Tailored Brands, citing "substantial doubt about our ability to continue as a going concern," said a bankruptcy filing is "likely" and could come as soon as its third quarter, which begins Sunday, according to a filing with the Securities and Exchange Commission.
The company, which runs Men's Wearhouse, Jos. A. Bank, Moores Clothing for Men and K&G, also said in the Monday filing it hired advisers "to evaluate several alternatives, including seeking a restructuring, amendment or refinancing" of its debt through private restructuring or bankruptcy.
Unless lenders grant a waiver or otherwise agree to new terms, the company warned it will default on all its debt. "[W]e do not have sufficient liquidity to repay the amounts due under our indebtedness, consisting of our term loan, Senior Notes and ABL Facility," the company wrote, noting that it's unlikely to make a $6.1 million interest payment to 7% Senior Notes that it skipped July 1.
Already struggling retailers like Tailored Brands have been especially hit hard by the challenges of closed stores, economic uncertainty and lower demand that were brought on by the COVID-19 pandemic.
The situation has been especially tough for apparel retailers, and Tailored Brands' emphasis on garb for professional workers makes that all the worse, considering that working from home, without need for suits, has become at least a temporary norm. That has also challenged Brooks Brothers, which filed under Chapter 11 earlier this month.
Even before the disease outbreak, the retailer made it onto Retail Dive's list of companies that could go bankrupt this year. Tailored Brands was already trimming operations and grabbing cash when it sold off its Joseph Abboud trademarks in January to brand management firm WHP Global for $115 million. During the pandemic, the company slashed costs further, identifying up to 500 stores for potential closure and planning to cut 20% of its corporate positions by the end of its second quarter.
The possibility of bankruptcy emerged in June as store comps plummeted. In Monday's filing, the company said that net sales fell to $286.7 million from $724.7 million a year ago in the quarter ended May 2 and that it swung to a net loss of $269.9 million from net income of $7.1 million a year ago.
Tailored Brands on Monday cited its finances and liquidity situation in raising doubt about its ability to make interest payments or rent over the next 12 months, leading to "substantial doubt about our ability to continue as a going concern within one year after these condensed consolidated financial statements are issued."
All of these troubles have devastated the company's stock price, to the point where it's also grappling with a July 22 delisting notice from the New York Stock Exchange, the company said last week. In its Monday filing, Tailored Brands said that "No assurance can be given that we will be able to regain compliance with these requirements or maintain compliance with the other continued listing requirements."