Men's Wearhouse Beats the Analysts in Q2

Posted Sep 9th 2010 3:00PM by Steven Mallas
Filed under: Earnings Reports

Men's Wearhouse (MW) guarantees that you'll like the way you look in the suits the company sells. But are you guaranteed to like being an actual investor in the retailer? Over the last year, the stock has basically been a trading vehicle. On Wednesday, the shares closed at $21. At the time of this writing, they were up 4.8% to $22.01 during the afternoon session. That's still below the 52-week high of $27.67.

Back in June, I thought the business might be a buy for a short-term gain. What about now? Well, the second-quarter earnings report was posted yesterday after the bell. TheFly says that earnings of 80 cents per share topped the consensus estimate by three pennies.

The press release states that same-store sales went up 2.3% at the Men's Wearhouse concept. That isn't the biggest growth rate ever, perhaps, but at least the metric is positive in this tough environment; plus, it's a lot nicer than the 6.4% decline in comps that K&G experienced. Another highlight from the release involves the management team's decision to purchase Dimensions Clothing Limited and certain assets of Alexandra plc, which are suppliers of corporate apparel in the United Kingdom. Hopefully this acquisition strategy will lead to a good return on investment.

According to Trey Thoelcke's preview article from earlier in the week, Men's Wearhouse may be attractive from a valuation standpoint. Also, analysts seem to consider the stock a buy.

I'm not as positive on the stock as I was previously, but I think it can be examined on pullbacks. My hesitation is mostly based on the downtrend we're seeing in the overall markets.

Disclosure: I don't own any company mentioned; positions can change without notice.

Tags: inthenews, mens wearhouse, MW, retail