TAILORED BRANDS RESULTS DOWN IN SECOND QUARTER, SUSPENDS DIVIDENDS
Tailored Brands, the owner of Men’s Wearhouse and Jos. A. Bank and other brands, reported mixed second-quarter results and issued guidance that suggests the company is expecting a tough third quarter.
Total net sales decreased by 4.1 percent to $789.5 million. Retail net sales decreased 4.1 percent primarily due to a decrease in retail segment comparable sales of 3.6 percent. Corporate apparel net sales decreased 3.9 percent, or $2.2 million, primarily due to the impact of a weaker British pound this year compared to last year.
By brand, Men’s Wearhouse comparable sales decreased 4.3 percent. Comparable sales for clothing decreased due to a decrease in transactions, average unit retail and units per transaction. Comparable rental services revenue decreased 3.1 percent, primarily reflecting the continuing trend to purchase suits for special occasions.
Jos. A. Bank comparable sales decreased 3.3 percent primarily from a decrease in average unit retail partially offset by an increase in both transactions and units per transaction.
The company is also trying to improve its debt management. To that end, executives announced they are suspending the company’s quarterly cash dividend. The move will free up about $36.5 million annually to be used for share buybacks and “accelerated debt reduction.”
“Our sale of the corporate apparel business is consistent with our commitment to focused execution and investment,” said Dinesh Lathi, president and CEO of Tailored Brands. The Board of Directors’ unanimous decision to suspend the quarterly cash dividend for reallocation to debt repayment and share repurchases is consistent with our commitment to responsible allocation of capital. And while our Q2 results and Q3 guidance reflect what we’ve previously shared about the need to transform our customer experience and the fact that transformations take time, the early signs of customer response to our strategies indicate that we are making healthy progress on our journey.”
Tailored Brands also forecast lower third-quarter sales, with earnings per share to drop to between 40 to 45 cents. The retailer is also bracing for a drop in same-store sales of 3 percent to 5 percent at Men’s Wearhouse and 2 percent to 4 percent at Jos. A. Bank.
The menswear company closed six Jos. A. Bank stores during the second quarter. A combined seven stores between Jos. A. Bank and Men’s Wearhouse are expected to be closed in the third quarter.
