Men’s Wearhouse Stock (MW) off Sharply on Jos. A. Bank Woes
Shares of the Men’s Wearhouse (MW) were trading down -3.64 or -19.79 percent to $14.75 per share in Thursday’s premarket after the company reported lower than expected revenue and significantly lower sales from its Jos. A. Bank unit late yesterday. Men’s Wearhouse stock closed at $18.39, down -1.13 or -5.79 percent in Wednesday’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.
Men’s Wearhouse reported a GAAP net loss of -$27.15 million or -$0.56 per share in the company’s fiscal third quarter. The loss was the result of the company booking a $90.1 million non-cash impairment charge for Men’s Wearhouse’s failed Jos. A Bank acquisition it completed last year. Excluding the charge, Men’s Wearhouse third quarter earnings came to $0.50 per share.
The $90.1 million charge was taken after Men’s Wearhouse performed an interim valuation of the Jos. A. Bank tradename. Same store sales for the Jos. A. Bank unit declined -14.6 percent during the third quarter ended on October 31st, while same store sales through the first week of December plunged -35.1 percent. The company’s other brand’s same store sales averaged an increase of +5.5 percent for the same period.
For the third quarter, Men’s Wearhouse comparable store sales rose +5.3 percent, with clothing comps of +7.2 percent , while K&G’s comparable store sales increased +3.7 percent, driven by higher transactions per store. Moore’s comparable store sales declined -5.4 percent, mainly due to weaker macro-economic conditions in Canada.
Men's Wearhouse Chief Executive Officer, Doug Ewert stated in the company’s press release yesterday that, “When we acquired Joseph Bank, we knew that we needed to correct the promotional model. However, we underestimated the impact to the near-term performance as we began to execute the difficult, but necessary, corrective steps. We remain confident that these steps will restore a long-term, sustainable, profit model and reshape the business for a healthy and growing Jos. A. Bank.”
Ewert concluded saying that, “We are working hard to become an innovative and differentiated retailer in men's apparel, from our stores to our digital properties, from our customers' visits to our tailors and stylists, to their phones and their homes. We look forward to sharing more with you in the near future about this and our other initiatives to create value for all our stakeholders”
Men’s Wearhouse stock has declined significantly since its takeover of Jos. A Bank in June of 2014. The shares are off over 70 percent with this morning’s action. The stock will open at a six year low this morning pressured by a downgrade by Stifel that downgraded the stock to a “hold” recommendation, while Zacks gave the stock a short term rating of “strong sell”.
Other News About MW
Why Shares of Men's Wearhouse Inc. Were Cut in Half in November
Company released a warning on November 5th detailing its disappointing results for the quarter.
According to this article, six hedge funds have been buying MW stock lately.
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