Market Overview

Tailored Brands, Inc. Reports Fiscal 2016 Second Quarter And Six Month Results

Share:

- Second quarter 2016 GAAP diluted EPS of $0.51; Adjusted diluted EPS(1) of $0.99

- Company maintains full-year guidance

- Conference call scheduled for Thursday, September 8th at 9:00 a.m. Eastern time

FREMONT, Calif., Sept. 7, 2016 /PRNewswire/ -- Tailored Brands, Inc. (NYSE: TLRD) today announced consolidated financial results for the fiscal second quarter ended July 30, 2016.

Second quarter 2016 GAAP diluted earnings per share ("EPS") were $0.51 and adjusted diluted EPS(1) was $0.99 excluding certain items(1).

"We are pleased to report a 2.9% comparable sales increase at Men's Wearhouse. In addition, Jos. A. Bank's 16.3% comparable sales decline was consistent with the trend we saw in the first quarter and in line with our expectations," said Doug Ewert, president and chief executive officer of Tailored Brands.  "Our second quarter results showed improvement compared to the first quarter yet reflected a challenging retail apparel spending environment as well as the continued transitioning of our Jos. A. Bank business.

"We continue to execute our transition plan for Tailored Brands and are on track to achieve our targeted $50 million of cost savings in fiscal 2016.  Our store base rationalization is well underway.  During the second quarter, we closed 86 stores, including 45 Jos. A. Bank factory stores and eight Men's Wearhouse outlet stores, and we remain on schedule to close approximately 250 stores during fiscal 2016," said Ewert. 

"We maintain our outlook for full year adjusted EPS in the range of $1.55 to $1.85 per diluted share.  Our full year guidance, reflective of a cautious retail environment, assumes slightly lower comparable sales growth at Men's Wearhouse and better comparable sales performance at Jos. A. Bank, including positive comparable sales for Jos. A. Bank in the fourth quarter.

"We remain positive on the long-term outlook for Tailored Brands and our positioning for sustainable growth and profitability.  In addition to rightsizing our Jos. A. Bank business, we are advancing our initiatives to drive top-line growth and profitability, including introducing innovative product offerings such as custom clothing and strengthening our omni-channel capabilities to better serve our customers."

SALES REVIEW

The table that follows is a summary of total net sales for the second quarter and year-to-date period ended July 30, 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.  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. 

Second 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

 

(3.3%)

 

($28.7)

 

$830.2

 

91%



       Men's Wearhouse

2.7%

$12.9

$482.9

53%

2.9%

3.1%

       Jos. A. Bank

(16.1%)

($35.7)

$186.0

20%

(16.3%)

(9.0%)

       K&G

(2.6%)

($2.3)

$86.4

10%

(2.2%)

6.7%

       Moores

(4.9%)

($3.4)

$66.5

7%

(1.5%)

0.7%

       MW Cleaners

(1.9%)

($0.2)

$8.4

1%










Corporate Apparel Segment

30.0%

$18.3

$79.5

9%










Total Company

(1.1%)

($10.4)

$909.7





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

 

(5.2%)

 

($86.8)

 

$1,596.4

 

92%



       Men's Wearhouse

(0.2%)

($1.8)

$924.5

53%

(0.3%)

4.9%

       Jos. A. Bank

(16.7%)

($73.3)

$364.5

21%

(16.2%)

(5.3%)

       K&G

(1.9%)

($3.6)

$181.1

10%

(0.9%)

7.0%

       Moores

(6.6%)

($7.7)

$109.7

6%

(2.5%)

0.7%

       MW Cleaners

(1.9%)

($0.3)

$16.6

1%










Corporate Apparel Segment

16.5%

$20.1

$142.1

8%










Total Company

(3.7%)

($66.7)

$1,738.5




 

Net sales for the second quarter at our largest brand, Men's Wearhouse, increased 2.7% and comparable sales increased 2.9% from last year's second quarter.  Comparable sales increased primarily due to an increase in average unit retails (net selling prices) partially offset by decreases in average transactions per store and units sold per transaction.  Comparable rental services revenue increased 4.7% in the second quarter of 2016.

Jos. A. Bank comparable sales for the second quarter decreased 16.3% primarily due to a decrease in average transactions per store partially offset by higher units sold per transaction, higher average unit retails and higher rental services revenue.  K&G comparable sales decreased 2.2% primarily due to lower average transactions per store partially offset by an increase in average unit retails.  Net sales for Moores, our Canadian retail brand, decreased 4.9% primarily due to unfavorable currency fluctuations.  Moores had a comparable sales decrease of 1.5% due to decreases in both average transactions per store and units sold per transaction driven by weakening macro-economic conditions in Canada, partially offset by an increase in average unit retails.  The Corporate Apparel segment had a sales increase of 30.0% primarily driven by the beginning of the rollout of a large new uniform program.

SECOND QUARTER GAAP RESULTS

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

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












Q2 FY16

Q2 FY16

Q2 FY15

Q2 FY15

Variance


$

% of Sales

$

% of Sales

Dollar

%

Basis
Points

Net sales:







          Retail clothing product

$615,946

67.71%

$649,190

70.56%

($33,244)

-5.12%

(2.85)

          Rental services

165,009

18.14%

157,049

17.07%

7,960

5.07%

1.07

          Alteration and other services   

49,226

5.41%

52,674

5.72%

(3,448)

-6.55%

(0.31)

               Total retail sales

830,181

91.26%

858,913

93.35%

(28,732)

-3.35%

(2.09)

               Corporate apparel clothing product

79,503

8.74%

61,161

6.65%

18,342

29.99%

2.09

                    Total net sales

909,684

100.00%

920,074

100.00%

(10,390)

-1.13%

-









Gross margin(1):








        Retail clothing product

338,064

54.89%

367,140

56.55%

(29,076)

-7.92%

(1.67)

        Rental services

137,908

83.58%

131,698

83.86%

6,210

4.72%

(0.28)

        Alteration and other services

14,817

30.10%

15,556

29.53%

(739)

-4.75%

0.57

        Occupancy costs

(108,615)

-13.08%

(114,255)

-13.30%

5,640

4.94%

0.22

               Total retail gross margin

382,174

46.04%

400,139

46.59%

(17,965)

-4.49%

(0.55)

               Corporate apparel clothing product

28,130

35.38%

18,542

30.32%

9,588

51.71%

5.07

                   Total gross margin

410,304

45.10%

418,681

45.51%

(8,377)

-2.00%

(0.40)









Advertising expense

44,963

4.94%

44,981

4.89%

(18)

-0.04%

0.05

Selling, general and administrative expenses

305,709

33.61%

275,577

29.95%

30,132

10.93%

3.65









Operating income

$   59,632

6.56%

$  98,123

10.66%

($38,491)

-39.23%

(4.11)









Summary of Operating Income by Reportable Segment and Shared Services

Retail

$ 101,227

12.19%

$137,324

15.99%

$(36,097)

-26.29%

(3.79)

Corporate apparel

11,920

14.99%

2,494

4.08%

9,426

377.95%

10.92

Shared services

(53,515)

-5.88%

(41,695)

-4.53%

(11,820)

28.35%

(1.35)









Total operating income

$ 59,632

6.56%

$  98,123

10.66%

($38,491)

-39.23%

(4.11)


(1) As a percent of related sales.

 

Total net sales decreased 1.1%, or $10.4 million, to $909.7 million.  Retail segment net sales decreased by 3.4%, or $28.7 million.  Corporate apparel sales increased by 30.0% or $18.3 million.

Total gross margin was $410.3 million, a decrease of $8.4 million, or 2.0% due primarily to the decrease in retail segment net sales.  As a percent of sales, total gross margin decreased 40 basis points to 45.1% of net sales primarily due to the impact of clearance activity as we exited the factory/outlet business.

Advertising expense was flat to last year but increased slightly by 5 basis points as a percent of sales. 

Selling, general and administrative expenses ("SG&A") increased $30.1 million to $305.7 million, or 365 basis points, primarily due to costs associated with our store rationalization and profit improvement programs.

Operating income for the second quarter was $59.6 million compared to operating income of $98.1 million last year. 

Net interest expense for the second quarter was $25.8 million compared to $26.5 million in 2015.

The effective tax rate for the second quarter was 25.9% for 2016 and 33.3% for 2015. 

Net earnings for the quarter were $25.0 million compared to net earnings of $47.8 million last year.  Diluted EPS was $0.51 compared to diluted EPS of $0.98 in the prior year quarter. 

SECOND QUARTER ADJUSTED RESULTS (1)

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

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










Q2 FY16

Q2 FY16

Q2 FY15

Q2 FY15

Variance


$

% of Sales

$

% of Sales

Dollar

%

Basis
Points









Gross margin(2):








        Retail clothing product

$     338,064

54.89%

$  367,335

56.58%

($29,271)

-7.97%

(1.70)

        Alteration and other services

14,954

30.38%

15,556

29.53%

(602)

-3.87%

0.85

        Occupancy costs

(109,582)

-13.20%

(113,355)

-13.20%

3,773

-3.33%

(0.00)

         Total retail gross margin

381,344

45.94%

401,235

46.71%

(19,891)

-4.96%

(0.78)

         Total gross margin

409,474

45.01%

419,777

45.62%

(10,303)

-2.45%

(0.61)









Selling, general and administrative expenses

265,510

29.19%

269,106

29.25%

(3,596)

-1.34%

(0.06)









Operating income

$      99,001

10.88%

$ 105,690

11.49%

($6,689)

-6.33%

(0.60)









Summary of Operating Income by Reportable Segment and Shared Services

Retail

$    130,535

15.72%

$ 143,777

16.74%

$ (13,242)

-9.21%

(1.02)

Corporate apparel

11,920

14.99%

2,494

4.08%

9,426

377.95%

10.92

Shared services

(43,454)

-4.78%

(40,581)

-4.41%

(2,873)

7.08%

(0.37)









Total operating income

$      99,001

10.88%

$ 105,690

11.49%

($6,689)

-6.33%

(0.60)


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

(2) Gross margin percent of related sales.

 

Total gross margin decreased $10.3 million and decreased 61 basis points.  Retail gross margin decreased $19.9 million primarily due to lower sales while the retail gross margin rate decreased 78 basis points primarily due to the impact of clearance activity as we exited the factory/outlet business. Excluding the impact of the factory/outlet stores from both periods, total gross margin increased by 44 basis points and retail gross margin increased 38 basis points.

On a stand-alone basis, Jos. A. Bank retail clothing product selling margin excluding factory stores increased approximately 590 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 $3.6 million and decreased 6 basis points.

Operating income decreased $6.7 million or 6.3%.

The effective tax rate was 34.2%. 

Adjusted net earnings were $48.1 million, or $0.99 adjusted diluted earnings per share.

SIX MONTH GAAP RESULTS

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

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












YTD FY16

YTD FY16

YTD FY15

YTD FY15

Variance


$

% of Sales

$

% of Sales

Dollar

%

Basis
Points

Net sales:







          Retail clothing product

$1,231,614

70.84%

$1,316,052

72.90%

($84,438)

-6.42%

(2.06)

          Rental services

264,840

15.23%

260,178

14.41%

4,662

1.79%

0.82

          Alteration and other services   

99,969

5.75%

106,954

5.92%

(6,985)

-6.53%

(0.17)

               Total retail sales

1,596,423

91.83%

1,683,184

93.24%

(86,761)

-5.15%

(1.42)

               Corporate apparel clothing product

142,083

8.17%

121,979

6.76%

20,104

16.48%

1.42

                    Total net sales

1,738,506

100.00%

1,805,163

100.00%

(66,657)

-3.69%

-









Gross margin(1):








        Retail clothing product

683,377

55.49%

739,618

56.20%

(56,241)

-7.60%

(0.71)

        Rental services

221,855

83.77%

218,743

84.07%

3,112

1.42%

(0.30)

        Alteration and other services

29,410

29.42%

33,686

31.50%

(4,276)

-12.69%

(2.08)

        Occupancy costs

(218,750)

-13.70%

(227,351)

-13.51%

8,601

3.78%

(0.20)

               Total retail gross margin

715,892

44.84%

764,696

45.43%

(48,804)

-6.38%

(0.59)

               Corporate apparel clothing product

46,253

32.55%

35,537

29.13%

10,716

30.15%

3.42

                   Total gross margin

762,145

43.84%

800,233

44.33%

(38,088)

-4.76%

(0.49)









Advertising expense

92,891

5.34%

95,637

5.30%

(2,746)

-2.87%

0.05

Selling, general and administrative expenses

578,628

33.28%

551,184

30.53%

27,444

4.98%

2.75









Operating income

$     90,626

5.21%

$  153,412

8.50%

($62,786)

-40.93%

(3.29)









Summary of Operating Income by Reportable Segment and Shared Services

Retail

$   181,102

11.34%

$  232,630

13.82%

$  (51,528)

-22.15%

(2.48)

Corporate apparel

13,974

9.84%

3,806

3.12%

10,168

267.16%

6.71

Shared services

(104,450)

-6.01%

(83,024)

-4.60%

(21,426)

25.81%

(1.41)









Total operating income

$    90,626

5.21%

$  153,412

8.50%

($62,786)

-40.93%

(3.29)


(1) As a percent of related sales.

 

Total net sales decreased 3.7%, or $66.7 million, to $1,738.5 million.  Retail segment net sales decreased by 5.2%, or $86.8 million.  Corporate apparel sales increased by 16.5% or $20.1 million.

Total gross margin was $762.1 million, a decrease of $38.1 million, or 4.8% due primarily to the decrease in retail segment net sales.  As a percent of sales, total gross margin decreased 49 basis points to 43.8% of net sales primarily due to the impact of clearance activity as we exited the factory/outlet business. 

Advertising expense decreased $2.7 million to $92.9 million but increased slightly by 5 basis points as a percent of sales. 

SG&A increased $27.4 million to $578.6 million or 275 basis points, primarily due to costs associated with our store rationalization and profit improvement programs.

Operating income for the quarter was $90.6 million compared to operating income of $153.4 million last year. 

Net interest expense for the six months was $52.3 million compared to $52.9 million in 2015.

The effective tax rate for the six months was 30.4% for 2016 and 33.8% for 2015. 

Net earnings for the six months were $26.6 million compared to net earnings of $58.1 million last year.  Diluted EPS was $0.55 compared to diluted EPS of $1.20 in the prior year quarter. 

SIX MONTH ADJUSTED RESULTS (1)

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

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










YTD FY16

YTD FY16

YTD FY15

YTD FY15

Variance


$

% of Sales

$

% of Sales

Dollar

%

Basis
Points









Gross margin(2):








        Retail clothing product

$   683,354

55.48%

$  740,554

56.27%

(57,200)

-7.72%

(0.79)

        Alteration and other services

29,698

29.71%

33,686

31.50%

(3,988)

-11.84%

(1.79)

        Occupancy costs

(219,740)

-13.76%

(226,164)

-13.44%

6,424

-2.84%

(0.33)

        Total retail gross margin

715,167

44.80%

766,818

45.56%

(51,651)

-6.74%

(0.76)

        Total gross margin

761,420

43.80%

802,355

44.45%

(40,935)

-5.10%

(0.65)









Selling, general and administrative expenses

522,032

30.03%

533,091

29.53%

(11,059)

-2.07%

0.50









Operating income

$  146,497

8.43%

$173,627

9.62%

($27,130)

-15.63%

(1.19)









Summary of Operating Income by Reportable Segment and Shared Services

Retail

$ 218,593

13.69%

$  250,003

14.85%

$  (31,410)

-12.56%

(1.16)

Corporate apparel

13,974

9.84%

3,806

3.12%

10,168

267.16%

6.71

Shared services

(86,070)

-4.95%

(80,182)

-4.44%

(5,888)

7.34%

(0.51)









Total operating income

$ 146,497

8.43%

$ 173,627

9.62%

($27,130)

-15.63%

(1.19)


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

(2) Gross margin percent of related sales.

 

Total gross margin decreased $40.9 million and decreased 65 basis points.  Retail gross margin decreased $51.7 million primarily due to lower sales and decreased 76 basis points primarily due to the impact of clearance activity as we exited the factory/outlet business. Excluding the impact of the factory/outlet stores from both periods, total gross margin decreased by 6 basis points and retail gross margin decreased 11 basis points.

On a stand-alone basis, Jos. A. Bank retail clothing product selling margin excluding factory stores increased approximately 560 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 $11.1 million yet deleveraged 50 basis points due to lower sales.

Operating income decreased $27.1 million or 15.6%.

The effective tax rate was 34.1%. 

Adjusted net earnings were $62.1 million, or $1.27 adjusted diluted earnings per share.

BALANCE SHEET

Total debt at the end of the second quarter 2016 was approximately $1.61 billion.  The Company made its scheduled $1.8 million payment as well as an additional $35.5 million payment on its term loan during the second quarter.  In addition, during the quarter, the Company repurchased and retired $6.5 million of its senior notes. Subsequent to the end of the quarter, the Company repurchased and retired an additional $18.5 million of its senior notes.  There were no borrowings outstanding on our revolving credit facility at the end of the second quarter of 2016.

Inventories increased $66.6 million to $1,023.6 million at the end of the second quarter 2016 from $957.0 million at the end of the prior year second quarter, primarily due to higher Jos. A. Bank inventory reflecting lower sales and increased corporate apparel inventory as a result of the rollout of the large new uniform program.

Capital expenditures through the second quarter 2016 were $55.9 million compared to $56.8 million in the prior year.

CALL AND WEBCAST INFORMATION

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

To access the conference call, dial 412-902-0030.  To access the live webcast presentation, visit the Investor Relations section of the Company's website at http://ir.tailoredbrands.com. A telephonic replay will be available through September 15, 2016 by calling 201-612-7415 and entering the access code of 13642600#, or a webcast archive will be available free on the website for approximately 90 days.

STORE INFORMATION


July 30, 2016

August 1, 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)

710

3,998.9

704

3,974.3

714

4,025.7








Jos. A. Bank (b)

557

2,616.0

636

2,925.0

625

2,880.7








Men's Wearhouse and Tux

135

190.5

201

280.8

160

223.5








The Tuxedo Shop @ Macy's

150

74.4

12

6.5








Moores, Clothing for Men

126

789.0

124

781.0

124

779.8








K&G (c)

89

2,091.1

89

2,109.0

89

2,102.1








Total

1,767

9,759.9

1,754

10,070.1

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 the largest specialty retailer of men's suits and the largest provider of rental product in the U.S. and Canada with over 1,700 stores including tuxedo shops within Macy's.  The Company's brands include Men's Wearhouse, Jos. A. Bank, Joseph Abboud, Moores Clothing for Men and K&G Fashion Superstores.  Tailored Brands also operates 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.twinhill.com, www.dimensions.co.uk and www.alexandra.co.uk.

This press release contains forward-looking information.  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. 

Contact:
Investor Relations
(281) 776-7575
ir@tailoredbrands.com

Jon Kimmins, EVP, CFO and Treasurer
Tailored Brands, Inc.

Ken Dennard
Dennard ▪ Lascar Associates

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

 


TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


For the Three Months Ended July 30, 2016 and August 1, 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

$            615,946

67.71%

$   649,190

70.56%


$       (33,244)

-5.12%

-2.85

          Rental services

165,009

18.14%

157,049

17.07%


7,960

5.07%

1.07

          Alteration and other services   

49,226

5.41%

52,674

5.72%


(3,448)

-6.55%

-0.31

               Total retail sales

830,181

91.26%

858,913

93.35%


(28,732)

-3.35%

-2.09

               Corporate apparel clothing product

79,503

8.74%

61,161

6.65%


18,342

29.99%

2.09

                    Total net sales

909,684

100.00%

920,074

100.00%


(10,390)

-1.13%

0.00










                   Total cost of sales

499,380

54.90%

501,393

54.49%


(2,013)

-0.40%

0.40










Gross margin (a):









        Retail clothing product

338,064

54.89%

367,140

56.55%


(29,076)

-7.92%

-1.67

        Rental services

137,908

83.58%

131,698

83.86%


6,210

4.72%

-0.28

        Alteration and other services

14,817

30.10%

15,556

29.53%


(739)

-4.75%

0.57

        Occupancy costs

(108,615)

-13.08%

(114,255)

-13.30%


5,640

4.94%

0.22

               Total retail gross margin

382,174

46.04%

400,139

46.59%


(17,965)

-4.49%

-0.55

               Corporate apparel clothing product

28,130

35.38%

18,542

30.32%


9,588

51.71%

5.07

                   Total gross margin

410,304

45.10%

418,681

45.51%


(8,377)

-2.00%

-0.40










Advertising expense

44,963

4.94%

44,981

4.89%


(18)

-0.04%

0.05

Selling, general and administrative expenses

305,709

33.61%

275,577

29.95%


30,132

10.93%

3.65










Operating income

59,632

6.56%

98,123

10.66%


(38,491)

-39.23%

-4.11










Net interest

(25,839)

-2.84%

(26,473)

-2.88%


634

-2.39%

0.04

Loss on extinguishment of debt, net

(71)

-0.01%

-

0.00%


(71)

NM

-0.01










Earnings before income taxes

33,722

3.71%

71,650

7.79%


(37,928)

-52.94%

-4.08










Provision for income taxes

8,747

0.96%

23,871

2.59%


(15,124)

-63.36%

-1.63










Net earnings

$              24,975

2.75%

$     47,779

5.19%


$      (22,804)

-47.73%

-2.45










Net earnings per diluted common share allocated to common shareholders

$                  0.51


$         0.98















Weighted-average diluted common shares outstanding:

48,639


48,544















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

 


TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


For the Six Months Ended July 30, 2016 and August 1, 2015

(In thousands, except per share data)



Six Months Ended


Variance



% of


% of




Basis


2016

Sales

2015

Sales


Dollar

%

Points










Net sales:









          Retail clothing product

$  1,231,614

70.84%

$  1,316,052

72.90%


$      (84,438)

-6.42%

-2.06

          Rental services

264,840

15.23%

260,178

14.41%


4,662

1.79%

0.82

          Alteration and other services   

99,969

5.75%

106,954

5.92%


(6,985)

-6.53%

-0.17

               Total retail sales

1,596,423

91.83%

1,683,184

93.24%


(86,761)

-5.15%

-1.42

               Corporate apparel clothing product

142,083

8.17%

121,979

6.76%


20,104

16.48%

1.42

                    Total net sales

1,738,506

100.00%

1,805,163

100.00%


(66,657)

-3.69%

0.00










                    Total cost of sales

976,361

56.16%

1,004,930

55.67%


(28,569)

-2.84%

0.49










Gross margin (a):









        Retail clothing product

683,377

55.49%

739,618

56.20%


(56,241)

-7.60%

-0.71

        Rental services

221,855

83.77%

218,743

84.07%


3,112

1.42%

-0.30

        Alteration and other services

29,410

29.42%

33,686

31.50%


(4,276)

-12.69%

-2.08

        Occupancy costs

(218,750)

-13.70%

(227,351)

-13.51%


8,601

3.78%

-0.20

               Total retail gross margin

715,892

44.84%

764,696

45.43%


(48,804)

-6.38%

-0.59

               Corporate apparel clothing product

46,253

32.55%

35,537

29.13%


10,716

30.15%

3.42

                   Total gross margin

762,145

43.84%

800,233

44.33%


(38,088)

-4.76%

-0.49










Advertising expense

92,891

5.34%

95,637

5.30%


(2,746)

-2.87%

0.05

Selling, general and administrative expenses

578,628

33.28%

551,184

30.53%


27,444

4.98%

2.75










Operating income

90,626

5.21%

153,412

8.50%


(62,786)

-40.93%

-3.29










Net interest

(52,327)

-3.01%

(52,928)

-2.93%


601

-1.14%

-0.08

Loss on extinguishment of debt, net

(71)

0.00%

(12,675)

-0.70%


12,604

-99.44%

0.70










Earnings before income taxes

38,228

2.20%

87,809

4.86%


(49,581)

-56.46%

-2.67










Provision for income taxes

11,616

0.67%

29,661

1.64%


(18,045)

-60.84%

-0.97










Net earnings

$        26,612

1.53%

$        58,148

3.22%


$      (31,536)

-54.23%

-1.69



















Net earnings per diluted common share allocated to common shareholders

$            0.55


$            1.20















Weighted-average diluted common shares outstanding:

48,630


48,487















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

 


TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)




July 30,


August 1,



2016


2015






ASSETS









Current assets:





Cash and cash equivalents

$             11,430


$              73,403


Accounts receivable, net

84,348


70,392


Inventories

1,023,603


956,976


Other current assets

81,113


153,350







   Total current assets

1,200,494


1,254,121

Property and equipment, net

510,520


551,920

Rental product, net

171,469


148,037

Goodwill

118,307


891,316

Intangible assets, net

174,752


661,973

Other assets

9,012


8,985







   Total assets

$         2,184,554


$         3,516,352






LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY









Current liabilities:





Accounts payable

$           169,820


$            176,560


Accrued expenses and other current liabilities

296,857


270,702


Current portion of long-term debt

14,000


7,000







   Total current liabilities

480,677


454,262






Long-term debt, net

1,600,402


1,649,487

Deferred taxes and other liabilities

192,125


393,628







   Total liabilities

2,273,204


2,497,377






Shareholders' (deficit) equity:





Preferred stock

-


-


Common stock

486


485


Capital in excess of par

461,143


448,036


(Accumulated deficit) retained earnings

(519,068)


577,648


Accumulated other comprehensive loss

(31,211)


(4,110)


Treasury stock, at cost

-


(3,084)







   Total shareholders' (deficit) equity

(88,650)


1,018,975







    Total liabilities and shareholders' (deficit) equity

$         2,184,554


$         3,516,352

 


TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Six Months Ended July 30, 2016 and August 1, 2015

(In thousands)




Six Months Ended



2016


2015






CASH FLOWS FROM OPERATING ACTIVITIES:





Net earnings

$            26,612


$          58,148


Non-cash adjustments to net earnings:





   Depreciation and amortization

60,275


65,213


   Rental product amortization

23,176


19,995


   Asset impairment charges

3,864


260


   Loss on extinguishment of debt

71


12,675


   Amortization of deferred financing costs

3,307


3,485


   Amortization of discount on long-term debt

491


598


   Loss on disposition of assets

49


886


   Other

9,992


(2,807)


Changes in operating assets and liabilities

(27,533)


(63,539)







        Net cash provided by operating activities

100,304


94,914






CASH FLOWS FROM INVESTING ACTIVITIES:





Capital expenditures

(55,912)


(56,764)


Proceeds from sales of property and equipment

605


-







        Net cash used in investing activities

(55,307)


(56,764)






CASH FLOWS FROM FINANCING ACTIVITIES:





Payments on term loan

(38,951)


(4,500)


Proceeds from asset-based revolving credit facility

305,549


5,500


Payments on asset-based revolving credit facility

(305,549)


(5,500)


Repurchase and retirement of senior notes

(6,500)


-


Deferred financing costs

-


(3,566)


Cash dividends paid

(17,676)


(17,561)


Proceeds from issuance of common stock

932


1,961


Tax payments related to vested deferred stock units

(1,258)


(4,506)


Excess tax benefits from share-based plans

-


1,094


Repurchases of common stock

-


(277)







        Net cash used in financing activities

(63,453)


(27,355)







Effect of exchange rate changes

(94)


347






 (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(18,550)


11,142







Balance at beginning of period

29,980


62,261


Balance at end of period

$            11,430


$          73,403

 

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 second quarter and six months of 2016 and 2015 as well as our fiscal year ending January 28, 2017.  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 operating results, primarily costs related to our store rationalization and profit improvement programs as well as certain items related to the acquisition and integration of Jos. A. Bank.  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 operating 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.

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. 

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.

GAAP to Non-GAAP Adjusted Consolidated Statements of Earnings Information


GAAP to Non-GAAP Adjusted - Three Months Ended July 30, 2016

Consolidated Results

GAAP Results

Jos. A. Bank Integration (1)

Profit Improvement(2)

Other

Total Adjustments

Non-GAAP Adjusted Results

Retail clothing product gross margin

$             338,064

$         -

$         -

$           -

$                     -

$            338,064

Alteration and other services gross margin

14,817

-

137

-

137

14,954

Occupancy costs

(108,615)

539

(1,506)

-

(967)

(109,582)








       Total retail gross margin

382,174

539

(1,369)

-

(830)

381,344

       Total gross margin

410,304

539

(1,369)

-

(830)

409,474








Selling, general and administrative expenses

305,709

(1,483)

(36,384)

(2,332)

(40,199)

265,510








Operating income(3)

59,632

2,022

35,015

2,332

39,369

99,001









Loss on extinguishment of debt, net

(71)

-

-

71

71

-








Provision for income taxes(4)

8,747




16,272

25,019








Net earnings

24,975




23,168

48,143








Net earnings per diluted common share allocated to common shareholders

$                     0.51




$                0.48

$                    0.99



(1) Primarily consisting of accelerated depreciation.

(2) Primarily consists of $26.4 million of lease termination costs and $6.8 million of consulting costs.

(3) Of the $39.4 million in total adjustments to operating income, $29.3 million relates to the retail segment and $10.1 million relates to shared services.

(4) 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 August 1, 2015

Consolidated Results

GAAP Results

Acquisition & Integration(1)

Purchase Acctg. Allocation (2)

Other

Total Adjustments

Non-GAAP Adjusted Results

Retail clothing product gross margin

$         367,140

$              5

$                   190

$                     -

$                  195

$        367,335

Occupancy costs

(114,255)

516

384

-

900

(113,355)








       Total retail gross margin

400,139

521

575

-

1,096

401,235

       Total gross margin

418,681

521

575

-

1,096

419,777









Selling, general and administrative expenses

275,577

(4,589)

(1,882)

-

(6,471)

269,106









Operating income(3)

98,123

5,110

2,457

-

7,567

105,690









Provision for income taxes(4)

23,871




3,167

27,038









Net earnings


47,779




4,400

52,179









Net earnings per diluted common share allocated to common shareholders

$                0.98




$0.09

$                 1.07









(1) Acquisition & integration primarily relates to Jos. A. Bank.

(2) Consists of depreciation and amortization adjustments resulting from the recognition of intangible assets and step up in fair value for PP&E for Jos. A. Bank.

(3) Of the $7.6 million in total adjustments to operating income, $6.5 million relates to the retail segment and $1.1 million relates to shared services.

(4) 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 - Six Months Ended July 30, 2016

Consolidated Results

GAAP Results

Jos. A. Bank Integration (1)

Profit Improvement(2)

Other

Total Adjustments

Non-GAAP Adjusted Results

Retail clothing product gross margin

$             683,377

$         -

$         -

$        (23)

$                  (23)

$            683,354

Alteration and other services gross margin

29,410

-

288

-

288

29,698

Occupancy costs

(218,750)

1,080

(1,506)

(564)

(990)

(219,740)








       Total retail gross margin

715,892

1,080

(1,218)

(587)

(725)

715,167

       Total gross margin

762,145

1,080

(1,218)

(587)

(725)

761,420








Selling, general and administrative expenses

578,628

(4,565)

(49,394)

(2,637)

(56,596)

522,032








Operating income(3)

90,626

5,645

48,176

2,050

55,871

146,497









Loss on extinguishment of debt, net

(71)

-

-

71

71

-








Provision for income taxes(4)

11,616




20,481

32,097








Net earnings

26,612




35,461

62,073








Net earnings per diluted common share allocated to common shareholders

$                    0.55




$                0.72

$                     1.27


(1) Primarily consisting of accelerated depreciation and severance costs.

(2) Primarily consists of $28.4 million of lease termination costs and  $11.8 million of consulting costs.

(3) Of the $55.9 million in total adjustments to operating income, $37.5 million relates to the retail segment and $18.4 million relates to shared services.

(4) 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 - Six Months Ended August 1, 2015

Consolidated Results

GAAP Results

Acquisition & Integration(1)

Purchase Acctg. Allocation (2)

Other(3)

Total Adjustments

Non-GAAP Adjusted Results

Retail clothing product gross margin

$         739,618

$              5

$         931

$               -

$                 936

$        740,554

Occupancy costs

(227,351)

516

670

-

1,186

(226,164)








       Total retail gross margin

764,696

521

1,601

-

2,122

766,818

       Total gross margin

800,233

521

1,601

-

2,122

802,355








Selling, general and administrative expenses

551,184

(10,538)

(3,951)

(3,604)

(18,093)

533,091








Operating income(4)

153,412

11,059

5,552

3,604

20,215

173,627








Loss on extinguishment of debt

(12,675)

12,675

-

-

12,675

-








Provision for income taxes(5)

29,661




12,850

42,511








Net earnings

58,148




20,040

78,189








Net earnings per diluted common share allocated to common shareholders

$                 1.20




$              0.41

$                  1.61








(1) Acquisition & integration primarily relates to Jos. A. Bank.

(2) Consists of depreciation and amortization adjustments resulting from the recognition of intangible assets and step up in fair value for PP&E for Jos. A. Bank.

(3) Primarily consists of $3.7 million of separation costs with a former executive.

(4) Of the $20.2 million in total adjustments to operating income, $17.4 million relates to the retail segment and $2.8 million relates to shared services.

(5) 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 EPS for Fiscal 2016


GAAP to Non-GAAP Adjusted - Reconciliation of Forecasted Adjusted EPS for Fiscal 2016

Diluted EPS- GAAP Basis

 $0.40-$0.70

Profit Improvement Programs

$0.98

Jos. A. Bank Integration

$0.13

Other

          $0.04_____



Diluted EPS- Non-GAAP Adjusted (1)

$1.55-$1.85


(1)  Based on forecasted adjusted non-GAAP tax rate of 35%

 

GAAP to Non-GAAP Adjusted Earnings Information for Jos. A. Bank

GAAP to Non-GAAP Adjusted - Three Months Ended July 30, 2016

Jos. A. Bank Brand

GAAP Results

Total Adjustments

Non-GAAP Adjusted Results

Gross margin before occupancy

$            98,135

$                      -

$            98,135

Occupancy costs

(34,209)

(549)

(34,758)






Selling, general and administrative expenses

87,231

(20,934)

66,297






Operating income

$         (23,305)

$           (20,385)

$            (2,920)


GAAP to Non-GAAP Adjusted - Three Months Ended August 1, 2015

Jos. A. Bank Brand

GAAP Results

Total Adjustments

Non-GAAP Adjusted Results

Gross margin before occupancy

$         123,206

$                  196

$          123,402

Occupancy costs

(37,797)

898

(36,899)






Selling, general and administrative expenses

75,844

(3,809)

72,035






Operating income

$             9,565

$             (4,903)

$            14,468


GAAP to Non-GAAP Adjusted - Six Months Ended July 30, 2016

Jos. A. Bank Brand

GAAP Results

Total Adjustments

Non-GAAP Adjusted Results

Gross margin before occupancy

$          197,017

$                 (23)

$         196,994

Occupancy costs

(70,611)

(601)

(71,212)






Selling, general and administrative expenses

156,526

(25,783)

130,743






Operating income

$          (30,120)

$          (25,159)

$           (4,961)


GAAP to Non-GAAP Adjusted - Six Months Ended August 1, 2015

Jos. A. Bank Brand

GAAP Results

Total Adjustments

Non-GAAP Adjusted Results

Gross margin before occupancy

$          244,397

$                 936

$        245,333

Occupancy costs

(76,118)

1,184

(74,934)






Selling, general and administrative expenses

148,468

(8,549)

139,919






Operating income

$            19,811

$          (10,669)

$         30,480

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/tailored-brands-inc-reports-fiscal-2016-second-quarter-and-six-month-results-300324271.html

SOURCE Tailored Brands, Inc.

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