Men's Wearhouse to Buy Back Shares - Analyst Blog
July 23 2013 - 6:10PM
Zacks
Yesterday, after the market closed, The Men's Wearhouse,
Inc. (MW) announced that it has entered into an agreement
with JPMorgan Chase Bank, NA to repurchase its $100 million worth
of common stock under an accelerated share repurchase program.
One of the largest specialty retailers of menswear in the United
States and Canada will buy these shares under its ongoing $200
million share repurchase program announced on Mar 13 this year.
Furthermore, Men’s Wearhouse expects to close the transaction by
the end of fourth-quarter
2013.
Under the accelerated share repurchase program, a company buys
back its shares from an investment bank. The investment bank sells
these shares to the company after borrowing from clients or share
lenders.
Thereafter, the bank returns the shares borrowed from clients or
share lenders by purchasing shares from the open market over a
certain time period. This type of share repurchase program allows
companies to acquire shares at a faster pace and immediately reduce
the shares outstanding.
Initially, the menswear retailer will get nearly 2,197,000
shares from JPMorgan, approximately 85% of the total number of
shares projected to be repurchased. The price at which Men’s
Wearhouse will acquire these shares will be calculated on the basis
of volume-weighted average share price.
The company intends to fund this accelerated share repurchase
program with cash in hand and/or by utilizing its existing credit
facility. Men’s Wearhouse’s strong balance sheet and cash flows
provide financial flexibility and facilitate shareholder friendly
moves.
During fiscal 2012, the company shelled out $41.3 million on
share repurchases and $37.1 million on cash dividends. Furthermore,
last week, the company signed an agreement to acquire JA Holding,
Inc. for a sum of $97.5 million in cash.
Men’s Wearhouse currently carries a Zacks Rank #4 (Sell). Other
well-performing stocks in the apparel industry that are worth a
look include The Gap, Inc. (GPS), Citi
Trends, inc. (CTRN) and Express Inc.
(EXPR). All of them have a Zacks Rank #2 (Buy).
CITI TRENDS INC (CTRN): Free Stock Analysis Report
EXPRESS INC (EXPR): Free Stock Analysis Report
GAP INC (GPS): Free Stock Analysis Report
MENS WEARHOUSE (MW): Free Stock Analysis Report
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