that's why Custom brands , owner of the Men's Wearhouse brands, Jos. A. Bank and K&G, could be the next big American retailer to file for bankruptcy.
"The company has had bankruptcy counselors for a few months now. It is exploring all of its options and it is not 100% that they are filing, but the chances are pretty high," said Reshmi Basu, retail bankruptcy specialist and a Debtwire analyst, who tracks down companies. "There will not be as much demand given the work from home."
A number of national retailers have already filed for bankruptcy during the pandemic, including J.Crew, Neiman Marcus and JCPenney. The retail clothing industry was particularly hard hit by the crisis, as consumer demand for new clothing fell sharply. Difference reported a record loss of $ 932 million in its first quarter.
Other companies facing bankruptcy risk include Ascena Retail Group , owner of clothing chains Lane Bryant, Justice, Ann Taylor and Dress Barn, who recently warned that there is "substantial doubt" about her ability to stay in business.
Tailored Brands has revealed that it risks going bankrupt or even closing its doors due to the Covid-19 crisis in a case on Wednesday evening.
"If the effects of the Covid-19 pandemic continue and we are unable to increase liquidity and / or effectively resolve our debt situation, we may be forced to reduce or end our operations and / or seek protection under applicable bankruptcy laws, "filing said. The company said it had no comments beyond the file.
The company suspended rent payments for April and May when most of its locations were closed. He said he was able to negotiate rent deferrals for a significant number of his stores, with reimbursement at later dates, beginning in late 2020 until 2021. He also laid off or laid off 95% of its 19,000 employees.
But things didn't go well in the 44% of Tailored Brands stores that reopened in early May. For the week ended June 5, sales in stores open for at least one week fell 65% at his men's clothing store and decreased 78% at Jos. A. Bank and 40% at K&G.
Sales fell 60% in its first fiscal quarter, which ended on May 2. All of its stores were closed for approximately half of the quarter and its online operations were suspended for two weeks in March. But Tailored Brands has delayed reporting its full results - the Securities and Exchange Commission allows companies to postpone reporting during the pandemic.
One reason for the delay is that it assesses the amount of costs it must take to depreciate the value of various assets, including the goodwill it holds in its books - a measure of the value of brands and of a company's reputation. The charge will be purely an accounting transaction that involves no cash, but it could increase the cost of borrowing money that the business needs to weather the crisis.
Tailored Brands had $ 201 million in unrestricted cash as of June 5, but this was mainly due to the fact that it had drawn $ 310 million from existing lines of credit in the first quarter. There was therefore only $ 89 million in available borrowing on these lines.
The company has approximately 1,400 stores in the United States and Canada, about half of which are under the name of Men's Wearhouse. It will likely have to shut down a significant percentage of it whatever happens with its reorganization efforts, Basu said.
"It is the business that has the legs to turn things around," she said. "But consumer tastes and demand will change. They will come out of bankruptcy with a much smaller footprint."
