Dogged by bankruptcy speculation, Men’s Wearhouse parent Tailored Brands is hoping to stave off total collapse by slashing 20 percent of corporate jobs and closing as many as 500 stores in a sweeping restructuring.
On Tuesday, Tailored said it will finalize layoffs by the close of its fiscal second quarter, though it declined to offer a timeline for the planned closure of hundreds of stores.
“While today’s announcement is a difficult one, we are confident these are the right next steps to protect our business and position us to more effectively compete in today’s environment,” said Dinesh Lathi, president and CEO of Tailored Brands, which also owns Jos. A. Bank, Moores Clothing for Men and K&G. The COVID-19 pandemic has had a “significant impact on our business,” he added, noting further actions are needed to bolster the firm’s financial position even though it has managed to reopen 96 percent of its more than 1,400 stores.
As part of the restructuring changes, chief financial officer Jack Calandra, who also serves as executive vice president and treasurer, will leave the company on July 31. His responsibilities will be divided between Lathi and Holly Etlin, the newly hired chief restructuring officer who has been advising Tailored since late March.
Tailored has been searching for strategies to trim expenses. Earlier this year, it unloaded the Joseph Abboud brand to WHP Global for $115 million to gain some financial breathing room. Now the company is looking to its restructuring plan to stave off a bankruptcy filing.
In addition to up to 500 store closures, Tailored Brands has also identified “opportunities to reduce and realign its store organization and supply chain infrastructure…to best serve its go-forward store footprint and e-commerce business.” The company hasn’t outlined a timeline for the store closures, other than to say they will happen “over time” and that it has “identified up to 500 stores for closure over time.”
Tailored Brands expects to record a pre-tax charge of $6 million in the second quarter of fiscal 2020, mostly for severance payments and other termination costs. Because it hasn’t yet formulated a plan for other restructuring opportunities including the timing of store closures, the company has not yet determined the expense savings and costs connected to the shifts.
Earlier in the year, the company unloaded its Joseph Abboud brand to WHP Global for $115 million as a move to provide some financial breathing room. Tailored Brands has at least $1.4 billion in debt, a level that was once over $2 billion as a result of its $1.8 billion deal in 2014 for men’s apparel retail competitor Jos. A. Bank Clothiers Inc. But the core Men’s Wearhouse stores have also been impacted by changes in the retail landscape and the casualization of dress for the workplace.
The size of Tailored Brands’ debt load has the company on the watch lists of market observers, who speculate that the company’s financial pressures could leave it needing to file for bankruptcy court protection.