Men’s Wearhouse Parent Warns That Bankruptcy Is ‘Likely’
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Tailored Brands Inc. could be filing for bankruptcy soon.
In a Securities and Exchange Commission filing late Monday, the Houston-based company — owner of Men’s Wearhouse, Jos. A. Bank, Moores Clothing for Men and K&G — said that it is “likely” to go bankrupt. Further, the retailer said it could submit its Chapter 11 petition as soon as its fiscal third quarter, which begins Aug. 2.
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“We have determined that there is substantial doubt about our ability to continue as a going concern,” the company wrote.
Monday’s filing is just the latest sign of distress for Tailored Brands.
Amid the COVID-19 crisis, Tailored Brands, which primarily sells men’s formal ware, struggled with the cancellation of occasions such as proms and weddings, along with government mandated store closures, supply chain disruptions and reduced traffic to reopened outposts.
As it grapples with fallout from the pandemic, the beleaguered company announced on July 21 that it had identified 500 brick-and-mortar units for “potential” closure after evaluating the forecasted profitability and strategic value of its fleet. Further, it said it would cut about 20% of its corporate workforce by the end of the second quarter.
Tailored Brands additionally announced on July 21 the appointment of Holly Etlin to the newly created role of restructuring officer. On Monday, the company said it is working with advisers and evaluating alternatives, such as a private restructuring or the refinancing of debt.
On July 1, the men’s speciality retailer missed a $6.1 million interest payment, triggering a 30-day grace period after which it will go into default. This would set into motion defaults on Tailored Brand’s loan facility and asset-based revolving credit facilities, even though the company has stayed current on those payments. The company said Monday that “it is not probable” that it will make the payment — and warned it does not have sufficient liquidity to repay all its debts.
At the conclusion of the three-month period ended May 2, the company had $244.2 million in cash and cash equivalents, versus a long-term debt load of about $1.4 billion. It is seeking to bolster its liquidity through lease concessions and deferrals, further operating and capital expenditures reductions and raising additional capital.
Amid the challenges of the pandemic, numerous boldface retailers have been forced to file for bankruptcy since May. Brooks Brothers, Tailored Brands’ fellow men’s occasion retailer, pulled the trigger on a Chapter 11 filing earlier this month. JCPenney, Neiman Marcus and J.Crew have also gone bankrupt, as well as Ann Taylor parent Ascena Retail Group.
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