In a further sign of instability in the top echelon of Tailored Brands, the company revealed Wednesday that two of its board members have resigned.
In an 8-K filing Wednesday morning, the California-based men’s wear retailer said David Edwab, vice chairman of the board, along with director Sheldon Stein, have resigned from their positions. The filing with the Securities and Exchange Commission said the resignations were effective April 8 and were for “personal reasons” and “not the result of any disagreement with the company on any matter relating to the company’s operations, policies or practices.”
Edwab declined to comment further on his reasons for leaving the company, and Stein could not be reached. Sources said they were both at loggerheads with Tailored Brands chief executive officer DInesh Lathi and disagreed with the direction in which he is leading the company.
“We thank David Edwab and Shelly Stein for their contributions over many years of service and respect their decisions to focus on other priorities during this time,” the company told WWD. “We are confident the six remaining board members provide the right blend of skills and experience to guide our next steps, and accordingly, we have chosen not to replace the departing members at this time.”
Lathi, who had been executive chairman of the retailer, was elevated to the top post in March of last year. His background includes ceo of One Kings Lane Inc., as well as senior executive roles at eBay. Since taking over the helm, Lathi has made some major changes at the company that has seen many longtime executives depart including chief merchant Scott Norris and Jos. A. Bank president Mary Beth Blake.
Tailored Brands has been under major strain for a while now. In mid-March, the retailer, which owns Men’s Wearhouse, Moores and K&G Stores in addition to Jos. A. Bank, reported markedly higher losses in the fiscal fourth quarter and year, and drew on its revolving credit facility in order for it to have cash on hand to weather the current situation. In the fourth quarter, the company reported an operating loss of $35 million compared to operating income of $13.3 million last year. On an adjusted basis, the loss was $12.3 million, compared to an operating loss of $4.3 million last year. It was, however, seeing some green shoots until March when the country was forced into “pause” as a result of the coronavirus pandemic.
Tailored Brands late last month also adopted a poison pill as a result of the substantial impact COVID-19 is having on the company. Its stores have been closed since mid-March and are expected to remain shuttered until early May at least. It has reopened its fulfillment center for online orders and also converted its New Bedford, Mass., factory from the production of tailored clothing to face masks.
Edwab had been associated with Tailored Brands and its predecessor company, Men’s Wearhouse, since he was brought on board in 1983 as an independent auditor. He was the primary dealmaker for the retailer over the years, negotiating the acquisitions of Jos. A. Bank, Today’s Man, Joseph Abboud, After Hours and Moores. He also spearheaded the company’s initial public offering in 1992. He stepped down from the day-to-day operations of the company in 2015 but remained vice chairman of the board.
Stein was a one-time ceo of Glazer’s Inc., a spirits firm, and also worked at Bear, Stearns and other investment banks.
The Tailored Brands board now consists of Lathi as well as Theo Killion, the one-time ceo of Zale Corp., who was named chairman of the board last March. Other members are Irene Chang Britt, a consumer products specialist who has worked for Kimberly-Clark, Kraft Foods and Campbell Soup Co.; Sue Gove, president of Excelsior Advisors, a retail consulting firm; former Limited Brands and Victoria’s Secret executive Grace Nichols, and Drew Vollero, chief financial officer for securities firm Allied Universal. It now has one open position.
In early January, Tailored Brands sold its Joseph Abboud trademark to WHP Global for $115 million. The deal for the brand that represents some $500 million at its stores, was intended to help the company pare down the debt it acquired after purchasing Jos. A. Bank for $1.8 billion in 2014. Under the terms of the deal, it entered into a licensing agreement with WHP for the exclusive rights to sell and rent Joseph Abboud branded apparel and related merchandise in the U.S. and Canada.
The company’s stock price closed at $1.70 on Wednesday, up 26 cents, or 18 percent. Its 52-week high is $8.42.