some deferral of tux bookings. Is that something that you are seeing in terms of some of the bookings into the spring season?

Neill P. Davis: The forward bookings and forward visibility for our rental reservations in the fourth quarter are much more limited and narrow than at other peak seasonal times that favor the wedding business. Most of our business in the fourth quarter, certainly not all but most, are based on social type of events and we do not get a lot of forward lead time and therefore being able to determine the cadence as it will develop for the quarter. They tend to be a couple of week advance type reservations and I can’t really opine to what that means for us but you’ll recall that that business is subject to macroeconomic conditions and it could be soft for us in the fourth quarter. Fortunately, the fourth quarter is not as a meaningful event and period for us in terms of rental revenues as it is in the other quarters.

Betty Chen (Wedbush Morgan): Q1 and Q4 are the seasonally low periods and therefore the fixed costs will outweigh the sales volume in the tux business. How should we think about that for 2009?

Neill P. Davis: We still haven’t fully finalized what those are and the timing related to them but there are opportunities but they are not significant opportunities. When we affected the acquisition of After Hours formalwear, a fair amount of the infrastructure and cost savings that we were going to be able to achieve with the combination of the two companies were done within the first year of the operation and so anything we are able to do on a go-forward basis year two and beyond will take time as we learn to better and more efficiently manage the infrastructure support for the rental business. However, to answer your question directly, there are some and it would more likely than not impact fourth quarter of next year as it relates to our timing and ability to get to those opportunities.

Janet Kloppenburg (JJK Research): In your guidance, what sort of expectations did you have for the sale event in January?

George A. Zimmer: We are promoting now and we don’t know how much of future business is being pulled forward. This promotion, buy one get one free, ends at the end of the month and then our January sale will go on as normal. It’s going to be as aggressive as the market requires.
Janet Kloppenburg (JJK Research): You have probably seen that one of your competitors, as soon as you started your sales, stepped up their promotional activity and discounting levels. Do you have any contingency plans to get more aggressive as the quarter unfolds?

George A. Zimmer: We view our number one market share as our most valuable asset and we will do whatever it takes to maintain our number one share.

Brian Tunick (J.P. Morgan): You talked about potential real estate opportunities for adding on to the core business. On the flip side, what is your opinion about store closing opportunities, either at the core or at the MW Tux freestanding stores, either proactively or if you have lease expirations?