Tailored Brands shares take a dive following disappointing sales

By

Robin Driver

Published
Mar 14, 2019

Struggling owner of Men's Wearhouse and Jos. A. Bank, Tailored Brands Inc., reported Q4 sales that came in under analysts’ expectations as well as a weak outlook on Wednesday, sending its shares plummeting 26% on Thursday, according to figures cited by Bloomberg.

 
The company’s total net sales came to $785.8 million in the fourth quarter ended February 2, 2019, down 8.6% from the $859.9 million reported by Tailored Brands in the prior-year period. According to CNBC, Wall Street analysts had expected the group’s quarterly revenues to total $801 million.

The company’s brands gave mixed performances, with Men’s Wearhouse and Jos. A. Bank recording declines of 3.2% and 0.5%, respectively, in comparable sales, while K&G reported a slight comps increase of 0.9% and Moores managed an improvement of 2.8%.

Overall, the company’s comparable retail sales dropped 1.5% in the three-month period, while its corporate apparel division saw net sales tumble 23.3%.
 
“We attribute the current softness to both the macro-environment as well as the need for us to execute more quickly and effectively on our core growth strategies: deliver personalized products and services, create inspiring and seamless experiences in and across every channel, and build brands that stand for something more than just price,” explained Dinesh Lathi, Tailored Brands executive chairman, in a release. “Our teams are intently focused on delivering against these objectives in fiscal 2019 as we look to build long-term sustainable value creation for our stakeholders.”
 
News was more positive with Tailored Brands’ quarterly net income, which totaled $6.22 million, or $0.12 per share, compared to a loss of $499,000, or $0.01 per share, in the equivalent period in the previous year.
 
For the full fiscal year 2018, the company’s total net sales fell 2% to $3.24 billion, while comparable retail sales rose 1.2%. Corporate apparel sales declined 6.3%.
 
Annual net earnings were $83.2 million, or $1.64 per share, down from $96.7 million, or $1.95 per share, in fiscal 2017.

The company did, however, reduce its total debt by $232 million over the course of the year and successfully negotiated the extension of the maturity on its term loan to 2025.

In the first quarter of 2019, Tailored Brands expects to achieve earnings per share in the range of $0.10 to $0.15. Comparable sales are projected to drop between 3% and 7% across the company’s brand portfolio, except at K&G, where they are expected to remain flat or increase 2%.
 
Sales in the group’s corporate apparel division are predicted to fall between 10% and 12%.