Tailored Brands' (tlrd) shares rose 44% on Thursday as signs emerged that its troubled Jos. A. Bank chain was finally snapping its long streak of sales declines.
The company, which also owns Men's Wearhouse and bought Jos. A. Bank two years ago, raised its full-year profit forecast in part because it expects comparable sales at Jos. A. Bank to rise by a mid-to-high single digit percentage in the current holiday quarter. In the third quarter, comparable sales fell 9.8%, a sharp drop to be sure, but far less dramatic than precious declines.
Shares rose to $27.19 in late-morning trading.
Since Tailored bought Jos. A. Bank in 2014 for $1.8 billion, the chain has been an albatross on company results. The company has struggled to wean customers off aggressive deals that were the brands' hallmark, including "Buy 1, Get 3 Free" that diminished the brand and trained shoppers to expect massive discounts.
Tailored, still known as Men's Wearhouse at the time of acquisition, has reported two consecutive annual losses because of write downs on the Jos. A. Bank deals. The merger at the time was intended to give the company more clout with suppliers and reduce the costs of its back-office operations and advertising.
"While there is still work to be done, we are encouraged by the healthier trends we are seeing at Jos. A. Bank that reflect our investments in elevating the brand and customer experience through marketing, merchandising and a more engaging sales experience," said CEO Doug Ewert in a statement.
Tailored now expects to make $1.70 to $1.85 a share for the full fiscal year, compared with its previous view of $1.55 to $1.85 a share. The company's third-quarter profit was $28.4 million, or 58 cents a share. Excluding certain charges, profit rose to 68 cents from 50 cents a year earlier. And sales fell 2% to $846.9 million, the fifth consecutive sales decline.
Still, the company is hardly out of the woods. Comparable sales at Men's Wearhouse, its largest chain, rose a mere 0.1% and Ewert said the chain was struggling to get shoppers into its stores