TAILORED BRANDS, INC. 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 % of Total Current Prior Year
Sales Quarter
Quarter 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 % of Total Current Prior
Sales Year
Year 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 $ % of Dollar % Basis
Sales Sales 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 YTD FY15 YTD Variance
FY16 FY15
$ % of $ % of Dollar % Basis
Sales Sales 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 YTD FY15 YTD Variance
FY16 FY15
$ % of $ % of Dollar % Basis
Sales Sales 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 8(th), 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 Sq. Ft. Number of Sq. Ft. Number of Sq. Ft.
Stores Stores Stores
(000's) (000's) (000's)
------ ------ ------
Men's
Wearhouse (a) 713 4,010.2 709 3,998.7 714 4,025.7
-------------- --- ------- --- ------- --- -------
Jos. A. Bank
(b) 550 2,588.7 633 2,912.5 625 2,880.7
------------ --- ------- --- ------- --- -------
Men's
Wearhouse and
Tux 61 90.1 183 255.1 160 223.5
-------------- --- ---- --- ----- --- -----
The Tuxedo
Shop @ Macy's 170 84.0 12 6.6 12 6.5
-------------- --- ---- --- --- --- ---
Moores,
Clothing for
Men 126 789.0 123 775.0 124 779.8
------------- --- ----- --- ----- --- -----
K&G (c) 90 2,101.5 88 2,087.1 89 2,102.1
------ --- ------- --- ------- --- -------
Total 1,710 9,663.5 1,748 10,035.0 1,724 10,018.3
(a) Includes one Joseph Abboud
store.
(b) Excludes 14 franchise stores.
(c) 82, 81 and 82 stores, respectively, offering women's apparel.
Tailored Brands, Inc. is a leading authority on helping men dress for work, special occasions and everyday life. We serve our customers through an expansive omnichannel network that includes over 1,700 locations in the U.S. and Canada as well as our branded ecommerce websites. Our brands include Men's Wearhouse, Jos. A. Bank, Joseph Abboud, Moores Clothing for Men and K&G Fashion Superstores. We also operate a global corporate apparel and workwear group consisting of Twin Hill in the United States and Dimensions, Alexandra and Yaffy in the United Kingdom.
For additional information on Tailored Brands, please visit the Company's websites at www.tailoredbrands.com, www.menswearhouse.com, www.josbank.com, www.josephabboud.com, www.mooresclothing.com, www.kgstores.com, www.mwcleaners.com, www.twinhill.com, www.dimensions.co.uk and www.alexandra.co.uk.
This press release contains forward-looking information, including the Company's statements regarding its ability to drive traffic and growth through innovative product offerings and strengthened omnichannel capabilities, comparable sales expectations and adjusted earnings per share guidance, and inventory expectations. In addition, statements containing words such as "guidance," "may," "believe," "anticipate," "expect," "intend," "plan," "project," "projections," "business outlook," and "estimate" or similar expressions constitute forward-looking statements.. The forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performance and a variety of factors could cause actual results to differ materially from the anticipated or expected results expressed in or suggested by these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to: actions by governmental entities, domestic and international macro-economic conditions, inflation or deflation, the loss of, or changes in, key personnel; success, or lack thereof, in executing our internal strategies and operating plans including new store and new market expansion plans, cost reduction initiatives, store rationalization plans, profit improvement plans, revenue enhancement strategies and the impact of opening tuxedo shops within Macy's stores, changes in demand for clothing, market trends in the retail business, customer confidence and spending patterns, changes in traffic trends in our stores, customer acceptance of our merchandise strategies, performance issues with key suppliers, disruptions in our supply chain, severe weather, foreign currency fluctuations, government export and import policies, advertising or marketing activities of competitors, and legal proceedings.
The forward-looking statements in this press release speak only as of the date hereof. Except for the ongoing obligations of Tailored Brands to disclose material information under the federal securities laws, Tailored Brands undertakes no obligation to revise or update publicly any forward-looking statement, except as required by law. Other factors that may impact the forward-looking statements are described in our latest annual report on Form 10-K and our filings on Form 10-Q.
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 Profit Other Total Adjustments Non-GAAP
Integration (1) Improvement(2) 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 & Purchase Acctg. Other(3) Total Adjustments Non-GAAP
Integration(1) Allocation (2) 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 $(0.56) $1.06 $0.50
to common shareholders
(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 Profit Other Total Adjustments Non-GAAP Adjusted
Integration (1) Improvement(2) 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 & Purchase Acctg. Other(3) Total Non-GAAP
Integration(1) Allocation (2) Adjustments 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.
