Tailored Brands Inc. jumped the most in more than two years after announcing plans to close hundreds of stores, part of a cost-cutting push for the owner of Men's Wearhouse and Jos. A. Bank.
The Houston-based company plans to shutter about 250 locations this fiscal year, including all of its outlet stores, according to a statement Wednesday. Tailored Brands also is reducing expenses by about $50 million by slimming down its operations and overhead.
Investors applauded the move, which followed an unprofitable holiday quarter and a slide in sales. The stock rose as much as 16 percent to $18.91 in New York. The shares -- traded under the Men's Wearhouse name until February -- were up 11 percent this year through Wednesday's close.
Tailored Brands, the largest retailer specializing in
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men's suits, is scrambling to align its two major divisions. While sales have been growing at Men's Wearhouse, Jos. A. Bank faces a customer exodus. Last year, management abandoned Jos. A. Bank's "buy one suit, get three free"-style promotions, irking longtime shoppers. That sent the chain into free fall. Jos. A Bank's same-store sales plunged 32 percent last quarter, compared with a 4.3 percent gain for Men's Wearhouse.
Tailored Brands, which took that name when it adopted a holding-company structure this year, said streamlining its stores will weigh on its profit forecast for the year. It now expects earnings of $1.55 to $1.85 a share, excluding some items, down from as much as $2 a share previously.
The retailer is "tailoring down to a suitable size," Cowen & Co. analyst John Kernan said in a report on Thursday.
Tailored Brands posted a loss of 30 cents a share, excluding some items, in the quarter ended Jan. 30. Still, that wasn't as bad a result as analysts expected. They had projected a loss 37 cents on average, according to data compiled by Bloomberg. Sales fell to $825.7 million, missing the $838.6 million estimated by analysts.