Macy’s and Tailored Brands to wind down tuxedo business

By

Obi Anyanwu

Published
May 4, 2017

Macy’s and Tailored Brands’ rental license business is coming to an end. The two companies announced on Wednesday their joint plan to wind down their tuxedo rental license agreement that was first established on June 9, 2015.

 

The tuxedo license agreement did not perform well for Tailored Brands in fiscal 2016. The partnership resulted in adjusted operating losses of $14 million for Tailored Brands in fiscal 2016, and was projected to result in operating losses of $19 million to $20 million in 2017. As a result of the new agreement, the Men’s Wearhouse parent company expects to report an operating loss on the tuxedo business in range of $7 million to $8 million.
 
The Tuxedo Shops at Macy’s will continue to take new reservations until June 1, 2017, with operations winding down by July 14, 2017.

“Innovating new business models is an important catalyst for long-term growth and we saw the partnership with Macy’s as an opportune way to expand our leadership in the tuxedo rental market,” said Tailored Brands’ CEO Doug Ewert.

“Unfortunately, the initiative did not generate the revenue that both companies had envisioned. We believe it is in the best interest of our company and our shareholders to wind down the partnership.”
 
In addition, Tailored Brands updated its fiscal 2017 outlook due to the wind down. The company now expects its diluted EPS to range to be in range of $1.37 to $1.67 and adjusted diluted EPS, which excludes the one-time charges, of $1.60 to $1.90.