Why Men's Wearhouse Shares Plunged
Dec 6th 2012 12:44PM
Updated Dec 6th 2012 12:50PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of specialty retailer Men's Wearhouse sank as low as 12.5% today after its quarterly results and guidance missed Wall Street expectations.
So what: The third-quarter miss -- EPS of $0.95 versus the average analyst estimate of $0.97 -- coupled with downbeat guidance for the full year reinforces concerns over slowing growth going forward. Of course, management blamed Superstorm Sandy, the presidential election, and the fiscal cliff for the reduced traffic levels, suggesting that the weakness is just short-term in nature.
Now what: Management now sees full-year EPS of $2.57-$2.63, down from its prior view of $2.74-$2.80 and well below the consensus of $2.78. "We experienced negative November comparable store clothing sales in both the U.S. and Canada as a result of lower traffic levels at our retail stores," CEO Doug Ewert said. "[A] more cautious outlook for traffic trends and clothing sales through the fourth quarter is now warranted and [we] have revised our guidance accordingly." Of course, with the stock now sporting a 2%-plus dividend yield and a forward P/E of 10, much of that caution might already be baked into the price.
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The article Why Men's Wearhouse Shares Plunged originally appeared on Fool.com.Fool contributor Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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