Tailored Brands Inc. jumped the most in more than two years after announcing plans to close hundreds of stores, part of a cost-cutting push for the owner of Men’s Wearhouse and Jos. A. Bank.
The Houston-based company plans to shutter about 250 locations this fiscal year, including all of its outlet stores, according to a statement Wednesday. Tailored Brands also is reducing expenses by about $50 million by slimming down its operations and overhead.
Investors applauded the move, which followed an unprofitable holiday quarter and a slide in sales. The stock rose as much as 16 percent to $18.91 in New York. The shares –traded under the Men’s Wearhouse name until February — were up 11 percent this year through Wednesday’s close.
Tailored Brands, the largest retailer specializing in men’s suits, is scrambling to align its two major divisions. While sales have been growing at Men’s Wearhouse, Jos. A. Bank faces a customer exodus. Last year, management abandoned Jos. A. Bank’s “buy one suit, get three free”-style promotions, irking longtime shoppers. That sent the chain into free fall. Jos. A Bank’s same-store sales plunged 32 percent last quarter, compared with a 4.3 percent gain for Men’s Wearhouse.
Tailored Brands, which took that name when it adopted a holding-company structure earlier this year, said streamlining its stores will weigh on its profit forecast for the year. It now expects earnings of $1.55 to $1.85 a share, excluding some items, down from as much as $2 a share previously.
The retailer is “tailoring down to a suitable size,” Cowen & Co. analyst John Kernan said in a report on Thursday.
Tailored Brands posted a loss of 30 cents a share, excluding some items, in the quarter ended Jan. 30. Still, that wasn’t as bad a result as analysts expected. They had projected a loss 37 cents on average, according to data compiled by Bloomberg. Sales fell to $825.7 million, missing the $838.6 million estimated by analysts.
As part of the store-closing plan, the company will shut 80 to 90 standard Jos. A. Bank stores, as well as 58 outlet stores. Between 100 and 110 MW Tux stores also will be eliminated, part of a shift of tuxedo rentals to its full-line stores and partner Macy’s Inc.