Tailored Brands Inc. said it sold its corporate apparel business for $62 million in cash to a group led by the existing corporate apparel executive team in the U.K.
Under the terms of the transaction, the purchase price is subject to certain working capital adjustments. The men’s wear retailer said $56 million was received on the closing of the deal, and $6 million was deferred to the first quarter of fiscal 2020. Tailored Brands disclosed that the deal represented a multiple of 4.3 times fiscal 2019 adjusted earnings before interest, taxes, depreciation and amortization for the business, which posted net sales of $235.4 million in fiscal 2018.
The company said it will use the cash proceeds to reinvest in its business per the terms of its term loan. Tailored Brands added, “This will free up funds previously slated for capital expenditures for debt reduction.”
Dinesh Lathi, Tailored Brands’ president and chief executive officer, said, “The consummation of this transaction supports our previously stated strategy to focus on our core retail business in the U.S. and Canada while reducing debt.”
The CEO added that the company is updating guidance for the second quarter, with adjusted earnings per share above prior forecasts. The company now expects to post adjusted diluted EPS of between 78 cents to 80 cents, on net sales in the range of $787 to $789 million. The prior guidance from June 12 estimated the adjusted EPS range at between 65 cents to 70 cents. The company will report second quarter results on Sept. 11.
Lathi added: “We remain focused on improving our performance by transforming our customer experience through three key strategic initiatives: delivering personalized products and services, inspiring–and seamless–experiences in and across every channel, and brands that stand for more than just price. We look forward to sharing more about our progress on these initiatives on our upcoming conference call in September.”
Tailored Brands is a specialty retailer operating men’s tailored clothing doors and also a provider of formalwear. Its brands include Men’s Wearhouse, Jos. A. Bank, Joseph Abboud, Moores Clothing for Men, and K&G.