Tailored Brands’ chief executive officer Doug Ewert on Thursday told Wall Street — during a conference call about second-quarter results — that most of the retailer’s Houston operations are back up and running following the aftermath of Hurricane Harvey.
Ewert said Houston is home to 2,000 employees, the company’s enterprise support functions that include retail and rental distribution, e-commerce fulfillment and customer service, as well as 32 retail stores and 39 dry cleaning stores. The stores were closed for at least three days and except for one K&G store and one dry cleaning location, all are now open. Ewert said service to customers across the U.S. and Canada remained intact as wedding tuxedos were delivered from other distribution centers and e-commerce orders were fulfilled directly from stores. Customer service stayed online throughout the storm.
He also noted that the company for the past 20 years has had a voluntarily funded employee emergency assistance program, and has distributed over $7 million in relief to employees over the years for catastrophic losses. He asked all employees, customers, suppliers and investors to make a donation to the American Red Cross Houston Relief Fund through any of the company’s stores or web sites and Tailored Brands will match the first $1 million.
The men’s retailer said net earnings for the three months ended July 29 more than doubled to $58.5 million, or $1.19 a diluted share, from $25 million, or 51 cents, a year ago. Excluding the net gain from the extinguishment of debt, adjusted EPS for the quarter was $1.14.
Net sales, which includes retail sales and services and sales from its corporate apparel division, fell 6.5 percent to $850.8 million from $909.7 million. Total retail sales, including apparel and rental and alteration services, slipped 4.5 percent to $793 million. Retail sales of just apparel merchandise fell 3.4 percent to $595 million. The company attributed the declines to the impact from last year’s store closures. Comparable-store sales fell 2.2 percent at Men’s Wearhouse, but rose 7.8 percent at Jos. A. Bank. K&G saw comps slip 1.7 percent, while comps at its Moores nameplate inched up 0.3 percent.
Wall Street analysts were expecting adjusted EPS of 88 cents on revenues of $868.2 million.
Shares of Tailored Brands closed up 1.5 percent to $13.16 Thursday, but began slipping lower — down 1.9 percent to $12.91 at 5:10 p.m. — in after-market trading. The company, which posted earnings after the markets closed, updated fiscal year 2018 guidance. It is now forecasting adjusted EPS in the range of $1.65 to $1.85. While better on the low end of the range, the upper range estimate is 5 cents below the $1.60 to $1.90 projection the company provided in June when it reported first-quarter results.
Ewert said, “We were pleased that all brands posted sequential improvement in comparable sales on a one- and two-year stacked basis during the second quarter, which resulted in positive comparable sales for our retail segment as a whole. That said, the retail environment remains challenging and therefore we have a cautious outlook for the second half of the year.”
The ceo said the company continues to execute on its plan to “innovate the best men’s specialty retailer of the future. Our custom suit business continues to grow and exemplifies our unique ability to deliver exclusivity, personalization and fit at unsurpassed value and convenience.”
He also said the company has new services, such as guided shopping to help men find the “perfect look.” Ewert also noted that the company’s “rationalized store footprint and more efficient expense structure” enable the company to generate strong cash flow that is being deployed towards capital investment, dividend payment and debt reduction.”
During the quarter, the company shuttered all 170 tuxedo shops at Macy’s, and continues to expect “net 20 store closures in 2017” from its ongoing review of its real estate portfolio as lease terms expire.
During the conference call, he said the average unit retail at Men’s Wearhouse improved both year-over-year and sequentially, due mostly to higher average retail prices for suits. “Special occasion dressing is a very important business for us and is at the center of our strategies to acquire Millennial-age men,” he said, adding that the relationships with men start in high school, with the second quarter important due to proms, graduations and weddings.
At Jos. A. Bank, Ewert said the comps gain was due in part to transfers from closed stores. “We’re seeing a lift from existing customers who are replenishing their wardrobes and from new customers shopping for the first time,” he said. For brand growth, the ceo said, “To build Joseph Bank to its full potential we’re taking a comprehensive approach to building a stronger, aspirational brand identity and closer relationships with our customers,” adding that improvement has been made to the products offered and its approach in outreach to consumers.