- FY 2018 GAAP diluted EPS of $1.64 and adjusted diluted EPS(1)
of $2.31 - FY 2018 retail segment comparable sales up 1.2%
- Total debt reduced by $232 million in FY 2018
- Company provides guidance for Q1 2019 adjusted diluted EPS(1)
of $0.10 to $0.15
FREMONT, Calif.–(BUSINESS WIRE)–
Tailored Brands, Inc. (NYSE:TLRD) today announced consolidated financial
results for the fiscal fourth quarter and year ended February 2, 2019
and provided guidance for the first quarter of fiscal 2019.
For the fourth quarter ended February 2, 2019, the Company reported GAAP
diluted earnings per share of $0.12 and adjusted diluted loss per share
of $0.28, compared to GAAP diluted loss per share of $0.01 and adjusted
diluted loss per share of $0.00 for the same period a year ago.
Fourth quarter 2018 GAAP results include a favorable non-cash adjustment
to net sales totaling $17.6 million reflecting a reduction of the
deferred revenue liability as a result of changes made to our loyalty
programs during the fourth quarter of 2018.
For the fiscal year ended February 2, 2019, the Company reported GAAP
diluted EPS of $1.64 and adjusted diluted EPS(1) of $2.31,
compared to GAAP diluted EPS of $1.95 and adjusted diluted EPS of $2.20
for the same period a year ago.
“In fiscal 2018, we delivered positive retail comps of 1.2%, with all
brands positive, and we reported full year adjusted EPS of $2.31,
consistent with the revised guidance we provided in January. We
significantly strengthened our balance sheet, reducing our total debt by
$232 million and extending the maturity on our term loan to 2025, and we
generated strong operating cash flow of $323 million,” said Tailored
Brands Executive Chairman Dinesh Lathi.
“While all of our retail brands delivered positive comps for the full
year, during the fourth quarter, comps at Men’s Wearhouse and Jos. A.
Bank were down and this trend has continued into the first quarter of
2019. We attribute the current softness to both the macro-environment as
well as the need for us to execute more quickly and effectively on our
core growth strategies: deliver personalized products and services,
create inspiring and seamless experiences in and across every channel,
and build brands that stand for something more than just price. Our
teams are intently focused on delivering against these objectives in
fiscal 2019 as we look to build long-term sustainable value creation for
our stakeholders.”
In fiscal 2017, the fourth quarter and year included an additional
operating week (“53rd week”) compared to fiscal 2018. Net
sales related to the extra week in fiscal 2017 were $45.7 million and
the Company estimates that the impact of the extra week was $0.05 per
diluted share.
| (1) |
In fiscal 2018, adjusted items consisted of a favorable net sales adjustment reflecting the impact of changes made to our loyalty programs, a goodwill impairment charge related to our corporate apparel business, losses on extinguishment of debt related to the refinancing and repricing 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 the finalization of the tax effects of the Tax Cuts and Jobs Act of 2017. In fiscal 2017, adjusted items consisted of costs to terminate our tuxedo rental license agreement with Macy’s, a goodwill impairment charge related to our divestiture of MW Cleaners and one-time tax adjustments. See Use of Non-GAAP Financial Measures for additional information on items excluded from adjusted EPS. |
||
Fourth Quarter Fiscal 2018 Results
|
Net Sales Summary(a) |
||||||||||
|
Net Sales |
% Total |
Comparable |
||||||||
| Retail (a) | $712.4 | (9.5%) | (1.5%) | |||||||
| Men’s Wearhouse (a) | $375.0 | (9.6%) | (3.2%) | |||||||
| Jos. A. Bank (a) | $215.4 | (6.7%) | (0.5%) | |||||||
| K&G | $ 73.9 | (7.5%) | 0.9% | |||||||
| Moores(a) (c) | $ 48.0 | (8.8%) | 2.8% | |||||||
| Corporate Apparel | $ 55.7 | (23.3%) | ||||||||
| Total Company(d) | $768.1 | (10.7%) | ||||||||
| a) |
Amounts may not sum due to rounded numbers. Retail net sales exclude the $17.6 million favorable impact of changes made to our loyalty programs. See Use of Non-GAAP Financial Measures for additional information. |
||
| b) |
Comparable sales is defined as net sales from stores open at least 12 months at period end and includes e-commerce sales. Due to the 53-week to 52-week calendar shift, fourth quarter 2018 comparable sales are compared with the 13-week period ended February 3, 2018. |
||
|
c) |
The Moores comparable sales change is based on the Canadian dollar. | ||
|
d) |
On March 3, 2018, the Company sold its MW Cleaners business. | ||
Net Sales
On a GAAP basis, total net sales decreased 8.6% to $785.8 million. On an
adjusted basis, which excludes the $17.6 million favorable impact of
changes made to our loyalty programs, total net sales decreased 10.7% to
$768.1 million.
On a GAAP basis, retail net sales decreased 7.3% to $730.0 million. On
an adjusted basis, retail net sales decreased 9.5% to $712.4 million.
The decrease was primarily due to the impact of last year’s 53rd
week, the 1.5% decrease in retail comparable sales, and a $12.0 million
decrease in alteration and other services revenue largely resulting from
the MW Cleaners divestiture.
Corporate apparel net sales decreased 23.3% to $55.7 million, primarily
due to lower replenishment demand in both the United Kingdom (“UK”) and
the U.S., the impact of last year’s 53rd week, and the impact
of a weaker British pound this year.
Comparable Sales
Men’s Wearhouse comparable sales decreased 3.2%. Comparable sales for
clothing decreased primarily due to decreases in both transactions and
units per transaction partially offset by an increase in average unit
retail. Comparable rental services revenue increased 0.7%.
Jos. A. Bank comparable sales decreased 0.5% primarily due to decreases
in both transactions and units per transaction partially offset by an
increase in average unit retail.
K&G comparable sales increased 0.9% due to an increase in average unit
retail partially offset by a decrease in transactions while units per
transaction were flat.
Moores comparable sales increased 2.8% primarily due to an increase in
average unit retail that more than offset decreases in both transactions
and units per transaction.
Gross Margin
On a GAAP basis, consolidated gross margin was $300.6 million, a
decrease of $20.3 million, primarily due to the impact of last year’s 53rd
week, somewhat offset by the $17.6 million favorable net sales
adjustment reflecting the impact of changes made to our loyalty
programs. As a percent of net sales, consolidated gross margin increased
100 basis points to 38.3%. On an adjusted basis, consolidated gross
margin decreased $37.9 million, or 50 basis points, to 36.8% primarily
due to deleveraging of occupancy costs driven by the impact of the 53rd
week partially offset by higher corporate apparel gross margins due to
customer mix and the impact of renegotiated pricing arrangements with
our UK customers.
On a GAAP basis, retail segment gross margin was $283.7 million, a
decrease of $18.5 million, primarily due to the impact of last year’s 53rd
week, somewhat offset by the $17.6 million favorable net sales
adjustment reflecting the impact of changes made to our loyalty
programs. As a percent of net sales, retail segment gross margin
increased 50 basis points to 38.9%. On an adjusted basis, retail segment
gross margin decreased $36.2 million, or 110 basis points to 37.3%,
primarily due to deleveraging of occupancy costs driven by the impact of
the 53rd week.
Advertising Expense
Advertising expense decreased $3.4 million to $49.2 million. As a
percent of net sales, advertising expense increased 20 basis points to
6.3%. As a percent of adjusted sales, advertising expense increased 30
basis points to 6.4% primarily due to deleveraging from lower sales.
Selling, General and Administrative Expenses (“SG&A”)
On a GAAP basis, SG&A decreased $17.9 million to $234.9 million and as a
percent of net sales increased 50 basis points to 29.9%, primarily due
to the impact of last year’s 53rd week and the impact of the
MW Cleaners divestiture. As a percent of adjusted sales, SG&A increased
120 basis points to 30.6%, primarily due to deleveraging from lower
sales.
Operating Income
On a GAAP basis, operating income was $16.0 million compared to $13.3
million last year. On an adjusted basis, operating loss was $1.7 million
compared to operating income of $14.8 million last year.
Net Interest Expense
Net interest expense was $17.8 million compared to $25.0 million last
year. The decrease in interest expense resulted from the reduction of
outstanding debt as well as the impact of last year’s 53rd
week.
Effective Tax Rate
On a GAAP basis, the effective tax rate was a benefit of 433.0% compared
to a benefit of 96.1% last year. Our GAAP effective tax rate includes a
$6.1 million credit reflecting finalization of the provisional amounts
that were recorded in last year’s fourth quarter related to the Tax Cuts
and Jobs Act of 2017. On an adjusted basis, the effective tax rate was
27.0% compared to 99.3% last year. Both the GAAP and the adjusted
effective tax rates reflect the impact of the Tax Cuts and Jobs Act of
2017.
Net Earnings and EPS
On a GAAP basis, net earnings were $6.2 million compared to a net loss
of $0.5 million last year. Diluted EPS was $0.12 compared to a diluted
loss per share of $0.01 last year.
On an adjusted basis, net loss was $14.2 million compared to a net loss
of $0.1 million last year. Adjusted diluted loss per share was $0.28
compared to an adjusted diluted loss per share of $0.00 last year.
Fiscal Year 2018 Results
|
Net Sales Summary(a) |
||||||||||
|
Net Sales |
% Total |
Comparable |
||||||||
| Retail (a) | $ 2,986.9 | (2.2%) | 1.2% | |||||||
| Men’s Wearhouse(a) | $ 1,722.9 | (1.1%) | 0.8% | |||||||
| Jos. A. Bank(a) | $ 726.3 | (1.2%) | 1.4% | |||||||
| K&G | $ 319.5 | (1.4%) | 1.5% | |||||||
| Moores(a) (c) | $ 215.7 | (0.3%) | 2.4% | |||||||
| MW Cleaners(d) | $ 2.6 | (92.7%) | ||||||||
| Corporate Apparel | $ 235.4 | (6.3%) | ||||||||
| Total Company | $ 3,222.3 | (2.5%) | ||||||||
| a) |
Amounts may not sum due to rounded numbers. Retail net sales exclude the $17.6 million favorable impact of changes made to our loyalty programs. See Use of Non-GAAP Financial Measures for additional information. |
||
| b) |
Comparable sales is defined as net sales from stores open at least 12 months at period end and includes e-commerce sales. Due to the 53-week to 52-week calendar shift, fiscal 2018 comparable sales are compared with the 52-week period ended February 3, 2018. |
||
| c) | The Moores comparable sales change is based on the Canadian dollar. | ||
| d) | On March 3, 2018, the Company sold its MW Cleaners business. | ||
Net Sales
On a GAAP basis, total net sales decreased 2.0% to $3,239.9 million. On
an adjusted basis, which excludes the $17.6 million favorable impact of
changes made to our loyalty programs, total net sales decreased 2.5% to
$3,222.3 million.
On a GAAP basis, retail net sales decreased 1.6% to $3,004.5 million. On
an adjusted basis, retail net sales decreased 2.2% resulting from the
impact of last year’s 53rd week and a $34.2 million decrease
in alteration and other services primarily resulting from the MW
Cleaners divestiture, partially offset by an increase in comparable
sales of 1.2%.
Corporate apparel net sales decreased 6.3%, or $15.9 million, primarily
due to lower replenishment demand in the UK and the U.S. as well as the
impact of last year’s 53rd week, partially offset by a
stronger British pound for the full year.
Comparable Sales
Men’s Wearhouse comparable sales increased 0.8%. Comparable sales for
clothing increased primarily due to increases in both average unit
retail and transactions partially offset by a decrease in units per
transaction. Comparable rental services revenue decreased 4.9%,
primarily reflecting the trend to purchase suits for special occasions.
Jos. A. Bank comparable sales increased 1.4% primarily due to an
increase in transactions partially offset by a decrease in units per
transaction while average unit retail was flat.
K&G comparable sales increased 1.5% primarily due to increases in both
units per transaction and average unit retail partially offset by a
decrease in transactions.
Moores comparable sales increased 2.4% primarily due to increases in
both average unit retail and transactions partially offset by a decrease
in units per transaction.
Gross Margin
On a GAAP basis, consolidated gross margin was $1,377.5 million, a
decrease of $31.3 million, primarily due to the impact of the 53rd
week, somewhat offset by the $17.6 million favorable net sales
adjustment reflecting the impact of changes made to our loyalty
programs. As a percent of net sales, consolidated gross margin decreased
10 basis points to 42.5%. On an adjusted basis, consolidated gross
margin decreased 40 basis points to 42.3%, primarily due to the mix
shift from rental services to retail clothing sales and the divestiture
of MW Cleaners.
On a GAAP basis, retail segment gross margin was $1,312.5 million, a
decrease of $30.4 million, primarily due to the impact of the 53rd
week, somewhat offset by the $17.6 million favorable net sales
adjustment reflecting the impact of changes made to our loyalty
programs. As a percent of net sales, retail segment gross margin
decreased 30 basis points to 43.7%. On an adjusted basis, retail segment
gross margin decreased 50 basis points to 43.5%, primarily due to the
mix shift from rental services to retail clothing sales and the
divestiture of MW Cleaners.
Advertising Expense
Advertising expense decreased $7.0 million to $166.5 million. As a
percent of net sales, advertising expense decreased 10 basis points to
5.1%. As a percent of adjusted sales, advertising expense was flat at
5.2%.
SG&A Expenses
On a GAAP basis, SG&A decreased $26.8 million to $974.1 million and as a
percent of net sales, decreased 20 basis points to 30.1%. On an adjusted
basis, SG&A decreased $22.2 million to $962.9 million primarily due to
the impact of last year’s 53rd week and the impact of the MW
Cleaners divestiture. As a percent of adjusted sales, adjusted SG&A
increased 10 basis points to 29.9% primarily due to deleveraging from
lower sales.
Goodwill Impairment Charge
During the third quarter of 2018, we concluded that the corporate
apparel segment’s goodwill was fully impaired and recorded a non-cash
goodwill impairment charge of $24.0 million.
Operating Income
On a GAAP basis, operating income was $211.9 million compared to $229.4
million last year. On an adjusted basis, operating income was $233.4
million, down 5.9% compared to $248.1 million last year. As a percent of
adjusted sales, adjusted operating margin decreased 30 basis points to
7.2%.
Net Interest Expense and Net Loss on Extinguishment of Debt
Net interest expense was $79.0 million compared to $99.9 million last
year reflecting the reduction in our outstanding debt.
On a GAAP basis, net loss on extinguishment of debt was $30.3 million
compared to a net gain on extinguishment of debt of $5.4 million last
year. The net loss on extinguishment of debt resulted primarily from the
refinancing and re-pricing of our term loan as well as the partial
redemption of $175 million of our senior notes. On an adjusted basis,
net loss on extinguishment of debt for fiscal 2018 was $0.9 million
compared to a net gain on extinguishment of debt of $5.4 million last
year.
Effective Tax Rate
On a GAAP basis, the effective tax rate was 18.9% compared to 28.3% last
year. On an adjusted basis, the effective tax rate was 23.7% compared to
29.3% last year. Both the GAAP and the adjusted effective tax rates
reflect the impact of the Tax Cuts and Jobs Act of 2017.
Net Earnings and EPS
On a GAAP basis, net earnings were $83.2 million compared to $96.7
million last year. Diluted EPS was $1.64 compared to $1.95 last year.
On an adjusted basis, net earnings were $117.1 million compared to
$108.6 million last year. Adjusted diluted EPS was $2.31 compared to
$2.20 last year. The Company estimates that the impact of the 53rd
week in 2017 was $0.05 per diluted share.
Balance Sheet Highlights
Cash and cash equivalents at the end of fiscal 2018 were $55.4 million,
a decrease of $48.2 million compared to the end of 2017, primarily
resulting from the use of cash on hand in the second quarter of 2018 to
fund a portion of the $175 million partial redemption of senior notes.
At the end of the 2018, there were $48.5 million of borrowings
outstanding on our revolving credit facility.
Inventories decreased $21.5 million to $830.4 million at the end of 2018
compared to the end of 2017, primarily due to a 10.6% reduction in
corporate apparel segment inventories, including the impact of foreign
exchange. Retail segment inventories were down 1.2%.
Total debt at the end of 2018 was approximately $1.2 billion, a decrease
of $231.9 million compared to the end of 2017. During the fourth
quarter, the Company made its scheduled $2.3 million payment on its term
loan and repaid $10.0 million on its revolving credit facility.
Cash flow from operating activities for fiscal 2018 was $322.7 million
compared to $350.8 million last year. The decrease was driven by higher
inventory purchases compared to last year partially offset by higher net
earnings, after adjusting for certain items primarily related to
extinguishment of debt and goodwill impairment, as well as favorable
fluctuations in accounts payable, accrued expenses and other current
liabilities primarily due to timing.
Capital expenditures for fiscal 2018 were $82.3 million compared to
$95.0 million last year.
Q1 FISCAL 2019 OUTLOOK
- Earnings per Share: The Company expects to achieve adjusted
diluted EPS in the range of $0.10 to $0.15. - Comparable Sales: The Company expects comparable sales for:
- Men’s Wearhouse to be down 3% to 5%
- Jos. A. Bank to be down 3% to 5%
- Moores to be down 5% to 7%
- K&G to be flat to up 2%.
- Corporate Apparel Sales: The Company expects corporate apparel
net sales to be down 10% to 12%. - Effective Tax Rate: The Company estimates a tax rate in the
range of 30% to 33% primarily as a result of an increase in tax
expense related to the accounting for employee share-based awards. - Real Estate: The Company expects to close three Jos. A. Bank
stores.
STORE INFORMATION
| February 2, 2019 | February 3, 2018 | ||||||||||||
|
Number of |
Sq. Ft. |
Number of |
Sq. Ft. |
||||||||||
| Men’s Wearhouse (a) | 720 | 4,035.5 | 719 | 4,036.0 | |||||||||
| Jos. A. Bank (b) | 484 | 2,280.2 | 491 | 2,309.9 | |||||||||
| Men’s Wearhouse and Tux | 46 | 68.8 | 51 | 77.0 | |||||||||
| Moores | 126 | 787.4 | 126 | 787.5 | |||||||||
| K&G (c) | 88 | 2,028.4 | 90 | 2,065.0 | |||||||||
| Total | 1,464 | 9,200.3 | 1,477 | 9,275.4 | |||||||||
| (a) | Includes one Joseph Abboud store. | ||
| (b) | Excludes 14 franchise stores. | ||
| (c) |
84 and 86 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 13, 2019, management will
host a conference call and webcast to discuss fiscal 2018 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.
The webcast archive will be available on the website for approximately
90 days.
About Tailored Brands, Inc.
As the leading specialty retailer of men’s tailored clothing and largest
men’s formalwear provider in the U.S. and Canada, Tailored Brands helps
men love the way they look for work and special occasions. We serve our
customers through an expansive omni-channel network that includes over
1,400 stores in the U.S. and Canada as well as our branded e-commerce
websites. Our brands include Men’s Wearhouse, Jos. A. Bank, Joseph
Abboud, Moores Clothing for Men and K&G. We also operate an
international corporate apparel and workwear group consisting of
Dimensions, Alexandra and Yaffy in the United Kingdom and Twin Hill in
the United States.
For additional information on Tailored Brands, please visit the
Company’s websites at www.tailoredbrands.com,
www.menswearhouse.com,
www.josbank.com,
www.josephabboud.com,
www.mooresclothing.com,
www.kgstores.com,
www.dimensions.co.uk,
www.alexandra.co.uk
and www.twinhill.com.
This press release contains forward-looking information, including
the Company’s statements regarding its Q1 2019 outlook for adjusted
earnings per share, comparable sales, corporate apparel sales, effective
tax rate and store closures. 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
personnel; 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 in demand for clothing or rental
product; market trends in the retail 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; 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 and 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 EARNINGS | |||||||||||||||
|
(Unaudited) |
|||||||||||||||
| For the Three Months Ended February 2, 2019 and February 3, 2018 | |||||||||||||||
|
(In thousands, except per share data) |
|||||||||||||||
| Three Months Ended | |||||||||||||||
| % of | % of | ||||||||||||||
| 2018 | Sales | 2017 | Sales | ||||||||||||
| Net sales: | |||||||||||||||
| Retail clothing product | $ | 646,868 | 82.3% | $ | 686,035 | 79.8% | |||||||||
| Rental services | 49,127 | 6.3% | 55,147 | 6.4% | |||||||||||
| Alteration and other services | 34,018 | 4.3% | 46,014 | 5.4% | |||||||||||
| Total retail sales | 730,013 | 92.9% | 787,196 | 91.5% | |||||||||||
| Corporate apparel clothing product | 55,748 | 7.1% | 72,668 | 8.5% | |||||||||||
| Total net sales | 785,761 | 100.0% | 859,864 | 100.0% | |||||||||||
| Total cost of sales | 485,155 | 61.7% | 538,991 | 62.7% | |||||||||||
| Gross margin (a): | |||||||||||||||
| Retail clothing product | 341,779 | 52.8% | 350,571 | 51.1% | |||||||||||
| Rental services | 41,226 | 83.9% | 45,754 | 83.0% | |||||||||||
| Alteration and other services | 2,376 | 7.0% | 9,860 | 21.4% | |||||||||||
| Occupancy costs | (101,725) | -13.9% | (103,987) | -13.2% | |||||||||||
| Total retail gross margin | 283,656 | 38.9% | 302,198 | 38.4% | |||||||||||
| Corporate apparel clothing product | 16,950 | 30.4% | 18,675 | 25.7% | |||||||||||
| Total gross margin | 300,606 | 38.3% | 320,873 | 37.3% | |||||||||||
| Advertising expense | 49,225 | 6.3% | 52,607 | 6.1% | |||||||||||
| Selling, general and administrative expenses | 234,904 | 29.9% | 252,764 | 29.4% | |||||||||||
| Goodwill impairment charge | – | – | 1,500 | 0.2% | |||||||||||
| Asset impairment charges | 522 | 0.1% | 680 | 0.1% | |||||||||||
| Operating income | 15,955 | 2.0% | 13,322 | 1.5% | |||||||||||
| Interest expense, net | (17,822) | -2.3% | (25,031) | -2.9% | |||||||||||
| Loss on extinguishment of debt, net | – | – | (1,090) | -0.1% | |||||||||||
| Loss before income taxes | (1,867) | -0.2% | (12,799) | -1.5% | |||||||||||
| Benefit for income taxes | (8,085) | -1.0% | (12,300) | -1.4% | |||||||||||
| Net earnings (loss) | $ | 6,218 | 0.8% | $ | (499) | -0.1% | |||||||||
| Net earnings (loss) per diluted common share | $ | 0.12 | $ | (0.01) | |||||||||||
| Weighted-average diluted common shares outstanding | 50,607 | 49,256 | |||||||||||||
|
(a) Gross margin percent of sales is calculated as a percentage of related sales. |
| TAILORED BRANDS, INC. | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||||
|
(Unaudited) |
|||||||||||||||
| For the Twelve Months Ended February 2, 2019 and February 3, 2018 | |||||||||||||||
|
(In thousands, except per share data) |
|||||||||||||||
| Year Ended | |||||||||||||||
| % of | % of | ||||||||||||||
| 2018 | Sales | 2017 | Sales | ||||||||||||
| Net sales: | |||||||||||||||
| Retail clothing product | $ | 2,454,747 | 75.8% | $ | 2,439,817 | 73.8% | |||||||||
| Rental services | 399,146 | 12.3% | 428,355 | 13.0% | |||||||||||
| Alteration and other services | 150,618 | 4.6% | 184,849 | 5.6% | |||||||||||
| Total retail sales | 3,004,511 | 92.7% | 3,053,021 | 92.4% | |||||||||||
| Corporate apparel clothing product | 235,391 | 7.3% | 251,325 | 7.6% | |||||||||||
| Total net sales | 3,239,902 | 100.0% | 3,304,346 | 100.0% | |||||||||||
| Total cost of sales | 1,862,435 | 57.5% | 1,895,580 | 57.4% | |||||||||||
| Gross margin (a): | |||||||||||||||
| Retail clothing product | 1,360,655 | 55.4% | 1,355,551 | 55.6% | |||||||||||
| Rental services | 339,903 | 85.2% | 358,382 | 83.7% | |||||||||||
| Alteration and other services | 18,027 | 12.0% | 45,009 | 24.3% | |||||||||||
| Occupancy costs | (406,037) | -13.5% | (415,981) | -13.6% | |||||||||||
| Total retail gross margin | 1,312,548 | 43.7% | 1,342,961 | 44.0% | |||||||||||
| Corporate apparel clothing product | 64,919 | 27.6% | 65,805 | 26.2% | |||||||||||
| Total gross margin | 1,377,467 | 42.5% | 1,408,766 | 42.6% | |||||||||||
| Advertising expense | 166,457 | 5.1% | 173,411 | 5.2% | |||||||||||
| Selling, general and administrative expenses | 974,054 | 30.1% | 1,000,892 | 30.3% | |||||||||||
| Goodwill impairment charge | 23,991 | 0.7% | 1,500 | 0.0% | |||||||||||
| Asset impairment charges | 1,026 | 0.0% | 3,547 | 0.1% | |||||||||||
| Operating income | 211,939 | 6.5% | 229,416 | 6.9% | |||||||||||
| Interest expense, net | (79,010) | -2.4% | (99,907) | -3.0% | |||||||||||
| (Loss) gain on extinguishment of debt, net | (30,253) | -0.9% | 5,445 | 0.2% | |||||||||||
| Earnings before income taxes | 102,676 | 3.2% | 134,954 | 4.1% | |||||||||||
| Provision for income taxes | 19,436 | 0.6% | 38,251 | 1.2% | |||||||||||
| Net earnings | $ | 83,240 | 2.6% | $ | 96,703 | 2.9% | |||||||||
| Net earnings per diluted common share | $ | 1.64 | $ | 1.95 | |||||||||||
| Weighted-average diluted common shares outstanding: | 50,725 | 49,468 | |||||||||||||
|
(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 2, | February 3, | ||||||||
| 2019 | 2018 | ||||||||
|
ASSETS |
|||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 55,431 | $ | 103,607 | |||||
| Accounts receivable, net | 73,073 | 79,783 | |||||||
| Inventories | 830,426 | 851,931 | |||||||
| Other current assets | 70,712 | 78,252 | |||||||
| Total current assets | 1,029,642 | 1,113,573 | |||||||
| Property and equipment, net | 439,172 | 460,674 | |||||||
| Rental product, net | 99,770 | 123,730 | |||||||
| Goodwill | 79,491 | 120,292 | |||||||
| Intangible assets, net | 163,901 | 168,987 | |||||||
| Other assets | 8,514 | 12,699 | |||||||
| Total assets | $ | 1,820,490 | $ | 1,999,955 | |||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 228,979 | $ | 145,106 | |||||
| Accrued expenses and other current liabilities | 282,029 | 285,537 | |||||||
| Income taxes payable | 15,968 | 6,121 | |||||||
| Current portion of long-term debt | 11,619 | 7,000 | |||||||
| Total current liabilities | 538,595 | 443,764 | |||||||
| Long-term debt, net | 1,153,242 | 1,389,808 | |||||||
| Deferred taxes and other liabilities | 125,022 | 164,191 | |||||||
| Total liabilities | 1,816,859 | 1,997,763 | |||||||
| Shareholders’ equity: | |||||||||
| Preferred stock | – | – | |||||||
| Common stock | 501 | 492 | |||||||
| Capital in excess of par | 505,157 | 491,648 | |||||||
| Accumulated deficit | (468,048) | (479,166) | |||||||
| Accumulated other comprehensive loss | (33,979) | (10,782) | |||||||
| Total shareholders’ equity | 3,631 | 2,192 | |||||||
| Total liabilities and shareholders’ equity | $ | 1,820,490 | $ | 1,999,955 | |||||
| TAILORED BRANDS, INC. | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
|
(Unaudited) |
|||||||||
| For the Twelve Months Ended February 2, 2019 and February 3, 2018 | |||||||||
|
(In thousands) |
|||||||||
| Year Ended | |||||||||
| 2018 | 2017 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
| Net earnings | $ | 83,240 | $ | 96,703 | |||||
| Adjustments to net earnings: | |||||||||
| Depreciation and amortization | 104,216 | 106,493 | |||||||
| Rental product amortization | 35,058 | 38,021 | |||||||
| Goodwill impairment charge | 23,991 | 1,500 | |||||||
| Asset impairment charges | 1,026 | 3,547 | |||||||
| Loss (gain) on extinguishment of debt, net | 30,253 | (5,445) | |||||||
|
Amortization of deferred financing costs and discount on long-term debt |
3,422 | 7,066 | |||||||
| Loss on disposition of assets | 8,587 | 1,237 | |||||||
| Other | 7,033 | 15,811 | |||||||
| Changes in operating assets and liabilities | 25,846 | 85,835 | |||||||
| Net cash provided by operating activities | 322,672 | 350,768 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
| Capital expenditures | (82,286) | (94,958) | |||||||
| Proceeds from divestiture of business | 17,755 | – | |||||||
| Acquisition of business, net of cash | – | (457) | |||||||
| Proceeds from sales of property and equipment | – | 5,480 | |||||||
| Net cash used in investing activities | (64,531) | (89,935) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
| Payments on old term loan | (993,420) | (53,379) | |||||||
| Proceeds from new term loan | 895,500 | – | |||||||
| Payments on new term loan | (9,000) | – | |||||||
| Proceeds from asset-based revolving credit facility | 655,500 | 276,300 | |||||||
| Payments on asset-based revolving credit facility | (607,000) | (276,300) | |||||||
| Repurchase and retirement of senior notes | (199,365) | (145,371) | |||||||
| Deferred financing costs | (6,713) | (2,580) | |||||||
| Cash dividends paid | (36,946) | (35,761) | |||||||
| Proceeds from issuance of common stock | 6,649 | 1,903 | |||||||
| Tax payments related to vested deferred stock units | (7,901) | (1,687) | |||||||
| Net cash used in financing activities | (302,696) | (236,875) | |||||||
| Effect of exchange rate changes | (3,621) | 8,760 | |||||||
| (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (48,176) | 32,718 | |||||||
| Balance at beginning of period | 103,607 | 70,889 | |||||||
| Balance at end of period | $ | 55,431 | $ | 103,607 | |||||
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 our fiscal fourth quarters and
twelve months of 2018 and 2017. 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. 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, a goodwill impairment charge related
to our corporate apparel business, 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. For fiscal 2017, adjusted items consisted of costs
to terminate our tuxedo rental license agreement with Macy’s, a goodwill
impairment charge related to our divestiture of MW Cleaners and one-time
tax adjustments.
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
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.
A reconciliation of first quarter fiscal 2019 adjusted EPS, which is a
forward-looking non-GAAP financial measure, to the most directly
comparable GAAP financial measure, is not provided because the Company
is unable to provide such reconciliation without unreasonable effort.
The inability to provide this reconciliation is due to the uncertainty
and inherent difficulty predicting the occurrence, the financial impact
and the periods in which the non-GAAP adjustments may be recognized.
These GAAP measures may include the impact of items such as costs
related to our multi-year cost saving initiative and the tax effect of
such items. Historically, the Company has excluded these types of items
from non-GAAP financial measures. The Company currently expects to
continue to exclude these items in future disclosures of non-GAAP
financial measures and may also exclude other items that may arise. The
decisions and events that typically lead to the recognition of non-GAAP
adjustments are inherently unpredictable as to if or when they may
occur. For the same reasons, the Company is unable to address the
probable significance of the unavailable information, which could be
material to future results.
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 Earnings
Information
| GAAP to Non-GAAP Adjusted – Three Months Ended February 2, 2019 | |||||||||||||||||
| Consolidated Results |
GAAP |
Changes to |
Total |
Non-GAAP |
|||||||||||||
| Total retail sales | $ | 730,013 | $ | (17,630) | $ | (17,630) | $ | 712,383 | |||||||||
| Total net sales | 785,761 | (17,630) | (17,630) | 768,131 | |||||||||||||
| Total retail gross margin | 283,656 | (17,630) | (17,630) | 266,026 | |||||||||||||
| Total gross margin | 300,606 | (17,630) | (17,630) | 282,976 | |||||||||||||
| Operating income (loss) | 15,955 | (17,630) | (17,630) | (1,675) | |||||||||||||
| (Benefit) provision for income taxes(2) | (8,085) | 2,814 | (5,271) | ||||||||||||||
| Net earnings (loss) | 6,218 | (20,444) | (14,226) | ||||||||||||||
| Net earnings (loss) per diluted common share | $ | 0.12 | ($0.40) | $ | (0.28) | ||||||||||||
|
(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 – Three Months Ended February 3, 2018 | ||||||||||||||||
| Consolidated Results | GAAP Results |
Divestiture of MW |
Total |
Non-GAAP |
||||||||||||
| Goodwill impairment charge | $ | 1,500 | (1,500) | (1,500) | $ | – | ||||||||||
| Operating income | 13,322 | 1,500 | 1,500 | 14,822 | ||||||||||||
| (Benefit) provision for income taxes(2) | (12,300) | 1,085 | (11,215) | |||||||||||||
| Net loss | (499) | 415 | (84) | |||||||||||||
| Net loss per diluted common share | $ | (0.01) | $ | 0.01 | $ | (0.00) | ||||||||||
|
(1) Consists of a $1.5 million goodwill impairment charge for MW Cleaners and related to the retail segment. |
|
(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 items primarily related to a favorable tax resolution of $18.3 million offset by a change in our position on permanently reinvested foreign earnings and other impacts of the recently enacted Tax Cuts and Jobs Act of 2017 totaling $17.2 million. |
| GAAP to Non-GAAP Adjusted – Fiscal Year Ended February 2, 2019 | |||||||||||||||||||||||||||||||||||||||||
| Consolidated Results |
GAAP |
Divestiture |
Refinancing |
Partial |
Closure of |
CEO |
Corporate |
Changes |
Total |
Non-GAAP |
|||||||||||||||||||||||||||||||
| Total retail sales | $ | 3,004,511 | $ | – | $ | – | $ | – | $ | – | $ | – | $ | – | $ | (17,630) | $ | (17,630) | $ | 2,986,881 | |||||||||||||||||||||
| Total net sales | 3,239,902 | – | – | – | – | – | – | (17,630) | (17,630) | 3,222,272 | |||||||||||||||||||||||||||||||
| Rental services gross margin | 339,903 | – | – | – | 4,029 | – | – | – | 4,029 | 343,932 | |||||||||||||||||||||||||||||||
| Total retail gross margin | 1,312,548 | – | – | – | 4,029 | – | – | (17,630) | (13,601) | 1,298,947 | |||||||||||||||||||||||||||||||
| Total gross margin | 1,377,467 | – | – | – | 4,029 | – | – | (17,630) | (13,601) | 1,363,866 | |||||||||||||||||||||||||||||||
| SG&A | 974,054 | (3,766) | – | – | (925) | (6,417) | – | – | (11,108) | 962,946 | |||||||||||||||||||||||||||||||
| Goodwill impairment charge | 23,991 | – | – | – | – | – | (23,991) | – | (23,991) | – | |||||||||||||||||||||||||||||||
| Operating income | 211,939 | 3,766 | – | – | 4,954 | 6,417 | 23,991 | (17,630) | 21,498 | 233,437 | |||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | (30,253) | 21,278 | 8,122 | 29,400 | (853) | ||||||||||||||||||||||||||||||||||||
| Provision for income taxes(8) | 19,436 | 16,992 | 36,428 | ||||||||||||||||||||||||||||||||||||||
| Net earnings | 83,240 | 33,906 | 117,146 | ||||||||||||||||||||||||||||||||||||||
| Net earnings per diluted common share | $ | 1.64 | $ | 0.67 | $ | 2.31 | |||||||||||||||||||||||||||||||||||
|
(1) Consists of a $3.8 million loss upon divestiture of MW Cleaners business related to the retail segment. |
|
(2) Consists of the elimination of unamortized deferred financing costs and original issue discount related to the refinancing and re-pricing 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, all related to the retail segment. |
|
(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, related to the shared services segment. |
|
(6) Consists of a $24.0 million goodwill impairment charge related to our corporate apparel segment. |
|
(7) Consists of a favorable adjustment to net sales totaling $17.6 million reflecting the impact of changes made to our loyalty programs. |
|
(8) 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 – Fiscal Year Ended February 3, 2018 | |||||||||||||||||||||
| Consolidated Results |
GAAP |
Macy’s |
Divestiture of |
Total |
Non-GAAP |
||||||||||||||||
| Rental services gross margin | $ | 358,382 | $ | 1,416 | $ | – | $ | 1,416 | $ | 359,798 | |||||||||||
| Total retail gross margin | 1,342,961 | 1,416 | – | 1,416 | 1,344,377 | ||||||||||||||||
| Total gross margin | 1,408,766 | 1,416 | – | 1,416 | 1,410,182 | ||||||||||||||||
| SG&A | 1,000,892 | (15,736) | – | (15,736) | 985,156 | ||||||||||||||||
| Goodwill impairment charge | 1,500 | – | (1,500) | (1,500) | – | ||||||||||||||||
| Operating income | 229,416 | 17,152 | 1,500 | 18,652 | 248,068 | ||||||||||||||||
| Provision for income taxes(3) | 38,251 | 6,756 | 45,007 | ||||||||||||||||||
| Net earnings | 96,703 | 11,896 | 108,599 | ||||||||||||||||||
| Net earnings per diluted common share | $ | 1.95 | $ | 0.25 | $ | 2.20 | |||||||||||||||
|
(1) Consists of $12.3 million of termination costs, $1.4 million of rental product write-offs, $1.2 million of asset impairment charges and $2.3 million of other costs, all related to the retail segment. |
|
(2) Consists of a $1.5 million goodwill impairment charge for MW Cleaners and related to the retail segment. |
|
(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 items primarily related to a favorable tax resolution of $18.3 million offset by a change in our position on permanently reinvested foreign earnings and other impacts of the recently enacted Tax Cuts and Jobs Act of 2017 totaling $17.2 million. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190313005709/en/
Investor Relations
(281) 776-7575
[email protected]
Julie MacMedan, VP, Investor Relations
Tailored Brands, Inc.
Source: Tailored Brands, Inc.
Released March 13, 2019