Tailored Brands, Inc. (NYSE:TLRD) has announced the closure of around 250 stores and all of its outlets to give a “face-lift” to its operations. The decision was announced yesterday after the suit maker posted $1 billion in net loss for the fiscal year ended January 30, 2016.
The company has divided the non-profitable stores into three categories, to close them in order of priority. In the first place, Tailored Brands intends to close 80-90 Jos. A. Bank's full-line stores having limited or no potential to make a comeback on the right track to start generating significant revenue in the future.
The company believes that its outlets not only failed to meet the revenue targets, but they were also unsuccessful in attracting more customers with unique marketing strategies to differentiate from the core business. So, in the second phase, the management plans to close all 49 Jos. A. Bank stores and nine Men's Warehouse outlets.
In the final stage, the retailer will close 100–110 Men's Warehouse Tux stores. The company labeled the closings as a result of its planned strategy to convert tuxedo rentals to full-line stores; it said that this initiative also reflects the company's partnership with Macy's “Tuxedo Shop @ Macy's.”
It appears that Tailored Brands is not just closing its non-profitable stores and downsizing its business; it also has plans to open stores in 2016-2017. In relation to Tuxedo Shop @ Macy's, the company would open 166 stores in 2016 and 122 stores by the end of 2017.
Tailored Brands CEO, Doug Ewert, said in a statement that his company had initiated a “profit improvement plan” to reduce expenditures by approximately $50 million by the end of current year.
Mr. Ewert said: “We estimate the cash costs to complete the store rationalization and profit improvement programs to be between $45 and $60 million for 2016. This is in addition to the non-cash charges recorded in 2015.”
The company announced financial results for the fiscal year ended January 30, 2016, where it posted a net loss of approximately $1 billion, compared to a net loss of $0.4 million last year. It recently made some changes in its brands promotion strategy; as a result of this change, it has called off Jos. A. Bank’s famous marketing bait of “buy-one-get-three-free” suits. The suit maker quit the “buy-one-get-three-free” marketing strategy by calling it “unsustainable”; however, this decision hit the sales quite negatively, as it was quite popular among the customers.
On March 10, Tailored Brands added a new member, Dinesh Lathi, to its board of directors. Mr. Lathi is a veteran in the financial world with more than a decade’s experience; prior to joining Tailored Brands, he worked with companies like eBay Inc. and One Kings Lane. The new role would be a test for the new board member, who has to help the company improve its financial standings.
The menswear retailer is certainly taking initiatives to control the damage caused by the $1 billion loss; however, it will take some time to turn the financial indicators green again. Tailored Brands' competitors would certainly try to benefit from the situation by launching customer-friendly marketing campaigns to attract new customers.
By: Ghous Zaman.
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Research Unit, Flagship Records.
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