Why Tailored Brands Inc (NYSE: TLRD) stock is crashing

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Tailored Brands Inc (NYSE: TLRD) stock fell 23.5% on June 14th, 2018 (as of 11:32 AM GMT-4; Source: Google finance) after the company in the first quarter of FY 18 has reported the adjusted earnings per share of 50 cents, beating the analysts’ estimates for the adjusted earnings per share of 48 cents. The company had reported the adjusted revenue growth of 4.5 percent to $818 million in the first quarter of FY 18, beating the analysts’ estimates for revenue of $794.05 billion. On an adjusted basis in the first quarter 2018, net earnings were $25.3 million compared to net earnings of $13.3 million last year. At the end of the first quarter of 2018, cash and cash equivalents were $93.2 million, which is an increase of $26.6 million compared to the end of the first quarter of 2017.

Moreover, in the first quarter 2018, Men’s Wearhouse comparable sales rose 3.2%. Comparable sales for clothing increased primarily due to an increase in transactions, partially offset by a decrease in units per transaction, while average unit retail was flat. Comparable rental services revenue fell 3.9%, primarily reflecting a continued shift to purchase suits for special occasions that more than offset the benefit of an earlier prom season. Jos. A. Bank comparable sales rose 1.2% primarily due to an increase in transactions and units per transaction that more than offset a decrease in average unit retail. K&G comparable sales fell 1.7% primarily due to lower transactions and a decrease in average unit retail partially offset by an increase in units per transaction.  Moores comparable sales increased 1.8% primarily due to an increase in transactions and units per transaction that more than offset a decrease in average unit retail.

For FY 18, TLRD expects to achieve adjusted diluted earnings per share to be in the range of $2.35 to $2.50, while the analysts are expecting earnings per share of $2.49. The company expects comparable sales for Men’s Wearhouse and Jos. A. Bank to be positive low-single-digits, Moores comparable sales to be flat-to-up slightly and K&G comparable sales to be flat-to-down slightly. The company expects the effective tax rate to be approximately 25%. Further, TLRD expects to reduce inventories by a high-single-digit percentage. The company expects capital expenditures of approximately $100 million for FY 18. The company expects depreciation and amortization of approximately $100 million. The company also expects approximately net 10 store closures in 2018 resulting from its continuous review of its real estate portfolio for opportunities to optimize its fleet as lease terms expire.

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