Rough quarter for Tailored Brands; restructuring deal with Macy’s

The parent of Men's Wearhouse, Jos. A. Bank and other menswear brand reported lower sales in its fourth quarter amid soft traffic across its brands.



Tailored Brands reported sales of $793.3 million in the quarter ended Jan. 28, down from $826 million a year ago. The company closed 232 stores in 2016.



The company lost 62 cents a share in the quarter, more than expected, compared with a loss of $21.86 a share in the same period a year ago.



"Fiscal 2016 was a year of significant strategic progress for Tailored Brands as we executed on our plans to right-size our store base, optimize our cost structure, and return Jos. A. Bank to a path of sustained profitable growth,” said CEO Doug Ewert. “We closed 233 stores under our store rationalization program, we achieved over $60 million in cost savings through our profit improvement plan, and we stabilized and began to turn around Jos. A. Bank.”



The company's fourth-quarter GAAP operating loss included a $14 million charge related to fixed assets in its Macy's tuxedo stores.



Citing the continuation of the "challenging retail environment,” Tailored Brands projected earnings between $1.45 a share to $1.75 a share for fiscal 2017. The outlook includes an estimated operating loss of $19 million to $20 million from the Macy's tuxedo business, which did not ramp in 2016 as the company expected. (In 2015, Tailored Brands signed an agreement with Macy’s to operate men’s tuxedo rental shops inside 300 Macy’s stores.)



“We are actively engaged in discussions with Macy's to restructure our agreement,” said Ewert. “Due to the early stages of our negotiations, our current 2017 plan assumes no further Macy's store expansion and that adjusted operating losses grow from $14 million in 2016 to between $19 million to $20 million in 2017 under the terms of the current agreement.”



Ewert added that given current and forecasted results, and the likelihood that a restructured agreement will involve a different operating model, the chain recorded an asset impairment charge of $14 million in the fourth quarter related to fixed assets in the Macy's stores.