The CEO of Jos. A. Bank’s parent company says that despite first-quarter numbers showing a substantial revenue decline better days are ahead.
Thursday was not one of them.
Investors pummeled Tailored Brands’ shares after the quarterly results were disclosed. The company’s stock fell about 21 percent, or 3.19 points. MarketWatch reported it was the company’s third-worst day on record.
Tailored Brands fell short of revenue projections in its first quarter by $13.21 million and $0.16 in earnings per share.
Jos. A. Bank sales were down 16 percent but better than Tailored Brands expected, given the discontinuation of the brand’s famous buy-one-get-three free promotion and slow season for the retail industry. Part of the decrease was also offset by an increase in rental revenue.
Retail operating income for Jos. A. Bank decreased $15.4 million on a GAAP basis and $18.2 million on an adjusted basis.
“The decline in Jos. A. Bank results was slightly better than the expectations we previously outlined for 2016,” the company said.
Doug Ewert, CEO of Tailored Brands, said he’s optimistic about Jos. A. Bank’s future and even expects its retail sales to eventually overtake Men’s Wearhouse.
“We remain committed to stabilizing, resizing, and rebuilding the foundation of the Jos. A. Bank business to a base from which we can profitably grow on a go-forward basis,” Ewert said.
In March, Tailored Brands Inc. announced plans to shutter about 250 locations, including all its outlet stores, to address slow sales at Men’s Wearhouse and Jos. A. Bank. The company’s March announcement included the closure of 80 to 90 full-line Jos. A. Bank stores and all 49 outlet stores. The full-line stores will be closed by January 2017. Nine stores have been closed so far, said CFO Jon Kimmins during the company’s earnings call on Thursday.
Jos. A. Bank’s retail clothing product margin increased 400 basis points for the first quarter, which Tailored Brands attributed to lower product costs and an increase in the average unit retail. Because Jos. A. Bank is a designer brand with a vertical product pipeline and minimal third-party suppliers, Tailored Brands expects to eventually see Jos. A. Bank become its most “margin rich brand” on the retail side.
Jos. A. Bank is one of several brands under the Tailored Brands umbrella, which also includes Men’s Wearhouse, Joseph Abboud, Moores Clothing for Men and K&G Fashion Superstores.
Men’s Wearhouse bought Baltimore-based Jos. A. Bank for $1.5 billion about two years ago after a fierce bidding war between the companies. Tailored Brands got its name after establishing a holding company structure earlier this year.
Last year, Jos. A. Bank was trying to steady sales after management ended the brand’s famous “ buy one suit, get three free” promotions, a move that irked loyal shoppers and experts, especially as more department stores carry their own menswear lines.