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Key Takeaways From Tailored Brands' 2nd-Quarter Earnings

Tailored Brands Inc. (NYSE:TLRD) released its second-quarter earnings after the market closed on Sept. 11. The company's earnings surpassed estimates due to strong top-line sales along with lower marketing expenditures and incentive compensation costs.

Key metrics

The men's clothing retailer, which owns the Men's Wearhouse and Joseph A. Bank brands, among others, reported adjusted earnings of 82 cents per share, down 34% from the prior-year quarter. Revenue was $789.9 million, reflecting a decline of 4% year over year. Analysts had anticipated earnings of 74 cents per share on $789 million in revenue.

At quarter-end, Tailored Brands' cash and cash equivalents were $19.5 million and outstanding borrowings was $45 million.

Same-store sales

Comparable store sales fell 3.6% in the reported quarter, down from a growth of 1.7% a year ago.

Comps at Men's Wearhouse dropped 4.3%. Comparable sales of clothing declined on the back of a decrease in transactions, average unit retail and units per transaction. Comparable rental services revenue tumbled 3.1% as the trend to purchase suits was on the rise. On the other hand, comps dipped 3.3% at Jos. A. Bank, 1.3% at K&G and 2.5% at Moores.

The specialty apparel retailer is focusing on custom-made offerings and enhancing the shopping experience across all channels in order to adapt to changing consumer trends. In a statement, CEO Dinesh Lathi said:

"Our Q2 comps and our outlook for Q3 reflect the facts that we are in the midst of a transformation, that transformations take time and that we are executing our transformation in a challenging retail environment. Despite these challenges, we are confident in and excited about our business because of the way the customer is responding to our initiatives."

Disposal of corporate apparel division

Tailored Brands sold its corporate apparel division for $62 million in a bid to concentrate on its core business lines.

Financial forecast

For the third quarter, Tailored Brands projects diluted earnings per share to be 40 cents to 45 cents, barring the impact of share repurchases. Same-store sales are expected to be down 3% to 5% for Men's Wearhouse, 2% to 4% for Joseph A. Bank, 2% to 4% for K&G and 4% to 6% for Moores.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.