Men's Wearhouse (NYSE: MW) reported first-quarter results after the close Monday. Earnings dropped 47% compared to a year ago. Although earnings contracted due to fewer customers, cost-cutting measures helped the company top the consensus estimate and forecast solid second-quarter earnings. First-quarter earnings checked in at 10 cents per share for the quarter, down from 19 cents per share a year ago but far better than the Street's forecast loss of a penny per share. Quarterly sales dropped 6% to $464.1 million from $491.1 million a year ago, as clothing product sales dropped 7.6%. Nevertheless, sales topped the consensus estimate of $459.3 million.
Turning to the next quarter, MW forecast earnings between 56 and 60 cents per share. The lower end of the forecast range matches the consensus estimate. MW believes that same-store sales in its retail apparel business "will likely" decline by 4% to 6% with tux rental revenue at stores open at least a year is forecast to rise 3% to 5%. The company believes cost-cutting measures will reduce second-quarter costs by 6% to 8%, excluding costs. The retailer also plans to open eight new stores this year, but this number could be higher if new real estate opportunities arise.
In pre-market trading, shares of MW were 9% higher, trading near $19.50. Topping this level could be a major move for the stock, as it has struggled with $19.50 during the past two-plus months. While topping $19.50 would be huge, the stock would still face overhead resistance from its 20-month moving average. The last time MW closed a month north of this trendline was in late 2007. The equity will need some major momentum in order to take out this trendline, let's see if this earnings announcement is enough to start a sustained run higher.
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