The situation stabilized a bit at Tailored Brands Inc. in the first quarter as the custom business continued to gain steam for the men’s wear retailer.
The former Men’s Wearhouse reported Wednesday that net earnings for the period ended April 29, were $1.8 million, up from $1.6 million for the same quarter of last year. On an adjusted basis, net earnings were $13.3 million, compared to $13.9 million last year. Operating income was unchanged, hitting $31 million for the first quarter of both 2016 and 2017. On an adjusted basis, operating income for the first quarter was $48.2 million compared with $47.5 million in the same quarter last year.
Total net sales fell 5.5 percent to $782.9 million with retail segment net sales down 5.3 percent due primarily to the impact of last year’s store closures as well as comparable sales declines.
The first-quarter results include $17.2 million in one-time charges, of which $2.6 million are non-cash costs, to terminate the tuxedo rental license agreement with Macy’s.
By segment, comp sales at Men’s Wearhouse declined 3.1 percent while at K&G they fell 7.4 percent and at Moores 5.3 percent. Net sales for the corporate apparel segment fell 8 percent, due primarily to unfavorable currency fluctuations.
The picture was brighter for the Jos. A. Bank division in the period, where comparable store sales rose 3.5 percent.
In a conference call following the earnings release, chief executive officer Doug Ewert said the company saw “good growth from existing customers” at Jos. A. Bank, and indicated that those who were “turned off by extreme promotions are coming back.” He pointed to dress shirts as among the strongest performers.
Ewert said the custom business has proven to be a shining light for the company overall. Although he declined to say how much of the total mix custom represents, he said it accounted for 15 percent of the total retail sales at the top 50 Men’s Wearhouse stores that carry that merchandise. “Custom is a big growth opportunity for us,” he said.
Overall, Ewert said, “We are gaining traction on our initiatives of engaging more customers across all channels, strengthening our omnichannel experience and increasing sales of custom clothing. 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.”
The wind down of the tuxedo rental partnership with Macy’s is expected to be completed in the second quarter, he added, saying the move will allow the company to “focus on our rental business at Men’s Wearhouse, Jos. A. Bank and Moores.”
In addition, the retailer will close another 20 stores in the period, up from an initial expectation of 10 stores. The additional units slated to be shuttered are Jos. A. Bank stores whose leases are up for renewal.
The company also reaffirmed its outlook for fiscal 2017 where diluted earnings per share are expected to be in the range of $1.37 to $1.67, and adjusted diluted EPS $1.60 to $1.90. Additionally, it expects comparable-store sales for Men’s Wearhouse to be down in the low-single digits, Jos. A. Bank to increase mid-single digits, and Moores and K&G to be down mid-single digits.
The company’s stock closed at $11.22, up 61 cents, or 5.75 percent, on the New York Stock Exchange Wednesday, prior to results being released.