Tailored Brands sells corporate apparel business, updates Q2 outlook

Tailored Brands, Inc. has announced the sale of its corporate apparel business to a group led by the existing corporate apparel U.K. executive team for total cash consideration of 62 million dollars. For the second quarter, the company expects to report net sales in the range of 787 to 789 million dollars, GAAP diluted EPS in the range of 64 cents to 66 cents and adjusted diluted EPS in the range of 78 cents to 80 cents, which is above the company’s expected adjusted EPS range of 65 cents to 70 cents provided on June 12, 2019.

“The consummation of this transaction supports our previously stated strategy to focus on our core retail business in the U.S. and Canada while reducing debt,” said Tailored Brands President and CEO Dinesh Lathi in a statement.

The company added that it will use cash proceeds from the transaction to reinvest in its business in accordance with the provisions of its term loan. This will free up funds previously slated for capital expenditures for debt reduction. The transaction represents a multiple of 4.3 times fiscal 2018 adjusted EBITDA for the corporate apparel business, which had net sales of 235.4 million dollars in fiscal 2018.

The company noted that its updated adjusted EPS guidance includes a 2 cents benefit from a lower-than-anticipated effective tax rate.

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