Men’s Wearhouse owner Tailored Brands said on Wednesday it may have to seek bankruptcy protection or discontinue operations, if the COVID-19 crisis continues to pummel sales.
The retailer said it has taken “decisive actions to manage liquidity”, including borrowing money, while opening nearly half of its stores across the United States and Canada.
The company also said it expects to benefit from the Coronavirus Aid Relief and Economic Security (CARES) Act through net operating loss carrybacks, increased deductions associated with interest expense and enhanced fixed asset deductibility, payroll tax credits, and other beneficial provisions.
The pandemic has added to Tailored Brands’ woes, as it had already been struggling with competition from fast-fashion brands and a shift to online shopping.
As of May 2, the company had long-term debt of $1.4 billion and $244.2 million of cash and cash equivalents.
“If the effects of the COVID-19 pandemic are protracted and we are unable to increase liquidity … we may be forced to scale back or terminate operations and/or seek protection under applicable bankruptcy laws,” Tailored brands said in a SEC filing.
First-quarter net sales for the retailer, which also owns men’s clothing store Jos. A. Bank, plunged 60.4 percent as stores were closed due to coronavirus-led nationwide lockdowns.
It said store closures and lack of staff may have disrupted the level of customer service, which could result in decreased demand or customers switching to competitors.
The company, however, said it expects sales to rebuild gradually during the remainder of the year, calling the operating environment highly uncertain.