Exhibit 99.1

 

News Release

 

Contact:

Investor Relations

(281) 776-7575

ir@tailoredbrands.com

 

Julie MacMedan, VP, Investor Relations

Tailored Brands, Inc.

 

For Immediate Release

 

TAILORED BRANDS, INC. REPORTS

FISCAL 2016 THIRD QUARTER AND NINE MONTH RESULTS

 

·                  Third quarter 2016 GAAP diluted EPS of $0.58, compared to loss of $0.56 last year

 

·                  Third quarter 2016 Adjusted diluted EPS(1) of $0.68, compared to $0.50 last year

 

·                  Company updates full-year guidance

 

·                  Conference call scheduled for Thursday, December 8th at 9:00 a.m. Eastern Time

 

FREMONT, CA — December 7, 2016 — Tailored Brands, Inc. (NYSE: TLRD) today announced consolidated financial results for the fiscal third quarter ended October 29, 2016.

 

Third quarter 2016 GAAP diluted earnings per share (“EPS”) were $0.58, compared to a loss of $0.56 in the same period a year ago.  Third quarter 2016 adjusted diluted EPS(1) was $0.68 excluding certain items(1), compared to adjusted diluted EPS of $0.50 in the third quarter of 2015.

 

“Our improved profitability this quarter reflects solid progress on our cost reduction initiatives as we continue to navigate the turnaround of Jos. A. Bank and a choppy retail environment,” said Doug Ewert, president and chief executive officer of Tailored Brands.

 

“Men’s Wearhouse’s 0.1% comparable sales increase reflects the softening traffic trend we initially saw after Father’s Day, which has continued,” said Ewert.  “While the retail environment remains challenging, we are pleased with the response to premium clothing, custom clothing and performance wear, including the recently launched Kenneth Cole AWEAR-TECH.  We plan to drive greater awareness of these innovative offerings and view them as significant growth drivers in 2017.  In addition, we continued to strengthen our omnichannel capabilities during the third quarter, which we believe will help drive additional traffic as we make it easy for customers to shop with us both online and in-store.

 

“Our Jos. A. Bank turnaround is gaining traction.  We are pleased to report a better-than-expected comparable sales decline of 9.8% in the third quarter, particularly since we were up against last year’s final “Buy-One-Get-Three Free” event in October.  While there is still work to be done, we are encouraged by the healthier trends we are seeing at Jos. A. Bank that reflect our investments in elevating the brand and customer experience through marketing, merchandising and a more engaging sales experience.

 

“Based on our third quarter results and our outlook for the balance of the year, we are updating full year 2016 adjusted EPS expectations to $1.70 to $1.85 per diluted share from our previous range of $1.55 to $1.85 per diluted share.  Our updated full year guidance reflects our expectation for Jos. A. Bank comparable sales to be up mid-to-high-single-digits and Men’s Wearhouse comparable sales to be down slightly in the fourth quarter.

 


(1)         See Use of Non-GAAP Financial Measures for additional information.  Non-GAAP adjusted EPS is referred to as “adjusted EPS” for simplicity.

 

Page 1



 

“We are on track to achieve our targeted $50 million of cost savings in fiscal 2016.  In addition, we continue to make progress on our store base rationalization initiative.  During the third quarter, we closed 83 stores, including 74 Men’s Wearhouse and Tux stores, bringing our total year-to-date closures to 187 stores.  We expect to close approximately 63 stores in the fourth quarter for a total of approximately 250 store closures during fiscal 2016,” said Ewert.

 

SALES REVIEW

 

The table that follows is a summary of total net sales for the third quarter and year-to-date period ended October 29, 2016.  The dollars shown are U.S. dollars in millions and, due to rounded numbers, may not sum.  Comparable sales exclude the net sales of a store for any month of one period if the store was not owned or open throughout the same month of the prior period and include e-commerce net sales.  The Moores comparable sales change is based on the Canadian dollar.  In addition, Jos. A. Bank comparable sales exclude sales from factory stores as these stores were running clearance sales in preparation for closing.  Fiscal 2015 comparable sales shown below for Jos. A. Bank are based on a comparison to Jos. A. Bank’s fiscal 2014 sales, a portion of which was prior to the acquisition on June 18, 2014.

 

Third Quarter Net Sales Summary — Fiscal 2016

 

 

 

 

 

Net Sales

 

Comparable Sales
Change

 

 

 

Net Sales

 

Change

 

Current
Quarter

 

% of Total
Sales

 

Current
Quarter

 

Prior Year
Quarter

 

Retail Segment

 

(4.7

)%

$

(37.7

)

$

763.7

 

90.2

%

 

 

 

 

Men’s Wearhouse

 

(0.8

)%

$

(3.6

)

$

461.8

 

54.5

%

0.1

%

5.3

%

Jos. A. Bank

 

(16.6

)%

$

(32.9

)

$

166.0

 

19.6

%

(9.8

)%

(14.4

)%

K&G

 

(2.6

)%

$

(1.9

)

$

70.9

 

8.4

%

(3.0

)%

3.7

%

Moores

 

1.2

%

$

0.7

 

$

56.5

 

6.7

%

(0.4

)%

(5.4

)%

MW Cleaners

 

0.4

%

$

0.0

 

$

8.5

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Apparel Segment

 

30.0

%

$

19.2

 

$

83.2

 

9.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

(2.1

)%

$

(18.5

)

$

846.9

 

 

 

 

 

 

 

 

Year-To-Date Net Sales Summary — Fiscal 2016

 

 

 

 

 

Net Sales

 

Comparable Sales
Change

 

 

 

Net Sales

 

Change

 

Current
Year

 

% of Total
Sales

 

Current
Year

 

Prior
Year

 

Retail Segment

 

(5.0

)%

$

(124.5

)

$

2,360.1

 

91.3

%

 

 

 

 

Men’s Wearhouse

 

(0.4

)%

$

(5.4

)

$

1,386.3

 

53.6

%

(0.1

)%

5.0

%

Jos. A. Bank

 

(16.7

)%

$

(106.2

)

$

530.5

 

20.5

%

(14.2

)%

(8.3

)%

K&G

 

(2.1

)%

$

(5.4

)

$

252.0

 

9.8

%

(1.5

)%

6.0

%

Moores

 

(4.1

)%

$

(7.1

)

$

166.2

 

6.4

%

(1.8

)%

(1.4

)%

MW Cleaners

 

(1.1

)%

$

(0.3

)

$

25.1

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Apparel Segment

 

21.1

%

$

39.3

 

$

225.3

 

8.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

(3.2

)%

$

(85.2

)

$

2,585.4

 

 

 

 

 

 

 

 

Net sales for the third quarter at our largest brand, Men’s Wearhouse, decreased 0.8% while comparable sales increased 0.1% from last year’s third quarter.  The slight increase in comparable sales resulted primarily from higher rental services revenue while comparable sales for clothing decreased primarily due to decreases in both average transactions per store and units sold per transaction partially offset by an increase in average unit retails (net selling prices).  Comparable rental services revenue increased 4.9% in the third quarter of 2016.

 

Page 2



 

Jos. A. Bank comparable sales for the third quarter decreased 9.8% primarily due to decreases in both average transactions per store and average unit retails partially offset by higher units sold per transaction and higher rental services revenue.

 

K&G comparable sales decreased 3.0% primarily due to lower average transactions per store partially offset by an increase in average unit retails and units sold per transaction.

 

Net sales for Moores, our Canadian retail brand, increased 1.2% primarily due to the impact of new stores.  Moores had a comparable sales decrease of 0.4% due to a decrease in average transactions per store driven by weak macro-economic conditions in Canada, partially offset by an increase in average unit retails with units per transaction essentially flat.

 

The Corporate Apparel segment had a sales increase of 30.0% primarily driven by the rollout of a large new uniform program.

 

THIRD QUARTER GAAP RESULTS

 

Below is a comparison table and discussion of the condensed consolidated third quarter FY 2016 to third quarter FY 2015 operating results.

 

Consolidated Third Quarter FY 2016 Comparison to Third Quarter FY 2015 Operating Results

 

 

 

 

 

 

 

 

 

 

 

Variance

 

 

 

Q3 FY16

 

Q3 FY16

 

Q3 FY15

 

Q3 FY15

 

 

 

 

 

Basis

 

 

 

$

 

% of Sales

 

$

 

% of Sales

 

Dollar

 

%

 

Points

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

$

575,046

 

67.90

%

$

615,874

 

71.16

%

$

(40,828

)

-6.63

%

(3.27

)

Rental services

 

138,724

 

16.38

%

132,443

 

15.30

%

6,281

 

4.74

%

1.08

 

Alteration and other services

 

49,919

 

5.89

%

53,070

 

6.13

%

(3,151

)

-5.94

%

(0.24

)

Total retail sales

 

763,689

 

90.17

%

801,387

 

92.60

%

(37,698

)

-4.70

%

(2.43

)

Corporate apparel clothing product

 

83,245

 

9.83

%

64,059

 

7.40

%

19,186

 

29.95

%

2.43

 

Total net sales

 

846,934

 

100.00

%

865,446

 

100.00

%

(18,512

)

-2.14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

327,068

 

56.88

%

341,526

 

55.45

%

(14,458

)

-4.23

%

1.42

 

Rental services

 

115,766

 

83.45

%

111,012

 

83.82

%

4,754

 

4.28

%

(0.37

)

Alteration and other services

 

16,393

 

32.84

%

16,810

 

31.68

%

(417

)

-2.48

%

1.16

 

Occupancy costs

 

(108,923

)

-14.26

%

(114,629

)

-14.30

%

5,706

 

4.98

%

0.04

 

Total retail gross margin

 

350,304

 

45.87

%

354,719

 

44.26

%

(4,415

)

-1.24

%

1.61

 

Corporate apparel clothing product

 

26,902

 

32.32

%

18,272

 

28.52

%

8,630

 

47.23

%

3.79

 

Total gross margin

 

377,206

 

44.54

%

372,991

 

43.10

%

4,215

 

1.13

%

1.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising expense

 

45,656

 

5.39

%

47,991

 

5.55

%

(2,335

)

-4.87

%

(0.15

)

Selling, general and administrative expenses

 

270,494

 

31.94

%

271,301

 

31.35

%

(807

)

-0.30

%

0.59

 

Tradename impairment charge

 

 

 

90,100

 

10.41

%

(90,100

)

-100.00

%

(10.41

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

61,056

 

7.21

%

$

(36,401

)

-4.21

%

$

97,457

 

NM

 

11.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary of Operating Income (Loss) by Reportable Segment and Shared Services (1)

 

 

 

 

 

 

 

 

 

 

 

Retail

 

$

97,629

 

12.78

%

$

512

 

0.06

%

$

97,117

 

18968.16

%

12.72

 

Corporate apparel

 

10,314

 

12.39

%

2,623

 

4.09

%

7,691

 

293.21

%

8.30

 

Shared services

 

(46,887

)

-5.54

%

(39,536

)

-4.57

%

(7,351

)

18.59

%

(0.97

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income (loss)

 

$

61,056

 

7.21

%

$

(36,401

)

-4.21

%

$

97,457

 

NM

 

11.42

 

 


(1) As a percent of related sales.

 

Total net sales decreased 2.1%, or $18.5 million, to $846.9 million.  Retail segment net sales decreased by 4.7%, or $37.7 million.  Corporate apparel sales increased by 30.0% or $19.2 million.

 

Page 3



 

Total gross margin was $377.2 million, an increase of $4.2 million, or 1.1%, due primarily to the impact of the rollout of a large new uniform program partially offset by a decrease in retail segment net sales.  As a percent of retail sales, retail gross margin increased 161 basis points to 45.9% primarily as a result of anniversarying lower gross margins in last year’s third quarter that resulted from the clearance of merchandise through the e-commerce channel, primarily at our Men’s Wearhouse brand.

 

Advertising expense decreased $2.3 million to $45.7 million and decreased 15 basis points as a percent of total sales.

 

Selling, general and administrative expenses (“SG&A”) decreased $0.8 million to $270.5 million but increased 59 basis points as a percent of total sales, primarily as a result of deleverage from lower sales.

 

Operating income for the third quarter was $61.1 million compared to an operating loss of $36.4 million last year, which included a tradename impairment charge of $90.1 million.

 

Net interest expense for the third quarter was $25.4 million compared to $26.4 million in 2015.

 

The effective tax rate for the third quarter was 24.1% for 2016 and a benefit of (56.8)% for 2015.

 

Net earnings for the quarter were $28.4 million compared to a net loss of $27.2 million last year.  Diluted EPS was $0.58 compared to diluted loss per share of $0.56 in the prior year quarter.

 

THIRD QUARTER ADJUSTED RESULTS (1)

 

Below is a comparison table and discussion of adjusted operating metrics for the third quarter of FY 2016 and FY 2015.  Note that only the line items affected by adjustments are shown in the table.

 

Consolidated Adjusted Third Quarter FY 2016 Comparison to Adjusted Third Quarter FY 2015 Operating Results(1)

 

 

 

 

 

Q3 FY16

 

 

 

Q3 FY15

 

Variance

 

 

 

Q3 FY16

 

% of

 

Q3 FY15

 

% of

 

 

 

 

 

Basis

 

 

 

$

 

Sales

 

$

 

Sales

 

Dollar

 

%

 

Points

 

Gross margin(2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

$

327,068

 

56.88

%

$

341,575

 

55.46

%

$

(14,507

)

-4.25

%

1.42

 

Alteration and other services

 

16,400

 

32.85

%

16,810

 

31.68

%

(410

)

-2.44

%

1.18

 

Occupancy costs

 

(109,901

)

-14.39

%

(114,782

)

-14.32

%

4,881

 

-4.25

%

(0.07

)

Total retail gross margin

 

349,333

 

45.74

%

354,615

 

44.25

%

(5,282

)

-1.49

%

1.49

 

Total gross margin

 

376,235

 

44.42

%

372,887

 

43.09

%

3,348

 

0.90

%

1.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

257,176

 

30.37

%

263,890

 

30.49

%

(6,714

)

-2.54

%

(0.13

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

73,403

 

8.67

%

$

61,006

 

7.05

%

$

12,397

 

20.32

%

1.62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary of Operating Income by Reportable Segment and Shared Services (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

$

107,537

 

14.08

%

$

97,777

 

12.20

%

$

9,760

 

9.98

%

1.88

 

Corporate apparel

 

10,314

 

12.39

%

2,623

 

4.09

%

7,691

 

293.21

%

8.30

 

Shared services

 

(44,448

)

-5.25

%

(39,394

)

-4.55

%

(5,054

)

12.83

%

(0.70

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

 

$

73,403

 

8.67

%

$

61,006

 

7.05

%

$

12,397

 

20.32

%

1.62

 

 


(1) See Use of Non-GAAP Financial Measures for reconciliation to GAAP.

(2) As a percent of related sales.

 

Total gross margin increased $3.3 million and increased 134 basis points.  Retail gross margin dollars decreased $5.3 million primarily due to lower sales while the retail gross margin rate increased 149 basis points primarily due to anniversarying lower gross margins in last year’s third quarter, that resulted from

 

Page 4



 

clearance activities in our e-commerce channel.  Excluding the impact of the factory/outlet stores last year, total gross margin increased 140 basis points and retail gross margin increased 155 basis points.

 

On a stand-alone basis, Jos. A. Bank retail clothing product selling margin excluding factory stores increased approximately 277 basis points due to lower product costs and increased average unit retails.

 

Primarily due to the Company’s cost reduction efforts, SG&A expenses decreased $6.7 million and decreased 13 basis points as a percent of total sales.  The decrease in SG&A expenses was partially offset by increased incentive compensation accruals.

 

Operating income increased $12.4 million or 20.3%.

 

The effective tax rate was 30.6%.

 

Adjusted net earnings were $33.3 million, or $0.68 adjusted EPS compared to adjusted EPS of $0.50 in the last year’s third quarter.

 

NINE MONTH GAAP RESULTS

 

Below is a comparison table and discussion of the condensed consolidated nine months of FY 2016 to nine months of FY 2015 operating results.

 

Consolidated Nine Months FY 2016 Comparison to Nine Months FY 2015 Operating Results

 

 

 

 

 

YTD

 

 

 

YTD

 

 

 

 

 

 

 

 

 

 

 

FY16

 

 

 

FY15

 

Variance

 

 

 

YTD FY16

 

% of

 

YTD FY15

 

% of 

 

 

 

 

 

Basis 

 

 

 

$

 

Sales

 

$

 

Sales

 

Dollar

 

%

 

Points

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

$

1,806,660

 

69.88

%

$

1,931,926

 

72.34

%

$

(125,266

)

-6.48

%

(2.46

)

Rental services

 

403,564

 

15.61

%

392,621

 

14.70

%

10,943

 

2.79

%

0.91

 

Alteration and other services

 

149,888

 

5.80

%

160,024

 

5.99

%

(10,136

)

-6.33

%

(0.19

)

Total retail sales

 

2,360,112

 

91.28

%

2,484,571

 

93.03

%

(124,459

)

-5.01

%

(1.75

)

Corporate apparel clothing product

 

225,328

 

8.72

%

186,038

 

6.97

%

39,290

 

21.12

%

1.75

 

Total net sales

 

2,585,440

 

100.00

%

2,670,609

 

100.00

%

(85,169

)

-3.19

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

1,010,445

 

55.93

%

1,081,144

 

55.96

%

(70,699

)

-6.54

%

(0.03

)

Rental services

 

337,621

 

83.66

%

329,755

 

83.99

%

7,866

 

2.39

%

(0.33

)

Alteration and other services

 

45,803

 

30.56

%

50,496

 

31.56

%

(4,693

)

-9.29

%

(1.00

)

Occupancy costs

 

(327,673

)

-13.88

%

(341,980

)

-13.76

%

14,307

 

4.18

%

(0.12

)

Total retail gross margin

 

1,066,196

 

45.18

%

1,119,415

 

45.05

%

(53,219

)

-4.75

%

0.12

 

Corporate apparel clothing product

 

73,155

 

32.47

%

53,809

 

28.92

%

19,346

 

35.95

%

3.54

 

Total gross margin

 

1,139,351

 

44.07

%

1,173,224

 

43.93

%

(33,873

)

-2.89

%

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising expense

 

138,547

 

5.36

%

143,628

 

5.38

%

(5,081

)

-3.54

%

(0.02

)

Selling, general and administrative expenses

 

849,122

 

32.84

%

822,485

 

30.80

%

26,637

 

3.24

%

2.04

 

Tradename impairment charge

 

 

 

90,100

 

3.37

%

(90,100

)

-100.00

%

(3.37

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

151,682

 

5.87

%

$

117,011

 

4.38

%

$

34,671

 

29.63

%

1.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary of Operating Income by Reportable Segment and Shared Services (1)

 

 

 

 

 

Retail

 

$

278,732

 

11.81

%

$

233,143

 

9.38

%

$

45,589

 

19.55

%

2.43

 

Corporate apparel

 

24,288

 

10.78

%

6,429

 

3.46

%

17,859

 

277.79

%

7.32

 

Shared services

 

(151,338

)

-5.85

%

(122,561

)

-4.59

%

(28,777

)

23.48

%

(1.26

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

 

$

151,682

 

5.87

%

$

117,011

 

4.38

%

$

34,671

 

29.63

%

1.49

 

 


(1) As a percent of related sales.

 

Page 5



 

Total net sales decreased 3.2%, or $85.2 million, to $2,585.4 million.  Retail segment net sales decreased by 5.0%, or $124.5 million.  Corporate apparel sales increased by 21.1% or $39.3 million.

 

Total gross margin was $1,139.4 million, a decrease of $33.9 million, or 2.9% due primarily to the decrease in retail segment net sales.  As a percent of total sales, total gross margin increased 14 basis points.

 

Advertising expense decreased $5.1 million to $138.5 million and decreased slightly by 2 basis points as a percent of total sales.

 

SG&A increased $26.6 million to $849.1 million or 204 basis points, primarily due to costs associated with our store rationalization and profit improvement programs.

 

Operating income for the nine months was $151.7 million compared to operating income of $117.0 million last year.

 

Net interest expense for the nine months was $77.8 million compared to $79.3 million in 2015.

 

The effective tax rate for the nine months was 27.3% for 2016 and a benefit of (24.0%) for 2015.

 

Net earnings for the nine months were $55.0 million compared to net earnings of $31.0 million last year.  Diluted EPS was $1.13 compared to diluted EPS of $0.64 in the same period last year.

 

NINE MONTH ADJUSTED RESULTS (1)

 

Below is a comparison table and discussion of adjusted operating metrics for the nine months of FY 2016 and FY 2015.  Note that only the line items affected by adjustments are shown in the table.

 

Consolidated Adjusted Nine Months FY 2016 Comparison to Adjusted Nine Months FY 2015 Operating Results(1)

 

 

 

 

 

YTD

 

 

 

YTD

 

 

 

 

 

 

 

 

 

 

 

FY16

 

 

 

FY15

 

Variance

 

 

 

YTD FY16

 

% of

 

YTD FY15

 

% of 

 

 

 

 

 

Basis 

 

 

 

$

 

Sales

 

$

 

Sales

 

Dollar

 

%

 

Points

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin(2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

$

1,010,422

 

55.93

%

$

1,082,178

 

56.02

%

$

(71,756

)

-6.63

%

(0.09

)

Alteration and other services

 

46,098

 

30.75

%

50,496

 

31.56

%

(4,398

)

-8.71

%

(0.80

)

Occupancy costs

 

(329,640

)

-13.97

%

(340,996

)

-13.72

%

11,356

 

-3.33

%

(0.24

)

Total retail gross margin

 

1,064,501

 

45.10

%

1,121,433

 

45.14

%

(56,932

)

-5.08

%

(0.03

)

Total gross margin

 

1,137,656

 

44.00

%

1,175,242

 

44.01

%

(37,586

)

-3.20

%

(0.00

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

779,208

 

30.14

%

796,980

 

29.84

%

(17,772

)

-2.23

%

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

219,901

 

8.51

%

$

234,633

 

8.79

%

$

(14,732

)

-6.28

%

(0.28

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary of Operating Income by Reportable Segment and Shared Services (2)

 

 

 

 

 

 

 

Retail

 

$

326,131

 

13.82

%

$

347,781

 

14.00

%

$

(21,650

)

-6.23

%

(0.18

)

Corporate apparel

 

24,288

 

10.78

%

6,429

 

3.46

%

17,859

 

277.79

%

7.32

 

Shared services

 

(130,518

)

-5.05

%

(119,577

)

-4.48

%

(10,941

)

9.15

%

(0.57

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

 

$

219,901

 

8.51

%

$

234,633

 

8.79

%

$

(14,732

)

-6.28

%

(0.28

)

 


(1) See Use of Non-GAAP Financial Measures for reconciliation to GAAP.

(2) As a percent of related sales.

 

Page 6



 

Total gross margin decreased $37.6 million but was flat as a percent of sales.  Retail gross margin decreased $56.9 million primarily due to lower sales and decreased 3 basis points as a percent of retail sales. Excluding the impact of the factory/outlet stores from both periods, total gross margin increased by 46 basis points and retail gross margin increased 47 basis points.

 

On a stand-alone basis, Jos. A. Bank retail clothing product selling margin excluding factory stores increased approximately 498 basis points due to lower product costs and an increase in the average unit retail.

 

Primarily due to the Company’s cost reduction efforts, SG&A expenses decreased $17.8 million yet deleveraged 30 basis points due to lower sales. The decrease in SG&A expenses was partially offset by increased incentive compensation accruals.

 

Operating income decreased $14.7 million or 6.3%.

 

The effective tax rate was 32.9%.

 

Adjusted net earnings were $95.4 million, or $1.96 adjusted EPS compared to adjusted EPS of $2.11 in the same period last year.

 

BALANCE SHEET

 

Total debt at the end of the third quarter 2016 was approximately $1.6 billion.  The Company made its scheduled $1.8 million payment on its term loan during the third quarter.  In addition, as previously reported, during the third quarter, the Company repurchased and retired $18.5 million of its senior notes, resulting in a total of $25.0 million of its senior notes being repurchased and retired during 2016. There were no borrowings outstanding on our revolving credit facility at the end of the third quarter of 2016.

 

Inventories decreased $12.3 million to $1,047.9 million at the end of the third quarter 2016 from $1,060.2 million at the end of the prior year third quarter, primarily due to the weaker exchange rate from British pounds to U.S. dollars.  Excluding this foreign exchange translation impact, total inventories were a few million dollars higher than last year.  The Company expects inventories to be at or below prior-year levels at year end 2016, with Jos. A. Bank inventories already below prior-year levels.

 

Cash flow from operating activities through the third quarter 2016 was $176.9 million compared to $112.2 million in the same period last year.  The increase was primarily due to working capital items.

 

Capital expenditures through the third quarter 2016 were $80.6 million compared to $86.4 million in the prior year.

 

CALL AND WEBCAST INFORMATION

 

At 9:00 a.m. Eastern time on Thursday, December 8, 2016, management will host a conference call and real time webcast to discuss fiscal 2016 third quarter and nine month results.

 

To access the conference call at 9:00 a.m. Eastern on December 8th, please dial 412-902-0030.  To access the live webcast, visit the Investor Relations section of the Company’s website at http://ir.tailoredbrands.com.  A telephonic replay will be available through December 15, 2016, by calling 201-612-7415 and entering the access code of 13648633#, or a webcast archive will be available free on the website for approximately 90 days.

 

Page 7



 

STORE INFORMATION

 

 

 

October 29, 2016

 

October 31, 2015

 

January 30, 2016

 

 

 

Number of
Stores

 

Sq. Ft.
(000’s)

 

Number of
Stores

 

Sq. Ft.
(000’s)

 

Number of
Stores

 

Sq. Ft.
(000’s)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Men’s Wearhouse (a)

 

713

 

4,010.2

 

709

 

3,998.7

 

714

 

4,025.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jos. A. Bank (b)

 

550

 

2,588.7

 

633

 

2,912.5

 

625

 

2,880.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Men’s Wearhouse and Tux

 

61

 

90.1

 

183

 

255.1

 

160

 

223.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Tuxedo Shop @ Macy’s

 

170

 

84.0

 

12

 

6.6

 

12

 

6.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Moores, Clothing for Men

 

126

 

789.0

 

123

 

775.0

 

124

 

779.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

K&G (c)

 

90

 

2,101.5

 

88

 

2,087.1

 

89

 

2,102.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

1,710

 

9,663.5

 

1,748

 

10,035.0

 

1,724

 

10,018.3

 

 


(a)  Includes one Joseph Abboud store.

(b)  Excludes 14 franchise stores.

(c)  82, 81 and 82 stores, respectively, offering women’s apparel.

 

Tailored Brands, Inc. is a leading authority on helping men dress for work, special occasions and everyday life.  We serve our customers through an expansive omnichannel network that includes over 1,700 locations in the U.S. and Canada as well as our branded ecommerce websites.  Our brands include Men’s Wearhouse, Jos. A. Bank, Joseph Abboud, Moores Clothing for Men and K&G Fashion Superstores.  We also operate a global corporate apparel and workwear group consisting of Twin Hill in the United States and Dimensions, Alexandra and Yaffy in the United Kingdom.

 

For additional information on Tailored Brands, please visit the Company’s websites at www.tailoredbrands.com, www.menswearhouse.com, www.josbank.com,  www.josephabboud.com, www.mooresclothing.com, www.kgstores.com, www.mwcleaners.com, www.twinhill.com, www.dimensions.co.uk and www.alexandra.co.uk.

 

This press release contains forward-looking information, including the Company’s statements regarding its ability to drive traffic and growth through innovative product offerings and strengthened omnichannel capabilities, comparable sales expectations and adjusted earnings per share guidance, and inventory expectations.  In addition, statements containing words such as “guidance,” “may,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “project,” “projections,” “business outlook,” and “estimate” or similar expressions constitute forward-looking statements..  The forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are not guarantees of future performance and a variety of factors could cause actual results to differ materially from the anticipated or expected results expressed in or suggested by these forward-looking statements.  Factors that might cause or contribute to such differences include, but are not limited to:  actions by governmental entities, domestic and international macro-economic conditions, inflation or deflation, the loss of, or changes in, key personnel; success, or lack thereof, in executing our internal strategies and operating plans including new store and new market expansion plans, cost reduction initiatives, store rationalization plans, profit improvement plans, revenue enhancement strategies and the impact of opening tuxedo shops within Macy’s stores, changes in demand for clothing, market trends in the retail business, customer confidence and spending patterns, changes in traffic trends in our stores, customer acceptance of our merchandise strategies, performance issues with key suppliers, disruptions in our supply chain, severe weather, foreign currency fluctuations, government export and import policies, advertising or marketing activities of competitors, and legal proceedings.

 

The forward-looking statements in this press release speak only as of the date hereof. Except for the ongoing obligations of Tailored Brands to disclose material information under the federal securities laws, Tailored Brands undertakes no obligation to revise or update publicly any forward-looking statement, except as required by law.  Other factors that may impact the forward-looking statements are described in our latest annual report on Form 10-K and our filings on Form 10-Q.

 

Page 8



 

TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

(Unaudited)

 

For the Three Months Ended October 29, 2016 and October 31, 2015

(In thousands, except per share data)

 

 

 

Three Months Ended

 

Variance

 

 

 

 

 

% of

 

 

 

% of

 

 

 

 

 

Basis

 

 

 

2016

 

Sales

 

2015

 

Sales

 

Dollar

 

%

 

Points

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

$

575,046

 

67.90

%

$

615,874

 

71.16

%

$

(40,828

)

-6.63

%

-3.27

 

Rental services

 

138,724

 

16.38

%

132,443

 

15.30

%

6,281

 

4.74

%

1.08

 

Alteration and other services

 

49,919

 

5.89

%

53,070

 

6.13

%

(3,151

)

-5.94

%

-0.24

 

Total retail sales

 

763,689

 

90.17

%

801,387

 

92.60

%

(37,698

)

-4.70

%

-2.43

 

Corporate apparel clothing product

 

83,245

 

9.83

%

64,059

 

7.40

%

19,186

 

29.95

%

2.43

 

Total net sales

 

846,934

 

100.00

%

865,446

 

100.00

%

(18,512

)

-2.14

%

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cost of sales

 

469,728

 

55.46

%

492,455

 

56.90

%

(22,727

)

-4.62

%

-1.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin (a):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

327,068

 

56.88

%

341,526

 

55.45

%

(14,458

)

-4.23

%

1.42

 

Rental services

 

115,766

 

83.45

%

111,012

 

83.82

%

4,754

 

4.28

%

-0.37

 

Alteration and other services

 

16,393

 

32.84

%

16,810

 

31.68

%

(417

)

-2.48

%

1.16

 

Occupancy costs

 

(108,923

)

-14.26

%

(114,629

)

-14.30

%

5,706

 

4.98

%

0.04

 

Total retail gross margin

 

350,304

 

45.87

%

354,719

 

44.26

%

(4,415

)

-1.24

%

1.61

 

Corporate apparel clothing product

 

26,902

 

32.32

%

18,272

 

28.52

%

8,630

 

47.23

%

3.79

 

Total gross margin

 

377,206

 

44.54

%

372,991

 

43.10

%

4,215

 

1.13

%

1.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising expense

 

45,656

 

5.39

%

47,991

 

5.55

%

(2,335

)

-4.87

%

-0.15

 

Selling, general and administrative expenses

 

270,494

 

31.94

%

271,301

 

31.35

%

(807

)

-0.30

%

0.59

 

Tradename impairment charge

 

 

 

90,100

 

10.41

%

(90,100

)

-100.00

%

-10.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

61,056

 

7.21

%

(36,401

)

-4.21

%

97,457

 

NM

 

11.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest

 

(25,424

)

-3.00

%

(26,407

)

-3.05

%

983

 

-3.72

%

0.05

 

Gain on extinguishment of debt, net

 

1,808

 

0.21

%

 

 

1,808

 

NM

 

0.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) before income taxes

 

37,440

 

4.42

%

(62,808

)

-7.26

%

100,248

 

NM

 

11.68

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

9,007

 

1.06

%

(35,654

)

-4.12

%

44,661

 

NM

 

5.18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss)

 

$

28,433

 

3.36

%

$

(27,154

)

-3.14

%

$

55,587

 

NM

 

6.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) per diluted common share allocated to common shareholders

 

$

0.58

 

 

 

$

(0.56

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted common shares outstanding:

 

48,812

 

 

 

48,339

 

 

 

 

 

 

 

 

 

 


(a)  Gross margin percent of sales is calculated as a percentage of related sales.

 

Page 9



 

TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

(Unaudited)

 

For the Nine Months Ended October 29, 2016 and October 31, 2015

(In thousands, except per share data)

 

 

 

Nine Months Ended

 

Variance

 

 

 

 

 

% of

 

 

 

% of

 

 

 

 

 

Basis

 

 

 

2016

 

Sales

 

2015

 

Sales

 

Dollar

 

%

 

Points

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

$

1,806,660

 

69.88

%

$

1,931,926

 

72.34

%

$

(125,266

)

-6.48

%

-2.46

 

Rental services

 

403,564

 

15.61

%

392,621

 

14.70

%

10,943

 

2.79

%

0.91

 

Alteration and other services

 

149,888

 

5.80

%

160,024

 

5.99

%

(10,136

)

-6.33

%

-0.19

 

Total retail sales

 

2,360,112

 

91.28

%

2,484,571

 

93.03

%

(124,459

)

-5.01

%

-1.75

 

Corporate apparel clothing product

 

225,328

 

8.72

%

186,038

 

6.97

%

39,290

 

21.12

%

1.75

 

Total net sales

 

2,585,440

 

100.00

%

2,670,609

 

100.00

%

(85,169

)

-3.19

%

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cost of sales

 

1,446,089

 

55.93

%

1,497,385

 

56.07

%

(51,296

)

-3.43

%

-0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin (a):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail clothing product

 

1,010,445

 

55.93

%

1,081,144

 

55.96

%

(70,699

)

-6.54

%

-0.03

 

Rental services

 

337,621

 

83.66

%

329,755

 

83.99

%

7,866

 

2.39

%

-0.33

 

Alteration and other services

 

45,803

 

30.56

%

50,496

 

31.56

%

(4,693

)

-9.29

%

-1.00

 

Occupancy costs

 

(327,673

)

-13.88

%

(341,980

)

-13.76

%

14,307

 

4.18

%

-0.12

 

Total retail gross margin

 

1,066,196

 

45.18

%

1,119,415

 

45.05

%

(53,219

)

-4.75

%

0.12

 

Corporate apparel clothing product

 

73,155

 

32.47

%

53,809

 

28.92

%

19,346

 

35.95

%

3.54

 

Total gross margin

 

1,139,351

 

44.07

%

1,173,224

 

43.93

%

(33,873

)

-2.89

%

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising expense

 

138,547

 

5.36

%

143,628

 

5.38

%

(5,081

)

-3.54

%

-0.02

 

Selling, general and administrative expenses

 

849,122

 

32.84

%

822,485

 

30.80

%

26,637

 

3.24

%

2.04

 

Tradename impairment charge

 

 

 

90,100

 

3.37

%

(90,100

)

-100.00

%

-3.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

151,682

 

5.87

%

117,011

 

4.38

%

34,671

 

29.63

%

1.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest

 

(77,751

)

-3.01

%

(79,335

)

-2.97

%

1,584

 

-2.00

%

-0.04

 

Gain (loss) on extinguishment of debt, net

 

1,737

 

0.07

%

(12,675

)

-0.47

%

14,412

 

NM

 

0.54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

75,668

 

2.93

%

25,001

 

0.94

%

50,667

 

202.66

%

1.99

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

20,623

 

0.80

%

(5,993

)

-0.22

%

26,616

 

NM

 

1.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

55,045

 

2.13

%

$

30,994

 

1.16

%

$

24,051

 

77.60

%

0.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per diluted common share allocated to common shareholders

 

$

1.13

 

 

 

$

0.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted common shares outstanding:

 

48,691

 

 

 

48,513

 

 

 

 

 

 

 

 

 

 


(a)  Gross margin percent of sales is calculated as a percentage of related sales.

 

Page 10



 

TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

 

October 29,

 

October 31,

 

 

 

2016

 

2015

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

34,948

 

$

53,654

 

Accounts receivable, net

 

71,898

 

66,902

 

Inventories

 

1,047,915

 

1,060,247

 

Other current assets

 

60,190

 

168,071

 

Total current assets

 

1,214,951

 

1,348,874

 

Property and equipment, net

 

501,391

 

548,481

 

Rental product, net

 

160,101

 

147,344

 

Goodwill

 

116,026

 

890,991

 

Intangible assets, net

 

172,337

 

568,171

 

Other assets

 

10,323

 

8,518

 

 

 

 

 

 

 

Total assets

 

$

2,175,129

 

$

3,512,379

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

200,199

 

$

233,520

 

Accrued expenses and other current liabilities

 

280,658

 

265,993

 

Income taxes payable

 

917

 

13,218

 

Current portion of long-term debt

 

7,000

 

7,000

 

Total current liabilities

 

488,774

 

519,731

 

Long-term debt, net

 

1,588,873

 

1,649,206

 

Deferred taxes and other liabilities

 

175,179

 

358,059

 

 

 

 

 

 

 

Total liabilities

 

2,252,826

 

2,526,996

 

 

 

 

 

 

 

Shareholders’ (deficit) equity:

 

 

 

 

 

Preferred stock

 

 

 

Common stock

 

487

 

485

 

Capital in excess of par

 

466,817

 

452,666

 

(Accumulated deficit) retained earnings

 

(499,663

)

541,672

 

Accumulated other comprehensive loss

 

(45,338

)

(6,356

)

Treasury stock, at cost

 

 

(3,084

)

 

 

 

 

 

 

Total shareholders’ (deficit) equity

 

(77,697

)

985,383

 

 

 

 

 

 

 

Total liabilities and shareholders’ (deficit) equity

 

$

2,175,129

 

$

3,512,379

 

 

Page 11



 

TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Nine Months Ended October 29, 2016 and October 31, 2015

(In thousands)

 

 

 

Nine Months Ended

 

 

 

2016

 

2015

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net earnings

 

$

55,045

 

$

30,994

 

Non-cash adjustments to net earnings:

 

 

 

 

 

Depreciation and amortization

 

87,838

 

98,162

 

Rental product amortization

 

35,982

 

30,496

 

Tradename impairment charge

 

 

90,100

 

Asset impairment charges

 

4,293

 

1,695

 

(Gain) loss on extinguishment of debt, net

 

(1,737

)

12,675

 

Amortization of deferred financing costs

 

4,922

 

5,151

 

Amortization of discount on long-term debt

 

728

 

848

 

Loss (gain) on disposition of assets

 

616

 

(833

)

Other

 

(556

)

(46,457

)

Changes in operating assets and liabilities

 

(10,247

)

(110,595

)

 

 

 

 

 

 

Net cash provided by operating activities

 

176,884

 

112,236

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(80,550

)

(86,406

)

Proceeds from sales of property and equipment

 

605

 

2,613

 

 

 

 

 

 

 

Net cash used in investing activities

 

(79,945

)

(83,793

)