Men’s Wearhouse Executive Insights: K&G, Comp Performance
On Wednesday, Men’s Wearhouse (NYSE:MW) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Janet Kloppenburg – JJK Research: My first question is for Neil to clarify a statement about a loss of $0.02 a share, I think that was from the second quarter and to the first quarter because of tuxedo rentals, but I am very unclear about what happened, I thought the shift was supposed to benefit the first quarter and I am not sure what happened. For Doug, if you could just talk a little bit about K&G and the disappointment there, and what your strategies include to perhaps turnaround that plan which has been one of the least robust of your businesses. So, I am wondering, what you guys are thinking about in terms of getting that business back on track? Thanks so much.
Neill P. Davis – EVP, CFO, Treasurer and Principal Financial Officer: As to your first question on the tuxedo rental business first quarter versus second, we did anticipate a positive shift from the second quarter to the first because of the change in Easter holiday. We did realize better business, but not at a pace that we have eventually realized now that we have moved through the month of May, which captures the full prom season and as you recall Doug making a comment, we’ve had better prom seasons this year and that benefit is going to be sitting more in the second quarter than the first and we had planned to the tune of $0.02.
Douglas S. Ewert – President and CEO: From a K&G standpoint as I said in my prepared remarks, the disappointment was essentially in men’s suits, I think it’s worth noting that in the first quarter of 2011, we sold more suits to K&G than we ever had in any single quarter in the history of the Company. So, while we were not able to top that this year, we had one of the strongest quarters in men’s suits in the number of suits we sold this year in the first quarter, just not as high as the seasonal peak or the peak that we have seen in the past. I think that we have continued work do up here at K&G in merchandising and marketing and we are taking a look all of that, but when I take a look at what’s selling at K&G and what the forward outlook indicates and what the comp cadence looks like from last year, I think there is clearly some room for improvement, but I’m not overly concerned.
Margaret Whitfield – Sterne Agee: I was wondering if you could discuss the wide variance in the comp performance by category at Men’s Wearhouse with the comps in suits down 1%, but a huge gain in sportswear and also double-digits in sport coats. So the modern fit, I guess didn’t benefit the suit businesses, I might have thought and also wondered if you could give us some thoughts as to what you envision with your reservation for tux rentals in Q3?
Douglas S. Ewert – President and CEO: Well, I would point out that suits at Men’s Wearhouse on a two-year comp basis are still up dramatically. We are seeing dramatic growth in modern fit. I will remind you that modern fit extends beyond suits and to a lot of other categories that makes this trend a little bit more exciting and more significant than other fashion trends in men’s clothing. We are very pleased with the trend that we’re seeing in our sportswear division. We have focused on sportswear now for a number of years and to see it really start to payoff is really quite rewarding. Our teams have worked very hard on that and we think we’re heading in the right direction. As far as sport coat goes, we made some pretty significant shifts in the content of our inventory a year ago and I believe that we are reaping the rewards of that right now.
Margaret Whitfield – Sterne Agee: Tux rental in Q3?
Douglas S. Ewert – President and CEO: Forward reservations, are looking strong. We have visibility into about – we have currently about 70% of our plan remaining for the year under reservation, so we have a fair amount of visibility into it and it’s very strong and running as I said earlier, ahead of last year.