J. Crew was the first major clothing seller to file, and it has since been joined by such names as Neiman Marcus, J.C. Penney and Brooks Brothers. Apparel sales have nosedived as millions of workers lost jobs or shifted to working from home, and social gatherings such as weddings were canceled or reimagined through digital platforms like Zoom.
Tailored Brands’ bankruptcy filing comes less than two weeks after it announced it would slash its corporate head count by 20 percent, and rearrange its store lineup and supply chain infrastructure to prioritize e-commerce. At the time, the company had reopened nearly all 1,274 stores in the United States and 125 stores in Canada.
The company did not indicate any immediate plans for store closures in Sunday’s filing. But on July 21, it said it had identified as many as 500 stores for potential closure over time. The specialty menswear retailer said it will still honor customer gift cards and rewards, and fill rental reservations and custom orders in its stores. It also said it will continue paying its 18,000 workers and providing health benefits.
“As evidenced by the positive results we saw in January and February, we have made significant progress in refining our assortments, strengthening our omni-channel offering and evolving our marketing channel and creative mix. However, the unprecedented impact of COVID-19 requires us to further adapt and evolve,” Dinesh Lathi, the company’s chief executive and president, said in a release. “Reaching an agreement with our lenders represents a critical milestone toward our goal of becoming a stronger Company that has the financial and operational flexibility to compete and win in the rapidly evolving retail environment.”
Tailored Brands, based in Fremont, Calif., filed for Chapter 11 protection in U.S. Bankruptcy Court for the Southern District of Texas. It listed more than $2.4 billion in assets and more than $2.8 billion in debt, as of July 4, according to the filing.
The company said the filing will support its restructuring plan, approved by its board of directors on Saturday and in agreement with 75 percent of its senior lenders. The plan is expected to reduce debt by at least $630 million. The filing also comes shortly after Tailored Brands delivered nearly $3.3 million in incentive compensation to its top executives, including $1.7 million for Lathi, according to a July 24 filing with the U.S. Securities and Exchange Commission.
On July 27, Tailored Brands posted nearly $287 million in sales during the first quarter, which ended May 2, a 60 percent drop compared with $724 million in the same period last year.