FREMONT, Calif., March 14, 2018 /PRNewswire/ -- Tailored
Brands, Inc. (NYSE: TLRD) today announced consolidated financial
results for the fiscal fourth quarter and year ended February 3, 2018, and provided guidance for
fiscal 2018.
For the fourth quarter ended February 3,
2018, the Company reported GAAP diluted loss per share of
$0.01 and adjusted diluted loss per
share of $0.00, compared to GAAP
diluted loss per share of $0.62 and
adjusted diluted loss per share of $0.19 for the fourth quarter last year.
For the fiscal year ended February 3,
2018, the Company reported GAAP diluted EPS of $1.95 and adjusted diluted EPS of $2.20, compared to GAAP diluted EPS of
$0.51 and adjusted diluted EPS of
$1.79 last year.
In fiscal 2017, the fourth quarter and year included an
additional operating week ("53rd week") compared to
fiscal 2016.
"In 2017, we delivered significant EPS growth and finished the
year strong with positive comparable sales for both Men's Wearhouse
and Jos. A. Bank in the fourth quarter," said Tailored Brands CEO
Doug Ewert. "Our performance
reflects the progress we are making on our key growth
strategies. We more than doubled our custom business to over
$100 million in 2017. We
believe Tailored Brands is the largest and fastest growing retailer
of men's custom clothing in North
America and we plan to further enhance and differentiate our
custom offering in 2018.
"We also significantly strengthened our balance sheet, reducing
debt by approximately $200 million
and lowering inventories by 11%. In 2018, we plan to further
reduce our debt, invest behind our growth strategies and return
cash to shareholders via our dividend.
"In 2018, we remain focused on executing three key growth
strategies: expand our custom business and make buying a custom
suit as easy and affordable as buying a suit off the rack,
strengthen our brands and grow market share by communicating the
quality selection and service we provide at a great value, and
enhance our omni-channel experience by combining the high-touch
service we offer in our stores with the convenience of online
shopping."
(1)
|
In fiscal 2017,
adjusted items consist 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. In fiscal 2016, these items primarily related to
our store rationalization and profit improvement initiatives and
integration costs related to Jos. A. Bank. Given the recurring
nature of our debt reduction transactions and to facilitate
comparability, we have recast our non-GAAP measures presentations
for 2016 to remove adjustments previously made for gains/losses on
extinguishment of debt. This changes our non-GAAP diluted EPS
for fiscal 2016 to $1.79 from $1.76. See Use of Non-GAAP Financial
Measures for additional information on items excluded from adjusted
EPS.
|
Sale of MW Cleaners
Today, the Company also announced the sale of its MW Cleaners
business for approximately $18
million, as part of the Company's strategy to focus on its
core businesses and unlock cash flow. In the fourth quarter
of 2017, the Company recorded a goodwill impairment charge for MW
Cleaners of $1.5 million.
Fourth Quarter Fiscal 2017 Results
Fourth Quarter Net
Sales Summary – Fiscal 2017
|
|
|
Net Sales
(U.S.
dollars, in
millions)
|
% Total
Sales
Change
|
Comparable
Sales
Change(1)
|
|
|
|
|
Retail
|
$787.2
|
6.6%
|
2.5%
|
Men's
Wearhouse
|
$414.9
|
7.9%
|
2.3%
|
Jos. A.
Bank
|
$230.9
|
5.2%
|
5.3%
|
K&G
|
$79.9
|
2.6%
|
-1.7%
|
Moores(2)
|
$52.6
|
8.9%
|
-1.4%
|
MW
Cleaners
|
$8.9
|
9.9%
|
|
Corporate
Apparel
|
$72.7
|
32.2%
|
|
Total
Company
|
$859.9
|
8.4%
|
|
|
|
(1)
|
Comparable sales
is defined as net sales from stores open at least twelve months at
period end and includes e-commerce sales.
|
|
The
53rd week is excluded from comparable sales
calculations.
|
|
|
(2)
|
The Moores
comparable sales change is based on the Canadian
dollar.
|
Net Sales
Total net sales increased 8.4% to $859.9
million, including a $45.7
million benefit from the 53rd week. Retail net
sales increased 6.6% primarily due to an increase in retail segment
comparable sales of 2.5% and a $40.7
million benefit from the 53rd week.
Corporate apparel net sales increased 32.2%, primarily due to the
rollout of new uniform programs in the U.S. and U.K., a
$5.0 million benefit from the
53rd week and the impact of a stronger British pound
this year compared to last year.
Comparable Sales
Men's Wearhouse comparable sales increased 2.3%. Comparable
sales for clothing increased primarily due to an increase in
transactions, partially offset by a decrease in units per
transaction, while average unit retail was flat. Comparable rental
services revenue increased 2.1%, primarily reflecting an increase
in rental units.
Jos. A. Bank comparable sales increased 5.3% primarily due to an
increase in transactions and units per transaction that more than
offset a decrease in average unit retail.
K&G comparable sales decreased 1.7% primarily due to lower
transactions partially offset by an increase in units per
transaction, while average unit retail was flat.
Moores comparable sales decreased 1.4% primarily due to a
decrease in average unit retail partially offset by an increase in
transactions, while units per transaction were flat.
Gross Margin
On a GAAP basis, consolidated gross margin was $320.9 million, an increase of $18.8 million, primarily due to the increase in
net sales. As a percent of sales, consolidated gross margin
decreased 80 basis points to 37.3%. On an adjusted basis,
consolidated gross margin decreased 80 basis points, primarily due
to a decrease in retail gross margin rate.
On a GAAP basis, retail gross margin was $302.2 million, an increase of $14.6 million. As a percent of sales,
retail gross margin decreased 60 basis points to 38.4%. On an
adjusted basis, retail gross margin increased $14.1 million while the retail gross margin rate
decreased 60 basis points primarily due to higher procurement and
distribution costs as a percent of sales, somewhat offset by lower
occupancy costs as a percent of sales.
Advertising Expense
Advertising expense increased $1.2
million to $52.6 million but
decreased 40 basis points as a percent of sales to 6.1%. The
increase in advertising expense was driven primarily by a shift in
timing of marketing spend from the third quarter.
Selling, General and Administrative Expenses
("SG&A")
On a GAAP basis, SG&A decreased $1.7
million to $252.8 million and
decreased 270 basis points as a percent of sales. On an
adjusted basis, SG&A increased $10.9
million, primarily due to the impact of the 53rd
week and increased incentive compensation expense, partially offset
by lower employee-related benefit costs. As a percent of sales,
adjusted SG&A decreased 110 basis points to 29.4%.
Operating Income
On a GAAP basis, operating income was $13.3 million compared to an operating loss of
$18.9 million last year. On an
adjusted basis, operating income was $14.8
million compared to $9.3
million last year. As a percent of sales, adjusted
operating margin increased 50 basis points to 1.7%.
Net Interest Expense and Net Loss on Extinguishment of
Debt
Net interest expense was $25.0
million compared to $25.2
million last year. The decrease in interest expense
was due to reducing our outstanding debt but was mostly offset by
the impact of the 53rd week. Net loss on
extinguishment of debt was $1.1
million primarily related to the write-off of deferred
financing costs resulting from the Company's voluntary $40.0 million prepayment on its Term Loan and the
Company's repurchase of senior notes.
Effective Tax Rate
On a GAAP basis, the effective tax rate was a benefit of 96.1%
compared to a benefit of 31.8% last year. Our GAAP effective
tax rate includes one-time items including a favorable tax
resolution 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. On an adjusted basis,
the effective tax rate was 99.3% compared to 42.3% last year.
Both the GAAP and the adjusted effective tax rate reflect a
benefit related to a change in the full year effective tax rate
from 33% to 29%, primarily driven by discrete tax items, tax
credits, and reductions in state income tax items including
reversal of valuation allowances and uncertain tax positions.
Net Loss and EPS
On a GAAP basis, net loss was $0.5
million compared to a net loss of $30.1 million last year. GAAP diluted loss
per share was $0.01 compared to a
diluted loss per share of $0.62 last
year. On an adjusted basis, fourth quarter 2017 net loss was
$0.1 million compared to a net loss
of $9.2 million last year.
Adjusted diluted loss per share was $0.00, compared to an adjusted loss per share of
$0.19 last year. As a reminder,
this year's fourth quarter contained 14 weeks while last year's
fourth quarter contained 13 weeks. The Company estimates the
impact of the extra week in 2017 was $0.05 per diluted share.
Fiscal Year 2017 Results
Full Year Net
Sales Summary – Fiscal 2017
|
|
|
Net Sales
(U.S.
dollars, in
millions)
|
% Total
Sales
Change
|
Comparable
Sales
Change(1)
|
|
|
|
|
Retail
|
$3,053.0
|
-1.5%
|
0.1%
|
Men's
Wearhouse
|
$1,742.7
|
-1.6%
|
-1.1%
|
Jos. A.
Bank
|
$735.1
|
-2.0%
|
5.4%
|
K&G
|
$324.0
|
-1.8%
|
-3.1%
|
Moores(2)
|
$216.4
|
0.9%
|
-2.0%
|
MW
Cleaners
|
$34.8
|
5.1%
|
|
Corporate
Apparel
|
$251.3
|
-10.3%
|
|
Total
Company
|
$3,304.3
|
-2.2%
|
|
|
|
(1)
|
Comparable sales
is defined as net sales from stores open at least twelve months at
period end and includes e-commerce sales.
|
|
The 53rd week is
excluded from comparable sales calculations.
|
|
|
(2)
|
The Moores
comparable sales change is based on the Canadian
dollar.
|
Net Sales
Total net sales decreased 2.2% to $3,304.3 million. Retail net sales decreased 1.5%
primarily due to the impact of last year's store closures partially
offset by the $40.7 million benefit
from the 53rd week and an increase in retail segment
comparable sales of 0.1%. Corporate apparel net sales
decreased 10.3%, in line with expectations, primarily due to
anniversarying last year's rollout of a large new uniform program,
partially offset by a $5.0 million
benefit from the 53rd week.
Comparable Sales
Men's Wearhouse comparable sales decreased 1.1%. Comparable
sales for clothing decreased primarily due to a decrease in
transactions and units per transaction, partially offset by an
increase in average unit retail. Comparable rental services revenue
decreased 2.0%, primarily reflecting a consumer shift to purchase
suits for special occasions.
Jos. A. Bank comparable sales increased 5.4% primarily due to an
increase in transactions partially offset by a decrease in average
unit retail, while units per transaction were flat.
K&G comparable sales decreased 3.1% primarily due to lower
transactions partially offset by increases in units per transaction
and average unit retail.
Moores comparable sales decreased 2.0% primarily due to
decreases in both units per transaction and average unit retail
that more than offset a slight increase in transactions.
Gross Margin
On a GAAP basis, consolidated gross margin was $1,408.8 million, a decrease of $32.7 million, primarily due to a decrease in
corporate apparel net sales. As a percent of sales,
consolidated gross margin decreased 10 basis points to 42.6%.
On an adjusted basis, consolidated gross margin increased 10 basis
points to 42.7%.
On a GAAP basis, retail gross margin was $1,343.0 million, a decrease of $10.8 million. As a percent of sales,
retail gross margin increased 30 basis points to 44.0%. On an
adjusted basis, retail gross margin decreased $8.2 million but the retail gross margin rate
increased 40 basis points compared to last year primarily due to
leverage from occupancy costs.
Advertising Expense
Advertising expense decreased $16.5
million to $173.4 million and
decreased 40 basis points as a percent of sales to 5.2%. The
decrease in advertising expense was driven primarily by reductions
in television advertising reflecting a shift to digital
advertising.
SG&A
On a GAAP basis, SG&A decreased $98.4
million to $1,000.9 million
and decreased 220 basis points as a percent of sales. On an
adjusted basis, SG&A decreased $35.9
million, primarily due to decreases in store-related costs
resulting from last year's store rationalization program as well as
lower employee-related benefit costs, partially offset by increased
incentive compensation expense. As a percent of sales,
adjusted SG&A decreased 40 basis points to 29.8%.
Operating Income
On a GAAP basis, operating income was $229.4 million compared to $132.8 million last year. As a percent of
sales, operating margin increased 300 basis points to 6.9%. On an
adjusted basis, operating income was $248.1
million, up 8.2% compared to $229.2
million last year. As a percent of sales, adjusted
operating margin increased 70 basis points to 7.5%.
Net Interest Expense and Net Gain on Extinguishment of
Debt
Net interest expense was $99.9
million compared to $103.0
million last year, as we reduced our outstanding debt.
Net gain on extinguishment of debt was $5.4
million, or $0.08 per diluted
share, compared to $1.7
million, or $0.03 per diluted
share, last year resulting from the Company's repurchase of senior
notes and write-off of deferred financing costs for its voluntary
term loan prepayment.
Effective Tax Rate
On a GAAP basis, the effective tax rate was 28.3% compared to
21.0% last year. On an adjusted basis, the effective tax rate
was 29.3% compared to 31.7% last year.
Net Earnings and EPS
On a GAAP basis, net income was $96.7
million compared to $25.0
million last year. Diluted earnings per share were
$1.95 compared to $0.51 last year. On an adjusted basis, net
income was $108.6 million compared to
$87.3 million last year.
Adjusted diluted earnings per share were $2.20, an increase of 22.9% compared to
$1.79 last year. The Company
estimates the impact of the 53rd week was $0.05 per diluted share.
Balance Sheet Highlights
Cash and cash equivalents at the end of fiscal 2017 were
$103.6 million, an increase of
$32.7 million compared to the end of
2016. There were no borrowings outstanding on our revolving
credit facility at the end of 2017.
Inventories decreased $103.6
million, or 10.8%, to $851.9
million at the end of 2017 compared to the end of 2016,
primarily due to lower inventories across all of our retail
brands.
Total debt at the end of 2017 was approximately $1.4 billion. During the fourth quarter,
the Company repurchased and retired $38.8
million face value of its senior notes for a full year total
of $153.8 million. In addition,
during the fourth quarter, the Company made a total of $43.5 million in payments on its term loan,
including a $40.0 million voluntary
prepayment, for a full year total of $53.4
million.
Cash flow from operating activities for fiscal 2017 was
$350.8 million compared to
$242.6 million last year. The
increase was primarily driven by higher net earnings, and expected
lower inventory and rental product purchases, partially offset by
anniversarying last year's income tax refund.
Capital expenditures for fiscal 2017 were $95.0 million compared to $99.7 million last year.
FISCAL 2018 FULL YEAR OUTLOOK
- Earnings per Share: The Company expects to achieve GAAP
diluted EPS in the range of $2.35 to
$2.50.
- Comparable Sales: The Company expects comparable sales
for Men's Wearhouse and Jos. A. Bank to be positive
low-single-digits, Moores comparable sales to be flat-to-up
slightly and K&G comparable sales to be flat-to-down
slightly.
- Effective Tax Rate: The Company expects the effective
tax rate to be approximately 25%.
- Capital Expenditures: The Company expects capital
expenditures of approximately $100
million.
- Depreciation and Amortization: The Company expects
depreciation and amortization of approximately $100 million.
- Real Estate: The Company expects approximately net 10
store closures in 2018 resulting from its continuous review of its
real estate portfolio for opportunities to optimize its fleet as
lease terms expire.
The Company noted that fiscal 2018 is a 52-week year versus the
53-week fiscal 2017.
STORE
INFORMATION
|
|
|
February 3,
2018
|
January 28,
2017
|
|
Number
of Stores
|
Sq.
Ft. (000's)
|
Number
of Stores
|
Sq.
Ft. (000's)
|
|
|
|
|
|
Men's Wearhouse
(a)
|
719
|
4,036.0
|
716
|
4,021.7
|
|
|
|
|
|
Jos. A. Bank
(b)
|
491
|
2,309.9
|
506
|
2,388.9
|
|
|
|
|
|
Men's Wearhouse and
Tux
|
51
|
77.0
|
58
|
86.0
|
|
|
|
|
|
The Tuxedo Shop @
Macy's (c)
|
-
|
-
|
170
|
84.0
|
|
|
|
|
|
Moores
|
126
|
787.5
|
126
|
789.0
|
|
|
|
|
|
K&G
(d)
|
90
|
2,065.0
|
91
|
2,113.5
|
|
|
|
|
|
Total
|
1,477
|
9,275.4
|
1,667
|
9,483.1
|
|
|
(a)
|
Includes one Joseph
Abboud store.
|
(b)
|
Excludes 14 franchise
stores.
|
(c)
|
All Tuxedo Shop @
Macy's stores were closed in the second quarter of 2017.
|
(d)
|
86 and 82 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 14, 2018, management will host a conference
call and webcast to discuss fiscal 2017 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 telephonic replay will be
available through March 28, 2018, by
calling 201-612-7415 and entering the access code of 13676272#, or
a webcast archive will be available free 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 locations 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 2018 outlook for
earnings per share, comparable sales, effective tax rate, capital
expenditures, depreciation and amortization, and net 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; advertising or marketing
activities of competitors; the impact of cybersecurity threats or
data breaches and legal proceedings.
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.
TAILORED BRANDS,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS
|
(Unaudited)
|
|
For the Three
Months Ended February 3, 2018 and January 28, 2017
|
(In thousands, except
per share data)
|
|
|
Three Months
Ended
|
|
|
%
of
|
|
%
of
|
|
2017
|
Sales
|
2016
|
Sales
|
|
|
|
|
|
Net sales:
|
|
|
|
|
Retail clothing product
|
$
686,035
|
79.8%
|
$
639,262
|
80.6%
|
Rental services
|
55,147
|
6.4%
|
53,880
|
6.8%
|
Alteration and other services
|
46,014
|
5.4%
|
45,147
|
5.7%
|
Total retail sales
|
787,196
|
91.5%
|
738,289
|
93.1%
|
Corporate apparel clothing product
|
72,668
|
8.5%
|
54,974
|
6.9%
|
Total net sales
|
859,864
|
100.0%
|
793,263
|
100.0%
|
|
|
|
|
|
Total cost of sales
|
538,991
|
62.7%
|
491,146
|
61.9%
|
|
|
|
|
|
Gross margin
(a):
|
|
|
|
|
Retail
clothing product
|
350,571
|
51.1%
|
341,838
|
53.5%
|
Rental
services
|
45,754
|
83.0%
|
37,059
|
68.8%
|
Alteration
and other services
|
9,860
|
21.4%
|
12,328
|
27.3%
|
Occupancy
costs
|
(103,987)
|
-13.2%
|
(103,625)
|
-14.0%
|
Total retail gross margin
|
302,198
|
38.4%
|
287,600
|
39.0%
|
Corporate apparel clothing product
|
18,675
|
25.7%
|
14,517
|
26.4%
|
Total gross margin
|
320,873
|
37.3%
|
302,117
|
38.1%
|
|
|
|
|
|
Advertising
expense
|
52,607
|
6.1%
|
51,409
|
6.5%
|
Selling, general and
administrative expenses
|
252,764
|
29.4%
|
254,499
|
32.1%
|
Goodwill impairment
charge
|
1,500
|
0.2%
|
-
|
-
|
Asset impairment
charges
|
680
|
0.1%
|
15,065
|
1.9%
|
|
|
|
|
|
Operating income
(loss)
|
13,322
|
1.5%
|
(18,856)
|
-2.4%
|
|
|
|
|
|
Interest expense,
net
|
(25,031)
|
-2.9%
|
(25,231)
|
-3.2%
|
Loss on
extinguishment of debt, net
|
(1,090)
|
-0.1%
|
-
|
-
|
|
|
|
|
|
Loss before income
taxes
|
(12,799)
|
-1.5%
|
(44,087)
|
-5.6%
|
|
|
|
|
|
Benefit for income
taxes
|
(12,300)
|
-1.4%
|
(13,998)
|
-1.8%
|
|
|
|
|
|
Net loss
|
$
(499)
|
-0.1%
|
$
(30,089)
|
-3.8%
|
|
|
|
|
|
Net loss per diluted
common share allocated to common shareholders
|
$
(0.01)
|
|
$
(0.62)
|
|
|
|
|
|
|
Weighted-average
diluted common shares outstanding
|
49,256
|
|
48,718
|
|
|
(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 3, 2018 and January 28, 2017
|
(In thousands, except
per share data)
|
|
|
Year
Ended
|
|
|
%
of
|
|
%
of
|
|
2017
|
Sales
|
2016
|
Sales
|
|
|
|
|
|
Net sales:
|
|
|
|
|
Retail clothing product
|
$
2,439,817
|
73.8%
|
$
2,445,922
|
72.4%
|
Rental services
|
428,355
|
13.0%
|
457,444
|
13.5%
|
Alteration and other services
|
184,849
|
5.6%
|
195,035
|
5.8%
|
Total retail sales
|
3,053,021
|
92.4%
|
3,098,401
|
91.7%
|
Corporate apparel clothing product
|
251,325
|
7.6%
|
280,302
|
8.3%
|
Total net sales
|
3,304,346
|
100.0%
|
3,378,703
|
100.0%
|
|
|
|
|
|
Total cost of sales
|
1,895,580
|
57.4%
|
1,937,235
|
57.3%
|
|
|
|
|
|
Gross margin
(a):
|
|
|
|
|
Retail
clothing product
|
1,355,551
|
55.6%
|
1,352,283
|
55.3%
|
Rental
services
|
358,382
|
83.7%
|
374,680
|
81.9%
|
Alteration
and other services
|
45,009
|
24.3%
|
58,131
|
29.8%
|
Occupancy
costs
|
(415,981)
|
-13.6%
|
(431,298)
|
-13.9%
|
Total retail gross margin
|
1,342,961
|
44.0%
|
1,353,796
|
43.7%
|
Corporate apparel clothing product
|
65,805
|
26.2%
|
87,672
|
31.3%
|
Total gross margin
|
1,408,766
|
42.6%
|
1,441,468
|
42.7%
|
|
|
|
|
|
Advertising
expense
|
173,411
|
5.2%
|
189,956
|
5.6%
|
Selling, general and
administrative expenses
|
1,000,892
|
30.3%
|
1,099,328
|
32.5%
|
Goodwill impairment
charge
|
1,500
|
0.0%
|
-
|
-
|
Asset impairment
charges
|
3,547
|
0.1%
|
19,358
|
0.6%
|
|
|
|
|
|
Operating
income
|
229,416
|
6.9%
|
132,826
|
3.9%
|
|
|
|
|
|
Interest expense,
net
|
(99,907)
|
-3.0%
|
(102,982)
|
-3.0%
|
Gain on
extinguishment of debt, net
|
5,445
|
0.2%
|
1,737
|
0.1%
|
|
|
|
|
|
Earnings before
income taxes
|
134,954
|
4.1%
|
31,581
|
0.9%
|
|
|
|
|
|
Provision for income
taxes
|
38,251
|
1.2%
|
6,625
|
0.2%
|
|
|
|
|
|
Net
earnings
|
$
96,703
|
2.9%
|
$
24,956
|
0.7%
|
|
|
|
|
|
Net earnings per
diluted common share allocated to common shareholders
|
$
1.95
|
|
$
0.51
|
|
|
|
|
|
|
Weighted-average
diluted common shares outstanding
|
49,468
|
|
48,786
|
|
|
(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 3,
|
|
January 28,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
103,607
|
|
$
70,889
|
|
Accounts receivable,
net
|
79,783
|
|
65,714
|
|
Inventories
|
851,931
|
|
955,512
|
|
Other current
assets
|
78,252
|
|
73,602
|
|
|
|
|
|
|
Total
current assets
|
1,113,573
|
|
1,165,717
|
Property and
equipment, net
|
460,674
|
|
484,165
|
Rental product,
net
|
123,730
|
|
152,610
|
Goodwill
|
120,292
|
|
117,026
|
Intangible assets,
net
|
168,987
|
|
171,659
|
Other
assets
|
12,699
|
|
6,695
|
|
|
|
|
|
|
Total
assets
|
$
1,999,955
|
|
$
2,097,872
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
145,106
|
|
$
177,380
|
|
Accrued expenses and
other current liabilities
|
285,537
|
|
267,899
|
|
Income taxes
payable
|
6,121
|
|
1,262
|
|
Current portion of
long-term debt
|
7,000
|
|
13,379
|
|
|
|
|
|
|
Total
current liabilities
|
443,764
|
|
459,920
|
|
|
|
|
|
Long-term debt,
net
|
1,389,808
|
|
1,582,150
|
Deferred taxes and
other liabilities
|
164,191
|
|
163,420
|
|
|
|
|
|
|
Total
liabilities
|
1,997,763
|
|
2,205,490
|
|
|
|
|
|
Shareholders' equity
(deficit):
|
|
|
|
|
Preferred
stock
|
-
|
|
-
|
|
Common
stock
|
492
|
|
487
|
|
Capital in excess of
par
|
491,648
|
|
470,801
|
|
Accumulated
deficit
|
(479,166)
|
|
(538,823)
|
|
Accumulated other
comprehensive loss
|
(10,782)
|
|
(40,083)
|
|
|
|
|
|
|
Total
shareholders' equity (deficit)
|
2,192
|
|
(107,618)
|
|
|
|
|
|
|
Total liabilities and shareholders' equity (deficit)
|
$
1,999,955
|
|
$
2,097,872
|
TAILORED BRANDS,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
For the Twelve
Months Ended February 3, 2018 and January 28, 2017
|
(In
thousands)
|
|
|
|
Twelve Months
Ended
|
|
|
2017
|
|
2016
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net
earnings
|
$
96,703
|
|
$
24,956
|
|
Non-cash adjustments
to net earnings:
|
|
|
|
|
Depreciation and amortization
|
106,493
|
|
115,205
|
|
Rental
product amortization
|
38,021
|
|
42,171
|
|
Goodwill
impairment charge
|
1,500
|
|
-
|
|
Asset
impairment charges
|
3,547
|
|
19,358
|
|
Gain on
extinguishment of debt, net
|
(5,445)
|
|
(1,737)
|
|
Amortization of deferred financing costs and discount on long-term
debt
|
7,066
|
|
7,503
|
|
Loss on
disposition of assets
|
1,237
|
|
6,396
|
|
Other
|
15,811
|
|
(8,288)
|
|
Changes in operating
assets and liabilities
|
85,835
|
|
37,064
|
|
|
|
|
|
|
Net cash
provided by operating activities
|
350,768
|
|
242,628
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Capital
expenditures
|
(94,958)
|
|
(99,694)
|
|
Acquisition of
business, net of cash
|
(457)
|
|
-
|
|
Proceeds from sales
of property and equipment
|
5,480
|
|
617
|
|
|
|
|
|
|
Net cash
used in investing activities
|
(89,935)
|
|
(99,077)
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Payments on term
loan
|
(53,379)
|
|
(42,451)
|
|
Proceeds from
asset-based revolving credit facility
|
276,300
|
|
609,537
|
|
Payments on
asset-based revolving credit facility
|
(276,300)
|
|
(609,537)
|
|
Repurchase and
retirement of senior notes
|
(145,371)
|
|
(21,924)
|
|
Deferred financing
costs
|
(2,580)
|
|
-
|
|
Cash dividends
paid
|
(35,761)
|
|
(35,240)
|
|
Proceeds from
issuance of common stock
|
1,903
|
|
2,189
|
|
Tax payments related
to vested deferred stock units
|
(1,687)
|
|
(1,362)
|
|
Excess tax benefits
from share-based plans
|
-
|
|
11
|
|
|
|
|
|
|
Net cash
used in financing activities
|
(236,875)
|
|
(98,777)
|
|
|
|
|
|
|
Effect of exchange
rate changes
|
8,760
|
|
(3,865)
|
|
|
|
|
|
INCREASE IN
CASH AND CASH EQUIVALENTS
|
32,718
|
|
40,909
|
|
|
|
|
|
|
Balance at beginning
of period
|
70,889
|
|
29,980
|
|
Balance at end of
period
|
$
103,607
|
|
$
70,889
|
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 twelve months of 2017 and 2016. 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 2017, these items consist 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. For fiscal 2016, these costs primarily related
to our store rationalization and profit improvement programs and
integration costs related to Jos. A. Bank. Given the
recurring nature of our debt reduction transactions and to
facilitate comparability, we have recast our non-GAAP presentation
for 2016 to remove adjustments previously made for gains/losses on
extinguishment of debt.
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.
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 3, 2018
|
Consolidated
Results
|
GAAP
Results
|
Divestiture of
MW
Cleaners (1)
|
Total
Adjustments
|
Non-GAAP
Adjusted Results
|
|
|
|
|
|
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 allocated to common shareholders
|
$
(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 one-time
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 - Three Months Ended January 28, 2017
|
Consolidated
Results
|
GAAP
Results
|
Jos. A. Bank
Integration (1)
|
Profit
Improvement(2)
|
Other
(3)
|
Total
Adjustments
|
Non-GAAP
Adjusted Results
|
Retail clothing
product gross margin
|
$
341,838
|
$
-
|
$
-
|
$
-
|
$
-
|
$
341,838
|
Rental services gross
margin
|
37,059
|
-
|
-
|
1,069
|
1,069
|
38,128
|
Alteration and other
services gross margin
|
12,328
|
-
|
(40)
|
-
|
(40)
|
12,288
|
Occupancy
costs
|
(103,625)
|
513
|
(1,093)
|
-
|
(580)
|
(104,205)
|
|
|
|
|
|
|
|
Total retail gross
margin
|
287,600
|
513
|
(1,133)
|
1,069
|
449
|
288,049
|
|
|
|
|
|
|
|
Total gross
margin
|
302,117
|
513
|
(1,133)
|
1,069
|
449
|
302,566
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
254,499
|
(1,228)
|
(10,095)
|
(1,314)
|
(12,637)
|
241,862
|
Asset impairment
charges
|
15,065
|
-
|
-
|
(15,065)
|
(15,065)
|
-
|
|
|
|
|
|
|
|
Operating (loss)
income(4)
|
(18,856)
|
1,741
|
8,962
|
17,448
|
28,151
|
9,295
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes(5)
|
(13,998)
|
|
|
|
7,263
|
(6,735)
|
|
|
|
|
|
|
|
Net (loss)
earnings
|
(30,089)
|
|
|
|
20,888
|
(9,201)
|
|
|
|
|
|
|
|
Net (loss) earnings
per diluted common share allocated to common
shareholders
|
$
(0.62)
|
|
|
|
$
0.43
|
$
(0.19)
|
|
(1) Primarily
consists of severance costs and accelerated
depreciation.
|
|
(2) Primarily
consists of $6.1 million of lease termination costs and $1.5
million of consulting costs.
|
|
(3) Primarily
consists of asset impairment charges related to Macy's and
severance costs.
|
|
(4) Of the $28.2
million in total adjustments to operating (loss) income, $22.5
million relates to the retail segment and $5.7 million relates to
shared services.
|
|
(5) 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 - Full Year Ended February 3, 2018
|
Consolidated
Results
|
GAAP
Results
|
Macy's
Termination (1)
|
Divestiture of
MW Cleaners(2)
|
Total
Adjustments
|
Non-GAAP
Adjusted
Results
|
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
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
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 allocated to common shareholders
|
$
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 one-time
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 - Full Year Ended January 28, 2017
(Recasted)
|
Consolidated
Results
|
GAAP
Results
|
Jos. A. Bank
Integration (1)
|
Profit
Improvement(2)
|
Other(3)
|
Total
Adjustments
|
Non-GAAP
Adjusted Results
|
Retail clothing
product gross margin
|
$
1,352,283
|
$
-
|
$
-
|
$
(23)
|
$
(23)
|
$
1,352,260
|
Rental services gross
margin
|
374,680
|
-
|
-
|
1,069
|
1,069
|
375,749
|
Alteration and other
services gross margin
|
58,131
|
-
|
255
|
-
|
255
|
58,386
|
Occupancy
costs
|
(431,298)
|
2,126
|
(4,109)
|
(564)
|
(2,547)
|
(433,845)
|
|
|
|
|
|
|
|
Total retail gross
margin
|
1,353,796
|
2,126
|
(3,854)
|
482
|
(1,246)
|
1,352,550
|
|
|
|
|
|
|
|
Total gross
margin
|
1,441,468
|
2,126
|
(3,854)
|
482
|
(1,246)
|
1,440,222
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
1,099,328
|
(6,656)
|
(69,848)
|
(1,754)
|
(78,258)
|
1,021,070
|
Asset impairment
charges
|
19,358
|
-
|
(2,093)
|
(17,265)
|
(19,358)
|
-
|
|
|
|
|
|
|
|
Operating
income(4)
|
132,826
|
8,782
|
68,087
|
19,501
|
96,370
|
229,196
|
|
|
|
|
|
|
|
Gain on
extinguishment of debt, net(5)
|
1,737
|
-
|
-
|
-
|
-
|
1,737
|
|
|
|
|
|
|
|
Provision for income
taxes(6)
|
6,625
|
|
|
|
33,987
|
40,612
|
|
|
|
|
|
|
|
Net
earnings
|
24,956
|
|
|
|
62,383
|
87,339
|
|
|
|
|
|
|
|
Net earnings per
diluted common share allocated to common shareholders
|
$
0.51
|
|
|
|
$
1.28
|
$
1.79
|
|
(1) Primarily
consisting of severance costs and accelerated
depreciation.
|
|
(2) Primarily
consists of $43.1 million of lease termination costs, $15.1 million
of consulting costs and $6.1 million of severance costs.
|
|
(3) Primarily
consists of asset impairment charges related to Macy's and
severance costs.
|
|
(4) Of the $96.4
million in total adjustments to operating income, $69.9 million
relates to the retail segment and $26.5 million relates to shared
services.
|
|
(5) Recast to remove
adjustments previously made for gains/losses on extinguishment of
debt, which changes non-GAAP diluted EPS to $1.79 from
$1.76.
|
|
(6) 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.
|
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SOURCE Tailored Brands, Inc.