Tailored Brands caused a few jaws to drop Tuesday afternoon when it said that Doug Ewert, its longtime chief executive officer, will be retiring from his position and his post on the board on Sept. 30. At the same time, Bruce Thorn resigned from his position as president and chief operating officer, effective Aug. 31. The company said Thorn is leaving to pursue another opportunity and his new role is expected to be revealed shortly.
Tailored Brands said that “to ensure an orderly transition,” Ewert will serve as a strategic adviser to the company until the end of the calendar year. The board is currently initiating “a comprehensive search process” to identify a new ceo.
Ewert did not respond to a request for further comment on Tuesday.
Ewert, 54, has been with the parent company of Men’s Wearhouse and Jos. A. Bank for more than two decades. But his tenure in the past few years has been rocky. He was at the helm of the business during a nasty, public fight with the corporation’s founder, George Zimmer, that resulted in Zimmer being ousted from the firm in 2013.
Ewert was also in charge during the $1.8 billion acquisition of competitor Jos. A. Bank Clothiers in 2014, a back-and-forth bidding war that lasted for nearly six months. When the then-Men’s Wearhouse ultimately emerged victorious, it created a public men’s wear specialty store behemoth, but the purchase also saddled the corporation with a hefty debt load.
For two years following the acquisition, Ewert took heat from Wall Street as he worked tirelessly to turn the Bank business around. Bank’s aggressive promotional strategy — as much as “buy one, get seven free” at one point — was revamped, some 250 stores were closed, and a restructuring strategy initiated. But this year, the corporation looked to finally be turning a corner, which makes Ewert’s departure now more of a mystery.
Sources speculated that while the company’s results have shown improvement, it’s just not enough.
“The business is good, but the stock continues to disappoint,” one source said. “Maybe the board just got frustrated and realized the master plan at the company is not working that great.”
In reporting first-quarter results in mid-June, Tailored Brands reported net income of $13.9 million, up markedly from the $1.8 million reported a year ago. Net sales totaled $818 million, a 4.5 percent increase from $782.9 million a year ago, and comparable-store sales rose 2.1 percent. Even so, Wall Street punished the company and sent its stock down nearly 20 percent the day the numbers were reported.
The stock’s 52-week high is $35.94 and the low is $10. But more recently, shares of the company have been trading in the $20 to $22 range and they closed Tuesday up 3.8 percent to $22.47. The company’s announcement was made after the markets closed, and the stock then dropped 3.4 percent to $21.70 in after-market trading.
Analyst Janet Kloppenburg of JJK Research, who has long covered the company, said: “It’s an odd announcement. It came out of the blue. They beat the numbers, but we don’t know how they got there.” She said sales were not released when the company issued preliminary second-quarter results Tuesday and declined to provide them when asked.
In addition to the personnel announcement, Tailored Brands also said it now expects to report GAAP diluted EPS in the range of 95 cents to 97 cents, and adjusted diluted EPS in the range of $1.05 to $1.07 for the second quarter. This includes an $8.1 million loss on extinguishment of debt related to the partial redemption of $175 million of the company’s senior notes, $4.4 million of costs related to the closure of a rental product distribution location and a $200,000 million unfavorable final working capital adjustment related to the previously announced divestiture of the MW Cleaners business. Full results will be released on Sept. 12.
Also on Tuesday, the company said Dinesh Lathi, non-executive chairman of the board, has been appointed executive chairman, effective immediately. As a result of his elevation, the board appointed Theo Killion as lead independent director.
Regarding his impending departure, Ewert said in a statement: “It has been my privilege to lead the Tailored Brands team and I am proud of everything that we have accomplished. During my tenure as ceo we have grown revenues from $2.4 billion to $3.3 billion and built the custom-suit business into a driver of sales and profitability. We have a compelling business with brands that can win in today’s market and I believe that now is the right time to begin the succession process to hand over the reins to new leadership. I am eager to work with the board and management team to ensure a smooth transition and I look forward to my next chapter. I would also like to thank Bruce for his contributions as he begins the next phase of his career.”
Lathi said, “I’d like to personally thank and acknowledge Doug for his more than two decades of leadership and dedication. At this important time for Tailored Brands, I am honored to take on the role of executive chairman and look forward to working closely with the board and management team. Our leading market position is the result of our employees’ focus on delighting the customer. As executive chairman, I’ll be focused on creating shareholder value by ensuring our employees are empowered and equipped to win customers in a rapidly evolving landscape.”
Killion said Lathi’s track record of building high-performance teams that deliver customer-focused innovation will help us to continue to strengthen our leadership position in the marketplace.”
Ewert joined Tailored Brands in 1995 and has served as ceo since June 2011. Before being elevated to his current position, Ewert had served as general merchandise manager, senior vice president of merchandising, chief operating officer and president. He had spent 10 years with Macy’s before joining the company.
In an interview with WWD in April, Ewert gave no hint of any impending departure. In fact, he said he did not regret the Jos. A. Bank purchase, noting: “While the path hasn’t been as smooth as we had hoped, we’ve gotten to the right place. It’s a very strong brand, it’s complementary to the other brands in our portfolio and it attracts a different customer than we see in any of our other businesses,” he said at the time.
He also pointed to the strength of the company’s custom business, which now represents over $100 million in sales for the company.
Thorn joined Tailored Brands in 2015 and was elevated to president and chief operating officer two years later. He had formerly worked for PetSmart and Gap, Inc.
Tailored Brands operates over 1,400 stores in the U.S. and Canada under the Men’s Wearhouse, Jos. A. Bank, Moores Clothing for Men and K&G names. It also owns the Joseph Abboud brand.