Image source: Tailored Brands.

What happened

Shares of menswear retailer Tailored Brands (NYSE:TLRD) surged on Thursday following the company's second-quarter report. Tailored Brands beat analyst estimates on all fronts, driven in part by comparable sales growth at its Men's Wearhouse brand. At 11 a.m. EDT, the stock was up about 15%.

So what

Tailored Brands reported second-quarter revenue of $909.7 million, down 1.1% year over year and about $23 million higher than the average analyst estimate. While retail comparable sales declined by 3.3%, the Men's Wearhouse brand, which accounts for more than half of total revenue, posted a 2.9% increase in comparable sales. This partially offset the continued sales decline occurring at the company's Jos. A. Bank brand, which reported a 16.3% drop in comparable sales.

Non-GAAP earnings per share came in at $0.99, down from $1.07 during the prior-year period but $0.06 higher than analysts were expecting. On a GAAP basis, EPS was $0.51, with the difference primarily due to lease termination costs and consulting fees. With a stronger-than-expected quarter under its belt, Tailored Brands reiterated its full-year guidance, calling for non-GAAP EPS of between $1.55 and $1.85. The company noted that its outlook is based on Jos. A. Bank posting positive comparable sales during the fourth quarter.

CEO Doug Ewert expressed his long-term optimism:

We remain positive on the long-term outlook for Tailored Brands and our positioning for sustainable growth and profitability. In addition to rightsizing our Jos. A. Bank business, we are advancing our initiatives to drive top-line growth and profitability, including introducing innovative product offerings such as custom clothing and strengthening our omni-channel capabilities to better serve our customers.

Now what

The merger between Men's Wearhouse and Jos. A. Bank that created Tailored Brands has been an unmitigated disaster, and the company continued its struggle to right the ship during the second quarter. The Men's Wearhouse brand performed well, but sales at Jos. A. Bank are still falling sharply. It remains to be seen whether growth will return during the fourth quarter.

Despite a drop in revenue and profits, investors and analysts were expecting worse. While the double-digit rise in the stock price is a nice reward for those betting on a turnaround, the company still has a lot of work to do.

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