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Why Tailored Brands Stock Dropped Today

Timothy Green, The Motley Fool

What happened

Shares of menswear retailer Tailored Brands (NYSE: TLRD) slumped on Monday, down about 9.6% at 3:05 p.m. EDT. There were no new developments pushing down the stock. Instead, pessimism seems to be building after a disappointing earnings report and leadership shuffle last month.

So what

Tailored Brands' core brands, Men's Wearhouse and Jos. A. Bank, both suffered comparable sales declines during the fourth quarter of 2018. Men's Wearhouse saw comps slump by 3.2%, while Jos. A. Bank registered a 0.5% decline.

A declining stock chart.

Image source: Getty Images.

Dinesh Lathi, now the President and CEO of Tailored Brands after a post-earnings shake-up, said in the earnings press release that those weak trends had continued into the first quarter of 2019. The company blamed the macroeconomic environment as well as slow execution on its growth initiatives.

Tailored Brands expects its results to be much worse in the first quarter. The company sees comparable sales at both Men's Wearhouse and Jos. A. Bank down by 3% to 5%. Adjusted earnings per share is expected to be $0.10 to $0.15, far below the average analyst estimate of $0.51.

Now what

Tailored Brands is now valued at roughly $375 million. The stock has shed nearly 90% of its value since peaking in 2015, right before problems with the Jos. A. Bank acquisition came to light.

The current retail environment is not treating Tailored Brands well. On top of that, men's suits aren't as popular as they once were. The market's increasing pessimism on the stock looks like it's warranted.

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Timothy Green 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.