Men’s Wearhouse Stock (MW) Pummeled on Guidance Cut

Shares of the Men’s Wearhouse (MW) were trading down -15.67 or -39.08 percent to $24.43 per share in Friday’s premarket after the company warned its earnings would fall short of expectations for in most recent quarter late yesterday. Men’s Wearhouse stock closed at $40.10, down -0.34 or -0.84 percent in Thursday’s regular trading session.

Westchase, Houston, Texas based The Men’s Wearhouse was founded by George Zimmer in 1973 and is largest retailer of men’s suits and largest tuxedo rental product company in the United States and Canada.
The company operates 1,754 stores in the two countries, as well as an online website and employs more than 15,000 people. Men’s Wearhouse brands include K&G Stores, Moore’s, The Men’s Wearhouse and, after its acquisition last year, Jos. A. Bank.

After the market close yesterday, Men’s Wearhouse released an adjusted outlook for earnings per share for the company’s third quarter ended on October 31st, in addition to comparable sales ranges for the company’s fourth quarter and an updated outlook for full year 2015 earnings per share. Third quarter results are scheduled to be released on December 9th, 2015 followed by a conference call on the morning of December 10th.

Men’s Wearhouse reported that Jos. A. Bank comparable store sales had decreased -14.6 percent during the third quarter, significantly lower than previously forecast. The company cited a decline in traffic as Jos. A. Bank transitioned from its Buy One Get Three promotional program.

The company reported third quarter comparable sales for Men’s Wearhouse increased +5.3 percent, with a rise of +7.2 percent in clothing comps driven by higher tuxedo comps of +0.7%. K&G comparable store sales increased +3.7% due to higher transactions per store, while Moore’s comparable sales dropped -5.4 percent on weaker macroeconomic conditions in Canada.

Men's Wearhouse Chief Executive Officer, Doug Ewert stated in the company’s press release that, "We are obviously disappointed by the third quarter results at Jos. A. Bank.” He continued saying, “Despite these results, we continue to believe that transitioning away from the unsustainable promotional strategy we inherited from Jos. A. Bank and accelerating our new promotional strategy is the right thing to do for the long-term success of the Jos. A. Bank business. We have already begun to strategically rebuild Jos. A. Bank for consistent and profitable long-term growth. We are focused on and committed to rebuilding the Jos. A. Bank profit model and remain confident our long-term strategy is the right one despite the disappointing short-term results.”

Jos. A. Bank comparable store sales are now expected to decrease -20 to -25 percent in the third quarter as a result of declining traffic due to a change in promotional strategy as customers adjust to a decline in units per transaction. Based on preliminary data, Men’s Wearhouse now expects adjusted earnings per share in the range of $0.46 to $0.51 in the third quarter compared to the company’s previous forecast of $0.87 per share.

Full year earnings per share are now expected to be between $1.75 and $2.00 compared to the company’s previous guidance of $2.70 to $2.90 for adjusted earnings per share. The drastic cut in the company’s third quarter and full year results is putting significant pressure on Men’s Wearhouse stock. The stock was hammered in yesterday’s aftermarket and has continued to slide this morning, down almost 40 percent before the market open.

Other News About MW

Shoppers revolt after Jos. A. Bank nixes 'Buy One, Get 3 Free' suit sale

Sales at the stores fell -15 percent after the promotion was cancelled yesterday.

Men’s Wearhouse founder George Zimmer’s second act is taking him online

Zimmer is starting a new online tuxedo rental and tailoring business.
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Published on Nov 6, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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