George Zimmer hosted his final conference call as chief executive officer of the Men’s Wearhouse Wednesday afternoon, presiding over a discussion of a first quarter when the company managed to double profits and beat analysts’ estimates.
“I think that it’s clear that there is a relationship between the model that we’ve developed at The Men’s Wearhouse and the very positive results that we’ve just reported today,” he said, pointing to the company’s strong culture and increasing market share. “Today we estimate that we sell one out of every five suits sold and rent one out of every three tuxedo rentals in the United States.”
In the three months ended April 30, the Houston-based men’s wear retailer reported that net income attributable to common shareholders rose to $27.4 million, or 52 cents a diluted share, from $13.6 million, or 26 cents, in the 2010 period. Excluding expenses related to the integration of its acquisitions in corporate apparel, EPS was 53 cents, 4 cents above the estimate tabulated by Yahoo Finance.
Sales in the quarter expanded 22.6 percent to $580.4 million from $473.5 million as same-store sales increased at all three of its nameplates — 10.8 percent at Men’s Wearhouse, 9.3 percent at K&G and 6 percent, in Canadian dollars, at Moores. Gross margin held steady at 42.5 percent of sales in both periods.
Included in total sales was $59.7 million from corporate apparel, $54 million of it attributable to the company’s acquisition last August of the Dimensions and Alexandra businesses in the U.K. In 2010, the segment generated just $3.7 million in revenues.
The company registered more units per transaction and higher average tickets at all three brands during the quarter, and customer traffic rose at K&G and Moores.
Neill Davis, chief financial officer, said clothing sales rose 12.5 percent in the period, driven by aggressive promotions, while tuxedo rental comp-store sales nearly doubled plan, increasing 3.9 percent versus a planned hike of 1 percent to 2 percent.
Doug Ewert, president and chief operating officer, who will succeed Zimmer as ceo next week, added: “From a product category perspective, suits, our largest category with approximately 40 percent of the retail sales mix, led the way with many complementary categories close behind. This strength was mostly average ticket driven as our customers responded aggressively to the value and trend-right assortments offered during this spring selling season.”
He singled out the “much stronger than expected results at K&G” which followed the company’s efforts to target the core urban and fashion customer.
Ewert also pointed to the vitality of the company’s e-commerce initiatives. Sales jumped 137 percent in the period, on top of a 132 percent increase last year. A K&G Web site went live last month.
The company expects EPS of $1.01 to $1.04 in the second quarter with comparable-store sales gains of between 8 percent and 9 percent at Men’s Wearhouse, 2 percent to 3 percent at K&G and 6 percent to 7 percent at Moores.