Driven by acquisition of Jos. A. Bank and also rise in retail segment sales, clothing marketer Men's Wearhouse said it reported a 24% revenue hike in the second quarter ended August 2, 2014.
Total net sales increased 24.1% or $155.8 million to $803.1 million in the second quarter of 2014 from $647.3 million in the second quarter of 2013.
Men's Wearhouse said retail segment sales for the quarter rose 24.1% or $143.0 million by including $113.7 million in sales at Jos. A. Bank and also an increase in comparable sales at all other retail brands.
Adjusted consolidated gross margin totalled $365.3 million in the second quarter of 2014, up $56.5 million or 18.3% compared to the prior year quarter.
However, the total adjusted gross margin rate decreased 222 basis points primarily due to lower retail margin related to the Jos. A. Bank acquisition, the apparel marketer informed.
On an absolute dollar basis adjusted SG&A expense increased by $42.4 million or 18.5%, primarily due to the addition of Jos. A. Bank SG&A and a growth in advertising expense primarily related to the rollout of Joseph Abboud.
Second quarter of 2104 adjusted operating income witnessed a rise of $14.1 million or 17.8% over the prior year to $93.3 million from $79.2 million.
Net interest expense for the second quarter of 2014 totalled $13.1 million, impacting adjusted diluted EPS by $0.18, while effective tax rate was 55.0%. Excluding the impact of non-deductible transaction costs, adjusted effective tax rate touched 33.9%.
Adjusted net earnings grew marginally to $52.9 million, or $1.10 adjusted earnings per share in the quarter under preview versus $51.0 million, or $1.01 adjusted diluted earnings per share last year.
Considering the acquisition of Jos. A. Bank, debt at the end of the second quarter was $1.7 billion, while inventories increased $444.7 million to $1,044.5 million from $599.8 million.
Men's Wearhouse said around $425 million is due to the Jos. A. Bank acquisition and inventory at the Joseph Abboud factory.
"Additionally, approximately $10 million of the increase was related to an inventory build at its corporate apparel business to service existing customers and the rest was due to new store openings", it added.
President Doug Ewert said, "While we are very early in the Jos. A. Bank integration process, we continue to expect between $100 million to $150 million in synergies".
He added, "We secured the early termination of the Jim's Formal Wear contract and will begin leveraging our tuxedo rental inventory and logistics to serve the Jos. A. Bank rental customers for the 2015 wedding season."
