Adopting a “more cautious outlook” in light of comparable-store sales decreases in November, The Men’s Wearhouse Inc. reported earnings that missed analysts’ expectations for the third quarter and reduced its guidance for the fourth quarter.
“We experienced negative November comparable-store clothing sales in both the U.S. and Canada as a result of lower traffic levels at our retail stores,” said Doug Ewert, president and chief executive officer of the Houston-based men’s apparel chain. “We believe the storms in the Northeast U.S. at the start of the month, as well as consumer distractions caused by the Presidential election, the ‘fiscal cliff’ and other economic concerns, contributed to our reduced traffic levels. We further believe that a more cautious outlook for traffic trends and clothing sales through the fourth quarter is now warranted.”
In the three months ended Oct. 27, net income grew 22.5 percent to $48.8 million, or 95 cents a diluted share, from $39.9 million, or 77 cents, a year ago. Analysts, on average, expected earnings per share of 97 cents.
Revenues were up 7.9 percent to $631 million, just below analysts’ estimates, from $584.6 million in last year’s third quarter. Prior to the softness in November, quarterly sales were up 10.6 percent at the flagship division, to $407.4 million, on a 9.5 percent comp increase, and up 4.8 percent at Moores, its Canadian unit, to $72.3 million, as comps expanded 3 percent.
K&G proved problematic for the company, however, as sales declined 3.5 percent, to $77.3 million, with comps down 4.2 percent.
“Sales at K&G were disappointing as customers did not respond to our promotions and new marketing campaign as well as expected,” Ewert said.
Fourth-quarter EPS is now expected to land between a loss of 5 cents and a profit of 1 cent, well below the profit range of between 12 and 15 cents provided when second-quarter results were released in September. Comps are expected to be positive at all retail units except for K&G, where the decline is projected to be between 3 and 4 percent.
For the nine months, net income increased 8.6 percent to $135.1 million, or $2.62 a diluted share, as revenues were up 3.3 percent to $1.88 billion.
The company will hold a conference call at 9 a.m. today to discuss the results and projections.
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