The Men’s Wearhouse Inc. is reaping the rewards of a revitalized tailored-clothing business.
In 2011, the company “sold a record-breaking 3 million suits,” Doug Ewert, president and chief executive officer, told analysts during the company’s fourth-quarter earnings call on Wednesday, as it benefited from the popularity of a more modern fit with higher quarterly sales and a lower-than-expected loss.
“Roughly once every 10 years, a replenishment cycle is driven by a silhouette change in men’s suits,” he said. “Twenty years ago the cycle was driven by wide shouldered and double-breasted suits; 10 years later the three-button suit drove the replenishment cycle. Today we’re seeing a much trimmer shape drive replenishment. It can be described as modern fit and is influencing trimmer shirtings and neckwear as well. Though these trimmer looks are particularly attractive to a younger customer, influences are being seen across all demographics and sizes in the form of narrower lapels and pleatless pants.”
Ewert said sales of modern-fit product jumped 64 percent last year and now account for 19 percent of the business, or $309 million in revenue.
To capitalize on the trend, the company expects to shift more inventory into modern-fit products this year and will feature the merchandise in all marketing efforts, including a new television campaign that will begin airing later this month. “We’re focusing considerable resources toward maximizing this fashion cycle,” he said. “We have high expectations.”
Another growth area is big and tall, where sales rose 14 percent last year to $369 million, representing 23 percent of its “retail clothing product” sales, meaning revenues other than from tuxedos, alterations and corporate apparel. Even so, Ewert said a three-store test undertaken last year to open freestanding stores for this category is being abandoned.
“Through these test stores, we see customers responding to an expanded array of products and sizes,” he said, and the company will “utilize this learning in our full-line retail stores and forgo further expansion of big and tall stores.”
Ewert said the units in Houston and Dallas led to “cannibilization” from nearby full-line stores, while customers shopping in the New York City unit were requesting smaller sizes. The Manhattan store has already been converted to a regular Men’s Wearhouse unit.
Tuxedo rentals are also viewed as a continuing growth opportunity. Comp sales rose 16 percent over the past two years to reach $377 million, and the recently introduced Black by Vera Wang collection has performed above plan, Ewert said.
The company is planning to add to its store count going forward. Ewert expects to eventually expand to 750 stores in the U.S. and 125 in Canada over the next few years. As of Jan. 28, there were 607 Men’s Wearhouse stores and 117 Moores units.
Despite strong demand, the company remained in the red in the fourth quarter, although it pared its losses more than analysts had expected. In the three months ended Jan. 28, the Houston-based men’s specialty retailer registered a net loss of $3.8 million, or 7 cents a diluted share, down from a loss of $14.1 million, or 27 cents, in the comparable year-ago period. On an adjusted basis, eliminating nonrecurring charges, the loss came to 5 cents, below both Wall Street’s estimate of a 13-cent shortfall and the company’s earlier guidance of a loss ranging between 12 cents and 15 cents.
Total revenues were up 3.7 percent to $562.2 million from $542.1 million in the year-ago period. Men’s Wearhouse stores’ sales rose 9.8 percent to $341.5 million, more than compensating for declines of 0.8 percent and 1.7 percent at K&G and Moores, respectively, to $95.7 million and $65.2 million. Same-store sales at the two smaller divisions also declined, pulling back 2.1 percent and 0.2 percent, while the anchor brand’s expanded 9.3 percent. Gross margin, including the corporate apparel segment, rose to 40 percent of revenues from 37.2 percent.
Retail clothing product sales were up 5.5 percent, to $430.3 million, and tuxedo rentals up 13.3 percent to $43.4 million. The company said that transactions per store were down, but that decline was offset by both higher average unit selling prices in the U.S. and more units per transaction throughout the chain.
In preliminary guidance, the company projected first-quarter earnings of between 53 and 54 cents a diluted share and full-year EPS of $2.70 to $2.78. Sales are expected to grow 4 to 5 percent for the year and 2 to 2.5 percent in the quarter.
Results were reported after the close of the market Wednesday. Earlier in the day, shares closed at $40.20, up 88 cents, or 2.2 percent, after hitting a 52-week high of $40.50 in late afternoon trading.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty