The Men’s Wearhouse Inc. late Monday reported lower first-quarter earnings that came in well in excess of analysts’ estimates and used the opportunity to show off improvements in its balance sheet as the retailer gets closer to a takeover of bankrupt Filene’s Basement.
During the three months ended May 2, the Houston-based men’s wear specialty chain logged net income of $5.3 million, or 10 cents a diluted share, 47.1 percent below the $9.9 million, or 19 cents, reported for the year-ago quarter. But the bottom-line results were well in excess of analysts’ estimates of a 1-cent loss and the company’s guidance, provided in March, of a breakeven performance to a loss in the midsingle digits.
Revenues declined 5.5 percent to $464.1 million from $491.1 million a year ago as increases of 1.7 and 3.8 percent in tuxedo rentals and alterations, to $71.4 million and $33.7 million, respectively, failed to offset a 7.6 percent contraction in apparel sales to $359.1 million. Same-store sales fell 7 percent at Men’s Wearhouse and 4.3 percent at Moores, but rose 2.3 percent at K&G.
Gross margin fell back to 40.5 percent of sales from 43.1 percent in the 2008 quarter.
The firm’s K&G Acquisition Corp. unit prevailed over several companies, including Syms Corp., in the bidding for bankrupt Filene’s Basement late Friday night, agreeing to pay more than $60 million for 17 to 20 stores and inventory. A hearing is scheduled for Wednesday in Delaware bankruptcy court to consider the bid, and Men’s Wearhouse has rescheduled its conference call for Thursday, after the hearing, one day later than originally planned.
Company officials declined to comment further Monday.
The first-quarter results came packaged with a balance sheet that showed improvement in the retailer’s cash and debt positions. Cash and cash equivalents at the end of the first quarter stood at $107.5 million, nearly $31 million above their level a year ago. Long-term debt fell to $39.2 million from $106.9 million. Meanwhile, inventories stood at $448 million, down 8.2 percent from their year-ago level. Shares of Men’s Wearhouse closed down 10 cents, or 0.6 percent, at $17.87 on Monday, prior to the earnings announcement, but were up 9.1 percent in after-hours trading.
The company projected earnings of 56 to 60 cents a diluted share in the second quarter with a same-store sales decline of 4 to 6 percent in its apparel business and a corresponding increase of 3 to 5 percent in tuxedo rentals.