• Q3 Jos A Bank sales fall 14.6%
  • Men's Wearhouse sales up 5.3%
  • EPS outlook for Q3 and FY both cut
Mens Wearhouse cut its Q3 and FY outlook

Men's Wearhouse cut its Q3 and FY outlook

Formal clothing specialist Men's Wearhouse has cut its full-year and third-quarter EPS guidance based on what the company has described as “disappointing” preliminary sales.

In a third-quarter trading update, the clothing retailer revealed “significant” comparable sales weakness at Jos A Bank, with revenues falling 14.6%, far below earlier expectations. This was primarily driven by a decline in traffic as the company began a transition away from promotional events.

Comparable sales increased 5.3% at Men's Wearhouse, and K&G sales were up 3.7% driven by higher transactions per store. Moores, however, saw sales fall 5.4%, hurt by weakening macro-economic conditions in Canada. 

"We are obviously disappointed by the third quarter results at Jos A Bank,” said CEO Doug Ewert. “Toward the end of the quarter, we reduced the number of buy-one-get-two free and buy-one-get-three free days in anticipation of our final buy-one-get-three free event. While we expected top-line volatility, as we previously stated, we did not anticipate that the impact from the traffic decline would occur to this degree, primarily because the prior year comparisons got progressively easier as the quarter progressed.”

As a result, Men's Wearhouse said it now expects adjusted EPS to be in the range of $0.46 to $0.51 for the third quarter, down from its previous expectation of $0.87.

For the full year, the company is forecasting adjusted EPS of between $1.75 and $2.00. This compares to previous guidance of $2.70 to $2.90.

Ewert added: "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.”

The company has been implementing a number of strategies to try and offset expected traffic and unit declines including new, updated and expanded assortments, higher average unit retail prices to go along with a new promotional strategy, investment in new promotional and brand building marketing, a new rewards-based customer loyalty programme, and better selling behaviours supported by staff training.