How Tailored Brands Inc. Plans to Implement Operational and Organizational Changes in 2020
One Investment Group / August 7, 2020
The California-headquartered multi-channel specialty menswear franchise is looking to bolster its operations amid the COVID-19 scourge.
Tailored Brands (NYSE: TLRD) and a number of its divisions are mired in debt as the pandemic forced the shutting down of stores due to a dip in consumer demand for office apparel. Amid companywide business disruptions from the global health crisis, the brand looking to rebound by implementing a series of operational overhauls.
Strategic employee downsizing
In July, the brand announced plans to eliminate nearly 20% of its corporate job positions and up to 500 stores by the end of Q2 2020. The company, which owns suit sellers Men’s Wearhouse and Jos A. Bank, is also aiming to reduce and revamp its store arrangement, supply chain infrastructure, and organization to adapt to mainstream store footprint and e-commerce trends.
Tailored Brands’ CEO, Dinesh Lathi chimes following the filing for insolvency at the U.S Bankruptcy Court for the Southern District of Texas, “We have safely reopened almost all of our retail stores and look forward to helping our customers looks and feel their best for their moments that matter. Unfortunately, due to the COVID-19 pandemic and its significant impact on our business, further actions are needed to help us strengthen our financial position so we can navigate our current realities.”
In addition to considerable personnel changes, the company expects to register a pre-tax charge of nearly $6 million in Q2 2020 for severance payments and other annulment costs.
Intervention looms with the RSA
In August, the company entered a Restructuring Support Agreement (RSA) with over 75% of its biggest financiers. This RSA is features ratified terms and a preprogrammed financial restructuring strategy that is intended to lower the company’s funded debt by at least $630 million and provide the much-needed fiscal flexibility that Tailored Brands need to steady its ship and reposition itself for profitability.
The outfit also announced that Executive Vice President, Chief Financial Officer, and Treasurer, Jack Calandra, will abdicate his roles as of July 31. In the interim, Calandra’s obligations will be bifurcated between Lathi and Holly Etlin, a Managing Director at AlixPartners, who has been appointed to the newly created position of Chief Restructuring Officer and will report directly to Lathi. Etlin brings to the group more than 30 years of restructuring and repositioning expertise, as well as seasoned experience in retail. Etlin has been collaborating with the executive setup and Board of Directors as a counselor since March.
Of Calandra’s departure, Lathi said. “Jack and I have been discussing a transition, with a full appreciation of both the challenges to be solved and the opportunities to be realized in the next phase of the company’s journey, we both agree this is the right time for a change. I want to thank Jack for his numerous, varied, and significant contributions over the past three years. He leaves behind a strong Finance team that, with Holly’s support and leadership, will help us continue to build a strong future for our company.”
Store arrangement changes
Tailored Brands has safely welcomed clients back to 96% of its retail stores in full compliance with CDC and government stipulations. Simultaneously, the outfit has reappraised the projected profitability and strategic value of every store in its fleet against the backdrop of current and anticipated trends in consumer demand.
Additional information will be relayed to affected employees and customers as decisions are set in stone, while store updates, hours and safety guidelines will be made available through store locators on each of the company’s brand sites: menswearhouse.com, josbank.com, kgstores.com, and mooresclothing.com.
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