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Tailored Brands Stock Drops ~20% on Sales Miss, Tepid Outlook

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Mar. 14 2019, Published 9:58 a.m. ET

Key takeaways

Tailored Brands (TLRD) posted weak results for its fiscal 2018 fourth quarter (ended February 2) today, prompting its stock to fall more than 20% before markets opened. Its sales fell 10.7% YoY (year-over-year) and missed analysts’ estimate due to lower comps at Men’s Wearhouse and JoS. A. Bank.

Sales deleverage weighed on Tailored Brands’ profit margins and, in turn, its earnings. Although the company reported a loss during the fourth quarter, it beat analysts’ expectation thanks to its lower effective tax rate.

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Tailored Brands’ weak comps guidance for fiscal 2019 spooked investors. Men’s Wearhouse and JoS. A. Bank comps are expected to fall 3%–5% in fiscal 2019, and Moores comps and corporate apparel net sales are projected to fall 5%–7% and 10%–12%, respectively. Tailored Brands’ weak sales, margin pressure, and higher adjusted effective tax rate could hurt its bottom line in fiscal 2019.

Key financials

In fiscal 2018’s fourth quarter, Tailored Brands’ adjusted net sales fell 10.7% YoY to $0.77 billion, missing analysts’ estimate of $0.80 billion. Its retail net sales fell 9.5%, reflecting a 1.5% decline in comps and lower alteration and other service revenue. The company’s corporate apparel net sales fell 23.3%, reflecting weakness in the United Kingdom and United States. Tailored Brands’ adjusted EPS of -$0.28 fell short of analysts’ estimate of -$0.29.

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