What happened
Shares of Tailored Brands (TLRD), the owner of the Men's Wearhouse and JoS. A. Bank chains, fell more than 10% on Thursday despite the men's fashion retailer reporting stronger-than-expected quarterly results. Investors appeared more focused on the company's guidance for future results, which was well below analyst forecasts.
So what
After markets closed on Wednesday, Tailored Brands reported fiscal third-quarter adjusted earnings of $0.53 per share on revenue of $729.5 million, beating analyst expectations for per-share earnings of $0.42 on sales of $716 million. It's worth noting that analysts had been anticipating $0.88 earnings per share for the third quarter as recently as September, before the company guided to between $0.40 and $0.45 per share.
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The company is acting again to reduce future expectations, saying it's looking for a loss of between $0.55 and $0.60 per share in the fourth quarter, worse than analyst predictions of a $0.36-per-share loss. For the full fiscal 2019, Tailored Brands expects to earn between $0.97 and $1.02 per share, short of the $1.10-per-share consensus estimate.
Tailored Brands has struggled to adjust to trends including a move toward a casual workplace and online sales, as well as strong-dollar issues. CEO Dinesh Lathi is pushing to adjust the product mix with more of a focus on casual clothing, as well as build Tailored Brands' web presence. According to Lathi, "Our third quarter performance reflects continued progress in each of our transformational strategies."
Now what
Tailored Brands is operating in a tough environment for clothing retailers, and with shares now down 77% year to date and off nearly 90% over the past five years, it appears many investors are concerned that the turnaround effort is too little too late.
The company still has more restructuring actions in mind. During the post-earnings call with investors, CFO Jack Calandra said he sees "big opportunity for profit improvement and cost reduction" in the store review currently underway, implying Tailored Brands might be readying a significant round of store closures.
Further restructuring could provide a boost, but to be a long-term success, Tailored Brands needs to show it still is relevant to customers in a rapidly evolving retail environment. That's going to take some time to play out.
