Tailored Brands, the parent company of American men's suits and clothing retailer Men's Wearhouse, is planning to further reduce its workforce and close down hundreds of its stores. The company announced on Tuesday that it needs to implement the drastic measures to ensure its survival amid the ongoing retail demand slump caused by the coronavirus pandemic.
The California-based company, which also operates JoS. A. Bank Clothiers, had revealed new plans for reducing its workforce by an additional 20 percent by the end of its fiscal second quarter. The move is expected to mostly affect the company's corporate workforce. Along with the job cuts, the company is also planning to close 500 out of its 1,450 Men's Wearhouse outlets.
Tailor Brands did not disclose the specific locations that would be closed nor did it specify the timeframe. However, the company did state that the closures will happen "over time."
As part of its strategy to mitigate the effects of the retail slump, Tailored Brands will also be making some changes to its corporate structure. The company revealed that its chief financial officer, Jack Calandra, will be stepping down from his position on July 31. His responsibilities will be divided between the current chief executive officer, Dinesh Lathi, and Holly Etlin, the newly appointed chief restructuring officer.
In a statement published this week, the company mentioned that although the decision was hard to make, it was the right step to take to ensure the continued operation of the business. Given the current state of the economy and the retail industry, the company had to implement drastic measures to prevent it from collapsing.
Earlier in the month, the company had reportedly missed releasing a $6.1 million payment to several bondholders. This triggered a 30-day grace period, which is now placing added pressure on the company's finances. According to the company, the planned layoffs and the closures will result in it incurring an additional $6 million in pretax charges related to severance payments and other costs. The charges will all be cash considered cash expenses for its second quarter. Tailored Brands stated that it has yet to calculate the estimated savings it would gain as a result of the store closures.
Shares of the company, which also operates Moores Clothing for Men and K&G, climbed around 4.3 percent on Tuesday. Since the start of the year, the company's share price has fallen more than 83 percent. Based on its current share prices, the company's market capitalization now stands at around $34.1 million.
