Designed brands have exposed them to the risk of bankruptcy or even closing operations due to the Covid-19 crisis in registrations on Wednesday evening.
“If the effects of the Covid-19 epidemic are long-term and we are not able to increase liquidity and / or effectively address our debt situation, we may have to reduce or terminate operations and / or seek protection under applicable bankruptcy laws,” said the registry. The company said it had no comment other than depositing.
The company suspended rental payments for April and May when most of its locations were closed. She said she was able to negotiate a postponement of the rent to a large number of her stores, with repayment on subsequent dates, from the end of 2020 to 2021. She also expelled or fired 95% of her 19,000 employees.
But things did not go well in 44% of Tailored Brands stores that reopened in early May. For the week ending June 5, sales in open locations for at least one week decreased 65% in the men’s clothing store, decreased 78% in Jos A. A. and 40% in K&G.
Sales decreased 60% in the first fiscal quarter that ended on May 2. Nearly all of its stores were closed for nearly half of the quarter, and online operations stopped for two weeks in March. But Tailored Brands has delayed reporting their full results – the Securities and Exchange Commission allows companies to delay reporting during the epidemic.
One of the reasons for this delay is that it weighs the amount of cost it must take to write down the value of various assets, including the goodwill it carries in its books – a measure of the company’s brand value and reputation. These fees will be just an accounting step that does not involve funds, but it may raise the cost of borrowing the money the company needs to overcome the crisis.
Designed brands had $ 201 million in unrestricted cash on hand as of June 5, but this is primarily because they withdrew $ 310 million on existing credit lines during the first quarter. That was left with only $ 89 million of borrowing available under these lines.
The company has about 1,400 stores in the U.S. and Canada, and nearly half of it are named after the Wearhousehouse. Basso said he would likely be forced to close a large proportion of it, no matter what happens with the reorganization efforts.
And she said, “This is the company that has legs that need to change things.” “But consumer tastes and demand will change. They will emerge from bankruptcy with a much smaller footprint.”