Benzinga | Jul 21, 2020 06:47AM EDT

Tailored Brands Announces Plans To Reduce Headcount And Close Stores; Expects Corporate Workforce Reduction Of Approximately 20% Of Its Corporate Positions By End Of Q2, Up To 500 Stores Identified For Potential Closure Over Time

* Expects corporate workforce reduction of approximately 20% of its corporate positions by the end of the fiscal second quarter

* Up to 500 stores identified for potential closure over time

* CFO Jack Calandra to depart Tailored Brands and Holly Etlin appointed as Chief Restructuring Officer

Tailored Brands, Inc. (NYSE:TLRD) today announced that, as a result of the unprecedented and industrywide business disruptions resulting from the coronavirus pandemic, it is implementing a series of operating and organizational changes.

Specifically, the Company will make organizational changes that will result in the elimination of approximately 20% of its corporate positions by the end of the fiscal second quarter. In addition, the Company has identified up to 500 retail stores for potential closure as well as associated opportunities to reduce and realign its store organization and supply chain infrastructure and organization to best serve its go-forward store footprint and e-commerce business. These changes are designed to strengthen the Company's financial position and enable it to compete more effectively in the challenging retail environment.

Tailored Brands President and CEO Dinesh Lathi said, "We have safely reopened almost all of our retail stores and look forward to helping our customers look and feel their best for their moments that matter. Unfortunately, due to the COVID-19 pandemic and its significant impact on our business, further actions are needed to help us strengthen our financial position so we can navigate our current realities. It is always difficult to eliminate jobs and say farewell to our friends and colleagues. I want to thank our teammates affected by these changes as well as those who continue to help us meet the challenges currently facing our industry and who remain dedicated to serving our customers."

Lathi added, "While today's announcement is a difficult one, we are confident these are the right next steps to protect our business and position us to more effectively compete in today's environment."

In connection with these corporate personnel changes, the Company expects to record a pre-tax charge of approximately $6 million in the second quarter of fiscal 2020 for severance payments and other termination costs, all of which are cash costs.

Leadership Update

The Company also announced that Jack Calandra, Executive Vice President, Chief Financial Officer and Treasurer, will leave Tailored Brands as of July 31. In the near term, Calandra's responsibilities will be divided between Lathi and Holly Etlin, a Managing Director at AlixPartners who has been appointed to the newly created role of Chief Restructuring Officer, reporting directly to Lathi. Etlin brings more than 30 years of restructuring experience and a deep expertise in retail, and has been working closely with the executive team and Board of Directors as an advisor since late March.

Lathi said, "Jack and I have been discussing a transition and, with a full appreciation of both the challenges to be solved and the opportunities to be realized in the next phase of the Company's journey, we both agree this is the right time for a change. I want to thank Jack for his numerous, varied and significant contributions over the past three years. He leaves behind a strong Finance team that, with Holly's support and leadership, will help us continue to build a strong future for our Company."

Store Update

Tailored Brands has safely welcomed customers back to 96% of its retail stores in full compliance with CDC and government requirements. At the same time, the Company has re-evaluated the forecasted profitability and strategic value of every store in its fleet relative to current and anticipated trends in consumer demand and has identified up to 500 stores for closure over time. The Company has not yet quantified the expense savings and costs related to potential store closures and the corresponding store organization and supply chain infrastructure and organization realignment.

Additional information will be shared with impacted employees and customers as decisions are made, and store updates, hours and safety measures will continue to be available via the store locators on each of the Company's brand websites: menswearhouse.com, josbank.com, kgstores.com and mooresclothing.com.