- Q4 2019 GAAP diluted loss per share and adjusted diluted
loss per share(1) from continuing operations of $0.80 and $0.46,
respectively
- FY 2019 GAAP diluted EPS and adjusted diluted EPS from
continuing operations of $0.51 and $1.08, respectively
- Company taking steps to increase liquidity to address
uncertainty from COVID-19
Tailored Brands, Inc. (NYSE: TLRD) today announced consolidated
financial results for the fiscal fourth quarter and year ended
February 1, 2020.
For the fourth quarter ended February 1, 2020, the Company
reported GAAP loss from continuing operations per diluted share of
$0.80 compared to GAAP earnings from continuing operations per
diluted share of $0.08 in the fourth quarter last year. Excluding
the impact of certain items in both periods, fourth quarter 2019
adjusted loss from continuing operations per diluted share(1) was
$0.46 compared to adjusted loss from continuing operations per
diluted share(1) of $0.34 last year.
Fourth quarter 2019 pre-tax results from continuing operations
include $22.7 million of charges consisting of $17.4 million
associated with the Company’s previously announced sale of the
Joseph Abboud trademarks primarily due to the write-off of
inventory related to its recently closed Joseph Abboud store and
e-commerce site and $5.2 million of charges related to our
multi-year cost savings and operational excellence programs,
including consulting, severance and lease termination costs. In
addition, we have reflected the results of the corporate apparel
business as discontinued operations for all periods presented.
For the fiscal year ended February 1, 2020, the Company reported
GAAP earnings from continuing operations per diluted share of $0.51
compared to GAAP earnings from continuing operations per diluted
share of $1.94 last year. For fiscal 2019, adjusted diluted EPS
from continuing operations was $1.08 compared to adjusted diluted
EPS from continuing operations of $2.15 for the same period a year
ago.
Tailored Brands President and CEO Dinesh Lathi said, “Fiscal
2020 got off to a solid start, with total retail comparable sales
up 2.4% and all brands positive in February. However, over the past
two and a half weeks, we’ve seen a deceleration in comparable sales
across brands, coinciding with heightened actions taken by
governments, businesses, schools and citizens to curb the spread of
COVID-19. Beginning March 17th, we have decided to close stores in
the U.S. and Canada until March 28th to ensure the safety and
well-being of our employees and customers. We will continue to
monitor this timing based on guidance from health authorities. We
are taking aggressive and prudent actions to ensure the business
has ample liquidity to weather this uncertain period. In an
abundance of caution and as a proactive measure, on March 16th we
drew down $260 million from our revolving credit facility.”
(1)
We have reflected the results of
the corporate apparel business as discontinued operations for all
periods presented. In addition, we have recast our non-GAAP
presentation for prior periods to remove the results of the
corporate apparel business and provide results from continuing
operations. The Company believes that disclosure of non-GAAP
results for its continuing operations is meaningful to the user’s
overall understanding of the Company’s financial performance. In
the fourth quarter of fiscal 2019, adjusted items include $22.7
million of charges consisting of $17.4 million related to the
Company’s previously announced sale of the Joseph Abboud trademarks
primarily due to the write-off of inventory related to its recently
closed Joseph Abboud store and e-commerce site and $5.2 million of
charges related to our multi-year cost savings and operational
excellence programs, including consulting, severance and lease
termination costs. In the fourth quarter of fiscal 2018, adjusted
items related to continuing operations consisted of a favorable net
sales adjustment reflecting the impact of changes made to our
loyalty programs. See Use of Non-GAAP Financial Measures for
additional information on items excluded from adjusted EPS.
Lathi continued, “We are confident in the long-term prospects of
our business, despite the near-term disruption from COVID-19,
because of the progress we made in 2019 to enhance our competitive
positioning and how we show up for customers. A few key highlights
include strengthening our leadership and operating structure,
offering a more compelling polished casual assortment, delivering
double-digit e-commerce growth, shifting our marketing spend to
digital from broadcast, and strengthening our balance sheet and our
ability to reduce our debt. As we gain more visibility into
macro-economic and business conditions, we plan to share more
specifics on our financial outlook for fiscal 2020.”
Fourth Quarter Fiscal 2019
Results
The following commentary reflects results from the Company’s
continuing operations.
Net Sales Summary(1)
Net
Sales
% Total
Sales
Comparable Sales
(U.S.
dollars in millions)
Change
Change(2)
Men's Wearhouse
$
366.6
(2.2
)
%
(1.9
)
%
Jos. A. Bank
$
204.7
(5.0
)
%
(5.0
)
%
K&G
$
76.1
2.9
%
2.2
%
Moores(3)
$
43.6
(9.1
)
%
(10.0
)
%
Total
$
691.0
(3.0
)
%
(3.0
)
%
(1)
Amounts may not sum due to rounded
numbers. Excludes last year’s $17.6 million favorable impact of
changes made to our loyalty programs. See Use of Non-GAAP Financial
Measures for additional information.
(2)
Comparable sales is defined as net sales
from stores open at least 12 months at period end and includes
e-commerce sales.
(3)
The Moores comparable sales change is
based on the Canadian dollar.
Net Sales
On a GAAP basis, net sales decreased 5.3% to $691.0 million,
primarily due to a decrease in comparable sales of 3.0% and last
year’s favorable $17.6 million net sales adjustment related to the
impact of changes made to our loyalty programs. On an adjusted
basis, net sales decreased 3.0% primarily due to the decrease in
comparable sales of 3.0%.
Comparable Sales
Men’s Wearhouse comparable sales decreased 1.9%. Comparable
sales for clothing decreased due to a decrease in both average unit
retail and units per transaction partially offset by an increase in
transactions. Comparable rental services revenue increased 1.8%
primarily due to an increase in average price per rental unit.
Jos. A. Bank comparable sales decreased 5.0% primarily due to a
decrease in both transactions and average unit retail partially
offset by an increase in units per transaction.
K&G comparable sales increased 2.2% primarily due to
increases in both average unit retail and transactions while units
per transaction were essentially flat.
Moores comparable sales decreased 10.0% primarily due to
decreases in both transactions and average unit retail while units
per transaction were essentially flat.
Gross Margin
On a GAAP basis, gross margin was $236.8 million, a decrease of
$46.4 million, primarily due to the decrease in net sales and the
write-off of $13.4 million of inventory related to the closure of
our Joseph Abboud store and e-commerce site. As a percent of sales,
gross margin decreased 450 basis points to 34.3%.
On an adjusted basis, gross margin was $250.2 million, a
decrease of $15.4 million primarily due to the decrease in net
sales. As a percent of sales, gross margin decreased 110 basis
points to 36.2% primarily due to increased promotional activities,
as well as deleveraging of occupancy costs.
Advertising Expense
Advertising expense decreased $1.5 million to $47.5 million
primarily driven by reductions in television advertising reflecting
a shift to more efficient online advertising. On an adjusted basis,
as a percent of sales, advertising expense was flat at 6.9%.
Selling, General and Administrative Expenses
(“SG&A”)
On a GAAP basis, SG&A increased $3.3 million to $224.3
million and increased 220 basis points as a percent of sales. On an
adjusted basis, SG&A decreased $5.9 million to $215.0 million
primarily due to lower store bonuses and employee-related benefit
costs. As a percent of sales, adjusted SG&A increased 10 basis
points to 31.1% primarily due to deleveraging from lower sales.
Operating (Loss) Income
On a GAAP basis, operating loss was $35.0 million compared to
operating income of $13.3 million last year. On an adjusted basis,
operating loss was $12.3 million compared to an operating loss of
$4.3 million last year.
Net Interest Expense
Net interest expense was $16.7 million compared to $17.8 million
last year. The decrease in interest expense was primarily due to
the reduction of outstanding debt.
Effective Tax Rate
On a GAAP basis, the effective tax rate was 25.4% compared to
184.2% last year. The decrease in the effective tax rate was
primarily driven by anniversarying a $6.1 million credit related to
finalization of tax reform last year. On an adjusted basis, the
effective tax rate was 22.4% compared to 23.0% last year.
Net (Loss) Earnings and EPS
On a GAAP basis, net loss from continuing operations was $38.6
million compared to net earnings from continuing operations of $3.8
million last year. Diluted loss per share was $0.80 compared to
diluted EPS of $0.08 last year.
On an adjusted basis, net loss from continuing operations was
$22.5 million compared to net loss from continuing operations of
$17.0 million last year. Adjusted diluted loss per share was $0.46
compared to an adjusted diluted loss per share of $0.34 last
year.
Fiscal Year 2019 Results
The following commentary reflects results from the Company’s
continuing operations.
Net Sales Summary(1)
Net
Sales
% Total
Sales
Comparable Sales
(U.S.
dollars in millions)
Change
Change(2)
Men's Wearhouse
$
1,655.9
(3.9
)
%
(3.5
)
%
Jos. A. Bank
$
706.0
(2.8
)
%
(2.3
)
%
K&G
$
318.4
(0.3
)
%
(0.3
)
%
Moores(3)
$
200.9
(6.8
)
%
(5.4
)
%
Total
$
2,881.3
(3.5
)
%
(3.0
)
%
(1)
Amounts may not sum due to rounded
numbers. Excludes last year’s $17.6 million favorable impact of
changes made to our loyalty programs. See Use of Non-GAAP Financial
Measures for additional information.
(2)
Comparable sales is defined as net sales
from stores open at least 12 months at period end and includes
e-commerce sales.
(3)
The Moores comparable sales change is
based on the Canadian dollar.
Net Sales
On a GAAP basis, net sales decreased 4.1% to $2,881.3 million
primarily due to the decrease in comparable sales of 3.0% and the
impact of changes to our loyalty program last year. On an adjusted
basis, net sales decreased 3.5% primarily due to the decrease in
comparable sales of 3.0%.
Comparable Sales
Men’s Wearhouse comparable sales decreased 3.5%. Comparable
sales for clothing decreased primarily due to a decrease in average
unit retail while both transactions and units per transaction were
essentially flat. Comparable rental services revenue decreased 3.1%
primarily due to a decrease in number of rentals.
Jos. A. Bank comparable sales decreased 2.3% primarily due to
decreases in both average unit retail and transactions partially
offset by an increase in units per transaction.
K&G comparable sales decreased 0.3% primarily due to
decreases in both units per transaction and transactions partially
offset by an increase in average unit retail.
Moores comparable sales decreased 5.4% primarily due to a
decrease in transactions while both average unit retail and units
per transaction were essentially flat.
Gross Margin
On a GAAP basis, gross margin was $1,168.6 million, a decrease
of $142.0 million, primarily due to the decrease in net sales. As a
percent of sales, gross margin decreased 310 basis points.
On an adjusted basis, gross margin was $1,185.1 million, a
decrease of $111.9 million, primarily due to the decrease in net
sales. As a percent of sales, gross margin decreased 230 basis
points to 41.1%, primarily due to increased promotional activities,
as well as deleveraging of occupancy costs.
Advertising Expense
Advertising expense decreased $6.2 million to $159.1 million
primarily driven by reductions in television advertising reflecting
a shift to more efficient online advertising. On an adjusted basis,
as a percent of sales, advertising expense was flat at 5.5%.
SG&A Expenses
On a GAAP basis, SG&A decreased $8.1 million to $911.7
million and increased 100 basis points as a percent of sales. On an
adjusted basis, SG&A decreased $25.0 million to $883.7 million
primarily due to lower stock-based and incentive compensation
costs, and lower employee-related benefit costs. As a percent of
sales, adjusted SG&A increased 30 basis points to 30.7%
primarily due to deleveraging from lower sales.
Operating Income
On a GAAP basis, operating income was $97.8 million compared to
$225.6 million last year and operating margin decreased 410 basis
points. On an adjusted basis, operating income was $142.4 million
compared to $223.1 million last year. As a percent of sales,
adjusted operating margin decreased 250 basis points to 4.9%.
Net Interest Expense and Net Loss on Extinguishment of
Debt
Net interest expense was $70.7 million compared to $79.0 million
last year. The decrease in interest expense was due primarily due
to the reduction of outstanding debt.
On a GAAP basis, net loss on extinguishment of debt was $0.1
million this year compared to $30.3 million last year. This year’s
net loss on extinguishment of debt resulted from the Company’s open
market repurchases of senior notes. Last year’s net loss on
extinguishment of debt resulted from the refinancing and repricing
of our term loan as well as the partial redemption of $175 million
of our senior notes. On an adjusted basis, there was a $0.1 million
net loss on extinguishment of debt this year compared to a $0.9
million net loss on extinguishment of debt last year.
Effective Tax Rate
On a GAAP basis, the effective tax rate was 6.1% compared to
15.2% last year. On an adjusted basis, the effective tax rate was
24.3% compared to 23.7% last year.
Net Earnings and EPS
On a GAAP basis, net earnings from continuing operations were
$25.4 million compared to net earnings from continuing operations
of $98.6 million last year. Diluted EPS was $0.51 compared to
diluted EPS of $1.94 last year.
On an adjusted basis, net earnings from continuing operations
were $54.1 million compared to net earnings from continuing
operations of $109.2 million last year. Adjusted diluted EPS was
$1.08 compared to adjusted diluted EPS of $2.15 last year.
Balance Sheet Highlights
Cash and cash equivalents at the end of fiscal 2019 were $14.4
million, a decrease of $18.3 million compared to the end of 2018
primarily due to the decrease in sales and the use of cash on hand
for costs related to our multi-year cost savings and operational
excellence programs, and debt reduction. Total liquidity at the end
of 2019 was $415.0 million, comprised of availability on our
revolving credit facility and cash and cash equivalents.
Inventories decreased $27.4 million, or 3.8%, to $696.7 million
at the end of 2019 compared to the end of 2018.
Total debt at the end of 2019 was approximately $1.1 billion,
down $61.5 million compared to the end of 2018. During the fourth
quarter of 2019, borrowings on our revolving credit facility
decreased $17.5 million and we ended the year with $50.0 million of
borrowings outstanding on our revolving credit facility.
Cash flow from operating activities for fiscal 2019 was $99.6
million compared to $322.7 million last year. Of the $223.0 million
decrease, lower net earnings after adjusting for non-cash items and
excluding non-cash lease expense represented $123.7 million;
fluctuations in accounts payable and accrued liabilities due to
timing of inventory receipts and related vendor payments, vendor
payment terms and timing of capital expenditure projects
represented $83.0 million; and other items represented $16.3
million.
Capital expenditures for fiscal 2019 were $88.5 million compared
to $82.3 million last year.
FISCAL 2020 OUTLOOK
The Company notes that fiscal 2020 started strong with total
retail comparable sales up 2.4% in February and all brands positive
for the month. However, over the past two and a half weeks,
coinciding with heightened actions taken by governments and
citizens to curb the spread of COVID-19, the Company has seen a
deceleration in comparable sales across brands. As a result, the
Company is refraining from providing a specific financial outlook
for fiscal 2020 at this time until economic and business conditions
provide better visibility.
In response to the coronavirus outbreak, we have taken
aggressive and prudent actions to reduce expenses and defer
discretionary capital expenditures and inventory purchases to
preserve our cash and liquidity. In addition to these efforts, we
believe a preemptive borrowing on our ABL Facility is a prudent
decision to ensure our ability to immediately access cash for any
operational needs. As a result, on March 16, 2020, we executed a
borrowing of $260.0 million under our ABL Facility. As of March 18,
2020, we have just under $400.0 million in cash. Of this amount,
the Company notes that the net proceeds of approximately $100.0
million from the recently completed sale of the Joseph Abboud
trademarks is considered restricted cash, which can be applied to
acquire real property, equipment or other tangible assets to be
used in the business.
STORE INFORMATION
February 1, 2020
February 2, 2019
Number
Sq. Ft.
Number
Sq. Ft.
of Stores
(000's)
of Stores
(000's)
Men's Wearhouse(a)
717
4,022.0
720
4,035.5
Men's Wearhouse and Tux
44
65.5
46
68.8
Jos. A. Bank(b)
474
2,235.3
484
2,280.2
K&G(c)
89
2,033.2
88
2,028.4
Moores
126
779.4
126
787.4
Total
1,450
9,135.4
1,464
9,200.3
(a)
Includes one Joseph Abboud store, which
closed in February 2020.
(b)
Excludes 14 franchise stores.
(c)
85 and 84 stores offering women’s apparel
at the end of each period, respectively.
Conference Call and Webcast Information
At 5:00 p.m. Eastern time on Wednesday, March 18, 2020,
management will host a conference call and webcast to discuss
fiscal 2019 fourth quarter and year end results. To access the
conference call, please dial 201-689-8029. To access the live
webcast, visit the Investor Relations section of the Company’s
website at http://ir.tailoredbrands.com. A webcast archive will be
available free on the website for approximately 90 days.
About Tailored Brands, Inc.
Tailored Brands is a leading omni-channel specialty retailer of
menswear, including suits, formalwear and a broad selection of
business casual offerings. We help our customers look and feel
their best by delivering personalized products and services through
our convenient network of stores and e-commerce sites. Our brands
include Men's Wearhouse, Jos. A. Bank, Moores Clothing for Men and
K&G.
For additional information on Tailored Brands, please visit the
Company’s websites at www.tailoredbrands.com, www.menswearhouse.com, www.josbank.com, www.mooresclothing.com, and www.kgstores.com.
This press release contains forward-looking information,
including the Company’s statements regarding its ability to weather
short-term disruptions in its business caused by heightened actions
taken by governments and citizens to curb the spread of COVID-19.
In addition, words such as “expects,” “anticipates,” “envisions,”
“targets,” “goals,” “projects,” “intends,” “plans,” “believes,”
“seeks,” “estimates,” “guidance,” “may,” “projections,” and
“business outlook,” variations of such words and similar
expressions are intended to identify such forward-looking
statements. The forward-looking statements are made pursuant to the
Safe Harbor provisions of the Private Securities Litigation Reform
Act of 1995. Any forward-looking statements that we make herein are
not guarantees of future performance and actual results may differ
materially from those in such forward-looking statements as a
result of various factors. Factors that might cause or contribute
to such differences include, but are not limited to: actions or
inactions by governmental entities; domestic and international
macro-economic conditions; inflation or deflation; the loss of, or
changes in, key employees; success, or lack thereof, in formulating
or executing our internal strategies and operating plans including
new store and new market expansion plans; cost reduction
initiatives and revenue enhancement strategies; changes to our
capital allocation policy; changes in demand for our retail
clothing or rental products; market trends in the retail or rental
business; customer confidence and spending patterns; changes in
traffic trends in our stores; customer acceptance of our
merchandise strategies, including custom clothing; performance
issues with key suppliers; disruptions in our supply chain; severe
weather; public health crises, including the recent coronavirus
outbreak; foreign currency fluctuations; government export and
import policies, including the enactment of duties or tariffs;
advertising or marketing activities of competitors; the impact of
cybersecurity threats or data breaches; legal proceedings and the
impact of climate change.
Forward-looking statements are intended to convey the Company’s
expectations about the future, and speak only as of the date they
are made. We undertake no obligation to publicly update or revise
any forward-looking statements that may be made from time to time,
whether as a result of new information, future developments or
otherwise, except as required by applicable law. However, any
further disclosures made on related subjects in our subsequent
reports on Forms 10-K, 10-Q and 8-K should be consulted. This
discussion is provided as permitted by the Private Securities
Litigation Reform Act of 1995, and all written or oral
forward-looking statements that are made by or attributable to us
are expressly qualified in their entirety by the cautionary
statements contained or referenced in this section.
(Tables Follow)
TAILORED BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
(LOSS) EARNINGS
(Unaudited)
For the Three Months Ended February 1,
2020 and February 2, 2019
(In thousands, except per share data)
Three Months Ended
February 1,
% of
February 2,
% of
2020
Sales
2019
Sales
Net sales:
Retail clothing product
$
608,859
88.1
%
$
646,868
88.6
%
Rental services
49,431
7.2
%
49,127
6.7
%
Alteration and other services
32,683
4.7
%
34,018
4.7
%
Total net sales
690,973
100.0
%
730,013
100.0
%
Total cost of sales
454,139
65.7
%
446,735
61.2
%
Gross margin (a):
Retail clothing product
296,187
48.6
%
341,401
52.8
%
Rental services
41,512
84.0
%
41,226
83.9
%
Alteration and other services
993
3.0
%
2,376
7.0
%
Occupancy costs
(101,858
)
(14.7
)
%
(101,725
)
(13.9
)
%
Total gross margin
236,834
34.3
%
283,278
38.8
%
Advertising expense
47,526
6.9
%
49,007
6.7
%
Selling, general and administrative
expenses
224,308
32.5
%
220,964
30.3
%
Operating (loss) income
(35,000
)
(5.1
)
%
13,307
1.8
%
Interest expense, net
(16,656
)
(2.4
)
%
(17,819
)
(2.4
)
%
Loss before income taxes
(51,656
)
(7.5
)
%
(4,512
)
(0.6
)
%
Benefit for income taxes
(13,099
)
(1.9
)
%
(8,310
)
(1.1
)
%
Net (loss) earnings from continuing
operations
(38,557
)
(5.6
)
%
3,798
0.5
%
Earnings from discontinued operations, net
of tax
4,463
0.6
%
2,420
0.3
%
Net (loss) earnings
$
(34,094
)
(4.9
)
%
$
6,218
0.9
%
Net (loss) earnings from continuing
operations per diluted common share
$
(0.80
)
$
0.08
Net income from discontinued operations
per diluted common share
$
0.09
$
0.05
Net (loss) income per diluted common
share
$
(0.70
)
$
0.12
Weighted-average diluted common shares
outstanding:
48,467
50,607
(a)
Gross margin percent of sales is
calculated as a percentage of related sales.
TAILORED BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
(LOSS) EARNINGS
(Unaudited)
For the Year Ended February 1, 2020 and
February 2, 2019
(In thousands, except per share data)
Fiscal Year
% of
% of
2019
Sales
2018
Sales
Net sales:
Retail clothing product
$
2,358,392
81.9
%
$
2,454,747
81.7
%
Rental services
383,521
13.3
%
399,146
13.3
%
Alteration and other services
139,348
4.8
%
150,618
5.0
%
Total net sales
2,881,261
100.0
%
3,004,511
100.0
%
Total cost of sales
1,712,649
59.4
%
1,693,903
56.4
%
Gross margin (a):
Retail clothing product
1,250,750
53.0
%
1,358,715
55.4
%
Rental services
326,771
85.2
%
339,903
85.2
%
Alteration and other services
7,046
5.1
%
18,027
12.0
%
Occupancy costs
(415,955
)
(14.4
)
%
(406,037
)
(13.5
)
%
Total gross margin
1,168,612
40.6
%
1,310,608
43.6
%
Advertising expense
159,052
5.5
%
165,248
5.5
%
Selling, general and administrative
expenses
911,722
31.6
%
919,798
30.6
%
Operating income
97,838
3.4
%
225,562
7.5
%
Interest expense, net
(70,749
)
(2.5
)
%
(79,007
)
(2.6
)
%
Loss on extinguishment of debt, net
(77
)
(0.0
)
%
(30,253
)
(1.0
)
%
Earnings before income taxes
27,012
0.9
%
116,302
3.9
%
Provision for income taxes
1,645
0.1
%
17,706
0.6
%
Net earnings from continuing
operations
25,367
0.9
%
98,596
3.3
%
Loss from discontinued operations, net of
tax
(107,643
)
(3.7
)
%
(15,356
)
(0.5
)
%
Net (loss) earnings
$
(82,276
)
(2.9
)
%
$
83,240
2.8
%
Net earnings from continuing operations
per diluted common share
$
0.51
$
1.94
Net loss from discontinued operations per
diluted common share
$
(2.16
)
$
(0.30
)
Net (loss) income per diluted common
share
$
(1.65
)
$
1.64
Weighted-average diluted common shares
outstanding:
49,929
50,725
(a)
Gross margin percent of sales is
calculated as a percentage of related sales.
TAILORED BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands)
February 1,
February 2,
2020
2019
ASSETS
Current assets:
Cash and cash equivalents
$
14,420
$
32,671
Accounts receivable, net
39,973
34,686
Inventories
696,657
724,086
Assets held for sale
34,935
-
Other current assets
49,130
66,823
Current assets - discontinued
operations
-
171,376
Total current assets
835,115
1,029,642
Property and equipment, net
395,812
424,316
Operating lease right-of-use assets
880,291
-
Rental product, net
92,897
99,770
Goodwill
79,271
79,491
Intangible assets, net
116,843
153,711
Other assets
18,730
8,489
Non-current assets - discontinued
operations
-
25,071
Total assets
$
2,418,959
$
1,820,490
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
EQUITY
Current liabilities:
Accounts payable
$
183,897
$
204,775
Accrued expenses and other current
liabilities
246,110
268,698
Current portion of operating lease
liabilities
186,304
-
Income taxes payable
3,416
13,478
Current portion of long-term debt
9,000
11,619
Current liabilities - discontinued
operations
-
40,025
Total current liabilities
628,727
538,595
Long-term debt, net
1,094,398
1,153,242
Operating lease liabilities
726,327
-
Deferred taxes and other liabilities
67,813
119,545
Non-current liabilities - discontinued
operations
-
5,477
Total liabilities
2,517,265
1,816,859
Shareholders' (deficit) equity:
Preferred stock
-
-
Common stock
508
501
Capital in excess of par
514,397
505,157
Accumulated deficit
(568,697
)
(468,048
)
Accumulated other comprehensive loss
(34,514
)
(33,979
)
Treasury stock, at cost
(10,000
)
-
Total shareholders' (deficit) equity
(98,306
)
3,631
Total liabilities and shareholders'
(deficit) equity
$
2,418,959
$
1,820,490
TAILORED BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
For the Year Ended February 1, 2020 and
February 2, 2019
(In thousands)
Fiscal Year
2019
2018
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) earnings
$
(82,276
)
$
83,240
Adjustments to net (loss) earnings:
Depreciation and amortization
107,174
104,216
Non-cash lease expense
194,529
-
Rental product amortization
34,289
35,058
Goodwill impairment charge
-
23,991
Asset impairment charges
3,404
1,026
Loss on extinguishment of debt, net
77
30,253
Amortization of deferred financing costs
and discount on long-term debt
1,878
3,422
Loss on divestiture of business
83,513
3,766
Loss on release of cumulative foreign
currency translation adjustment
26,885
-
Loss on disposition of assets
2,628
4,821
Other
(4,479
)
7,033
Changes in operating assets and
liabilities:
Accounts receivable
3,161
2,264
Inventories
26,243
(4,482
)
Rental product
(30,513
)
(16,217
)
Other assets
(20,015
)
9,385
Accounts payable, accrued expenses and
other current liabilities
(39,325
)
43,706
Income taxes payable
(11,750
)
9,993
Operating lease and other liabilities
(195,782
)
(18,803
)
Net cash provided by operating
activities
99,641
322,672
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures
(88,502
)
(82,286
)
Proceeds from divestiture of business,
net
45,034
17,755
Proceeds from sales of property and
equipment
311
-
Net cash used in investing activities
(43,157
)
(64,531
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on old term loan
-
(993,420
)
Proceeds from new term loan
-
895,500
Payments on new term loan
(9,370
)
(9,000
)
Proceeds from asset-based revolving credit
facility
1,333,000
655,500
Payments on asset-based revolving credit
facility
(1,331,500
)
(607,000
)
Repurchase and retirement of senior
notes
(54,425
)
(199,365
)
Deferred financing costs
-
(6,713
)
Cash dividends paid
(28,071
)
(36,946
)
Proceeds from issuance of common stock
1,561
6,649
Tax payments related to vested deferred
stock units
(1,216
)
(7,901
)
Repurchases of common stock
(10,000
)
-
Net cash used in financing activities
(100,021
)
(302,696
)
Effect of exchange rate changes
2,526
(3,621
)
DECREASE IN CASH AND CASH
EQUIVALENTS
(41,011
)
(48,176
)
Balance at beginning of period
55,431
103,607
Balance at end of period
$
14,420
$
55,431
TAILORED BRANDS, INC. UNAUDITED NON-GAAP FINANCIAL
MEASURES (In thousands, except per share amounts)
Use of Non-GAAP Financial Measures
In addition to providing financial results in accordance with
GAAP, we have provided adjusted information for the fiscal fourth
quarters and years ended February 1, 2020 and February 2, 2019.
This non-GAAP financial information is provided to enhance the
user’s overall understanding of the Company’s financial performance
by removing the impacts of large, unusual or unique transactions
that we believe are not indicative of our core business results. In
addition, we have recast our non-GAAP presentation for prior
periods to remove the results of the corporate apparel business and
provide results from continuing operations. The Company believes
that disclosure of non-GAAP results for its continuing operations
is meaningful to the user’s overall understanding of the Company’s
financial performance.
For fiscal 2019, adjusted items consist of costs related to our
previously announced sale of the Joseph Abboud trademarks and our
multi-year cost savings and operational excellence programs and the
net release of tax-related valuation allowances. For fiscal 2018,
adjusted items consisted of a favorable adjustment to net sales
reflecting a reduction of the deferred revenue liability as a
result of changes made to our loyalty programs during the fourth
quarter of 2018, losses on extinguishment of debt related to the
refinancing and re-pricing of the Company’s term loan and the
partial redemption of senior notes, costs related to the retirement
of our former CEO, costs related to the closure of a rental product
distribution center, a loss upon sale of our divestiture of the MW
Cleaners business and finalization of the tax effects of the Tax
Cuts and Jobs Act of 2017.
Management uses these adjusted results to assess the Company’s
performance, to make decisions about how to allocate resources and
to develop expectations for future performance. In addition,
adjusted EPS from continuing operations is used as a performance
measure in the Company’s executive compensation program to
determine the number of performance units that are ultimately
earned for certain equity awards.
The non-GAAP financial information should be considered in
addition to, not as a substitute for or as being superior to,
financial information prepared in accordance with GAAP. Management
strongly encourages investors and shareholders to review the
Company’s financial statements and publicly filed reports in their
entirety and not to rely on any single financial measure.
Reconciliations of non-GAAP information to our actual results
follow and amounts may not sum due to rounded numbers. In addition,
only the line items affected by adjustments are shown in the
tables.
GAAP to Non-GAAP Adjusted Consolidated Statements of (Loss)
Earnings Information
GAAP to Non-GAAP Adjusted -
Three Months Ended February 1, 2020
Multi-Year Cost
Costs Related to the
GAAP
Savings and
Operational
Agreement to Sell the
Total
Non-GAAP
Consolidated Results
Results
Excellence Program(1)
Joseph Abboud
Trademarks(2)
Adjustments
Adjusted Results
Retail clothing product gross margin
$
296,187
$
-
$
13,381
$
13,381
$
309,568
Total gross margin
236,834
-
13,381
13,381
250,215
Selling, general and administrative
expenses
$
224,308
$
(5,238
)
(4,040
)
$
(9,278
)
$
215,030
Operating loss
(35,000
)
5,238
17,421
22,659
(12,341
)
Benefit for income taxes(3)
(13,099
)
6,600
(6,499
)
Net loss from continuing operations
(38,557
)
16,059
(22,498
)
Net loss from continuing operations per
diluted common share
$
(0.80
)
$
0.34
$
(0.46
)
(1)
Consists of $3.2 million in consulting
costs, $1.8 million in severance costs, and $0.2 million in lease
termination costs.
(2)
Consists of a $13.4 million write-off of
inventory related to the Joseph Abboud store and e-commerce site,
$2.6 million of impairment/accelerated depreciation charges for the
Joseph Abboud store and $1.4 million of other transaction-related
costs.
(3)
The tax effect of the excluded items is
computed as the difference between tax expense on a GAAP basis and
tax expense on an adjusted non-GAAP basis.
GAAP to Non-GAAP Adjusted -
Year Ended February 1, 2020
Multi-Year Cost
Costs Related to the
GAAP
Savings and
Operational
Agreement to Sell the
Total
Non-GAAP
Consolidated Results
Results
Excellence Program(1)
Joseph Abboud
Trademarks(2)
Adjustments
Adjusted Results
Retail clothing product gross margin
$
1,250,750
$
-
$
13,381
$
13,381
$
1,264,131
Rental services gross margin
$
326,771
$
2,938
$
-
$
2,938
$
329,709
Alteration and other services gross
margin
7,046
213
-
213
7,259
Total gross margin
1,168,612
3,151
13,381
16,532
1,185,144
Selling, general and administrative
expenses
911,722
(23,978
)
(4,040
)
(28,018
)
883,704
Operating income
97,838
27,129
17,421
44,550
142,388
Provision for income taxes(3)
1,645
15,771
17,416
Net earnings from continuing
operations
25,367
28,779
54,146
Net earnings from continuing operations
per diluted common share
$
0.51
$
0.57
$
1.08
(1)
Consists of $17.9 million in consulting
costs, $5.7 million in severance costs, $2.9 million of rental
product write-offs related to the closure of a distribution center
in Canada and $0.6 million in lease termination costs.
(2)
Consists of a $13.4 million write-off of
inventory related to the Joseph Abboud store and e-commerce site,
$2.6 million of impairment/accelerated depreciation charges for the
Joseph Abboud store and $1.4 million of other transaction-related
costs.
(3)
The tax effect of the excluded items is
computed as the difference between tax expense on a GAAP basis and
tax expense on an adjusted non-GAAP basis. The adjusted non-GAAP
rate also excludes a $5.9 million net valuation allowance
release.
GAAP to Non-GAAP Adjusted -
Three Months Ended February 2, 2019 (Restated)
GAAP
Changes to
Total
Non-GAAP
Consolidated Results
Results
Loyalty Program(1)
Adjustments
Adjusted Results
Total net sales
$
730,013
$
(17,630
)
$
(17,630
)
$
712,383
Total gross margin
283,278
(17,630
)
(17,630
)
265,648
Selling, general and administrative
expenses
220,964
-
-
220,964
Operating income
13,307
(17,630
)
(17,630
)
(4,323
)
Provision for income taxes(2)
(8,310
)
3,209
(5,101
)
Net earnings (loss) from continuing
operations
3,798
(20,839
)
(17,041
)
Net earnings (loss) from continuing
operations per diluted common share
$
0.08
$
(0.41
)
$
(0.34
)
(1)
Consists of a favorable adjustment to net
sales totaling $17.6 million reflecting the impact of changes made
to our loyalty programs.
(2)
The tax effect of the excluded items is
computed as the difference between tax expense on a GAAP basis and
tax expense on an adjusted non-GAAP basis. The adjusted non-GAAP
rate also excludes a credit related to the finalization of the
effects of the Tax Cuts and Jobs Act of 2017 totaling $6.1
million.
GAAP to Non-GAAP Adjusted -
Year Ended February 2, 2019 (Restated)
Partial
Closure of U.S. Rental
GAAP
Divestiture of
Refinancing of
Redemption of
Product Distribution
CEO Retirement
Changes to
Total
Non-GAAP
Consolidated Results
Results
MW Cleaners(1)
Term Loan(2)
Senior Notes(3)
Center(4)
Costs(5)
Loyalty Program(6)
Adjustments
Adjusted Results
Total net sales
$
3,004,511
$
-
$
-
$
-
$
-
$
-
$
(17,630
)
$
(17,630
)
$
2,986,881
Rental services gross margin
339,903
-
-
-
4,029
-
-
4,029
343,932
Total gross margin
1,310,608
-
-
-
4,029
-
(17,630
)
(13,601
)
1,297,007
Selling, general and administrative
expenses
919,798
(3,766
)
-
-
(925
)
(6,417
)
-
(11,108
)
908,690
Operating income
225,562
3,766
-
-
4,954
6,417
(17,630
)
(2,493
)
223,069
Loss on extinguishment of debt
(30,253
)
-
21,278
8,122
-
-
-
29,400
(853
)
Provision for income taxes(7)
17,706
16,277
33,983
Net earnings from continuing
operations
98,596
10,630
109,226
Net earnings from continuing operations
per diluted common share
$
1.94
$
0.21
$
2.15
(1)
Consists of a $3.8 million loss upon
divestiture of MW Cleaners business.
(2)
Consists of the elimination of unamortized
deferred financing costs and original issue discount related to the
refinancing and repricing of the Term Loan totaling $21.3
million.
(3)
Consists of the $6.1 million premium and
elimination of unamortized deferred financing costs totaling $2.0
million related to the partial redemption of senior notes.
(4)
Consists of $4.0 million of rental product
write-offs, $0.4 million of severance, $0.3 million of closure
related costs and $0.3 million of accelerated depreciation.
(5)
Consists of $5.4 million of severance and
consulting costs, $0.7 million related to accelerated vesting of
certain share-based awards (net of the impact of forfeited awards)
and $0.3 million of other costs.
(6)
Consists of a favorable adjustment to net
sales totaling $17.6 million reflecting the impact of changes made
to our loyalty programs.
(7)
The tax effect of the excluded items is
computed as the difference between tax expense on a GAAP basis and
tax expense on an adjusted non-GAAP basis. The adjusted non-GAAP
rate also excludes a credit related to the finalization of the
effects of the Tax Cuts and Jobs Act of 2017 totaling $6.1
million.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200318005709/en/
Investor Relations (281) 776-7575 ir@tailoredbrands.com
Julie MacMedan, VP, Investor Relations Tailored Brands, Inc.
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