TAILORED BRANDS, INC. FREMONT, Calif., June 7, 2017 /PRNewswire/ -- Tailored Brands, Inc. (NYSE: TLRD) today announced consolidated financial results for the fiscal first quarter ended April 29, 2017.
"After a tough February, our first quarter comparable sales improved as the quarter progressed," said Tailored Brands Chief Executive Officer Doug Ewert. "We were pleased to have reached an agreement with Macy's to wind down our tuxedo rental partnership, which eliminates the risk of extended future operating losses and enables us to focus on our rental business at Men's Wearhouse, Jos. A. Bank and Moores. As such, we are reaffirming our EPS outlook for fiscal 2017 that we provided on May 3(rd).
"We are gaining traction on our initiatives of engaging more customers across all channels, strengthening our omni-channel experience and increasing sales of custom clothing. These initiatives support our strategy to innovate the best men's specialty store of the future by delighting our customers with an unmatched level of convenience, authority and personalization.
"We are committed to a balanced approach of investing in the business while maintaining discipline in our management of inventory, expense and capital, and finding opportunities to unlock additional cash flow," said Ewert.
First quarter results include $17.2 million of one-time charges, of which $2.6 million are non-cash costs, to terminate the tuxedo rental license agreement with Macy's.
(1) See Use of Non-GAAP Financial
Measures for additional
information on items excluded
from adjusted EPS. In fiscal
2017, these items consist of
costs to terminate our tuxedo
rental license agreement with
Macy's. In fiscal 2016, these
items primarily related to our
store rationalization and profit
improvement initiatives as well
as integration costs related to
Jos. A. Bank. Non-GAAP adjusted
EPS is referred to as "adjusted
EPS" for simplicity.
First Quarter Fiscal 2017 Net Sales and Comparable Sales
The table that follows is a summary of total net sales for the first quarter ending April 29, 2017. 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 factory stores.
First Quarter Net Sales Summary - Fiscal 2017
Net Sales Comparable Sales
Change
------
Current % of Total % Change $ Change Current Prior Year
Sales Quarter
Quarter Quarter
Retail Segment $725.3 92.6% (5.3%) ($40.9) (2.4%) (6.2%)
-------------- ------ ---- ----- ------ ----- -----
Men's Wearhouse $420.1 53.7% (4.9%) ($21.6) (3.1%) (3.5%)
--------------- ------ ---- ----- ------ ----- -----
Jos. A. Bank $167.2 21.4% (6.3%) ($11.2) 3.5% (16.0%)
------------ ------ ---- ----- ------ --- ------
K&G $88.7 11.3% (6.4%) ($6.1) (7.4%) 0.2%
--- ----- ---- ----- ----- ----- ---
Moores $40.8 5.2% (5.6%) ($2.4) (5.3%) (3.9%)
------ ----- --- ----- ----- ----- -----
MW Cleaners $8.5 1.1% 4.4% $0.4
----------- ---- --- --- ----
Corporate Apparel $57.6 7.4% (8.0%) ($5.0)
Segment
-------
Total Company $782.9 (5.5%) ($45.9)
------------- ------ ----- ------
Total net sales decreased 5.5% to $782.9 million. Retail segment net sales decreased by 5.3% due primarily to the impact of last year's store closures as well as comparable sales declines. Corporate apparel segment net sales decreased 8.0% primarily due to unfavorable currency fluctuations partially offset by higher U.S. sales.
Comparable sales at Men's Wearhouse decreased 3.1%. The decrease in comparable sales resulted primarily from a decrease in transactions partially offset by an increase in average unit retail while units per transaction were essentially flat. Comparable rental services revenue decreased 0.9%.
Jos. A. Bank comparable sales increased 3.5% primarily due to an increase in transactions that more than offset a decrease in average unit retail while units per transaction were essentially flat.
K&G comparable sales decreased 7.4% primarily due to lower transactions partially offset by an increase in units per transaction and average unit retail.
Moores comparable sales decreased 5.3% primarily due to decreases in both average unit retail and transactions while units per transaction were flat.
Gross Margin
On a GAAP basis, total gross margin was $332.4 million, a decrease of $19.4 million, due primarily to a decrease in retail segment net sales. As a percent of sales, total gross margin was flat at 42.5%.
On a GAAP basis, retail gross margin was $316.7 million, a decrease of $17.0 million, but increased 20 basis points to 43.7%. On an adjusted basis, retail gross margin decreased $15.7 million but as a percent of retail sales increased 30 basis points to 43.9%. The increase in the retail gross margin rate was driven primarily by leveraging of procurement and distribution costs partially offset by deleveraging of occupancy costs as a result of lower retail sales.
Advertising Expense
Advertising expense decreased $5.7 million to $42.3 million and decreased 40 basis points as a percent of total sales. The decrease in advertising expense was driven primarily by reductions in television advertising reflecting a mix shift to digital advertising, as well as the timing of marketing campaigns that will launch later in 2017.
Selling, General and Administrative Expenses
On a GAAP basis, selling, general and administrative expenses ("SG&A") decreased $13.7 million to $259.2 million but increased 20 basis points as a percent of total sales primarily due to deleveraging from lower sales.
On an adjusted basis, SG&A expenses decreased $13.1 million primarily due to lower employee-related benefit costs as well as decreases in store-related costs resulting from last year's store rationalization program. SG&A expenses increased 20 basis points as a percent of total sales.
Operating Income
On a GAAP basis, operating income for both the first quarter of 2017 and 2016 was $31.0 million.
On an adjusted basis, operating income for the first quarter was $48.2 million compared to operating income of $47.5 million in the same quarter last year.
Interest Expense
Net interest expense for the first quarter was $25.6 million compared to $26.5 million in the same quarter last year.
Effective Tax Rate
On a GAAP basis, the effective tax rate for the first quarter was 70.2% compared to 63.7% for the same quarter last year.
On an adjusted basis, the effective tax rate for the first quarter was 42.9% compared to 33.7% in the same quarter last year. The increase in the effective tax rate was primarily driven by the impact of new accounting guidance related to stock-based compensation.
Net Earnings and EPS
On a GAAP basis, net earnings for the first quarter were $1.8 million compared to net earnings of $1.6 million for the same quarter last year. Diluted EPS was $0.04 compared to diluted EPS of $0.03 in last year's first quarter.
On an adjusted basis, net earnings for the first quarter were $13.3 million compared to net earnings of $13.9 million for the same quarter last year. Diluted EPS was $0.27 compared to diluted EPS of $0.29 in last year's first quarter.
Balance Sheet Highlights
Cash and cash equivalents at the end of the first quarter of 2017 were $66.6 million, an increase of $30.2 million compared to the end of the first quarter of 2016. There were no borrowings outstanding on our revolving credit facility at the end of the first quarter of 2017.
Inventories decreased $92.5 million to $984.2 million at the end of the first quarter of 2017 compared to the end of the first quarter of 2016, primarily due to lower inventories at Jos. A. Bank. In addition, inventories were lower at our corporate apparel business as we anniversary last year's rollout of a large uniform program.
Total debt at the end of the first quarter of 2017 was approximately $1.6 billion. The Company made its scheduled $1.8 million payment on its term loan during the first quarter. In addition, during the quarter, the Company repurchased and retired $7.4 million in face value of its senior notes. Subsequent to quarter end, the Company repurchased and retired $17.5 million in face value of its senior notes for a total of $24.9 million year-to-date. Also, subsequent to quarter end, the Company made a $4.6 million excess cash flow prepayment together with normal principal and interest payments on its term loan.
Cash flow from operating activities for the first quarter of 2017 was $33.4 million compared to $46.4 million in the same period last year. The decrease was primarily driven by the anniversarying of income tax refunds last year of $62.1 million, partially offset by lower inventory and rental product purchases this year.
Capital expenditures for the first quarter of 2017 were $17.8 million compared to $30.3 million in the same period last year.
FISCAL 2017 FULL YEAR OUTLOOK
-- Earnings per Share: As previously announced, the Company expects to
achieve diluted earnings per share in the range of $1.37 to $1.67, and
adjusted diluted earnings per share of $1.60 to $1.90.
-- Comparable Sales: The Company continues to expect comparable sales for
Men's Wearhouse to be down low-single digits, Jos. A. Bank to increase
mid-single digits, and Moores and K&G to be down mid-single digits.
-- Tax Rate: The Company continues to expect the effective tax rate to be
approximately 33%.
-- Capital Expenditures: The Company continues to expect capital
expenditures of approximately $90 million.
-- Real Estate: As previously announced, the Company plans to close all 170
tuxedo shops at Macy's in the second quarter. In addition, the Company
now expects approximately net 20 store closures compared to its previous
outlook of net 10 store closures, with the increase due to additional
Jos. A. Bank store closures. The additional Jos. A. Bank closures
resulted from the Company's continuous review of its real estate
portfolio for opportunities to optimize its fleet as lease terms expire.
The Company noted that fiscal 2017 is a 53-week year versus the 52-week fiscal 2016.
CALL AND WEBCAST INFORMATION
At 5:00 p.m. Eastern time on Wednesday, June 7, 2017, management will host a conference call and real time webcast to discuss fiscal 2017 first quarter results. To access the conference call, 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 June 14, 2017, by calling 201-612-7415 and entering the access code of 13661107#, or a webcast archive will be available free on the website for approximately 90 days.
STORE INFORMATION
April 29, 2017 April 30, 2016 January 28, 2017
-------------- -------------- ----------------
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) 717 4,027.8 716 4,031.0 716 4,021.7
-------------- --- ------- --- ------- --- -------
Jos. A. Bank
(b) 503 2,375.2 615 2,841.2 506 2,388.9
------------ --- ------- --- ------- --- -------
Men's
Wearhouse and
Tux 56 83.8 153 214.5 58 86.0
-------------- --- ---- --- ----- --- ----
The Tuxedo
Shop @ Macy's
(c) 170 84.0 148 73.4 170 84.0
-------------- --- ---- --- ---- --- ----
Moores,
Clothing for
Men 126 789.1 125 785.1 126 789.0
------------- --- ----- --- ----- --- -----
K&G (d) 91 2,113.5 89 2,091.1 91 2,113.5
------ --- ------- --- ------- --- -------
Total 1,663 9,473.4 1,846 10,036.3 1,667 9,483.1
(a) Includes one
Joseph
Abboud
store.
(b) Excludes 14
franchise
stores.
All Tuxedo
Shop @
Macy's
stores will
be closed
in the
second
quarter of
(c) 2017.
(d) 86, 82 and 86 stores offering women's apparel at the end of each period, respectively.
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 omni-channel network that includes over 1,600 locations in the U.S. and Canada as well as our branded e-commerce websites. Our brands include Men's Wearhouse, Jos. A. Bank, Joseph Abboud, Moores Clothing for Men and K&G. We also operate an international corporate apparel and workwear group consisting of Dimensions, Alexandra and Yaffy in the United Kingdom and Twin Hill in the United States.
For additional information on Tailored Brands, please visit the Company's websites at www.tailoredbrands.com, www.menswearhouse.com, www.josbank.com, www.josephabboud.com, www.mooresclothing.com, www.kgstores.com, www.mwcleaners.com, www.dimensions.co.uk, www.alexandra.co.uk. and www.twinhill.com.
This press release contains forward-looking information, including the Company's statements regarding its 2017 outlook for earnings per share, comparable sales, effective tax rate, capital expenditures and net store closures. 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; the impact of the termination of our tuxedo rental license agreement with Macy's; changes in demand for clothing or rental product; market trends in the retail business; customer confidence and spending patterns; changes in traffic trends in our stores; customer acceptance of our merchandise strategies; 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, Inc. to disclose material information under the federal securities laws, Tailored Brands, Inc. 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, as well as subsequent filings with the Securities and Exchange Commission.
TAILORED BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
For the Three Months Ended April 29, 2017 and April 30, 2016
(In thousands, except per share data)
Three Months Ended
------------------
% of % of
2017 Sales 2016 Sales
---- ----- ---- -----
Net sales:
Retail clothing product $583,585 74.5% $615,668 74.3%
Rental services 94,820 12.1% 99,831 12.0%
Alteration and other services 46,900 6.0% 50,743 6.1%
------ --- ------ ---
Total retail sales 725,305 92.6% 766,242 92.4%
Corporate apparel clothing product 57,601 7.4% 62,580 7.6%
------ --- ------ ---
Total net sales 782,906 100.0% 828,822 100.0%
Total cost of sales 450,466 57.5% 476,981 57.5%
Gross margin (a):
Retail clothing product 330,706 56.7% 345,313 56.1%
Rental services 78,652 82.9% 83,947 84.1%
Alteration and other services 12,428 26.5% 14,593 28.8%
Occupancy costs (105,089) -14.5% (110,135) -14.4%
-------- ----- -------- -----
Total retail gross margin 316,697 43.7% 333,718 43.5%
Corporate apparel clothing product 15,743 27.3% 18,123 29.0%
------ ---- ------ ----
Total gross margin 332,440 42.5% 351,841 42.5%
Advertising expense 42,252 5.4% 47,928 5.8%
Selling, general and administrative expenses 259,186 33.1% 272,918 32.9%
Operating income 31,002 4.0% 30,995 3.7%
Net interest (25,554) -3.3% (26,489) -3.2%
Gain on extinguishment of debt, net 715 0.1% - -
--- --- --- ---
Earnings before income taxes 6,163 0.8% 4,506 0.5%
Provision for income taxes 4,324 0.6% 2,869 0.4%
----- --- ----- ---
Net earnings $1,839 0.2% $1,637 0.2%
====== === ====== ===
Net earnings per diluted common share allocated to common shareholders $0.04 $0.03
===== =====
Weighted-average diluted common shares outstanding 49,151 48,621
====== ======
Gross
margin
percent of
sales is
calculated
as a
percentage
of related
(a) sales.
TAILORED BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
April 29, April 30,
2017 2016
---- ----
ASSETS
------
Current assets:
Cash and cash equivalents $66,580 $36,429
Accounts receivable, net 84,016 83,333
Inventories 984,221 1,076,733
Other current assets 69,288 77,903
------
Total current assets 1,204,105 1,274,398
Property and equipment, net 467,661 521,144
Rental product, net 147,495 174,240
Goodwill 117,585 121,498
Intangible assets, net 170,966 177,826
Other assets 6,423 7,715
----- -----
Total assets $2,114,235 $2,276,821
==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $171,886 $203,248
Accrued expenses and other current liabilities 303,602 311,044
Income taxes payable 2,861 -
Current portion of long-term debt 13,379 42,451
------
Total current liabilities 491,728 556,743
Long-term debt, net 1,574,486 1,613,192
Deferred taxes, net and other liabilities 161,600 197,116
------- -------
Total liabilities 2,227,814 2,367,051
---------
Shareholders' deficit:
Preferred stock - -
Common stock 490 486
Capital in excess of par 474,369 456,107
Accumulated deficit (546,230) (535,006)
Accumulated other comprehensive loss (42,208) (11,817)
Total shareholders' deficit (113,579) (90,230)
---------
Total liabilities and shareholders' deficit $2,114,235 $2,276,821
==========
TAILORED BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended April 29, 2017 and April 30, 2016
(In thousands)
Three Months Ended
------------------
2017 2016
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $1,839 $1,637
Non-cash adjustments to net earnings:
Depreciation and amortization 26,426 30,306
Rental product amortization 7,878 8,304
Asset impairment charges 2,867 1,162
Gain on extinguishment of debt, net (715) -
Amortization of deferred financing costs and discount on long-term debt 1,849 1,916
Loss on disposition of assets 1,437 9
Other 4,676 7,953
Changes in operating assets and liabilities (12,906) (4,852)
--------
Net cash provided by operating activities 33,351 46,435
------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (17,786) (30,325)
Acquisition of business, net of cash (457) -
Proceeds from sales of property and equipment 12 501
Net cash used in investing activities (18,231) (29,824)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on term loan (1,750) (1,750)
Proceeds from asset-based revolving credit facility 137,650 204,014
Payments on asset-based revolving credit facility (137,650) (204,014)
Repurchase and retirement of senior notes (6,601) -
Cash dividends paid (9,131) (8,921)
Proceeds from issuance of common stock 467 434
Tax payments related to vested deferred stock units (1,632) (1,247)
-------
Net cash used in financing activities (18,647) (11,484)
--------
Effect of exchange rate changes (782) 1,322
-----
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (4,309) 6,449
Balance at beginning of period 70,889 29,980
Balance at end of period $66,580 $36,429
=======
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 first quarters of 2017 and 2016 as well as forecasted information for our fiscal year ending February 3, 2018. This non-GAAP financial information is provided to enhance the user's overall understanding of the Company's financial performance by removing the impacts of large, unusual or unique transactions that we believe are not indicative of our core operating results. For fiscal 2017, these items currently consist of costs to terminate our tuxedo rental license agreement with Macy's. For fiscal 2016, these costs primarily related to our store rationalization and profit improvement programs and integration costs related to 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 for certain equity awards.
The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, financial information prepared in accordance with GAAP. Management strongly encourages investors and shareholders to review the Company's financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.
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 April 29, 2017
-------------------------------------------------------------
Consolidated Results GAAP Results Macy's Total Non-GAAP
Termination(1) Adjustments Adjusted Results
------------- ----------- ----------------
Rental services gross margin $78,652 $1,416 $1,416 $80,068
Total retail gross margin 316,697 1,416 1,416 318,113
Total gross margin 332,440 1,416 1,416 333,856
Selling, general and administrative expenses 259,186 (15,736) (15,736) 243,450
Operating income 31,002 17,152 17,152 48,154
Provision for income taxes(2) 4,324 5,671 9,995
Net earnings 1,839 11,481 13,320
Net earnings per diluted common share allocated to common shareholders $0.04 $0.23 $0.27
(1) Consists of $12.3 million of termination costs, $1.4 million of rental product write-offs, $1.2 million of asset impairment
charges and $2.3 million of other costs.
(2) 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 April 30, 2016
-------------------------------------------------------------
Consolidated Results GAAP Results Jos. A. Bank Integration (1) Profit Other Total Non-GAAP Adjusted
Improvement(2) Adjustments Results
------------- ----------- -------
Retail clothing product gross margin $345,313 $ - $ - $(23) $(23) $345,290
Alteration and other services gross margin 14,593 - 151 - 151 14,744
Occupancy costs (110,135) 541 - (564) (23) (110,158)
Total retail gross margin 333,718 541 151 (587) 105 333,823
Total gross margin 351,841 541 151 (587) 105 351,946
Selling, general and administrative expenses 272,918 (3,082) (13,010) (305) (16,397) 256,521
Operating income 30,995 3,623 13,161 (282) 16,502 47,497
Provision for income taxes(3) 2,869 4,209 7,078
Net earnings 1,637 12,293 13,930
Net earnings per diluted common share allocated to common shareholders $0.03 $0.26 $0.29
(1) Primarily
consisting
of severance
costs and
accelerated
depreciation.
(2) Consists of
$5.0 million
of
consulting
costs, $3.8
million of
severance
costs, $2.0
million of
store
impairment
charges and
accelerated
depreciation,
$1.9 million
of lease
termination
costs and
$0.5 million
of other
costs.
(3) The tax
effect of
the excluded
items is
computed as
the
difference
between tax
expense on a
GAAP basis
and tax
expense on
an adjusted
non-GAAP
basis.
GAAP to Non-GAAP Adjusted EPS for Fiscal 2017
GAAP to Non-GAAP Adjusted - Reconciliation of Forecasted Adjusted EPS for Fiscal 2017
-------------------------------------------------------------------------------------
Diluted EPS- GAAP Basis $1.37-$1.67
Costs to Terminate Macy's Agreement $0.23
Diluted EPS- Non-GAAP Adjusted (1) $1.60-$1.90
(1) Based on forecasted adjusted
non-GAAP tax rate of 33%
Contact:
Investor Relations
(281) 776-7575
ir@tailoredbrands.com
Julie MacMedan, VP, Investor Relations
Tailored Brands, Inc.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/tailored-brands-inc-reports-fiscal-2017-first-quarter-results-300470613.html
SOURCE Tailored Brands, Inc.
