[Update 08-02-20 Tailored Brands has now filed for bankruptcy]
Jack Calandra, CFO of Tailored Brands, is leaving the company in a cost-cutting move. The retailer, which has its head office in the Westchase area of Houston, operates 1,445 stores (mainly Men’s Wearhouse and Jos A Bank) and has been hit hard by global pandemic. All stores were shut between mid-March and early May. Sales are down substantially since most they reopened.
At the beginning of this month, the company announced it had elected not to pay interest on its 7% Senior Notes due 2022. Legally, the company has a 30-day grace period to make the payment before the non-payment is considered a default. In practice, it is negotiating with lenders on terms for a possible bankruptcy plan.
Mr Calandra will leave effective July 31, 2020. He will receive a lump sum payment of $600,000, which is the equivalent of one year’s base salary. The company has no immediate plans to replace Mr Calandra. Instead his duties will be divided up between CEO Dinesh Lathi and Holly Etlin, who has been appointed Chief Restructuring Officer. Ms Etlin is a Managing Director at AlixPartners.
The company has promoted John Vazquez to be the Chief Accounting Officer and Treasury. He was serving as the Vice President – Financial Reporting.
Layoffs and Store closures
The company will close up to 500 stores and reduce its corporate workforce by approximately 20%. It will record a $6 million charge for severance and other termination costs in the current quarter.
At the end of February 2020, the company had debt of $1.1 billion. In June it announced that it had borrowed an additional $310 million from the credit facility. The company had $200 million of cash on hand. It’s market capitalization is currently just $34 million.
As a reminder, back in September 2013, Jos A Bank made an unsolicited offer to buy Houston-based The Men’s Wearhouse for $2.3 billion (in cash at a 42% premium). Instead The Men’s Wearhouse ended up buying Jos A Bank for $1.8 billion in June 2014 (in cash at a 56% premium). The combined company was renamed Tailored Brands. Within 18 months, it had written off $1.3 billion of that. This is one of the most spectacular destructions of shareholder value in recent years!
The CEO in charge of that acquisition left in 2018 with a $10 million severance package. Mr Calandra was not part of that acquisition, having joined in December 2016.