Eminence Capital Presentation on MW, below is an excerpt followed by the full PDF.

Eminence Capital, LLC is a global asset management firm with over $4.5 billion in assets under management, primarily invested in publicly traded equity securities. Eminence is currently the single largest shareholder in The Men’s Wearhouse, Inc. (NYSE:MW) owning approximately 4.7 million shares (9.8% of shares outstanding) with a current market value of $215 million. We also own approximately 1.4 million shares of Jos. A. Bank Clothiers Inc (NASDAQ:JOSB), representing an investment with a current market value of $70 million.

Men's Wearhouse Eminence Capital

Why Eminence Capital like Men’s Wearhouse?

  • Scale, as the largest men’s specialty retailer in North America
  • Attractive niche, in that The Men’s Wearhouse, Inc. (NYSE:MW) services need-based purchases with inventory that is subject to reduced fashion cycles
  • Attractive core businesses, with stable merchandise margins that are over 60% in core apparel and tuxedo – among the highest and most consistent in retail apparel
  • Earnings upside that we believe will follow from the recent decision to shed non-core businesses and re-focus on the higher-margin suit and tuxedo categories
  • Growth driven by the introduction of premium-priced Joseph Abboud, an exclusive label strategy which we expect will drive enhanced sales, margins and ROIC
  • Underlevered balance sheet and positive free cash flow provide the opportunity for further return of capital to shareholders

Eminence Capital believe that the Men’s Wearhouse board is wrong

  • Eminence did not initially invest in The Men’s Wearhouse, Inc. (NYSE:MW) to agitate for change
  • However, when Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) surfaced with an offer, we recognized that this combination offers a COMPELLING OPPORTUNITY for Men’s Wearhouse shareholders
  • In our view, the VALUE CREATION from this combination is MASSIVE with a potential for $2 billion of value to be created from a combination of cost savings, revenue synergies and multiple expansion
  • The magnitude of potential value creation from this combination indicates to us that Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) should be prepared to offer a SIGNIFICANT PREMIUM for The Men’s Wearhouse, Inc. (NYSE:MW) that is far greater than its standalone prospects

See full article PDF here Eminence Capital Men’s Wearhouse