Struggling US menswear retailer Tailored Brands has said it could seek bankruptcy protection as early as the third quarter as the Covid-19 pandemic continues to batter sales.
In a Securities and Exchange Commission (SEC) filing yesterday (27 July), the firm said it has determined that there is substantial doubt about its ability to continue as a going concern.
“Although we are evaluating several alternatives, it is likely that we will pursue a reorganisation under applicable bankruptcy laws, possibly as soon as during the third quarter of fiscal 2020, which begins on 2 August 2020.”
It added: “Doubts regarding our ability to continue as a going concern could result in the further loss of confidence by customers, vendors, suppliers, landlords, employees and others, which in turn could materially adversely affect our business, results of operations and financial condition. Concerns about our financial condition could adversely impact the payment terms we can obtain from some of our vendors and suppliers.
“Some landlords may refuse to lease sites to us or to renew existing store leases in light of the uncertainty regarding our ability to continue as a going concern. We depend on our ability to retain our key employees at all levels of our business and on our ability to attract new qualified personnel. If we are unable to retain our key employees and we do not succeed in attracting new qualified personnel as a result of the uncertainty regarding our ability to continue as a going concern, our business and results of operations could suffer. Doubts regarding our ability to continue as a going concern may adversely impact our customers’ perceptions of our business and our continued viability, which in turn could further negatively impact our revenues. Further declines in our revenues as a result of these perceptions or otherwise may have a material adverse impact our cash flows, results of operations and financial condition.”
The group, which owns the Men’s Wearhouse, Jos. A. Bank, Moores Clothing for Men and K&G brands, said last week it plans to reduce its corporate workforce by 20% and has identified up to 500 retail stores for potential closure as well as associated opportunities to reduce and realign its supply chain infrastructure.
In a statement, the retailer said it is implementing a series of operating and organisational changes as a result of the unprecedented and industrywide business disruptions resulting from the coronavirus pandemic.
Several US retailers have recently outlined similar workforce reductions including Levi Strauss and PVH Corp, while others have moved to seek bankruptcy protection including JCPenney and more recently, Ascena.
Announcing select preliminary financial metrics for the first quarter ended 2 May, Tailored Brands said net sales were down 60.4% to US$286.7m due to the Covid-19 pandemic.