Tailored Brands Inc (NYSE:TLRD) — the Men’s Warehouse and JoS. A. Bank operator — is in trouble.
Just plain terrible earnings from Macy’s Inc (NYSE:M), Sears Holdings Corp (NASDAQ:SHLD) and J C Penney Company Inc (NYSE:JCP) have overshadowed TLRD’s struggles. But Tailored Brands is in trouble, make no mistake.
That means TLRD stock is a strong sell before its June earnings.
Sure, this retail stock hasn’t posted the same nasty headlines as SHLD or JCP. But that’s because TLRD stock only has a little more than a year of market history, thanks to the formation of a new holding company in early 2016 after Men’s Warehouse and JoS. A. Bank joined forces.
But the underlying numbers belie big problems for this men’s apparel company.
While the merger created a cosmetic pop in top-line performance, the last six consecutive quarters have featured declining revenue year-over-year. Most recently, in its March earnings report shares plummeted over 20% thanks to operations that posted an even deeper loss than expected.
Debt-wise, TLRD has a junk grade of CCC+ from S&P and $1.6 billion in debt. And when you throw in other expenses like accounts payable, total liabilities balloon to $2.20 billion – more than the $2.10 billion in assets on the balance sheet for a negative shareholder equity figure.
Those are numbers to give anyone pause.
Unlike other retailers struggling to post a profit for years, at least TLRD is projected to operate in the black for the full year. So the good news is that Tailored Brands isn’t going bankrupt anytime soon.
But this retail stock is certainly reeling after its March report, and the upcoming June filing of Tailored Brands earnings could be a doozy.
Sell or short TLRD before then.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.