Tailored Brands, Inc. (TLRD) Q4 2019 Earnings Call Transcript

Tailored Brands, Inc.  (NYSE: TLRD) Q4 2019 Earnings Conference Call

March 18, 2020

Corporate Participants:

Julie MacMedan — Vice President, Investor Relations

Dinesh Lathi — President and Chief Executive Officer

Jack Calandra — Executive Vice President, Chief Financial Officer and Treasurer

Presentation:

Operator

Greetings and welcome to the Tailored Brands Fourth Quarter 2019 and Year-End Results Conference Call. [Operator Instructions]

I will now turn the conference over to our host, Julie MacMedan, Vice President of Investor Relations. Thank you. You may begin.

Julie MacMedan — Vice President, Investor Relations

Thank you.

Good afternoon, everyone. Welcome to Tailored Brands’ fourth quarter 2019 results conference call.

This call is being webcast and a replay will be available on the Company’s Investor Relations website, ir.tailoredbrands.com. Also, on the website you will find the press release we issued earlier today for a detailed discussion of Q4 and fiscal 2019 financial results.

Please note that comments made during the conference call contain forward-looking statements within the meaning of the United States federal securities laws. These statements are subject to significant business, economic and competitive risks, uncertainties and contingencies, many of which are beyond our control. Any forward-looking statements are not guarantees of future performance, and actual results may differ materially from those in such forward-looking statements. Please refer to today’s earnings release, our Annual Report on Form 10-K and quarterly reports on Forms 10-Q to understand these risks and uncertainties. You can access all these reports on the Tailored Brands’ IR website. In addition, the information on this call speaks only as of today, March 18, 2019 [Phonetic], and we assume no obligation to publicly update or revise our forward-looking statements.

With me today are our President and CEO, Dinesh Lathi, and our CFO, Jack Calandra. Dinesh and Jack will review our recent business results and the actions we are taking to weather the near-term disruption to our business from the coronavirus outbreak. Given the uncertainty created by the unfolding economic impact of this virus, we will not be conducting a formal question-and-answer session following today’s prepared remarks.

I would now like to turn the call over to Dinesh.

Dinesh Lathi — President and Chief Executive Officer

Thank you, Julie, and good afternoon, everyone.

Let me start by extending on behalf of the entire Tailored Brands family our thoughts and prayers to those that are or have loved ones that are dealing with health or other hardships during this incredibly challenging time. As we have been reminding our entire team and our frequent communications with them, it is times like these that bring out the best in the best of us. In all of our actions and decisions during this time, we will endeavor to be our best selves.

Earlier today, we released our results for the fourth quarter and fiscal year 2019. Our Q4 loss per share of $0.46 marks the fourth quarter in a row where we have met or exceeded our guidance. Normally, we dive into a review of the quarter and our outlook for the coming year. But, as you are all aware, we are operating in a business environment that is anything but normal. The recent spread of the coronavirus and the actions taken by our government and citizens to reduce its impact have brought much of our economy to a halt in the short term, including brick and mortar retail. First and foremost, our priority continues to be the health and safety of our employees, customers and the communities in which we operate.

Given the current situation, instead of our normal call content, this call will be exclusively dedicated to how the coronavirus is impacting our Company and how we are responding. During this call, I will cover how our business was performing through the first month of Q1 and what we’ve seen over the last few weeks as the consumer is reacting to news and government directives related to coronavirus. Jack will then cover what we’ve done in response to these emerging business trends and how our business is positioned to weather them.

Let’s start with business performance. Heading into the month of March, we were seeing positive momentum in our business. In the month of January, we saw a positive comp in our Men’s Wearhouse and K&G brands, and in the month of February, we saw positive comps across all four brands, with total retail comps up 2.4%. We were seeing this positive momentum being driven in part by many of the initiatives we’ve discussed with you over the last few quarters, including our efforts in building a more relevant assortment, a robust e-commerce offering and more effective digital marketing. The positive turn in the comp was exciting and supporting evidence that we have the right strategy and that our teams are executing well.

Unfortunately, business performance became more uneven starting in the first week of March and decelerated in the second week of March, as broad actions by governments, businesses, schools and individuals to help slow the spread of the virus began to take effect. Yesterday, we, like many retailers, closed our brick and mortar stores through March 28. We will follow the guidance of the CDC, WHO and local health authorities to determine when we will reopen our stores.

I am pleased to report that we will continue to serve our customers both through our online business and with limited store services to ensure they are able to pick up merchandise previously ordered for in-store pickup. We also made the decision to compensate our employees during this time for regularly scheduled hours up to 40 hours per week. Our top priority always has been and always will be the safety and well-being of our employees, customers and communities. We firmly believe that putting the safety of our employees and customers first is in the best interest of all stakeholders.

Given the current environment, we are taking immediate and aggressive actions to increase our cash position and reduce near-term expenditures.

I’ll turn the call over to Jack now to review these actions in more detail, and then I’ll come back and close today’s call. Jack?

Jack Calandra — Executive Vice President, Chief Financial Officer and Treasurer

Thanks, Dinesh, and good afternoon, everyone.

Given the current business environment, my comments today will focus on how we prepare the Company to face these near-term challenges and emerge from this crisis in a strong financial position.

We are taking aggressive and prudent measures to ensure the business has ample liquidity during this uncertain period. As such, we’ve taken actions both to increase cash on hand and to reduce cash outflows. With regard to increasing cash on hand, on Monday of this week, we drew down $260 million from our revolving credit facility in an abundance of caution and as a proactive measure. We currently have just under $400 million in cash, which includes approximately $100 million from the recently completed sale of the Joseph Abboud trademarks that can be applied to reinvestments in the business.

The second thing we are doing to increase liquidity is eliminating or deferring all discretionary spending. We are significantly reducing inventory buy plans, capital expenditures, advertising spend and store and headquarters overhead costs. These actions will meaningfully reduce cash outlays. We also have contingency plans for deeper cuts if our stores are closed beyond March 28.

We believe the aggressive actions we’ve taken and the contingency plans we’ve developed will allow us to weather this period of uncertainty. As I’m sure you appreciate, the rapidly changing business environment makes providing accurate and useful guidance very difficult. And so I will not be providing any guidance for fiscal 2020 at this time. I look forward to doing so as visibility of economic and business conditions improves.

I wish you and your families good health. And now I’ll turn the call back to Dinesh to wrap up.

Dinesh Lathi — President and Chief Executive Officer

Thank you, Jack, and thank you, everyone, for joining us on today’s call. You have my commitment that during this time of great uncertainty, we will continue to focus on the safety of our employees, customers and communities, while continuing to exercise the fiscal prudence on expenditures and liquidity that this situation demands. We look forward to updating you on our progress and plans as the situation unfolds.

Please stay safe, stay home and stay healthy.

Operator, that will conclude this call.

Operator

[Operator Closing Remarks]