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Tailored Brands Idea Proposal (TLRD)

Tailored Brands Idea Proposal (TLRD)
 

Will Tailored Brands’ shift from deep discounting to a fresher look aimed at millennials be the catalyst for improved performance?

Report Available: May 24, 2017

 

Blueshift’s initial research found TLRD faltering on several fronts in Q4, with soft traffic, poor sales, and higher-than-expected losses from its start-up tuxedo business partnership with Macy’s. A tough 2017 is anticipated as TLRD continues to close poor performing stores, but a shift in its marketing strategy from deep discounting to attracting a broader range of customers with a new clothing assortment may be a needed catalyst.

 

Observations

  1. TLRD’s Q4 results were described as “a mess” by one Wall Street analyst, who added that the weakness across the company was “endemic.” TLRD reported sales and gross margins lower than expected. Sales fell 4%, marking the sixth consecutive quarterly decline. TLRD’s guidance for 2017 is for same-store-sales to be down low-single digits at Men’s Warehouse and up mid-single digits at Jos. A. Bank.
  2. TLRD’s tuxedo business partnership with M, launched in 2015 as a strategic opportunity with Men’s Wearhouse stores within Macy’s, is now viewed as a disappointment and expansion has been stopped with only 170 out of an expected 300 stores opened. Losses have reached $14 million and are expected to reach $20 million in 2017. Executives blamed the shortfall on the bulk of the shops missing the 2016 wedding season.
  3. Despite TLRD’s poor Q4 performance, sales for their Jos. A. Bank brand appear to be stabilizing. Comparable sales at the Jos. A. Bank stores rose 3.6% with increased transactions and number of units sold per transaction. The company said the brand is now on a path toward sustained profitable growth. This follows 119 store closings, the discontinuation of the buy-one-get-three promotions, and a reworking of the brands clothing assortment that is more appealing to millennials as well as traditional customers.
  4. TLRD promoted its executive vice president to president, with the CEO giving up his president’s title. It also hired a former executive from GPS to be the new executive vice president, CFO and treasurer.
  5. Blueshift’s May 28, 2015, November 6, 2014, and June 26, 2014 reports on the Men’s Warehouse and Jos. A. Bank merger showed disappointing results. Sources said it would not be the game changer the company sought, greater brand awareness was unlikely, and there was no evidence of the integration of inventory or POS systems. The merged company’s promotional strategy had not changed, and the chain would be hard-pressed to attract younger shoppers while retaining its older customer base.

 

How are customers responding to a reduction in discounts and BOGO offers? How is it affecting sales at Jos. A. Bank? How is the company performing as it laps last year’s negative comps? What is the response from millennials to the changing clothing assortment? What operational benefits are being felt as a result of integration efforts? What effect are the new executives expected to have on TLRD? Can the Macy’s tuxedo-rental shop partnership be salvaged?  To answer these and other questions, Blueshift will issue a market research report by gathering data from independent sources in the following areas: Men’s Warehouse and Jos. A. Bank store personnel, Supply chain, Competitor executives,Competitor store personnel, and Industry specialists.

 

Companies: Tailored Brand (TLRD), Express (EXPR),The Gap (GPS),J.C. Penney (JCP),Nordstrom (JWN), Kohl’s (KSS), Macy’s (M),

 

Research Begins: May 8, 2017