Tailored Brands, owner of Men’s Wearhouse and Jos. A. Bank, last week reported that second quarter overall net sales fell 6.5% to $850.8 million as retail sales fell 4.5% to $793 million and overall same-store sales rose 0.1%, mostly due to store closures, according to a company press release.
Men’s Wearhouse net sales fell 5% to $458.8 million as same-store sales fell 2.2%, compared to a 2.9% rise in the year-ago period. Jos. A Bank net sales fell 6.3% to $174.3 million as same-store sales grew 7.8% compared to a 16.3% decline a year ago. Same-store rental services revenue fell 2.1%.
The company reiterated its guidance for a same-store sales decline for Men's Wearhouse in the low-single digits and an increase in that measure at Jos. A. Bank in mid-single digits.
Tailored Brands has been battered in recent quarters, making its second quarter showing something of a comeback. Its total sales numbers look bleak, but they’re a result of store closures that are essentially a necessary evil. And Jos. A. Bank, once something of an albatross for the company, is rising to become a savior.
Still, posting improvements after last year’s gutter numbers isn’t that much of an achievement, according to GlobalData Retail analyst Anthony Riva. "This is not to impugn the work done to revitalize the Jos. A. Bank brand, including the efforts to scale back on discounting and to attract younger shoppers," Riva said in a note emailed to Retail Dive. "We believe these are showing some early signs of progress, although there is much more work to be done before Jos. A. Bank can declare itself a brand to be reckoned with in the menswear space."
There’s another downside within Jos. A. Bank’s improvements: the discount brand is eating into its sibling’s sales. "In addition to an increasing overlap between Jos and Men's which has cannibalized sales, we also believe that the proposition remains lackluster," Riva warned. "Our customer data suggests a lack of enthusiasm for Men's Wearhouse, with many shoppers buying on replacement cycles or out of necessity. The brand needs to work much harder if it is to draw in more customers in an increasingly competitive environment. This is especially so for the casual wear offer."
The company is working down its debt, so the bottom line is getting healthier, which bodes well for continued progress. But the company still needs to get a grip on its operations, he also said. "Some of this is down to improved gross margins — a consequence of less discounting," he noted. "However, the gains are also due to negative occupancy costs. Without these, the company would have made a loss of $44.9 million, an indication that it is still some way off being operationally sound."
The company's "colossal $1.5 billion" debt load remains a critical problem, Riva said, adding that while the company is getting its head above water, it’s not swimming yet. Jos. A. Bank has demonstrated that it can turn around its once dodgy reputation for poor quality and bottom-barrel pricing. But despite those improvements, the brand (which Men's Wearhouse founder and ex-CEO George Zimmerman fought to keep from acquiring) has yet to really prove itself.
"Moreover, total liabilities still exceed assets. As we have noted before, this is an uncomfortable position and one that gives Tailored Brands much less room for maneuver than it might like," Riva said. "Fortunately, the company has a reasonable cash position and a more than adequate debt facility. Along with its efforts to remain in the black, this is sufficient to ensure survival. But surviving is not thriving, nor is it enough to demonstrate a sound return on the expense of acquiring Jos. A Bank."