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  • Mens Wearhouse (MW) Experiences Soft Q4 On Patronage Deceleration 0 comments
    Mar 4, 2013 1:58 PM | about stocks: MW

    Men's Wearhouse is set to release fourth-quarter earnings results at 5:30 pm Eastern time on Wednesday, March 13, 2013. The company will then host a conference call on March 14, 2013 at around 9 am.

    Many analysts expect this conference call to be mediocre at best. Analyst John Kernan of Cowen recently downgraded the apparel store from outperform to neutral citing negative growth. The apparel company is expected to have an EPS of negative five cents with revenue of approximately $610 million.

    Men's Wearhouse also owns stores Moores and K&G. Overall, they have over 1,000 stores around the country and is in a testing phase of international growth. The company utilizes stores of approximately 5,700 square feet in order to service their male clientele. They're able to leverage inventory space by merging the stock room and the show room, by doing so they are able to carry a vast selection of sizes and colors in sport coats, full suits, accessories, and tuxedos. In 2010 they acquired rental stores across the country and have building a rental service for proms, weddings, and other special events.

    In mid-January Men's Wearhouse announced an eighteen cent per share cash dividend on common stocks in hopes of boosting their stock after a soft Q3. During that call, MW front man George Zimmer (You're going to like the way you look, I guarantee it), stated that improving conditions would most likely be exhibited in January and February. Currently, stock for Men's Wearhouse is at $27.88, but has been steadily declining over the past six months.

    Heading to channel-checks, we have not seen any improvement in foot-traffic or the direct to consumer channel. From historical data, we believe that Mens Wearhouse patronage is closely tied to the unemployment rate and monthly jobless claims data. Data here implies further slowing.

    In March, the commerce department reported that American personal income dropped by the large amount in the past 20 years, for a total of 3.6%. It remains to be seen how this drop would have affected Mens Wearhouse, but data digging for the positive has been increasingly difficult as a counter-exercise. The forecast is not looking great for Mens Wearhouse to report 4th quarter earnings above analyst consensus and we expect a small to moderate selloff in the neighborhood of 2-6% to be possible.

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