Men's Wearhouse (NYSE: MW) isn't looking very sharp these days. The purveyor of men's tailored fashions warned in November that fourth-quarter results wouldn't be elegant. In January, management advised investors to expect little in the way of holiday earnings cheer. When all was said and done, the actual results were nothing to write home about.

Comparable-store sales fell 8.6% during the holiday season, with sales at the namesake stores sliding 5%, and K&G outlets' sales dropping off the map -- down 17%. The company is taking a critical look at what's going on at K&G, eliminating the divisional management and giving store oversight to existing Men's Wearhouse field managers.

Gross margins fell 183 basis points, while SG&A (selling, general, and administrative) expenses were up significantly to 38.7% of sales from 31.5%. Earnings per share of $0.28 were 70% lower compared with the year-ago quarter, better than the recent guidance of $0.16 to $0.18 a share, but a disappointment nonetheless.

I hesitate to be this blunt, but since the acquisition of After Hours Formalwear last year, the company looks to be out of control. We heard again on the conference call that the tuxedo rental business is primarily responsible for the swings in margin and expenses. It's time to get these issues ironed out.

We also heard from management that when times are tough, men are the first to cut back on spending on apparel. But competitor Jos. A. Bank (Nasdaq: JOSB) just reported 5% positive comps for the quarter. Department stores like J.C. Penney (NYSE: JCP) and Kohl's (NYSE: KSS) are hitting a softpatch, but their sales aren't cratering.

Foolish investors may recall that I've favored Men's Wearhouse as a solidly run niche retailer. Through the third quarter this looked to be true, although sales were starting to decline.

After the fourth-quarter debacle, I'd like your indulgence to revise and extend those remarks. Men's Wearhouse used to be a well-run retailer; now it has seriously lost its way. Management gave guidance of fiscal 2008 earnings of around $2.00, but I don't have much confidence in the outlook. Until management figures out how to integrate the tuxedo rental business, and stem the tide of declining sales, I suggest you avoid this company.

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