Men's Wearhouse (NYSE: MW) released quarterly results on Wednesday that were quite nicely turned out. Revenues were higher, as were net income and per-share earnings. And the company's balance sheet continues to resemble a faultlessly tailored tux. The company has rid itself of underachievers and is apparently making sound acquisitions. It's only that dip in U.S. same-store sales that perhaps resembles a smudge on your tie.
For the quarter ended Feb. 3, a period that contained one more week than the comparable quarter of the prior year, Men's Wearhouse sales increased 12% to $556.8 million, versus $497 million the prior year. That increase pulled per-share earnings to $0.95, compared to $0.60 the prior year. Excluding stock-option expenses and other one-time items, the company's per-share figure was $0.81, or 21% above the $0.67 it saw in 2005.
But, perhaps to coin a phrase, what a difference a national border makes. In the U.S., same-store sales actually declined 1.5% in the quarter, a worse performance than management's initial guidance of a pickup of 1% to 2%. On a two-year basis, however, comparable-store sales in the United States were up 4.6%. Still, in Canada even the past quarter was strong, with a same-store increase of 9.8% -- nearly as high as the two-year 10.7% figure.
The analyst in me wants to attribute the past quarter's dip in that all-important same-store metric to a somewhat strange combination of frigid temperatures late in the quarter and unseasonably warm weather in the first part of the period. Remember the 70-degree November Saturday in the Northeast? I know for a fact that most of you Fools would rather be tossing a Frisbee or pointing a fishing pole in conditions like that. You're less likely to be selecting a new navy pinstripe, even if Men's Wearhouse founder and CEO George Zimmer himself were inclined to wait on you. I guarantee it.
The company's quarterly gross profit was up a substantial 331 basis points year over year. However, selling, general, and administrative expenses were 135 basis points higher. According to the company, that increase was lower than had been expected, largely because management kept advertising, payroll, and employee health-care costs in check.
So all in all, the quarter was a good one, particularly in view of the need for the company to compete on a variety of fronts. To the north -- the high end -- there's Brooks Brothers, and perhaps the department stores, a la Federated (NYSE: FD). On one flank, there's Jos. A. Bank (Nasdaq: JOSB), a retailer with a model somewhat similar to the one Zimmer unveiled in the 1970s. On the other, there's Casual Male (Nasdaq: CMRG), a purveyor of clothing for the larger man. And to the south, there sits -- among others -- such discount retailers as Syms (NYSE: SYM).
Now, having generally been impressed by the quarter at Men's Wearhouse, I'm going to suggest that Fools not become too voracious in buying its stock for about a quarter. After all, the company isn't alone among retailers in having experienced recent same-store sales declines. I think it'd be a good idea for us to ascertain whether my weather theory is spot-on, or whether we're really seeing the early signs of consumers pulling in their horns.
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Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your questions or comments.
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