Fortunes have turned a little threadbare for Tailored Brands (TLRD), the owner of Men's Wearhouse and JoS. A. Bank. Bloomberg reports the retailer is considering a bankruptcy filing among other options after countrywide lockdowns diminished the need for men's suits.
Tailored Brands has suffered for years following the ill-fated merger of the two brands in 2016, which larded the retailer's balance sheet with debt just as casual attire in the office and athleisure wear caught on.
A brand unraveled
Tailored Brands ended fiscal 2019 with $1.1 billion in long-term debt on the balance sheet and almost $750 million in operating lease obligations. Bloomberg says the menswear retailer is looking at a Chapter 11 bankruptcy filing that would allow it to rework its debts while also closing underperforming stores.
Men's Wearhouse acquired JoS. A. Bank in a contentious $1.8 billion deal four years ago, which ended up with Tailored Brands writing down the entire value of the acquisition plus taking a charge for almost the full value of the JoS. A. Bank tradename, which meant the entire business essentially held no value for the retailer.
But both businesses were done in by casual Fridays at the office being joined by casual Monday through Thursday too. Last year, sales at Tailored Brands fell 4% to under $2.9 billion, and it suspended its dividend last September. The situation was exacerbated by the coronavirus pandemic and the stay-at-home orders that followed.
Even as businesses are reopening, companies are continuing to allow employees to work from home, and the changed office dynamic could doom Tailored Brands for good.