Image source: Tailored Brands' Men's Wearhouse.
Friday was a bad day for the stock market. Major market benchmarks fell substantially in the wake of large financial challenges in the retail industry, as investors fear that the brick-and-mortar department-store sector will see future demand dry up in favor of online retail. Yet even the Dow's 185-point drop paled in comparison to how badly some companies did, and among the worst-performing stocks on the day were EXCO Resources (NYSE: XCO), ConforMIS (CFMS), and Tailored Brands (TLRD).
EXCO Resources plummeted 59% after the oil and gas exploration and production company announced this morning that it had formed a special committee to consider strategic alternatives. The new committee will "assess the Company's operating and financial situation." Among the specific possibilities that EXCO presented were trading existing debt for newly issued shares of common stock, renegotiating outstanding debt, or various types of corporate restructuring actions. The primary concern among current shareholders is that their ownership interest will be diluted substantially by these actions. EXCO gave no guidance about the timing of the process, but investors will have to remain vigilant until it's resolved.
ConforMIS also lost about half of its value Friday following the Thursday-night release of its quarterly report. The producer of joint replacements reduced its sales guidance for the full year by 8% to 10% after reporting a wider loss in its fiscal second quarter than it did in the year-ago period. As if that weren't enough, ConforMIS also said that it would seek to replace current CEO Philipp Lang, intending to conduct an executive search to name a successor. Analyst downgrades of the stock followed, and even though most investors still expect sizable sales growth from the company in the future, the pace of that growth might prove insufficient to sustain its current share price.
Finally, Tailored Brands dropped 8%. The parent company of men's clothing giants Men's Wearhouse and Jos. A. Bank became the latest target of negative commentary from the founder of Citron Research. Andrew Left said that he had sold shares of Tailored Brands short, raising new concerns in an industry that has already taken a lot of hits this week. With the merger of the two menswear companies not having led to the immediate synergies that some had hoped, Tailored Brands has taken drastic measures, and moves like eliminating traditional Jos. A. Bank promotions have thus far backfired in sending comparable-store sales for the unit plunging. Unless the company can find new ways to win back defecting customers and attract a new clientele, Tailored Brands could have trouble recovering from its recent weakness.
