Dividend.com: Men's Wearhouse Looks Good

Men's Wearhouse Shares Jump on Earnings Beat

Clothing retailer and tuxedo rental chain The Men's Wearhouse, Inc.(MW Quote) late Monday delivered fiscal first-quarter earnings that fell significantly from last year, but still beat analysts' estimates.

The Houston-based company reported first-quarter net income of $5.3 million, or 10 cents per share, down 46% from $9.9 million, or 19 cents per share, in the year-ago period.

Total sales in the latest quarter declined 6% to $464.1 million, compared with $491.1 in the same period last year.

These results were enough to beat analysts' estimates. On average, Wall Street analysts expected a net loss of 1 cent per share on sales of $459.3 million.

Tuxedo rentals, which gained 1.7%, helped offset a clothing sales decline of 7.6%.

Men's Wearhouse predicted a fiscal second-quarter profit of 56 cents to 60 cents per share, and a sales decline of 3% to 5%. On average, analysts expect a profit of 56 cents per share on sales of $518.3 million.

The company also predicted a same-store sales decline of 4% to 6%, but a rise of 3% to 5% in tuxedo rental revenue. Same-store sales are considered an important measure of a retailer's health, because they measure the performance of stores open at least one year.

Men's Wearhouse shares rose $2.32, or +13%, in morning trading Tuesday.

The Bottom Line

We have avoided shares of MW since our early June coverage began, and the stock was trading at $19.80. The company has a 1.57% dividend yield, based on last night's closing stock price of $17.87. The stock has technical support in the $12.50-$15.00 price area. If the shares can gain on this morning's momentum, we see overhead resistance around the $22 price level. We would remain on the sidelines for now.

The Men's Wearhouse is not recommended at this time, holding a Dividend.com DARS Rating of 3.1 out of 5 stars.