JoS. A. Bank and Men’s Wearhouse owner Tailored Brands his following in the footsteps of its retail peers and drastically pulling back on retail operations in the U.S. and Canada for the foreseeable future.
In a Nutshell: Tailored Brands sold the international intellectual property rights of its Joseph Abboud men’s wear business in January as part of its plan to reduce the debt load acquired after purchasing Jos. A. Banks Clothiers Inc. in 2014.
Two months later, the company will shutter both online and offline channels in order to protect its workforce from the coronavirus (COVID-19) pandemic.
“Our number one priority remains the health and well-being of our employees, customers, and local communities as we do our part to combat the spread of the coronavirus,” Tailored Brands president and CEO Dinesh Lathi said Thursday. “We apologize for any inconvenience this may cause our customers. We look forward to serving you as soon as our distribution facility and stores reopen.”
Customers can continue to place orders to be fulfilled once its distribution facilities are operational, the company said, and Tailored Brands will continue to pay employees for scheduled hours during the operational pause. Consumers who have already ordered through the company’s e-commerce channel will also be able to pick up their goods in store.
Although the fourth quarter saw decreased comparable sales for each of its brands, including Men’s Wearhouse, JoS A. Bank, K&G and Moores, Lathi said comparable sales were up 2.4 percent overall before the unprecedented pandemic took hold. All brands were positive in February, he said.
Related Stories
Tailored Brands will be taking the “proactive measure” of securing an additional $250 million from its revolving credit facility to maintain liquidity in a time of crisis.
“In response to the coronavirus outbreak, we have taken aggressive and prudent actions to reduce expenses and defer discretionary capital expenditures and inventory purchases to preserve our cash and liquidity,” the company said. “In addition to these efforts, we believe a preemptive borrowing on our ABL Facility is a prudent decision to ensure our ability to immediately access cash for any operational needs.”
Sales: Tailored Brands recorded $691 million in sales during Q4, below the $708.5 million Wall Street analysts expected and down 5.3 percent year-over-year. Comparable sales for the company declined 3 percent.
Comparable sales at Men’s Wearhouse declined 1.9 percent and JoS. A. Bank fell by 5 percent in the quarter. Men’s Wearhouse saw falling sales as a result of lower average unit retail and retail units per transaction, although transactions rose overall, according to Tailored Brands. JoS. A. Bank was impacted by a decrease in transactions and average unit retail while showing an increase in units per transaction.
For the full-year, net sales at Tailored Brands fell by 4.1 percent to $2.88 billion, as comparable sales decline 3 percent on the year. Men’s Wearhouse recorded a comparable sales loss of 3.5 percent and JoS. A. Bank fell by 2.3 percent. Rental service revenue also decreased by 3.1 percent.
Gross margin decreased by 310 basis points in fiscal 2019, as sales declined.
Earnings: Although Tailored Brands recorded a loss of 46 cents in the fourth quarter, the result surpassed the Wall Street estimate of a 54-cent loss and represented the fourth consecutive quarter in which the company bested earnings expectations. Net loss from continuing operations rose to $38.6 million from a loss of $3.8 million in the previous fiscal year.
In fiscal 209, Tailored Brands earned GAAP diluted EPS of 51 cents and net earnings from continued operations of $25.4 million compared to $98.6 million a year ago.
CEOs Take: “We are confident in the long-term prospects of our business, despite the near-term disruption from COVID-19, because of the progress we made in 2019 to enhance our competitive positioning and how we show up for customers,” Lathi said. “A few key highlights include strengthening our leadership and operating structure, offering a more compelling polished casual assortment, delivering double-digit e-commerce growth, shifting our marketing spend to digital from broadcast, and strengthening our balance sheet and our ability to reduce our debt.”