Tailored Brands (TLRD) Tops Q4 EPS by 7c, Revenues Miss

Tailored Brands (NYSE: TLRD) reported Q4 EPS of ($0.46), $0.07 better than the analyst estimate of ($0.53). Revenue for the quarter came in at $691 million versus the consensus estimate of $708.48 million.

Tailored Brands President and CEO Dinesh Lathi said, “Fiscal 2020 got off to a solid start, with total retail comparable sales up 2.4% and all brands positive in February. However, over the past two and a half weeks, we’ve seen a deceleration in comparable sales across brands, coinciding with heightened actions taken by governments, businesses, schools and citizens to curb the spread of COVID-19. Beginning March 17th, we have decided to close stores in the U.S. and Canada until March 28th to ensure the safety and well-being of our employees and customers. We will continue to monitor this timing based on guidance from health authorities. We are taking aggressive and prudent actions to ensure the business has ample liquidity to weather this uncertain period. In an abundance of caution and as a proactive measure, on March 16th we drew down $260 million from our revolving credit facility.”

(1) We have reflected the results of the corporate apparel business as discontinued operations for all periods presented. In addition, we have recast our non-GAAP presentation for prior periods to remove the results of the corporate apparel business and provide results from continuing operations. The Company believes that disclosure of non-GAAP results for its continuing operations is meaningful to the user’s overall understanding of the Company’s financial performance. In the fourth quarter of fiscal 2019, adjusted items include $22.7 million of charges consisting of $17.4 million related to the Company’s previously announced sale of the Joseph Abboud trademarks primarily due to the write-off of inventory related to its recently closed Joseph Abboud store and e-commerce site and $5.2 million of charges related to our multi-year cost savings and operational excellence programs, including consulting, severance and lease termination costs. In the fourth quarter of fiscal 2018, adjusted items related to continuing operations consisted of a favorable net sales adjustment reflecting the impact of changes made to our loyalty programs. See Use of Non-GAAP Financial Measures for additional information on items excluded from adjusted EPS.

Lathi continued, “We are confident in the long-term prospects of our business, despite the near-term disruption from COVID-19, because of the progress we made in 2019 to enhance our competitive positioning and how we show up for customers. A few key highlights include strengthening our leadership and operating structure, offering a more compelling polished casual assortment, delivering double-digit e-commerce growth, shifting our marketing spend to digital from broadcast, and strengthening our balance sheet and our ability to reduce our debt. As we gain more visibility into macro-economic and business conditions, we plan to share more specifics on our financial outlook for fiscal 2020.”

FISCAL 2020 OUTLOOK

The Company notes that fiscal 2020 started strong with total retail comparable sales up 2.4% in February and all brands positive for the month. However, over the past two and a half weeks, coinciding with heightened actions taken by governments and citizens to curb the spread of COVID-19, the Company has seen a deceleration in comparable sales across brands. As a result, the Company is refraining from providing a specific financial outlook for fiscal 2020 at this time until economic and business conditions provide better visibility.

In response to the coronavirus outbreak, we have taken aggressive and prudent actions to reduce expenses and defer discretionary capital expenditures and inventory purchases to preserve our cash and liquidity. In addition to these efforts, we believe a preemptive borrowing on our ABL Facility is a prudent decision to ensure our ability to immediately access cash for any operational needs. As a result, on March 16, 2020, we executed a borrowing of $260.0 million under our ABL Facility. As of March 18, 2020, we have just under $400.0 million in cash. Of this amount, the Company notes that the net proceeds of approximately $100.0 million from the recently completed sale of the Joseph Abboud trademarks is considered restricted cash, which can be applied to acquire real property, equipment or other tangible assets to be used in the business.

For earnings history and earnings-related data on Tailored Brands (TLRD) click here.

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