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Why Shares of Tailored Brands Jumped Today

By Timothy Green - Oct 24, 2017 at 11:48AM

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Sales have slumped at The Men's Wearhouse this year, but positive comments from an executive suggest that a turnaround is in the cards.

What happened

Shares of menswear retailer Tailored Brands (TLRD) jumped on Tuesday following positive comments from an executive in MR magazine. The company has suffered slumping comparable sales through the first half of 2017, with the core Men's Wearhouse brand particularly weak. The executive's comments suggest that business has started to pick up in the past month. As of 12:43 p.m. EDT, Tailored Brands stock was up about 14%.

So what

Comparable sales declined by 1.1% in the first half of 2017 for Tailored Brands. The Men's Wearhouse brand suffered a 2.6% decline, while Jos. A. Bank saw comps jump 5.7%. The acquisition of Jos. A. Bank has been an unmitigated disaster, with the company's attempts to end the brand's highly promotional strategy leading to an exodus of customers. That comparable sales increase is less impressive given the steep declines suffered since the brand was acquired.

Four men wearing tuxedos.

Image source: Tailored Brands.

Scott Norris, brand president of The Men's Wearhouse, has some good news for investors. Talking to MR magazine, Norris said that the business has turned positive over the past five to six weeks. This return to growth is despite warmer-than-usual weather in September and October in some parts of the country.

Norris talked up the core advantage that The Men's Wearhouse has over the competition: "We carry a lot of fitted suits, but our real advantage is a tailor in every store and a wardrobe consultant who can dress the customer from head to toe. Guys can buy suit separates anywhere, but few places provide a great experience buying a perfect-fitting suit at our prices."

Now what

Shares of Tailored Brands are still down about 75% since peaking in mid-2015. A turnaround for The Men's Wearhouse brand is certainly a positive, but Jos. A. Bank's depressed sales continue to be a drag on the company's bottom line.

Tailored Brands is expected to report its third-quarter results sometime in December. Investors will need to wait until then to see if these positive comments translate into improved results.

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