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 2019 FIRST QUARTER RESULTS

 

·                  Q1 2019 GAAP diluted EPS of $0.14 and adjusted diluted EPS(1) of $0.21

 

·                  Company expects Q2 2019 adjusted diluted EPS(1) of $0.65 to $0.70

 

FREMONT, CA – June 12, 2019 – Tailored Brands, Inc. (NYSE: TLRD) today announced consolidated financial results for the fiscal first quarter ended May 4, 2019.

 

For the first quarter ended May 4, 2019, the Company reported GAAP diluted earnings per share of $0.14 and adjusted diluted earnings per share(1) of $0.21, compared to GAAP diluted earnings per share of $0.27 and adjusted diluted earnings per share(1) of $0.50 last year.

 

First quarter 2019 results include $4.4 million of charges related to our multi-year cost savings and operational excellence programs consisting of $3.1 million in consulting costs, $1.1 million in severance costs and $0.2 million in lease termination costs.

 

Tailored Brands President and CEO Dinesh Lathi said, “I am pleased to report that we delivered first quarter adjusted EPS that exceeded our guidance, with Jos. A. Bank and Moores comparable sales ahead of expectations.

 

“While we are on a journey to evolve our business to more fully meet our customers’ needs and wants, we made good progress in the first quarter against our strategic initiatives.  Our custom business posted another strong quarter as we continued to respond to our customers’ demand for personalized products and services that help them look their best in the moments that matter.  Our e-commerce team executed a robust portfolio of user experience and personalization tests, several of which have been pushed into production to increase conversion and average order values.  Finally, as we seek an optimized creative mix between promotional and storytelling advertising and an enhanced channel mix between broadcast and digital, we launched new brand campaigns for both Men’s Wearhouse and Jos. A. Bank that are being leveraged across channels.”

 

(1)          In the first quarter of fiscal 2019, adjusted items consist of costs related to our multi-year cost savings and operational excellence programs including consulting, severance and lease termination costs.  In the first quarter of fiscal 2018, adjusted items consist of a loss on extinguishment of debt related to the refinancing of our term loan and a loss upon the divestiture of the MW Cleaners business.  See Use of Non-GAAP Financial Measures for additional information on items excluded from adjusted EPS.

 

Page 1


 

First Quarter Fiscal 2019 Results

 

Net Sales Summary(1)

 

Net Sales (U.S.
dollars, in
millions)

% Total
Sales
Change

Comparable
Sales
Change
(2)

Retail

$724.7

(4.0%)

(3.2%)

Men’s Wearhouse

$427.8

(4.5%)

(4.5%)

Jos. A. Bank

$166.9

(1.3%)

(0.7%)

K&G

$87.7

(1.8%)

(0.5%)

Moores(3)

$42.3

(8.3%)

(4.6%)

Corporate Apparel

$56.7

(10.1%)

Total Company(4)

$781.4

(4.5%)

 

(1)                Amounts may not sum due to rounded numbers.

(2)                Comparable sales is defined as net sales from stores open at least 12 months at period end and includes e-commerce sales.

(3)                The Moores comparable sales change is based on the Canadian dollar.

(4)                On March 3, 2018, the Company sold its MW Cleaners business.

 

Net Sales

 

Total net sales decreased 4.5% to $781.4 million. Retail net sales decreased 4.0% primarily due to the decrease in retail segment comparable sales of 3.2%.  Corporate apparel net sales decreased 10.1%, or $6.4 million, primarily due to lower replenishment demand in the U.S. as well as the impact of a weaker British pound this year compared to last year.

 

Comparable Sales

 

Men’s Wearhouse comparable sales decreased 4.5%. Comparable sales for clothing decreased primarily due to lower transactions and units per transaction, partially offset by an increase in average unit retail. Comparable rental services revenue decreased 6.0%, primarily reflecting the Easter shift and continuing trend to purchase suits for special occasions.

 

Jos. A. Bank comparable sales decreased 0.7% primarily from a decrease in both units per transaction and transactions partially offset by an increase in average unit retail.

 

K&G comparable sales decreased 0.5% primarily due to a decrease in transactions and units per transaction partially offset by an increase in average unit retail.

 

Moores comparable sales decreased 4.6% primarily due to a decrease in transactions and units per transaction partially offset by an increase in average unit retail.

 

Gross Margin

 

On a GAAP basis, consolidated gross margin was $320.6 million, a decrease of $24.7 million, primarily due to the decrease in net sales.  As a percent of sales, consolidated gross margin decreased 120 basis points to 41.0%.  On an adjusted basis, consolidated gross margin decreased 120 basis points to 41.1% primarily due to deleveraging of occupancy costs and the greater mix of clothing product sales versus rental services revenue.

 

Page 2


 

On a GAAP basis, retail gross margin was $305.4 million, a decrease of $23.3 million.  As a percent of sales, retail gross margin decreased 140 basis points to 42.1%.  On an adjusted basis, retail gross margin decreased $23.1 million and the retail gross margin rate decreased 140 basis points to 42.2%, primarily due to deleveraging of occupancy costs and the greater mix of clothing product sales versus rental services revenue due to the Easter shift.

 

Advertising Expense

 

Advertising expense increased $3.8 million to $45.0 million primarily reflecting the launch of new brand campaigns for Men’s Wearhouse and Jos. A. Bank, and more expensive local instead of more economical national broadcast media to support planned tests.  As a percent of sales, advertising expense increased 70 basis points to 5.8%.

 

Selling, General and Administrative Expenses (“SG&A”)

 

On a GAAP basis, SG&A decreased $5.9 million to $245.2 million and increased 70 basis points as a percent of sales.  On an adjusted basis, SG&A decreased $6.4 million to $241.0 million primarily due to lower share-based compensation, travel and entertainment and employee-related benefit costs, but increased 60 basis points as a percent of sales to 30.8% primarily due to deleveraging from lower sales.

 

Operating Income

 

On a GAAP basis, operating income was $30.3 million compared to $52.9 million last year and operating margin decreased 260 basis points.  On an adjusted basis, operating income was $34.7 million compared to $56.5 million last year.  As a percent of sales, adjusted operating margin decreased 250 basis points to 4.4%.

 

Net Interest Expense and Net Loss on Extinguishment of Debt

 

Net interest expense was $18.6 million compared to $21.9 million last year.  The decrease in interest expense was due to reducing our outstanding debt.

 

On a GAAP basis, there was no net loss on extinguishment of debt this year compared to a $12.7 million loss on extinguishment of debt last year.  Last year’s net loss on extinguishment of debt includes $11.9 million related to the write-off of deferred financing costs and original issue discount resulting from the Company’s refinancing of its Term Loan.  On an adjusted basis, there was no net loss on extinguishment of debt this year compared to a net loss on extinguishment of debt of $0.9 million last year.

 

Effective Tax Rate

 

On a GAAP basis, the effective tax rate was 39.1% compared to 24.0% last year.  On an adjusted basis, the effective tax rate was 33.7% compared to 25.0% last year.  The increase in the adjusted effective tax rate was due to an increase in tax expense related to the accounting for employee share-based awards.

 

Net Earnings and EPS

 

On a GAAP basis, net earnings were $7.1 million compared to net earnings of $13.9 million last year.  Diluted EPS was $0.14 compared to diluted EPS of $0.27 last year.

 

On an adjusted basis, net earnings were $10.7 million compared to net earnings of $25.3 million last year.  Adjusted diluted EPS was $0.21 compared to adjusted diluted EPS of $0.50 last year.

 

Page 3


 

Balance Sheet Highlights

 

Cash and cash equivalents at the end of the first quarter of 2019 were $29.7 million, a decrease of $63.4 million compared to the end of the first quarter of 2018 primarily resulting from the decrease in comparable sales as well as the impact the Easter shift.  At the end of the first quarter of 2019, there were $48.5 million of borrowings outstanding on our revolving credit facility.  Total liquidity at the end of the first quarter was $454.7 million, comprised of availability on our revolving credit facility and cash and cash equivalents.

 

Inventories increased $30.7 million, or 3.6%, to $874.4 million at the end of the first quarter of 2019 compared to the end of the first quarter of 2018.  The increase was primarily driven by an increase in receipts as we anniversary limited shipping container availability in last year’s first quarter as well as higher inventories at Men’s Wearhouse reflecting the decrease in comparable sales.

 

Total debt at the end of the first quarter of 2019 was approximately $1.2 billion, down $126.3 million compared to the end of the first quarter of 2018.  During the first quarter, the Company made a total of $4.9 million in payments on its term loan, consisting of its scheduled $2.3 million payment and a $2.6 million excess cash flow payment.

 

During the first quarter of 2019, the Company adopted new lease accounting guidance using the optional transition method. Under this method, the Company applied the new standard as of February 3, 2019 with no adjustments to the comparative period presented. At May 4, 2019, the operating lease right-of-use assets totaled $956.0 million, and the current portion and long-term operating lease liabilities totaled $183.0 million and $804.9 million, respectively.  The adoption of the lease accounting guidance did not have a material impact on our condensed consolidated statements of income or cash flows for the first quarter of 2019.

 

Cash flow from operating activities for the first quarter of 2019 was $11.8 million compared to $120.2 million last year and was largely expected due to the impact of the Easter shift.  The decrease was driven by lower net earnings, the increase in inventories described above and changes in accounts payable and accrued liabilities primarily due to timing.

 

Capital expenditures for the first quarter of 2019 were $21.7 million compared to $11.0 million last year.

 

Q2 FISCAL 2019 OUTLOOK

 

Given that we are in the early stages of executing our strategic initiatives and evaluating our cost savings opportunities, our plan is to continue to provide quarterly guidance for the remainder of this fiscal year.  The Company’s outlook for the second quarter of fiscal 2019 is as follows:

 

·                 Earnings per Share: The Company expects to achieve adjusted diluted EPS in the range of $0.65 to $0.70.

 

·                 Comparable Sales: The Company expects comparable sales for:

 

o                Men’s Wearhouse to be down 3% to 5%

 

o                Jos. A. Bank to be down 2% to 4%

 

o                Moores to be down 2% to 4%

 

o                K&G to be down 2% to flat.

 

·                 Corporate Apparel Sales: The Company expects corporate apparel net sales to be down 4% to 6%.

 

·                 Effective Tax Rate: The Company expects an effective tax rate of approximately 23%.

 

·                 Real Estate: The Company expects net closures of seven stores, primarily at Jos. A. Bank.

 

Page 4


 

STORE INFORMATION

 

 

May 4, 2019

May 5, 2018

February 2, 2019

 

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)

720

4,037.1

720

4,040.8

720

4,035.5

 

 

 

 

 

 

 

Jos. A. Bank (b)

482

2,271.2

491

2,309.9

484

2,280.2

 

 

 

 

 

 

 

Men’s Wearhouse and Tux

46

68.8

50

74.5

46

68.8

 

 

 

 

 

 

 

Moores

126

787.4

126

787.5

126

787.4

 

 

 

 

 

 

 

K&G (c)

88

2,028.4

89

2,043.5

88

2,028.4

 

 

 

 

 

 

 

Total

1,462

9,192.9

1,476

9,256.2

1,464

9,200.3

 

(a)  Includes one Joseph Abboud store.

(b)  Excludes 14 franchise stores.

(c)  84, 85, and 84 stores offering women’s apparel at the end of each period, respectively.

 

 

Conference Call and Webcast Information

 

At 5:00 p.m. Eastern time on Wednesday, June 12, 2019, management will host a conference call and webcast to discuss fiscal 2019 first quarter results.  To access the conference call, please dial 201-689-8029.  To access the live webcast, visit the Investor Relations section of the Company’s website at http://ir.tailoredbrands.com.  A webcast archive will be available free on the website for approximately 90 days.

 

About Tailored Brands, Inc.

 

As the leading specialty retailer of men’s tailored clothing and largest men’s formalwear provider in the U.S. and Canada, Tailored Brands helps men love the way they look for work and special occasions.  We serve our customers through an expansive omni-channel network that includes over 1,400 locations in the U.S. and Canada as well as our branded e-commerce websites.  Our brands include Men’s Wearhouse, Jos. A. Bank, Joseph Abboud, Moores Clothing for Men and K&G.  We also operate an international corporate apparel and workwear group consisting of Dimensions, Alexandra and Yaffy in the United Kingdom and Twin Hill in the United States.

 

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

 

This press release contains forward-looking information, including the Company’s statements regarding its Q2 2019 outlook for adjusted earnings per share, comparable sales, corporate apparel sales, effective tax rate and store closures. In addition, words such as “expects,” “anticipates,” “envisions,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “guidance,” “may,” “projections,” and “business outlook,” variations of such words and similar expressions are intended to identify such forward-looking statements.  The forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.  Any forward-looking statements that we make herein are not guarantees of future performance and actual results may differ materially from those in such forward-looking statements as a result of various factors.  Factors that might cause or contribute to such differences include, but are not limited to:  actions or inactions 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 formulating or executing our internal strategies and operating plans including new store and new market expansion plans; cost reduction initiatives and revenue enhancement strategies; changes in demand for clothing or rental product; market trends in the retail business; customer confidence and spending patterns; changes in traffic trends in our stores; customer acceptance of our merchandise strategies, including custom clothing; performance issues with key suppliers; disruptions in our supply chain; severe weather; foreign currency fluctuations; government export and import policies, including the enactment of duties or tariffs; advertising or marketing activities of competitors; the impact of cybersecurity threats or data breaches; legal proceedings and the impact of climate change.

 

Forward-looking statements are intended to convey the Company’s expectations about the future, and speak only as of the date they are made.  We undertake no obligation to publicly update or revise any forward-looking statements that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by applicable law.  However, any further disclosures made on related subjects in our subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995, and all written or oral forward-looking statements that are made by or attributable to us are expressly qualified in their entirety by the cautionary statements contained or referenced in this section.

 

(Tables Follow)

 

Page 5


 

TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

 

For the Three Months Ended May 4, 2019 and May 5, 2018

(In thousands, except per share data)

 

 

 

Three Months Ended      

 

 

 

 

% of

 

 

 

% of

 

 

2019       

 

Sales

 

2018

 

Sales

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

Retail clothing product

 

$

594,779

 

76.1%

 

$

613,644

 

75.0%

Rental services

 

93,740

 

12.0%

 

100,227

 

12.3%

Alteration and other services

 

36,143

 

4.6%

 

40,972

 

5.0%

Total retail sales

 

724,662

 

92.7%

 

754,843

 

92.3%

Corporate apparel clothing product

 

56,725

 

7.3%

 

63,121

 

7.7%

Total net sales

 

781,387

 

100.0%

 

817,964

 

100.0%

 

 

 

 

 

 

 

 

 

Total cost of sales

 

460,831

 

59.0%

 

472,740

 

57.8%

 

 

 

 

 

 

 

 

 

Gross margin (a):

 

 

 

 

 

 

 

 

Retail clothing product

 

326,135

 

54.8%

 

337,424

 

55.0%

Rental services

 

80,723

 

86.1%

 

85,570

 

85.4%

Alteration and other services

 

2,296

 

6.4%

 

6,794

 

16.6%

Occupancy costs

 

(103,732)

 

-14.3%

 

(101,019)

 

-13.4%

Total retail gross margin

 

305,422

 

42.1%

 

328,769

 

43.6%

Corporate apparel clothing product

 

15,134

 

26.7%

 

16,455

 

26.1%

Total gross margin

 

320,556

 

41.0%

 

345,224

 

42.2%

 

 

 

 

 

 

 

 

 

Advertising expense

 

45,043

 

5.8%

 

41,233

 

5.0%

Selling, general and administrative expenses

 

245,211

 

31.4%

 

251,094

 

30.7%

 

 

 

 

 

 

 

 

 

Operating income

 

30,302

 

3.9%

 

52,897

 

6.5%

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(18,567)

 

-2.4%

 

(21,896)

 

-2.7%

Loss on extinguishment of debt, net

 

 

 

(12,711)

 

-1.6%

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

11,735

 

1.5%

 

18,290

 

2.2%

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

4,593

 

0.6%

 

4,381

 

0.5%

 

 

 

 

 

 

 

 

 

Net earnings

 

$

7,142

 

0.9%

 

$

13,909

 

1.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per diluted common share

 

$

0.14

 

 

 

$

0.27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted common shares outstanding

 

50,587

 

 

 

50,720

 

 

 

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

 

Page 6


 

TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

 

 

May 4,

 

May 5,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$           29,749

 

$         93,166

 

Accounts receivable, net

 

80,623

 

87,411

 

Inventories

 

874,412

 

843,671

 

Other current assets

 

49,904

 

69,937

 

 

 

 

 

 

 

Total current assets

 

1,034,688

 

1,094,185

 

Property and equipment, net

 

428,380

 

437,944

 

Operating lease right-of-use assets

 

955,970

 

 

Rental product, net

 

103,895

 

128,744

 

Goodwill

 

78,964

 

104,802

 

Intangible assets, net

 

156,614

 

167,320

 

Other assets

 

6,942

 

12,827

 

 

 

 

 

 

 

Total assets

 

$      2,765,453

 

$    1,945,822

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$         218,492

 

$       192,878

 

Accrued expenses and other current liabilities

 

316,821

 

350,414

 

Current portion of operating lease liabilities

 

183,011

 

 

Income taxes payable

 

15,923

 

1,740

 

Current portion of long-term debt

 

9,000

 

9,000

 

 

 

 

 

 

 

Total current liabilities

 

743,247

 

554,032

 

 

 

 

 

 

 

Long-term debt, net

 

1,151,196

 

1,277,508

 

Operating lease liabilities

 

804,895

 

 

Deferred taxes and other liabilities

 

70,161

 

151,503

 

 

 

 

 

 

 

Total liabilities

 

2,769,499

 

1,983,043

 

 

 

 

 

 

 

Shareholders’ deficit:

 

 

 

 

 

Preferred stock

 

 

 

Common stock

 

504

 

496

 

Capital in excess of par

 

507,039

 

494,849

 

Accumulated deficit

 

(470,411)

 

(510,441)

 

Accumulated other comprehensive loss

 

(41,178)

 

(22,125)

 

 

 

 

 

 

 

Total shareholders’ deficit

 

(4,046)

 

(37,221)

 

 

 

 

 

 

 

 Total liabilities and shareholders’ deficit

 

$      2,765,453

 

$    1,945,822

 

 

Page 7


 

TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

For the Three Months Ended May 4, 2019 and May 5, 2018

(In thousands)

 

 

 

     Three Months Ended

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net earnings

 

$            7,142

 

 

$         13,909

 

Non-cash adjustments to net earnings:

 

 

 

 

 

 

Depreciation and amortization

 

26,695

 

 

26,679

 

Operating lease right-of-use asset amortization

 

49,969

 

 

 

Rental product amortization

 

8,348

 

 

8,756

 

Asset impairment charges

 

184

 

 

269

 

Loss on extinguishment of debt, net

 

 

 

12,711

 

Amortization of deferred financing costs and discount on long-term debt

 

486

 

 

1,333

 

Loss on disposition of assets

 

 

 

3,618

 

Other

 

4,082

 

 

5,402

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

(7,504

)

 

(10,871

)

Inventories

 

(44,900

)

 

(11,886

)

Rental product

 

(12,831

)

 

(14,377

)

Other assets

 

(269

)

 

8,124

 

Accounts payable, accrued expenses and other current liabilities

 

30,872

 

 

82,755

 

Income taxes payable

 

(28

)

 

(4,301

)

Other liabilities

 

(50,452

)

 

(1,893

)

Net cash provided by operating activities

 

11,794

 

 

120,228

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Capital expenditures

 

(21,691

)

 

(10,980

)

Proceeds from divestiture of business

 

 

 

17,732

 

Net cash (used in) provided by investing activities

 

(21,691

)

 

6,752

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Payments on original term loan

 

 

 

(993,420

)

Proceeds from new term loan

 

 

 

895,500

 

Payments on new term loan

 

(4,870

)

 

(2,250

)

Proceeds from asset-based revolving credit facility

 

399,500

 

 

1,500

 

Payments on asset-based revolving credit facility

 

(399,500

)

 

(1,500

)

Repurchase and retirement of senior notes

 

 

 

(18,240

)

Deferred financing costs

 

 

 

(5,576

)

Cash dividends paid

 

(9,590

)

 

(9,618

)

Proceeds from issuance of common stock

 

427

 

 

3,649

 

Tax payments related to vested deferred stock units

 

(940

)

 

(5,025

)

Net cash used in financing activities

 

(14,973

)

 

(134,980

)

 

 

 

 

 

 

 

Effect of exchange rate changes

 

(812

)

 

  (2,441

)

 

 

 

 

 

 

 

DECREASE IN CASH AND CASH EQUIVALENTS

 

(25,682

)

 

(10,441

)

Balance at beginning of period

 

55,431

 

 

103,607

 

Balance at end of period

 

$          29,749

 

 

$         93,166

 

 

Page 8


 

TAILORED BRANDS, INC.

UNAUDITED NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts)

 

Use of Non-GAAP Financial Measures

 

In addition to providing financial results in accordance with GAAP, we have provided adjusted information for the fiscal first quarters of 2019 and 2018.  This non-GAAP financial information is provided to enhance the user’s overall understanding of the Company’s financial performance by removing the impacts of large, unusual or unique transactions that we believe are not indicative of our core business results.  For the first quarter of fiscal 2019, these items consist of costs related to our multi-year cost savings and operational excellence programs including consulting, severance and lease termination costs.  For the first quarter of fiscal 2018, these items consist of a loss on extinguishment of debt related to the refinancing of our term loan and a loss upon closing of the divestiture of our MW Cleaners business.

 

Management uses these adjusted results to assess the Company’s performance, to make decisions about how to allocate resources and to develop expectations for future performance.  In addition, adjusted EPS is used as a performance measure in the Company’s executive compensation program to determine the number of performance units that are ultimately earned for certain equity awards.

 

The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, financial information prepared in accordance with GAAP.  Management strongly encourages investors and shareholders to review the Company’s financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

 

A reconciliation of second quarter fiscal 2019 adjusted EPS, which is a forward-looking non-GAAP financial measure, to the most directly comparable GAAP financial measure, is not provided because the Company is unable to provide such reconciliation without unreasonable effort.  The inability to provide this reconciliation is due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized.  These GAAP measures may include the impact of items such as costs related to our multi-year cost savings and operational excellence programs and the tax effect of such items. Historically, the Company has excluded these types of items from non-GAAP financial measures.  The Company currently expects to continue to exclude these items in future disclosures of non-GAAP financial measures and may also exclude other items that may arise. The decisions and events that typically lead to the recognition of non-GAAP adjustments are inherently unpredictable as to if or when they may occur. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

 

Reconciliations of non-GAAP information to our actual results follow and amounts may not sum due to rounded numbers.  In addition, only the line items affected by adjustments are shown in the tables.

 

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GAAP to Non-GAAP Adjusted Consolidated Statements of Earnings Information

 

 

GAAP to Non-GAAP Adjusted - Three Months Ended May 4, 2019

 

Consolidated Results

 

GAAP Results

 

Multi-Year
Cost Savings
and
Operational
Excellence
Programs
(1)

 

Total
Adjustments

 

Non-GAAP
Adjusted
Results

 

 

 

 

 

 

 

 

 

Alteration and other services gross margin

 

$

2,296

 

$

213

 

$

213

 

$

2,509

 

 

 

 

 

 

 

 

 

Total retail gross margin

 

305,422

 

213

 

213

 

305,635

 

 

 

 

 

 

 

 

 

Total gross margin

 

320,556

 

213

 

213

 

320,769

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

245,211

 

(4,171)

 

(4,171)

 

241,040

 

 

 

 

 

 

 

 

 

Operating income (2)

 

30,302

 

4,384

 

4,384

 

34,686

 

 

 

 

 

 

 

 

 

Provision for income taxes (3)

 

4,593

 

841

 

841

 

5,434

 

 

 

 

 

 

 

 

 

Net earnings

 

7,142

 

3,543

 

3,543

 

10,685

 

 

 

 

 

 

 

 

 

Net earnings per diluted common share

 

$

0.14

 

 

 

$

0.07

 

$

0.21

 

(1) Consists of $3.1 million in consulting costs, $1.1 million in severance costs and $0.2 million in lease termination costs.

(2) Of the $4.4 million in adjustments to operating income, $3.3 million relates to the retail segment and $1.1 million relates to shared services.

(3) The tax effect of the excluded items is computed as the difference between tax expense on a GAAP basis and tax expense on an adjusted non-GAAP basis.

 

GAAP to Non-GAAP Adjusted - Three Months Ended May 5, 2018

 

Consolidated Results

 

GAAP Results

 

Divestiture of
MW Cleaners
(1)

 

Refinancing of
Term Loan
(2)

 

Total
Adjustments

 

Non-GAAP
Adjusted
Results

Selling, general and administrative expenses

 

$

251,094

 

$

(3,612)

 

$

-

 

$

(3,612)

 

$

247,482

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

52,897

 

3,612

 

 

 

3,612

 

56,509

 

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt(2)

 

(12,711)

 

 

 

11,858

 

11,858

 

(853)

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes(3)

 

4,381

 

 

 

 

 

4,053

 

8,434

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

13,909

 

 

 

 

 

11,418

 

25,327

 

 

 

 

 

 

 

 

 

 

 

Net earnings per diluted common share

 

$

0.27

 

 

 

 

 

$

0.23

 

$

0.50

 

(1) Consists of a $3.6 million loss upon divestiture of MW Cleaners business related to the retail segment.

(2) Consists of the elimination of unamortized deferred financing costs and original issue discount related to the refinancing of the Term Loan totaling $11.9 million.

(3) The tax effect of the excluded items is computed as the difference between tax expense on a GAAP basis and tax expense on an adjusted non-GAAP basis.

 

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