Tailored Brands Misses Interest Payment
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The clock is ticking for Tailored Brands Inc.
The men’s wear retailer missed a roughly $6.1 million interest payment on Wednesday, starting a 30-day grace period on the debt — 7 percent senior bonds due 2022 and tied the firm’s The Men’s Wearhouse Inc. subsidiary.
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“Men’s Wearhouse has elected to enter into the 30-day grace period with respect to the interest payment,” Tailored Brands said in a filing with the Securities and Exchange Commission. “During the grace period, Men’s Wearhouse may elect to pay the interest payment and thereby remain in compliance with the indenture.”
But if the company does not make the interest payment, it would throw its loan facility and asset-based revolving credit facilities into default. Tailored Brands has stayed current on those credit facilities, making its scheduled payments on Wednesday even while skipping the bond payment.
While the company did not immediately return a WWD query to expand on the regulatory filing, the missed interest payment is a sign of extreme stress, although not unique given the shock that has rippled through retail with the coronavirus shutdown.
Both J.C. Penney Co. Inc. and Neiman Marcus Group skipped interest payments and used their grace periods to explore alternative paths forward, but ultimately filed for bankruptcy protection from creditors.
And Tailored Brands, which is also parent to Jos. A. Bank, K&G and Moores, is in a particularly tough spot, selling suits in a world that’s only grown more casual as many people work from home and dress-up events such as weddings have been postponed or downsized in the interest of social distancing.
It was a slow restart for the company as restriction on retail eased.
Tailored Brands started reopening stores on May 7 and had 634 doors open by June 5. But in the final week of that period, comparable sales for stores open at least a week were down 65 percent at Men’s Wearhouse and 78 percent at Jos. A. Bank.
As of the end of the first quarter on May 2, the company had cash and cash equivalents of $244.2 million, an increase of $231.2 million from a year earlier due to a $310 million draw down on the company’s asset-backed loan.
Total debt, however, stood at $1.4 billion.
Shares of the company fell 4 percent to 90 cents a share in after-hours trading.
