Tailored Brands Inc. has 30 days.
The Houston-based retailer’s subsidiary Men’s Wearhouse on July 1 skipped an interest payment of approximately $6.1 million on a group of bonds — triggering a 30-day grace period, after which it will go into default if it does not make good on owed payments.
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If Tailored Brands fails to cough up the $6.1 million, defaults will also be set in motion on its loan facility and asset-based revolving credit facilities, even though the company has stayed current on these payments.
The missed interest payment marks another sign of distress for Tailored Brands, which in a June regulatory filing indicated that the coronavirus crisis had caused “significant disruptions” to its day-to-day operations. What’s more, other retailers, such as Neiman Marcus Group and JCPenney, have missed bond payments in recent months shortly before filing for Chapter 11 protection.
“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 told the Securities and Exchange Commission.
Tailored Brands, which is also parent to Jos. A. Bank, Moores Clothing for Men and K&G, was forced to shutter many of its stores, along with its corporate offices, in mid-March due to government restrictions. The retailer made the decision to furlough more than 95% of its employees, as well as to cut salaries for senior-level executives.
After beginning to reopen stores in early May, Tailored Brands had 634 stores back in business as of June 5. However, the company experienced a significant declines in same-store sales for the week ended June 5, with comps down 65% at Men’s Wearhouse, 78% at Jos. A. Bank and 40% at K&G.
At the end of the first quarter ended May 2, Tailored Brands had approximately $224.2 million in cash and equivalents, with long-term debt totaling roughly $1.4 billion. The retailer had accessed $310 million in additional borrowings to bolster its business, as well as deferred operating expenses and inventory purchases.
“While it’s still early and the operating environment remains highly uncertain, we anticipate sales will rebuild gradually during the remainder of the year,” president and CEO Dinesh Lathi said in a previous release. “We are planning the business conservatively and will continue to operate with discipline to preserve our liquidity as we navigate this uncertain environment.”