The promotional posture instituted at The Men’s Wearhouse at the end of last year continues to pay dividends.
On Wednesday, the Houston-based company reported second-quarter profits rose more than 20 percent despite a decline in sales. In addition to aggressive promotions — buy-one, get-one-free suit sales, and now buy one, get the second for $100 — the strong showing was also driven by a double-digit decline in expenses.
In a conference call, George Zimmer, chief executive officer, told analysts, “In the fourth quarter of 2008, we learned that at Men’s Wearhouse and Moores [the company’s Canadian chain], a highly promotional strategy was effective in driving unit sales and gaining market share in our dominant clothing category, suits. Therefore, facing the ongoing challenging macroeconomic environment, we planned our 2009 business accordingly.”
Zimmer said the company’s departure from its “historic path of everyday low prices has been as successful as it was gut-wrenching to implement. So I’m encouraged and confident that the changes we have made and continue to refine in our pricing and marketing strategies are creating value that our customers are responding to very positively.”
Zimmer said according to industry estimates, unit sales of suits in the U.S. for the first half of 2009 were down in the double digits from the prior year. At Men’s Wearhouse, however, “our suit business in dollar terms is up 4.1 percent, and in unit terms, up 23 percent. Clearly we are growing our market share.”
Turning to tuxedo rentals, Zimmer said although wedding rentals are “soft, if not slightly down year-over-year,” the company’s sales rose 1.7 percent in the quarter, indicating the retailer is gaining market share here as well, “albeit at a slower rate than tailored clothing,” Zimmer said.
At the MW Tux stores, the company continues to add other categories to increase sales, including casualwear such as jeans and T-shirts. Zimmer said some stores are doing well with that merchandise, while others are struggling. “So we will continue to investigate other ways to stimulate sales in our tuxedo rental stores.”
Turning to its K&G division, Zimmer said the stores “significantly outperformed their volume targets for the first half of the year, with a 7.5 percent increase over plan in sales per gross square foot. Our increase over plan is a result of a significant improvement in our ladies’ business, upgrades to our store look and feel and an increased marketing spend and brand awareness.”
Responding to a question from an analyst about a report that competitor Jos. A. Bank Clothiers is considering entering the tuxedo rental business, Zimmer said. “We welcome the competition, but I would say they should think this through very carefully.” Neal Black, the current ceo, responded to WWD: “We have several growth initiatives under investigation for 2010 and beyond. We have always had an interest in all aspects of the formalwear business and we have a significant existing business in tuxedo sales. We have not made any announcement about tuxedo rentals but if we were to do so, it would be with a full and complete understanding of the competitive market.”
In the three months ended Aug. 1, net income hit $39.5 million, or 75 cents a diluted share, 20.3 percent above the $32.8 million, or 63 cents, achieved in the second quarter of 2008. The results easily passed both analysts’ consensus estimates for earnings per share of 61 cents a share and the company’s guidance of between 56 cents and 60 cents provided on June 8.
Sales fell 3.5 percent to $526.2 million from $545.3 million in the year-ago quarter with same-store sales dropping 2 percent at Men’s Wearhouse, 3.6 percent at K&G and, in Canadian dollars, 3.4 percent at Moores.
Gross margin fell to 45.2 percent of sales from 46.4 percent a year ago.
In initial guidance for the third quarter, the company said it expected earnings of 27 cents to 30 cents a diluted share, below the consensus estimate of 32 cents, on a 2 to 3 percent decline in same-store sales in its retail business and a 1 to 2 percent increase in same-store rentals for tuxedos. Zimmer said, “The reality is our business tends to lead the decline in business cycles and lag during the upturn.”
Year-to-date profits rose 4.6 percent to $44.7 million, or 85 cents a diluted share, while sales were down 4.4 percent to $990.3 million from the $1.04 billion registered in the first six months of 2008.
@zacposen's go-to holiday gift? Cookies! "I'll usually bake cookies and send them as a gift," said the designer, who recently released his cookbook "Cooking With Zac: Recipes from Rustic to Refined." Get the recipe for his Brown Butter-Chocolate Chip Cookies via link in bio 🍪🍪🍪 #wwdeye #cookingwithzac
For @monsemaison’s pre-fall 2018 collection, Fernando Garcia and Laura Kim honed in on the brand’s many signatures — men’s wear, which was tweaked and feminized through deconstruction, proportion play and lots of bare shoulders. See the rest of the photos on WWD.com #wwdfashion (📷: George Chinese)
On Friday night, @yohjiyamamotoofficial received the Design for Asia Lifetime Achievement Award in Hong Kong. The 75-year-old designer has been celebrated for many years and is best known for his dark and avant-garde tailoring. “In my long career, in design, architecture, [I’ve been to] so many parties, this is the very first time that I have such a warm feeling, I really appreciate this,” Yamamoto said. #wwdfashion (📷: @dominiquemaitre)
Discovery is collaborating with British pop artist @philipcolbert on a new line of clothing and accessories called Discovery Shark. The collection, which will launch next summer for Shark Week’s 30th anniversary, features a whimsical line of women’s and men’s bomber jackets, sweatshirts, bags and more. #wwdfashion
“I’m always a big champion of a female rapper, and I’m glad to see a new voice that feels unique and authentic that’s coming up, and I think we’re going to see more great things from her,” said @itsjeremyscott about @iamcardib, who performed at @moschino’s Art Basel Miami Beach party last night. #wwdeye (📷: @lexieblacklock)
@janellemonae’s “What’s Your Frequency?” room in @refinery29's #29Rooms made its debut this week at the opening of the Los Angeles art exhibit. “It’s about the ongoing conversation around mass surveillance, the weaponization of technology and cultural uniformity. My space was created so that we can come together and talk about the complexities of our humanity,” said Monáe. #wwdeye (📷: @bucknerphoto)
@pantone announced their Color of the Year 2018: Ultra Violet. Nearly 20 months after the musician Prince’s death, fashion is having a purple moment. Varying shades of purple appeared on spring or fall runways, from @christopherkane to @calvinklein. @gucci’s Alessandro Michele bathed his fall runway in ultra violet-colored light at one point. Pantone 18-3838 is meant to “push the boundaries of what inspires us to look upward and outward to the future.” #wwdnews #wwdfashion (📷: @kukukuba)