J.P Morgan Coments On Mens Wearhouse Post Earnings Results

Mens Wearhouse MW shares have fallen ~20% the past couple days (vs. group flat) following the company's Q3 results, and we think this has created an extremely compelling entry point for a handful of reasons. First and foremost, the thesis is playing out here. A shift in strategy is driving record comp increases at TMW, which is likely leading to share gains and solid margin flow-through. The complexity of the business now that the UK acquisitions have hit the P&L has confused many investors in regards to MW's consolidated product margins, although peeling back the onion you can see the margin profiles of each respective segment were strong. Q4 guidance was much worse than the Street had modeled (a $0.19 to $0.22 loss vs. Street's ($0.06)) – however, this includes higher bonuses, healthcare costs and a smaller tax benefit vs. LY…comps remain robust, and this could prove conservative, as it assumes a deceleration in December/January. J.P Morgan has an Overweight rating and $28 PT on MW MW closed Thursday at $23.42