Tailored Brands, Inc. is eyeing store closures and job cuts as it looks to reorganize following “unprecedented and industrywide business disruptions” stemming from the COVID-19 pandemic.
The Men’s Wearhouse and Jos. A. Bank parent said today that it has identified up to 500 brick-and-mortar units for “potential” closure after evaluating the forecasted profitability and strategic value of its fleet. Further, Tailored Brands announced that it will cut about 20% of its corporate workforce by the end of the fiscal second quarter. In addition, the conglomerate plans to reduce and adjust its store organization and supply chain infrastructure to serve its shrinking store footprint. It expects to spend approximately $6 million on severance payments and other terminations costs in Q2. Tailored Brands has not yet estimated the expense savings and costs related to potential store closures as well as organizational restructuring.
“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. It is always difficult to eliminate jobs and say farewell to our friends and colleagues,” Tailored Brands president and CEO Dinesh Lathi said in a release. “While today’s announcement is a difficult one, we are confident these are the right next steps to protect our business and position us to more effectively compete in today’s environment.”
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The company has also announced a series of executive moves. Effective July 31, EVP, CFO and treasurer Jack Calandra will depart the company. For now, his duties will be divided between CEO Lathi as well as AlixPartners managing director Holly Etlin, who has been appointed to the newly created role of restructuring officer. Etlin has been working with the Tailored Brands executive team and board of directors since March.
In a filing last month with the Securities and Exchange Commission, Tailored Brands wrote that the coronavirus crisis had caused “significant disruptions” to its day-to-day operations. The company — which has now reopened 96% of its retail stores in accordance with Centers for Disease Control and Prevention guidelines as well as local guidance — warned that it could be forced to file for bankruptcy.
“If the effects of the COVID-19 pandemic are protracted and we are unable to increase liquidity and/or effectively address our debt position, we may be forced to scale back or terminate operations and/or seek protection under applicable bankruptcy laws,” it shared.