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Why Shares of Tailored Brands Fell on Wednesday

Lou Whiteman, The Motley Fool

What happened

Shares of menswear retailer Tailored Brands (NYSE: TLRD) were out of fashion on Wednesday, falling 10.4% despite no company-specific news. The catalyst appeared to be fresh data suggesting that consumer preference is shifting away from mall-based retailers like Tailored Brands and toward online sales and big-box retailers, which adds to the fears that Tailored Brands is becoming unraveled.

So what

Shares of Tailored Brands, formed by the 2014 merger of Jos A. Bank and Men's Wearhouse, on Wednesday moved in the opposite direction of Target, which was up big after reporting solid first-quarter results. Target reported traffic growth of 4.3% year over year, and during its conference call with investors, it highlighted its efforts to target men through its Goodfellow & Co. brand.

A man in a suit.

Image source: Getty Images.

It doesn't take much to send shares of Tailored Brands falling these days. The company's stock has fallen more than 85% over the past five years and has lost nearly 50% since the start of 2019.

Management doesn't expect a recovery anytime soon. Tailored Brands warned back in March that it expects fiscal first-quarter comparable sales to fall by between 3% and 5% and expects adjusted earnings of between $0.10 and $0.15 per share. Analysts had been expecting earnings of $0.51 per share.

Now what

Tailored Brands is the victim of a number of converging trends that threaten to capsize the men's suit market. The company has struggled to adapt to relaxed business dress codes, and consumers looking for suits are increasingly shopping online and elsewhere away from the mall locations where many of Tailored Brands locations are based.

Until the company can come up with a credible plan to reverse those trends and give the market an indication that the plan is working, expect more jittery days for Tailored Brands' shares.

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.