The Men’s Wearhouse, Inc. (MW)
Q1 2009 Earnings Call Transcript
June 11, 2009 5:00 p.m. ET

Executives

Ken Dennard – DRG&E
Neill P. Davis - Chief Financial Officer, Principal Financial Officer, Executive Vice President & Treasurer
George A. Zimmer - Chairman of the Board & Chief Executive Officer

Analysts

Betty Chen – Wedbush Morgan Securities
David Mann – Johnson Rice & Company L.L.C.
Janet Kloppenburg – JJK Research
Evren Kopelman – JPMorgan
Richard Jaffe – Stifel Nicolaus & Co.
Laura Champine – Cowen & Company
William Baldwin – Baldwin Anthony Securities

Presentation

Operator

Good afternoon ladies and gentlemen, thank you for standing by. Welcome to The Men’s Wearhouse first quarter 2009 earnings conference call. During today’s presentation all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. If you have a question, please press the star followed by the one on your touchtone phone. Please press star zero for operator assistance at any time. For participants using speaker equipment, it may be necessary for you to pick up the handset before making your selection. This conference call is being recorded today, Thursday, June 11, 2009. I would now like to turn the conference over to Mr. Ken Dennard of DRG&E. Pleas go ahead, sir.

Ken Dennard

Thank you, Mary and good afternoon everyone and welcome to The Men''s Wearhouse first quarter 2009 earnings call. Today’s call will begin with a review of the first quarter results of the financial guidance summation by Neill Davis, who is Executive Vice President and CFO. George Zimmer, Chairman and CEO will then provide strategic commentary before opening the call to your questions.

Please remember we’ll be making a number of forward-looking statements today and all such statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions mentioned today due to a variety of factors that affect the company including the risks specified in the most recently filed Form 10-Q and Form 10-K.

This call is copyrighted material to The Men''s Wearhouse and cannot be rebroadcast without our express written consent. I would now like to turn the call over to Neill Davis. Neill.

Neill P. Davis

Thanks, Ken and good afternoon everyone. On Monday when we reported GAAP diluted earnings per share for the quarter of $0.10 which exceeded our guidance of break even to a mid-single digit loss range. Half of this favorable variance is a result of better than expected gross margins and the balance from lower than planned selling, general and administrative expenses.

The favorable impact to gross margin results are primarily driven by stronger comparable store sales within our retail apparel business in the US, and in particular within our K&G group of stores as they experienced a positive comparable sales result for the quarter of 2.3%.

Selling, general and administrative expenses were lower than had been planned and relate to operating efficiencies within our distribution infrastructure, negotiated travel and entertainment savings, and a favorable timing variance in our advertising spending.

Now for the details. Total company sales performance in the first quarter of $461.4 million declined 5.5% from last year’s first quarter of $491.9 million. Total clothing sales of $359.1 million declined 7.6% from last year’s first quarter of $388.5 million while Tuxedo rental revenues of $71.4 million increased 1.7% over last year’s first quarter revenues of $70.2 million.

Comparable store results for the quarter in our Men’s Wearhouse stores was 7% decrease. This was in line with our quarter total comp store sales expectations. However, retail performed better than expected due to increased customer traffic while we were on promotion.

Tuxedo rentals although increasing over the prior-year quarter were below our expectations largely due to softness in winter reservation for weddings.

K&G’s comparable store sales increased as I mentioned a minute ago, 2.3%. This exceeded our sales expectations for K&G due to stabilization in traffic trends as well as include average ticket levels. Both our men’s and ladies categories outperformed expectations. In Canada, comparable store sales decreased 4.3%. This was better than expected and is the result of an increase in average ticket extending from our promotional activities.