Shares of Tailored Brands, Inc. (NYSE:TLRD) were taking a hit today after the men's suiting specialist said in its earnings report that gross margin fell and comparable sales growth was slower than expected at Jos. A. Bank. As a result, the stock was trading down 21.1% as of 1:17 p.m EDT.
The company, which also owns the Men's Wearhouse chain, said overall comparable sales were up 2.1%, with comps up 3.2% at Men's Wearhouse and 1.2% at Jos. A. Bank. Total revenue increased 4.5% to $818 million, which beat estimates of $794 million.
However, adjusted gross margin was down 40 basis points to 42.2% due to increased promotional activities, a sign the company is still having trouble moving away from discounting. However, selling, general, and administrative expenses fell in the quarter, and the company's tax rate plunged, leading to an 85% jump in adjusted earnings per share to $0.50, which topped expectations of $0.48.
CEO Doug Ewert said in a statement: "Our improved first quarter results reflect continued execution on our growth strategies. ... Our brand campaigns are resonating with new and existing customers, helping drive positive 2.1% retail segment comps through increased transactions and new customer acquisition."
Considering that the company beat analyst estimates on top and bottom lines, the sell-off was a bit surprising. However, comparable sales at Jos. A. Bank were lower than expected, and the market still seems to have doubts about the long-term health of the business.
Tailored Brands maintained its full-year guidance, calling for adjusted earnings per share of $2.35 to $2.50, and comparable-sales growth in the low single digits at Men's Wearhouse and Jos. A. Bank. But the midpoint of that guidance was below the analyst consensus of $2.49.
Mall-based apparel retailers like Tailored Brands have struggled in recent years, but the company seems like it is on the right track. The stock is now trading at a price-to-earnings ratio of just 11 based on this year's expected earnings, which could present a buying opportunity.