Tailored Brands (NYSE: TLRD) shares are trading higher after the company announced it has sold its corporate apparel business for $62 million. The company has also raised second-quarter EPS guidance above analyst estimates.
Tailored Brands closed the sale of its corporate apparel business to a group led by the existing corporate apparel U.K. executive team for total cash consideration of $62 million. The company reports of the $62 million in total consideration, approximately $56 million was received upon closing and approximately $6 million is deferred to the first quarter of fiscal 2020.
"We are pleased to have reached an agreement to sell our corporate apparel business. The consummation of this transaction supports our previously stated strategy to focus on our core retail business in the U.S. and Canada while reducing debt," said Tailored Brands CEO Dinesh Lathi.
Tailored Brands will use cash proceeds from the transaction to reinvest in its business in accordance with the provisions of its term loan. The transaction represents a multiple of 4.3 times fiscal 2018 Adjusted EBITDA for the corporate apparel business, which had net sales of $235.4 million in fiscal 2018.
Tailored Brands shares are trading up 8.89% at $5.51 in Monday’s pre-market session. The stock has a 52-week high of $28.78 and a 52-week low of $4.23.
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