Jos. A. Bank’s net and comparable sales continued to slide in the fourth quarter, but parent firm The Men’s Wearhouse Inc. said both the sales associated with the acquired brand and the synergies derived from it were running ahead of schedule.
The company exceeded analysts’ expectations for top- and bottom-line results in the quarter, with mid- to high-single-digit comps at its three legacy operations — Men’s Wearhouse, Moores and K&G. While Jos. A. Bank continued to backtrack on sales, with a 6.6 percent decline in comps and a 5.4 percent drop in net sales in the quarter, Doug Ewert, chief executive officer of the company, classified the performance as “above our expectations.”
The process of integrating the operation has also yielded “significant progress,” said Ewert, estimating the run-rate synergies through the end of 2014 at $35 million, more than twice the target of $15 million.
“In the nine months since the acquisition,” Ewert commented, “Jos. A. Bank has transitioned many of the back-office functions, began store train programs, began the work to instill its employees with the Men’s Wearhouse culture and launched tuxedo rental in all its Jos. A. Bank stores.”
The company expects Jos. A. Bank comps to remain in negative territory through the first half of the year with “improvement” in the second half. Gross margin is expected to parallel the comp performance.
In the three months ended Jan. 31, the company recorded a net loss of $35.9 million, or 75 cents a diluted share, versus a loss of $30.4 million, or 64 cents, in the year-ago quarter. Excluding a series of nonrecurring items, the loss was reduced to 3 cents a share, better than the 7-cent loss expected, on average, by analysts. Among the special items were a $42.6 million arbitration settlement paid to former licensee The Siskind Group and acquisition and integration costs related to the $1.8 billion Bank purchase.
Overall revenues also beat Wall Street estimates, rising 65.6 percent to $928.4 million, above the $919.1 million expected, on average, by analysts. Without Bank’s $337 million sales contribution in the quarter, sales would have been ahead 5.5 percent.
In the quarter, the Men’s Wearhouse brand’s comps rose 6.8 percent while net sales moved up 8.4 percent to $379.4 million; Moores comps rose 8.6 percent while net sales expanded 0.8 percent to $59 million, and K&G’s comps grew 6.8 percent while net sales moved ahead 1.6 percent to $82.6 million.
For the full year, including special items, the net loss was $387,000, or 1 cent a diluted share, compared to net income of $83.8 million, or $1.70. Revenues were $3.25 billion, 31.5 percent above the 2013 mark of $2.47 billion. Subtracting Jos. A. Bank’s sales contribution of $684 million since June, sales would have increased 3.9 percent to $2.57 billion.