Men's Wearhouse Parent Files for Bankruptcy

By Aisha Al-Muslim 

Tailored Brands Inc., the parent company of Men's Wearhouse and Jos. A. Bank, has filed for bankruptcy after the coronavirus pandemic slashed demand for dress clothes.

The publicly traded company filed for chapter 11 protection Sunday in the U.S. Bankruptcy Court in Houston.

The move comes after the menswear retailer warned in late July that it had substantial doubt about its ability to continue as a going concern and that it was likely to file for bankruptcy as soon as its third quarter, which begins Aug. 2.

The company operated more than 1,400 stores and employed 19,300 people in the U.S. and Canada as of Feb. 1, according to a securities filing.

A regulatory filing in May showed that money-management giant BlackRock Inc. owned about 15.8% of Tailored Brands' common stock, private investment firm Scion Asset Management LLC had about 8.3% and investment adviser Vanguard Group had about 7.2%.

In response to the pandemic, Tailored Brands has said it was evaluating various alternatives to improve its liquidity, such as securing rent concessions and deferrals, cutting costs and raising more capital.

In mid-March, Tailored Brands temporarily closed all its retail locations. To preserve liquidity, the company furloughed or temporarily laid off all store employees, borrowed $300 million under its asset-based lending facility, suspended rent payments for April and May and negotiated rent deferrals for some stores.

By July, Tailored Brands said it would lay off 20% of its corporate staff, reduce its supply-chain footprint and close as many as 500 retail locations.

Earlier in July, the company skipped a payment to bondholders after it reported a net sales decline of more than 60% for the quarter ended May 2 compared with the year-earlier period. The missed $6.1 million coupon payment, on $600 million of senior notes that are due in 2022, started the clock on a 30-day grace period that ends the first week of August.

Before filing for bankruptcy, Tailored Brands said it would pay about $3.3 million in incentive compensation to its executives. In recent months, a number of other companies have paid out retention bonuses to top management just before seeking bankruptcy protection.

Other apparel retailers pushed into bankruptcy due to the pandemic include Ann Taylor owner Ascena Retail Group Inc., Brooks Brothers Group Inc., J.C. Penney Co., Neiman Marcus Group Ltd. and J.Crew Group Inc.

Write to Aisha Al-Muslim at [e-mail]

(END) Dow Jones Newswires

August 02, 2020 22:17 ET (02:17 GMT)

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