Tuxedo rentals continue to be a bright spot for The Men’s Wearhouse Inc.
Thanks in part to a shift in tuxedo prom rentals, the Fremont, Calif.-based company reported earnings for the first quarter ended May 4 rose 23.1 percent to $33.1 million, or 65 cents a diluted share, from $26.9 million, or 52 cents, a year ago. The company estimated that about 10 cents of the increase is attributable to the shift, which resulted from an earlier Easter this year.
Net sales in the period rose 5.1 percent to $616.5 million from $586.6 million for the same period last year. Retail sales for the quarter increased 4.4 percent to $560.2 million, while corporate apparel sales increased 13 percent to $56.4 million.
The company also reported that total gross margin rose 9.4 percent or 177 basis points to $23.9 million, due primarily to tuxedo revenues.
SG&A expenses increased 5.8 percent or $12.3 million, due mainly to higher store and nonstore payroll-related costs, including increased medical benefits and higher advertising costs.
Doug Ewert, president and chief executive officer, said, “Net sales at our core flagship brand Men’s Wearhouse stores, which represented 65 percent of our total first-quarter sales, got off to a slow start in February and were comping negatively until about President’s Weekend. After that, we began to pick up in both clothing sales and tuxedo revenues.”
Comparable-store sales at Men’s Wearhouse stores rose 1.6 percent over last year and 8.2 percent overall. Comparable-store sales of tuxedo rentals rose 6.5 percent in the period, and higher prices on tailored clothing offset decreases in units sold per transaction and average transactions per store, the company said.
Moores, the company’s Canadian chain, represented 9 percent of total first-quarter sales and posted a comparable store sales decrease of 7 percent due mainly to lower average transactions per store and units sold per transaction. K&G, which represents 16 percent of sales, posted a comparable-store sales decline of 6.7 percent.
“The decrease in the K&G comps were in line with internal expectations for the quarter,” Ewert said. “However, the Moores sales were below internal expectations as we are facing headwinds in Canada.”
The corporate apparel segment, which represented 9 percent of total first-quarter sales, had a sales increase of 13 percent due mainly to a higher level of new uniform rollouts.
In issuing guidance for 2013, Men’s Wearhouse is expecting diluted earnings per share in the range of $2.70 to $2.80. In addition, it now expects comparable-store sales of tuxedo rentals to come in slightly lower, to an increase of 4 to 5 percent. “The future reservations are running slightly below our initial expectations,” Ewert said.
Moores’ comparable-store sales are now expected to decrease 2 to 3 percent on an annual basis as a result of a continued decrease in average transactions per store. These decreases are being primarily offset by a favorable retail margin rate and lower selling, general and administrative expenses.
The company will hold a conference call Thursday morning to discuss the results.