Tailored Brands (NYSE:TLRD) felt the wrath of the market after reporting mixed second-quarter financial results compounded by a disappointing Q3 outlook. TLRD stock fell by more than 25% in the early session, as investors reacted to the company halting its dividend offering and lowering its profit outlook for the third quarter.
The company warned of lower sales across the board going forward, which also appears to have fuelled the sell-off.
Mixed Q2 Earnings
Sales in the second quarter dropped 4.1% to $789 million, in line with consensus estimates of $789 million. Comparable store sales continued their negative growth trend, decreasing 3.6% compared to a 1.7% growth reported a year earlier.
The company reported earnings per share of $0.82, above consensus estimates of $0.74 a share but compared to earnings of $1.07 a share reported a year earlier. For the third quarter, the company is projecting earnings of between 40 and 45 cents, less than half the earnings reported in Q2. Similarly, it is 50% below analyst estimates of 88 cents a share on sales of $763 million.
According to the Chief Executive Officer, Dinesh Lathi, focus going forward is on enhancing the customer experience in a bid to drive sales and profitability.
“We also said that, while we transform the experience, we would execute and invest in a focused manner with a clear goal of continuing to generate cash that we would deploy responsibly,” Lathi in a statement.
At the time of writing, TLRD stock is down 25.50% at $5.35.
A disappointing earnings result and Q3 outlook are contributing to the piling pressure on Tailored Brands. The stock has shed more than 70% in market value over the past 12 months, an underperformance that has left it staring at all-time lows. Investors have continued to push TLRD stock lower on growing concerns that the company is struggling amidst a shift in consumer shopping trends.
The board decided to suspend dividend payouts starting in the fourth quarter, which all but affirms growing concerns that things are not well with the retailer. Suspension of dividends payments should allow Tailored Brands to conserve some capital for paying a debt and carrying out share repurchases.
After today’s slump, TLRD stock is down over 60% so far in 2019.
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