The picture is brightening for Tailored Brands Inc.
On Wednesday, the men’s wear retailer reported that net profits in the third quarter ended Oct. 28 increased 30 percent to $36.9 million, or 75 cents a diluted share, from $28.4 million, or 58 cents, a year earlier.
Earnings per share came in 21 cents ahead of the 54 cents analysts projected and helped push shares of the company up 12 percent, to $19.26, in after-hours trading Wednesday.
Sales for the three months ended Oct. 28 fell 4.3 percent to $810.8 million from $846.9 million.
“While we still have more work to do, we are pleased with the progress in our business in the third quarter,” said Doug Ewert, chief executive officer. “We posted positive comparable sales at Jos. A. Bank and sequential comparable-sales improvement at Men’s Wearhouse and K&G, resulting in our second consecutive quarter of positive comparable sales for our retail segment.”
In the period, comparable-store sales at Jos. A. Bank increased 4.9 percent. Comps at the Men’s Wearhouse division fell 1 percent, Moores in Canada was down 2.6 percent and K&G was down 0.6 percent, he said. But on a late-afternoon earnings call with analysts, Ewert said both Men’s Wearhouse and Jos. A. Bank are notching comp-sale increases for the start of the fourth quarter.
Ewert also pointed to the company’s new marketing campaigns as helping to bring new customers into the stores, particularly for its custom suit offering.
“We are encouraged by the progress we are making on our strategic initiatives to grow our custom business and enhance our online and in-store omni-channel capabilities,” Ewert added. “These initiatives are part of our strategy to deliver a superior customer experience in order to increase market share and drive long-term sustainable growth.”
He said the company’s strategy to make custom “as easy to buy as an off-the-rack suit” has led to increased demand.
“Our research shows that men who buy custom suits from us are happier with their purchase, shop more frequently and have a higher annual spend than off-the-rack customers. I’m pleased to report that custom clothing is selling at a run rate of more than $2 million a week, over double that [of a] year ago,” he said.
However, about 80 percent of custom sales are to existing customers at Men’s Wearhouse and Jos. A. Bank. “That compares to the overall customer mix for each brand of roughly 50 percent new and 50 percent existing for Men’s Wearhouse and 30 percent new and 70 percent existing for Jos. A. Bank. So we believe there is a big growth opportunity for custom as we build awareness with new customers,” he said.
Additionally, at Jos. A. Bank, Ewert said suit sales as well as the new Travel Tech collection were among the bright spots for the chain.
As a result of the stronger results, the company boosted its outlook for the full year and is looking for adjusted earnings per share in the range of $2.03 to $2.08, up from the $1.65 to $1.85 previously projected.
In addition, it also repurchased and retired $65 million of senior notes in the quarter, bringing the total repurchasing year-to-date to $115 million. “We remain committed to a balanced capital allocation strategy, investing to support our growth initiatives, returning cash to shareholders via our dividend and using excess free cash flow to reduce debt,” Ewert said.
Tailored Brands is the largest specialty retailer of suits and formalwear in the U.S. and operates 1,480 stores.