Tailored Brands Inc. has gone bankrupt.
The Houston-based company — owner of the Men’s Wearhouse, Jos. A. Bank, Moores Clothing for Men and K&G Fashion Superstore brands — filed for Chapter 11 protection yesterday in the United States Bankruptcy Court for the Southern District of Texas as the coronavirus pandemic reduces demand for workwear.
In the filing, the retailer said it has entered into a restructuring support agreement with more than 75% of its senior lenders to reduce its debt by at least $630 million. It has also secured $500 million in debtor-in-possession financing from its existing revolving credit facility lenders.
“As evidenced by the positive results we saw in January and February, we have made significant progress in refining our assortments, strengthening our omnichannel offering and evolving our marketing channel and creative mix,” president and CEO Dinesh Lathi said in a statement. “However, the unprecedented impact of COVID-19 requires us to further adapt and evolve.”
He added, “Reaching an agreement with our lenders represents a critical milestone toward our goal of becoming a stronger company that has the financial and operational flexibility to compete and win in the rapidly evolving retail environment.”
Tailored Brands also filed customary motions with the court intended to allow it to continue business operations. It intends to pay employees as usual, along with continuing to provide health and welfare benefits. For customers, it plans to honor gift cards, rental reservations and custom clothing orders. In addition, it said it would maintain its existing loyalty programs.
The filing came less than two weeks after Tailored Brands identified up to 500 brick-and-mortar units for “potential” closures and revealed plans to cut about 20% of its corporate workforce by the end of the fiscal second quarter. In addition, the conglomerate said it would reduce and adjust its store organization and supply chain infrastructure.
At the end of the first quarter, which wrapped up on May 2, the retailer had approximately $224.2 million in cash and equivalents, with long-term debt totaling roughly $1.4 billion. To preserve liquidity, it accessed $310 million in additional borrowings, as well as implemented salary reductions for its senior-level executives, deferred operating expenses and postponed inventory purchases.