The Men’s Wearhouse Inc. easily surpassed Wall Street’s expectations for its first-quarter results Wednesday as it set two new marketing initiatives.
The first will put tuxedo shops, operated by Men’s Wearhouse, into 300 Macy’s locations, and the second will see Men’s Wearhouse introduce an exclusive tailored clothing collection from Kenneth Cole, dubbed “Awearness Kenneth Cole.”
In the three months ended May 2, the Fremont, Calif.-based men’s wear retailer registered net income of $10.4 million, or 21 cents a diluted share, 37.1 percent below the $16.5 million, or 34 cents, recorded in the 2014 quarter.
On an adjusted basis, eliminating a series of items including costs for the acquisition and integration of Jos. A. Bank, earnings per share were 54 cents, 2 cents above the consensus estimate of analysts.
Total sales rose 40.4 percent to $885.1 million from $630.5 million. Wall Street expected revenues of $857.7 million. Without Bank’s $216.1 million contribution, net sales would have risen 6.1 percent. Jos. A. Bank was acquired on June 18.
Comparable sales were up 6.8 percent at Men’s Wearhouse, 0.8 percent at Moore’s in Canada and 7.3 percent at K&G, while declining 1.5 percent at Jos. A. Bank.
“Traffic increased year-over-year at all of our U.S. brands and while stores’ traffic decreased, their average ticket increased,” said Doug Ewert, chief executive officer. “While the retail business has continued to perform well, the tuxedo business slowed this quarter with a decrease in comps of 1.2 percent at Men’s Wearhouse.”
Revenue from tuxedo rental services declined 2.8 percent to $103.1 million from $106.1 million, perhaps making the association with Macy’s more attractive.
The licensing agreement will initially place Men’s Wearhouse in 17 Macy’s locations, to open in the fall, with a rollout to 300 stores scheduled by fall 2016.
The shops will be Macy’s-branded, but operated and staffed by Men’s Wearhouse. Macy’s will also use the Men’s Wearhouse reservation and group management system that lets customers create and manage reservations and track the status of rentals by their wedding party. The department store will continue to sell tuxedos from its own men’s assortment.
“Macy’s is better able than any other retailer to assist customers with a broad range of needs related to special occasions,” said Tim Baxter, Macy’s chief merchandising officer. “Macy’s and Men’s Wearhouse will work together to provide additional convenience and simplicity for our customers while offering the latest trends in rental tuxedos.”
Down the line, Macy’s and Men’s Wearhouse will work together to create a digital tuxedo rental shop on macys.com.
The company also revealed it is partnering with Kenneth Cole to offer an exclusive new collection of tailored clothing under the Awearness Kenneth Cole label at its Men’s Wearhouse and Moores stores in the U.S. and Canada.
Under the terms of the deal, an unspecified contribution from the sale of all Awearness products will be donated to help veterans transition back into the workforce.
Ewert said, “As part of our ongoing companywide goal of giving back to the communities in which we serve, we have created this new partnership with Kenneth Cole to offer an exclusive designer men’s clothing line that does just that.”
“We are excited to partner with Men’s Wearhouse and bring tailored clothing to their customer while, at the same time, be able to assist our veterans in their transition into the workforce,” said Kenneth Cole, chairman and chief creative officer of Kenneth Cole Productions. “We have always sought to make an impact on people’s wardrobes, as well as communities in need.”
The line will launch in September and include ties, dress shirts, suits, sport coats and dress pants in slim fits. Price points were not revealed.