Tailored Brands’ Q2 earnings top Street; to halt dividend

Tailored Brands, the owner of Men's Wearhouse and Jos. A. Bank and other brands, reported mixed second-quarter results and issued guidance that suggests the company is expecting a tough third quarter.

The menswear retailer also said it plans to suspend payment of its 18-cents-a-share dividend in the fourth quarter in order to pay down debt and repurchase shares.

Tailored Brands reported net income of $34.3 million, or earnings per share of $0.68, in the quarter ended Aug.3. Adjusted earnings per share came to $0.82, topping analysts’ estimates of $0.74 cents.

Total revenue fell 4.1% to $789.5 million. Retail net sales decreased 4.1% primarily due to a decrease in retail segment comparable sales of 3.6%, the company said. Corporate apparel net sales decreased 3.9% amid a weaker British compared to last year.

By division, same-store sales fell 4.3% at Men’s Wearhouse due to a decrease in transactions, average unit retail and units per transaction, and 3.3% at Jos. A. Bank., with a decrease in average unit retail partially offset by an increase in both transactions and units per transaction. Same-store sales declined 1.3% at K&G and 2.5% at Moores.

“We were pleased to deliver second-quarter comparable sales in line with our guidance and adjusted earnings per share above our guidance,” said Tailored Brands President and CEO Dinesh Lathi. “We are also seeing early customer response to our initiatives, which gives us confidence that unleashing the potential for this business to generate healthy positive comps lies in our transformational strategies of providing i) personalized products and services, ii) inspiring and seamless experiences in and across every channel, and iii) brands that stand for more than just price.”

For the third quarter, the company said it expects adjusted earnings per share between $0.40 and $0.45, compared with analyst expectations of $0.88 a share. It also called for sales declines across the board in the quarter.

Tailored Brands operates more than 1,400 locations in the U.S. and Canada as well as branded e-commerce websites. Its brands include Men's Wearhouse, Jos. A. Bank, Joseph Abboud, Moores Clothing for Men and K&G.