Men's Wearhouse Drops After Cutting Profit Forecast
Men’s Wearhouse Inc. (MW), the clothing retailer that ousted its founder in June, slumped after it cut its full-year profit forecast, citing a “difficult economic climate” as customer traffic fell in the second quarter.
The shares dropped 14 percent to $33.26 in extended trading yesterday after slipping 0.6 percent to $38.77 at the close in New York. They had gained 24 percent this year.
Adjusted earnings were $1.01 per share in the quarter ended Aug. 3, the Houston-based company said in a statement after the close yesterday. That’s less than the average analysts’ estimate of $1.14 a share, according to data compiled by Bloomberg. The retailer lowered its annual profit forecast to as much as $2.50 a share from as much as $2.80 a share.
“We are being cautious as we face macro-economic headwinds,” Chief Executive Officer Doug Ewert said in the statement. The company also cut its estimates for same-store sales growth for the year by about 2 percent.
Retailers from Macy’s Inc. (M) to Wal-Mart Stores Inc. (WMT) have reported results that trailed expectations for their most recent quarters. Macy’s posted its first sales drop since 2010 and its profit trailed analysts’ estimates for the first time since 2007. Wal-Mart said earnings for the rest of the year would be less than it previously expected as consumers were hesitant to make discretionary purchases.
Men’s Wearhouse’s board removed founder George Zimmer as executive chairman over strategy disagreements on June 19. In July, it agreed to buy the Joseph Abboud clothing brand for $97.5 million in cash as a way to offer exclusive brands. The purchase of the brand’s parent JA Holding Inc. from funds affiliated with J.W. Childs Associates LP completed on Aug. 6, the company said yesterday.
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