The run up was due to the news that shows that Men’s Wearhouse has engaged Jefferies to evaluate strategic alternatives for its K&G operations. A sale of the division would be a big positive for the company, which would lead to higher profitability and a higher valuation.
Its January-end quarterly results came in at a $0.07 loss per share, below consensus estimate of a $0.03 per share loss. This was due in part to K&G. Comps at The Men’s Wearhouse, Inc. (NYSE:MW) were up 1% year over year, but comps at K&G fell 5.7%. K&G accounts for over 15% of sales, and continues to be a big drag on the company.
Consensus is calling for company wide sales to be up 5% for fiscal year 2013 (ending January), then 4% in 2014; this despite the expected weakness in its K&G segment. Imagine what Men’s Wearhouse could do without the drag of K&G.
Economic uncertainty has played its part in pressurizing all the major retailers. However, The Men’s Wearhouse, Inc. (NYSE:MW) has managed to hedge some of this slowness with new product introductions, that include its growing tuxedo rental and big-n-tall business lines (check out a SWOT on Men’s Wearehouse).
Men’s Wearhouse’s most formidable opponent, Jos. A. Bank Clothiers Inc (NASDAQ:JOSB), has traded in tandem with The Men’s Wearhouse, Inc. (NYSE:MW) over the past twelve months…
…and both also trade at 13 times earnings. However, could the recent news finally set Men’s Wearhouse apart? One notable difference is that Jos. A. Bank pays no dividend, while The Men’s Wearhouse, Inc. (NYSE:MW) has a 2.1% dividend yield. There are notable reasons to be cautious concerning Jos. A. Bank Clothiers Inc (NASDAQ:JOSB), which include expectations of 20% lower 2013 income when compared to 2012. Stifel Nicolaus recently reiterated a buy on Men’s Wearhouse, but cut its estimates on Jos. A. Bank Clothiers Inc (NASDAQ:JOSB). This was because customers did not respond positively to Jos. A. Bank Clothiers Inc (NASDAQ:JOSB)’s marketing and promo strategy over the holiday season.
How are other specialty retailers doing?
The answer is; quite well. Two notable retailers, Express, Inc. (NYSE:EXPR) and Ann Inc (NYSE:ANN), have seen major billionaire investors take sizable stakes in their companies within the past month. Billionaire Steve Cohen bought over 5% of ANN’s shares (see why billionaire Steve Cohen loves Ann), and fellow billionaire Ken Griffin bought over 5% of Express (read more about why).
Express posted EPS of $0.75 last quarter, compared to $0.68 for the same quarter last year, which was driven by 1.5% higher same-store sales, and 8% higher total sales. Express also believes that its first quarter 2013 comp sales, including e-commerce, will continue to grow in the low single digits, compared to an increase of 4% in the first quarter of 2012.
