Having never found the right buyer, The Men’s Wearhouse Inc. has removed the “for sale” sign from its K&G division.
This story first appeared in the December 11, 2014 issue of WWD. Subscribe Today.
K&G, the company’s discount division, has been on the market since 2013 and, as recently as June, was said to have attracted the interest of a single prospective buyer.
But on Wednesday, reporting third-quarter earnings and sales that fell below Wall Street’s expectations, the company said it had completed a strategic review of the business and would keep it in the Men’s Wearhouse family, which has expanded to include Jos. A. Bank since K&G was first made the subject of the strategic review.
“As part of the review, we considered offers to acquire the business, none of which were acceptable,” said Doug Ewert, chairman and chief executive officer. “We concluded that continuing to operate K&G as a part of the company’s overall portfolio will provide the most value to our shareholders.”
The subject is likely to come up when the company holds a conference call to discuss third-quarter results today.
In the three months ended Nov. 1, net income fell 82.2 percent to $6.8 million, or 14 cents a diluted share, from $38.2 million, or 79 cents. Adjusted EPS, eliminating the impact of the June acquisition of Jos. A. Bank and other factors, was 83 cents, 4 cents below the 87-cent consensus estimate of analysts.
Revenues expanded 37.3 percent to $890.6 million from $648.9 million and were up 1.3 percent without the $233.3 million contribution from Jos. A. Bank. Comparable sales fell 8.1 percent at Jos. A. Bank while rising 2.2 percent at Men’s Wearhouse, 8.8 percent at Moores and 4.4 percent at K&G.
Ewert said that, while Bank’s comps were “slightly below our internal expectations,” it made progress on margins, and cost synergies are running ahead of projections for the year.