Tailored Brands records poor Q4, full-year sales on soft traffic
Tailored Brands on Wednesday released its fourth quarter and full year 2016 financial results. The company was negatively impacted by soft traffic, which according to CEO Doug Ewert, "drove lower than anticipated fourth quarter and full year net sales and gross margins.”
Total company net sales fell 3.9% to $793.3 million in the fourth quarter, with retail segment net sales decreasing 3.9% to $738.3 million due to store closures and corporate apparel net sales falling 4.8% to $55.0 million due to currency fluctuations.
Net sales and comparable sales fell for all brands in the fourth quarter, except for Jos. A. Bank that posted a 3.6% increase in comparable sales. Men’s Wearhouse comparable sales fell 2.2% compared to an increase of 4.3% in the previous year and K&G comparable sales decreased 5.2% versus an increase of 1.9% in the prior fourth quarter.
Full year company sales decreased 3.4% to $3,378.7 million, retail segment net sales fell 4.7% to $3,098.4 million and corporate apparel segment sales increased 15.0% to $280.3 million. Men’s Wearhouse and K&G both posted comparable sales decreases after reporting increases of 4.9% and 5.0%, respectively, in the previous year.
The company’s tuxedo business at Macy’s did not perform well, and Ewert noted that its current deal with Macy’s would result in adjusted operating losses growing from $14 million in 2016 to $19 million or $20 million in 2017.
“Given current and forecasted results, and the likelihood that a restructured agreement will involve a different operating model, we recorded an asset impairment charge of $14 million in the fourth quarter related to fixed assets in the Macy's stores," said Ewert.
Adjusted diluted earnings per share for the year was $1.76, which reached the company’s guidance of $1.70 to $1.85, and fourth quarter adjusted diluted loss per share was $0.19 compared to a loss of $0.30 in the previous year.
"Fiscal 2016 was a year of significant strategic progress for Tailored Brands as we executed on our plans to right-size our store base, optimize our cost structure, and return Jos. A. Bank to a path of sustained profitable growth,” said Ewert. “I am pleased with our delivery on our operational initiatives that we established for 2016. We closed 233 stores under our store rationalization program, we achieved over $60 million in cost savings through our profit improvement plan, and we stabilized and began to turn around Jos. A. Bank.”
Tailored Brands expects its diluted EPS for fiscal 2017 to range from $1.45 to $1.75, which assumes a comparable sales decline for Men’s Wearhouse, Moores, K&G, and the corporate apparel business and a comparable sales increase from Jos. A. Bank.
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