Fourth quarter performance was poor, sales at Jos. A. Bank took a nosedive and now the holding company—which operates Men’s Wearhouse, Jos. A. Bank, Joseph Abboud, Moores Clothing for Men and K&G Fashion Superstores—says it’s closing 250 stores.
In the fourth quarter ended Jan. 30, operating loss was $1.19 billion compared to the prior year period’s $42 million, which the company said owed mostly to Jos. A. Bank. Comparable sales were up 4.3% at Men’s Wearhouse to $399.5 million. But at Jos. A. Bank, on the other hand, sales plunged 31.9% to $230.2 million.
“While our fourth quarter and full year results were consistent with our revised guidance, we remain very disappointed by the weak Jos. A. Bank results. Our transition away from unsustainable promotions has proven significantly more difficult and expensive than we expected,” Tailored Brands CEO Doug Ewert said. “We do, however, remain confident that Jos. A. Bank offers a longer-term opportunity to profitably grow market share in the menswear business. Additionally, our Men’s Wearhouse, Moores, and K&G brands continue to perform well, with profitability in line or ahead of our expectations.”
To get Jos. A. Bank, which then Men’s Wearhouse acquired in 2014 for $1.8 billion, back to profitability, Ewert said the company needs to right-size its store base and optimize its cost structure.
And right-sizing that store base means shuttering 250 locations this year.
“The store closures fall into three categories,” Ewert said. “First, we expect to close 80 to 90 full-line Jos. A. Bank stores which we believe have limited potential for meaningful profit improvement. Second, we will close all Jos. A. Bank (49) and Men’s Wearhouse (9) outlet stores. We have determined that outlet stores, which collectively were not profitable, are not sufficiently differentiated enough from our core offerings and have not resonated with our customers.”
Tailored Brands will also close between 100 and 110 MW Tux stores, and instead move its tuxedo rentals into full line stores. The company partnered with Macy’s for a Tuxedo Shop @ Macy’s and will open 166 stores this year and another 122 stores in 2017.
“We have also embarked on an extensive profit improvement program that we believe will reduce our expenses by approximately $50 million in 2016. This program includes reduced distribution costs, cost reductions in our organizational structure, payroll and employee benefit reductions and savings in occupancy and goods-not-for-resale,” Ewert explained.
The profit improvement plan is expected to cost the company between $45 million and $60 million cash for this year.
With all the changes and Jos. A. Bank’s poor position, Tailored Brands said earnings per share for this fiscal year will be in the $1.55 to $1.85 range and comparable sales will be in the negative mid-teens.
“We are working hard to restore Jos. A. Bank’s profitability and strengthen the rest of our portfolio of brands,” Ewert said. “While our current initiatives are expansive, we are closely monitoring our progress and will make adjustments as necessary to create value for all our stakeholders.”