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Earnings Analysis To Watch: Tailored Brands, Inc. (NYSE:TLRD)

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Tailored Brands, Inc. (NYSE:TLRD) reported earnings for the three months ended April 2016 on June 08, 2016. The company earned $0.29 per share on revenue of $828.82M. Analysts had been modeling earning per share of $0.44 with $842.25M in revenue.

Tailored Brands, Inc. (NYSE:TLRD) announced consolidated financial results for the fiscal first quarter ended April 30, 2016.

First quarter 2016 GAAP diluted earnings per share (“EPS”) were $0.03 and adjusted diluted EPS was $0.29 excluding certain items.

Doug Ewert, Tailored Brands president and chief executive officer stated, “Our first quarter results were mixed as we navigated the difficult consumer and retail environment and cycled a strong performance in last year’s first quarter.  While our net sales decline of 6.4% was slightly below our expectation, our focus on lowering operating expenses brought operating income and earnings per share in-line with our plan for the quarter.  Men’s Wearhouse reported a modestly below-plan comparable sales decline of 3.5% while our Jos. A. Bank comparable sales decline of 16% was better than our expectation, despite anniversarying significant Buy-One-Get-Three Free events in the same period last year.  On a GAAP basis, retail operating income decreased $15.4 million.   On an adjusted basis, retail operating income decreased $18.2 million driven by an $18.1 million reduction at Jos. A. Bank.  The decline in Jos. A. Bank results was slightly better than the expectations we previously outlined for 2016.

Total net sales decreased 6.4%, or $56.3 million, to $828.8 million.  Retail segment net sales decreased by 7.0%, or $58.0 million.  Corporate apparel sales increased by 2.9% or $1.8 million.

Total gross margin was $351.8 million, a decrease of $29.7 million, or 7.8% due primarily to the decrease in retail segment net sales.  As a percent of sales, total gross margin decreased 66 basis points to 42.5% of net sales primarily due to deleveraging of occupancy costs. Excluding Jos. A. Bank, total gross margin decreased by 15 basis points and retail gross margin decreased 17 basis points.

Advertising expense decreased $2.7 million to $47.9 million but increased slightly by 6 basis points as a percent of sales.

Selling, general and administrative expenses (“SG&A”) decreased $2.7 million to $272.9 million.  As a percent of sales, SG&A increased 179 basis points primarily due to deleveraging from lower sales.

Operating income for the quarter was $31.0 million compared to operating income of $55.3 million last year.

Net interest expense for the first quarter was $26.5 million for both 2016 and 2015.

The effective tax rate for the first quarter was 63.7% for 2016 and 35.8% for 2015.

Net earnings for the quarter were $1.6 million compared to net earnings of $10.4 million last year.  Diluted EPS was $0.03 compared to diluted EPS of $0.21 in the prior year quarter.

Tailored Brands, Inc. earnings per share showed a decreasing trend of -10% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 188%.Analysts project EPS growth over the next 5 years at 8.3%. It has EPS annual decline over the past 5 fiscal years of -7.81% when sales grew 10.7. It reported -6.4% sales drop, and -84.3% EPS decline in the last quarter.

The stock is trading at $12.28, up 26.52% from 52-week low of $9.95. The stock trades down -80.69% from its peak of $65.71 and % below the consensus price target of $16.6. Its volume clocked up at 0.74 million shares which is lower than the average volume of 1.33 million shares. Its market capitalization currently stands at $577.43M.

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