US: Men's Wearhouse cuts outlook despite Q3 profit rise
- Q3 net profit up 22% to $48.8m
- Sales rose 7.9% to $631m
- Gross margin improved to 46.1%
- Company cuts full-year outlook
Formal wear retailer The Men's Wearhouse has cut its full-year earnings forecast, amid economic concerns and lower than expected retail clothing sales in November.
The lower outlook came despite a 22% hike in third-quarter net profit to US$48.8m during the period to 27 October, compared to $39.9m last year.
Sales were up 7.9% to $631m from $584.6m the same period last year. Comparable store sales were up 9.5% as customers responded well to company promotions.
Retail segment sales rose 7.7% to $564m, compared to $523.8m the year before, while corporate apparel sales increased 10.1% to $66.9m from $60.8m last year.
Comparable store sales for the retailer's tuxedo rental division jumped 10.9%.
K&G comparable store sales declined 4.2% as customers did not respond to promotions and marketing campaigns as well as expected. Moores, the company's retail brand in Canada, saw comparable store sales climb 3%.
Gross margin improved to 46.1% from 45.9% the prior year.
President and CEO Doug Ewert said: "The revised guidance results from our lower than expected retail clothing sales in November and a more cautious outlook for the remainder of this fiscal year."
The retailer now expects diluted earnings per share to range from $2.57 to $2.63, compared to previous guidance of between $2.74 and $2.80.
"We experienced negative November comparable store clothing sales in both the US and Canada as a result of lower traffic levels at our retail stores.
"We believe the storms in the northeast US at the start of the month, as well as consumer distractions caused by the presidential election, the "fiscal cliff" and other economic concerns, contributed to our reduced traffic levels.
"We further believe that a more cautious outlook for traffic trends and clothing sales through the fourth quarter is now warranted and have revised our guidance accordingly."
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