JoS. A. Bank weighs on Men's Wearhouse in Q4

The acquisition of JoS. A. Bank is weighing on the financials at Men’s Wearhouse, which posted a decline in profits for the fourth quarter.

Men’s Wearhouse reported a quarterly loss of $35.9 million, or $0.75 per share, versus a year-ago loss of $30.4 million, or $0.64 per share. Excluding non-operating items, the company lost $0.03 per share, versus a year-ago loss of $0.38 per share. Its net sales surged 66% to $928.4 million.

Doug Ewert, Men's Wearhouse chief executive officer, said: "We continue to be pleased with the robust earnings performance of our legacy brands. Fueling this performance in the fourth quarter are comparable sales increases of 6.8% at Men's Wearhouse, 8.6% at Moores and 6.8% at K&G. And while Jos. A. Bank's comparable sales were negative 6.6%, they were above our expectations."

Men's Warehouse now expects 2015 adjusted earnings of $2.70 to $2.90 per share, versus analysts' estimates of $2.52 per share. It projects 2017 adjusted earnings of $5.75 to $6.25 per share.

“We have made significant progress on integrating Jos. A. Bank into the infrastructure of Men’s Wearhouse and have developed a robust process around synergy identification and realization,” Ewert said. “In the nine months since the acquisition, Jos. A. Bank has transitioned many of the back office functions, began store training programs, began the work to instill its employees with the Men’s Wearhouse culture, and launched tuxedo rental in all its Jos. A. Bank locations. All of this progress was made while exceeding our initial synergy run-rate target of $15 million as we ended the year with run-rate synergies of $35 million."

Ewert predicted sales growth at Jos. A. Bank this year and next, particularly after the company finishes system conversions.

"Fiscal year 2015 will be the year of strategic transition for Jos. A. Bank as we work on unlocking customer facing opportunities. Much of this work lies in systems conversions which will be completed in the second half of 2015. As such, we are looking forward to the growth in sales and gross margins that we anticipate achieving in late 2015 and into 2016. "We continue to be confident in our 2017 EPS guidance which has now been increased to include K&G. We expect profits to accelerate in 2016 with rebounding sales after three consecutive years of negative comps at Jos. A. Bank, realized cost synergies and modest growth in the legacy business. With the stable platform our legacy brands provide, we are able to focus on this transitional year for Jos. A. Bank as we complete the transition and integration of all the key areas during the year," Ewert added.

Men’s Wearhouse has more than 1,100 stores nationwide.