It was an up-and-down quarter and year for Tailored Brands, as comp-store sales rose in all divisions but bottom line numbers were off.
In a Nutshell: Tailored Brands Inc., with more than 1,400 Men’s Wearhouse, Jos. A. Bank, Joseph Abboud, Moores and K&G stores in the U.S. and Canada, delivered positive retail comps of 1.2 percent in fiscal 2018.
Net sales fell for the quarter and full year, but the company was able to turn a profit in the fourth quarter even as net earnings fell for the year.
The retailer said it strengthened its balance sheet, reducing total debt by $232 million and extending the maturity on its term loan to 2025, while generating strong operating cash flow of $323 million.
For fiscal 2019, Tailored Brands said it expects comparable sales for Men’s Wearhouse and Jos. A. Bank to be down 3 percent to 5 percent, while forecasting Moores comps to be down 5 percent to 7 percent and K&G to be flat to up 2 percent.
Sales: Total net sales for the fourth quarter ended Feb. 2 decreased 8.6 percent to $785.8 million. On an adjusted basis, which excludes a $17.6 million favorable impact of changes made to the company’s loyalty programs, total net sales fell 10.7 percent to $768.1 million.
The company noted that in fiscal 2017, the fourth quarter and year included an additional operating week compared to fiscal 2018. Net sales related to the extra week in fiscal 2017 were $45.7 million.
Retail net sales declined 7.3 percent to $730 million. On an adjusted basis, retail net sales were down 9.5 percent to $712.4 million. The company cited the impact of last year’s 53rd week, the 1.5 percent decrease in retail comparable sales and a $12 million decline in alteration and other services revenue largely resulting from the MW Cleaners divestiture as contributing to the falloff.
Corporate apparel net sales fell 23.3 percent to $55.7 million, primarily due to lower replenishment demand in the U.K. and U.S., the impact of last year’s 53rd week, and the impact of a weaker British pound this year.
For the year, total net sales dropped 2 percent to $3.24 billion. Retail net sales for the period fell 1.6 percent to $3 billion.
Corporate apparel net sales decreased 6.3 percent, or $15.9 million, primarily due to lower replenishment demand in the UK and the U.S. as well as the impact of last year’s 53rd week, partially offset by a stronger British pound for the full year.
Men’s Wearhouse comparable sales increased 0.8 percent for the year primarily due to increases in average unit retail and transactions partially offset by a decrease in units per transaction. Comparable rental services revenue decreased 4.9 percent, reflecting the trend to purchase suits for special occasions.
Jos. A. Bank comp sales rose 1.4 percent on an increase in transactions partially offset by a decrease in units per transaction. K&G comp sales increased 1.5 percent, while Moores comp sales were up 2.4 percent.
Earnings: Net earnings in the fourth quarter were $6.2 million compared to a net loss of $500,000 last year. For the year, net earnings fell 14 percent to $83.2 million compared to $96.7 million last year.
CEO’s Take: Dinesh Lathi, executive chairman, said: “While all of our retail brands delivered positive comps for the full year, during the fourth quarter comps at Men’s Wearhouse and Jos. A. Bank were down and this trend has continued into the first quarter of 2019. We attribute the current softness to both the macro-environment, as well as the need for us to execute more quickly and effectively on our core growth strategies: deliver personalized products and services, create inspiring and seamless experiences in and across every channel, and build brands that stand for something more than just price. Our teams are intently focused on delivering against these objectives in fiscal 2019 as we look to build long-term sustainable value creation for our stakeholders.”