Men’s Wearhouse Q3 profit plunges 82% on Jos. A. Bank costs

Fremont, Calif. – Men's Wearhouse Inc.'s third-quarter profit plunged 82%, mainly on expenses related to its June 2014 acquisition of rival Jos. A. Bank Clothiers Inc.



The retailer reported a profit $6.8 million in the third quarter of fiscal 2014, from $38.2 million in the year-ago-period and below Wall Street projections.



Total net sales increased 37% to $890.6 million from $648.9 million. Jos. A. Bank contributed 28% of sales. Men’s Wearhouse said it has considered offers to acquire its K&G brand and decided against selling.



Men’s Wearhouse has completed its review of Jos. A. Bank’s inventory and will dispose of about $50 million of product, which will be recorded as a reduction in the inventory value at the date of acquisition. Excess Jos. A. Bank inventory will be pulled from the stores as part of the regular physical inventory process in January.

In addition, Men’s Wearhouse wrote off approximately $10 million of slower-renting tuxedo inventory and will begin renting tuxedos from the existing rental inventory in Jos. A. Bank beginning in January 2015. The retailer said cost synergies with Jos. A. Bank are ahead of original projections for $15 million by the end of 2014 and systems conversions are on target.



"We continue to be pleased with the progress we are making on the Jos. A. Bank integration,” said Doug Ewert, CEO of Men’s Wearhouse. “In addition, we are pleased with the overwhelmingly positive reaction of the Jos. A. Bank employees to our culture and are very optimistic about our opportunities to expand consolidated sales and margins as we complete the integration.”