Market Overview

Tailored Brands, Inc. Reports Fiscal 2016 Third Quarter And Nine Month Results

Share:

- 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, Calif., Dec. 7, 2016 /PRNewswire/ -- 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. 

"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.

(1)

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

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.

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


Q3 FY16

Q3 FY16

Q3 FY15

Q3 FY15

Variance


$

% of Sales

$

% of Sales

Dollar

%

Basis
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.

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 FY16

Q3 FY15

Q3 FY15

Variance




$

% of
Sales

$

% of
Sales

Dollar

%

Basis
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 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 FY16

YTD
FY16

YTD FY15

YTD
FY15

Variance


$

% of
Sales

$

% of
Sales

Dollar

%

Basis
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.

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 FY16

YTD
FY16

YTD FY15

YTD
FY15

Variance




$

% of
Sales

$

% of
Sales

Dollar

%

Basis
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.

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.

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.comwww.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. 

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

Julie MacMedan, VP, Investor Relations
Tailored Brands, Inc.

 

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.



 

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.



 

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






 

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)






CASH FLOWS FROM FINANCING ACTIVITIES:





Payments on term loan

(40,701)


(6,250)


Proceeds from asset-based revolving credit facility

520,550


5,500


Payments on asset-based revolving credit facility

(520,550)


(5,500)


Repurchase and retirement of senior notes

(25,000)


-


Deferred financing costs

-


(3,566)


Cash dividends paid

(26,438)


(26,269)


Proceeds from issuance of common stock

1,451


2,454


Tax payments related to vested deferred stock units

(1,258)


(4,538)


Excess tax benefits from share-based plans

-


1,104


Repurchases of common stock

-


(277)







        Net cash used in financing activities

(91,946)


(37,342)







Effect of exchange rate changes

(25)


292






 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

4,968


(8,607)







Balance at beginning of period

29,980


62,261


Balance at end of period

$            34,948


$           53,654

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 third quarter and nine 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 October 29, 2016


Consolidated Results

GAAP Results

Jos. A. Bank
Integration (1)

Profit
Improvement(2)

Other

Total Adjustments

Non-GAAP
Adjusted Results


Alteration and other services gross margin

$               16,393

$           -

$               7

$           -

$                 7

$          16,400


Occupancy costs

(108,923)

532

(1,510)

-

(978)

(109,901)










Total retail gross margin

350,304

532

(1,503)

-

(971)

349,333










Total gross margin

377,206

532

(1,503)

-

(971)

376,235










Selling, general and administrative expenses

270,494

(866)

(12,452)

-

(13,318)

257,176










Operating income(3)

61,056

1,398

10,949

-

12,347

73,403











Gain on extinguishment of debt, net

1,808

-

-

(1,808)

(1,808)

-










Provision for income taxes(4)

9,007




5,667

14,674










Net earnings

28,433




4,872

33,305










Net earnings per diluted common share allocated to common shareholders

$                0.58




$          0.10

$           0.68




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


(2) Primarily consists of $8.7 million of lease termination costs and $1.8 million of consulting costs.


(3) Of the $12.3 million in total adjustments to operating income, $9.9 million relates to the retail segment and $2.4 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 - Three Months Ended October 31, 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

$         341,526

$                 10

$                  39

$              -

$                   49

$         341,575

Occupancy costs

(114,629)

(206)

53

-

(153)

(114,782)









Total retail gross margin

354,719

(196)

92

-

(104)

354,615









Total gross margin

372,991

(196)

92

-

(104)

372,887









Selling, general and administrative expenses

271,301

(5,222)

(2,116)

(73)

(7,411)

263,890

Tradename impairment charge

90,100

-

-

(90,100)

(90,100)

-









Operating (loss) income(4)

(36,401)

5,026

2,208

90,173

97,407

61,006









(Benefit) provision for income taxes(5)

(35,654)




46,116

10,462









Net (loss) earnings

(27,154)




51,291

24,137









Net (loss) earnings per diluted common share allocated

to common shareholders

$          (0.56)




$           1.06

$           0.50

















(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) Other primarily relates to non-cash tradename and store impairment charges and a gain on the sale of property.

(4) Of the $97.4 million in total adjustments to operating income, $97.3 million relates to the retail segment and $0.1 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 - Nine Months Ended October 29, 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

$     1,010,445

$         -

$         -

$        (23)

$                  (23)

$           1,010,422

Alteration and other services gross margin

45,803

-

295

-

295

46,098

Occupancy costs

(327,673)

1,613

(3,016)

(564)

(1,967)

(329,640)








      Total retail gross margin

1,066,196

1,613

(2,721)

(587)

(1,695)

1,064,501








      Total gross margin

1,139,351

1,613

(2,721)

(587)

(1,695)

1,137,656








Selling, general and administrative expenses

849,122

(5,431)

(61,846)

(2,637)

(69,914)

779,208








Operating income(3)

151,682

7,044

59,125

2,050

68,219

219,901









Gain on extinguishment of debt, net

1,737

-

-

(1,737)

(1,737)

-








Provision for income taxes(4)

20,623




26,173

46,796








Net earnings

55,045




40,309

95,354








Net earnings per diluted common share allocated

to common shareholders

$              1.13




$                0.83

$                     1.96



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

(2) Primarily consists of $37.0 million of lease termination costs and $13.6 million of consulting costs.

(3) Of the $68.2 million in total adjustments to operating income, $47.4 million relates to the retail segment and $20.8 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 - Nine Months Ended October 31, 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

$  1,081,144

$                    65

$                   969

$           -

$        1,034

$       1,082,178

Occupancy costs

(341,980)

260

723

-

983

(340,996)








       Total retail gross margin

1,119,415

325

1,692

-

2,017

1,121,433








       Total gross margin

1,173,224

325

1,692

-

2,017

1,175,242








Selling, general and administrative expenses

822,485

(15,597)

(6,067)

(3,841)

(25,505)

796,980

Tradename impairment charge

90,100

-

-

(90,100)

(90,100)

-








Operating income(4)

117,011

15,922

7,759

93,941

117,622

234,633








Loss on extinguishment of debt

(12,675)

12,675

-

-

12,675

-








Provision for income taxes(5)

(5,993)




58,965

52,972








Net earnings

30,994




71,331

102,326








Net earnings per diluted common share allocated to common shareholders

$         0.64




$        1.47

$             2.11















(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) Other primarily relates to non-cash tradename and store impairment charges, separation costs with a former executive and a gain on the sale of property.

(4) Of the $117.6 million in total adjustments to operating income, $114.6 million relates to the retail segment and $3.0 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

$0.65-$0.80

Profit Improvement Programs

$0.94

Jos. A. Bank Integration

$0.10

Other

          $0.01_____



Diluted EPS- Non-GAAP Adjusted (1)

$1.70-$1.85

(1)  Based on forecasted adjusted non-GAAP tax rate of 33%

 


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

GAAP to Non-GAAP Adjusted - Three Months Ended October 29, 2016

Jos. A. Bank Brand

GAAP Results

Total Adjustments

Non-GAAP Adjusted Results

Gross margin before occupancy

$            95,708

$                     -

$            95,708

Occupancy costs

(34,167)

(406)

(34,573)





Selling, general and administrative expenses

70,429

(6,964)

63,465





Operating loss

$            (8,888)

$           (6,558)

$           (2,330)


GAAP to Non-GAAP Adjusted - Three Months Ended October 31, 2015

Jos. A. Bank Brand

GAAP Results

Total Adjustments

Non-GAAP Adjusted Results

Gross margin before occupancy

$          113,500

$                   49

$          113,549

Occupancy costs

(38,237)

(175)

(38,412)





Selling, general and administrative expenses

167,043

(96,024)

71,019





Operating (loss) income

$          (91,780)

$         (95,898)

$               4,118


GAAP to Non-GAAP Adjusted - Nine Months Ended October 29, 2016

Jos. A. Bank Brand

GAAP Results

Total Adjustments

Non-GAAP Adjusted Results

Gross margin before occupancy

$        292,725

$                 (23)

$        292,702

Occupancy costs

(104,778)

(1,007)

(105,785)





Selling, general and administrative expenses

226,955

(32,747)

194,208





Operating loss

$          (39,008)

$          (31,717)

$           (7,291)


GAAP to Non-GAAP Adjusted - Nine Months Ended October 31, 2015

Jos. A. Bank Brand

GAAP Results

Total Adjustments

Non-GAAP Adjusted Results

Gross margin before occupancy

$            357,897

$                 985

$        358,882

Occupancy costs

(114,355)

1,009

(113,346)





Selling, general and administrative expenses

315,511

(104,573)

210,938





Operating (loss) income

$          (71,969)

$       (106,567)

$           34,598

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/tailored-brands-inc-reports-fiscal-2016-third-quarter-and-nine-month-results-300374885.html

SOURCE Tailored Brands, Inc.

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