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Market Update : 
The Men’s Wearhouse Q1 Earnings Call Transcript
Author: 123jump.com Staff
123jump.com
Last Update: 9:08 PM ET June 21 2009


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Well, this remains an ongoing challenge and I don’t want to suggest we have now discovered the solution because it is an ongoing obstacle. What we are experiencing right as I speak is we now have over 1,000 Men’s Wearhouse and Men’s Wearhouse and Tux stores that have our full young men’s sportswear and separates assortment. They did not have these goods in the first quarter but now in the second quarter they now have the full assortments. So we are starting to see some sales coming out of this area. It is far too soon to predict.

I don’t necessarily hang my hat on our ability to convert in real-time Tux rental customers into retail customers. That would be wonderful, don’t get me wrong. But I think that as long as this Tux rental customer gives us a leg up when they become a retail customer I am satisfied.

David Mann – Johnson Rice & Company L.L.C.

Thanks. And then in terms of your comments about the rental business, in terms of weddings, can you just give a little more detail in terms of the visibility going forward. Are you seeing continued weakness in terms of wedding bookings?

George A. Zimmer

I am sorry, Neill, go ahead.

Neill P. Davis

I was just going to mention that the 3% to 5% increase that we have for the second quarter is supported by very high rate of bookings in hand. We seem to be seeing a continuing bill at a rate that we are comfortable that supports that range and we are just able to better life size the top line growth rate. It seems to be developing fine and we have adequate bookings in hand to support that range for the second quarter.

George A. Zimmer

And I would simply add that we are all disappointed I think in our Tux rental performance even though it remains enormously profitable and successful. We are taking steps to do a better job in the future, I mean this year (inaudible) is over and in effect your weddings are already in-house. We are by no means tapped out in Tux rental.

Operator

Thank you. Our next question comes from the line of Janet Kloppenburg with JJK Research. Please go ahead.

Janet Kloppenburg – JJK Research

Good afternoon. George, I was wondering if you could elaborate a bit more on K&G given your comparison to Filene’s Basement and if you are thinking about increasing the percentage of the women’s business in the K&G stores or that’s a strategy that Mary Beth will be pursuing.

And Neill, I wondered if there was any public update about what was happening in the auction process. I know you don’t want to talk about it but I think there may have been another auction today or there is one for later today, I was wondering if you could just talk a little bit about that. And lastly, George, you have changed the business model for The Men’s Wearhouse stores now being more promotional than you were in the past and I wondered if that’s something that you consider permanent. Thank you.

George A. Zimmer

Right. Well, let me comment on the ladies at K&G. I tried to suggest this a moment ago that Mary Beth was already making the changes at K&G that I described including a greater percentage of branded product, more upscale brands, more women’s, less men’s. These changes were underway under Mary Beth’s leadership. What has happened is that Mary Beth’s confidence has been strengthened, which if you ever had a leadership position is one of those magical things and now she is going to be accelerating the development in our branded program and our ladies program raising the percentage of ladies even more than she was attempting, raising the percentage of branded even more than contemplated. So, I see that is what’s happening with our ladies.

The new promotional stance we have taken actually seems to be working out quite well. We no longer offer buy one get one free on a significant amount of inventory on a regular basis. Right now you will see there is a summer sale being advertised so there will continue to be many promotions but because of some of the price increases we took we have been able to mitigate the deterioration in product margins from what was originally expected and I believe Neill indicated that in his remarks.

Neill P. Davis

Janet, what I will say about the following situation. At a hearing yesterday, the bankruptcy court had directed Filene to conduct a new auction which will take place tomorrow. That’s all.


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