Author Topic: TLRD - Tailored Brands  (Read 14975 times)

spartansaver

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Re: TLRD - Tailored Brands
« Reply #40 on: September 12, 2019, 08:59:32 AM »
Assuming that Burry's 13-F reflects a net long position, being on the other side of the trade from him gives me pause. Nevertheless, I still don't see how TLRD isn't a zero.

Men's formalwear is in secular decline. The tie is dead (thank God we put an end to that nonsense) and the jacket is dying. Millenials aren't buying, and when they are buying, it's from places like Suit Supply that have slightly higher pricing but offer better quality and more customization than TLRD. This trend is apparent even away from the coasts in Middle America; at the low end, men's formal wear is an undifferentiated commodity business that is being disrupted. Add in the huge footprint of the TLRD locations (overhead $$$), the poor management and capital allocation decisions, and the big debt load, and I don't see how TLRD is around in 10 years.

As an aside, SNL had a funny take on TLRD's core product a couple years ago: https://www.nbc.com/saturday-night-live/video/jos-a-bank-cleaning-product/2768588

Hahaha, awesome video.


dbuch

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Re: TLRD - Tailored Brands
« Reply #41 on: September 12, 2019, 09:52:04 AM »

Quote
Assuming that Burry's 13-F reflects a net long position, being on the other side of the trade from him gives me pause. Nevertheless, I still don't see how TLRD isn't a zero.

Men's formalwear is in secular decline. The tie is dead (thank God we put an end to that nonsense) and the jacket is dying. Millenials aren't buying, and when they are buying, it's from places like Suit Supply that have slightly higher pricing but offer better quality and more customization than TLRD. This trend is apparent even away from the coasts in Middle America; at the low end, men's formal wear is an undifferentiated commodity business that is being disrupted. Add in the huge footprint of the TLRD locations (overhead $$$), the poor management and capital allocation decisions, and the big debt load, and I don't see how TLRD is around in 10 years.

As an aside, SNL had a funny take on TLRD's core product a couple years ago: https://www.nbc.com/saturday-night-live/video/jos-a-bank-cleaning-product/2768588

The SSS appear to be fairly flat per year outside of '08-09







walkie518

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Re: TLRD - Tailored Brands
« Reply #42 on: September 13, 2019, 07:56:09 AM »

Quote
Assuming that Burry's 13-F reflects a net long position, being on the other side of the trade from him gives me pause. Nevertheless, I still don't see how TLRD isn't a zero.

Men's formalwear is in secular decline. The tie is dead (thank God we put an end to that nonsense) and the jacket is dying. Millenials aren't buying, and when they are buying, it's from places like Suit Supply that have slightly higher pricing but offer better quality and more customization than TLRD. This trend is apparent even away from the coasts in Middle America; at the low end, men's formal wear is an undifferentiated commodity business that is being disrupted. Add in the huge footprint of the TLRD locations (overhead $$$), the poor management and capital allocation decisions, and the big debt load, and I don't see how TLRD is around in 10 years.

As an aside, SNL had a funny take on TLRD's core product a couple years ago: https://www.nbc.com/saturday-night-live/video/jos-a-bank-cleaning-product/2768588

The SSS appear to be fairly flat per year outside of '08-09

If SSS declines after recent changes... that TLRD paid such a big dividend was a travesty given the debt load

For all practical purposes, getting rid of the dividend is likely a good thing, unless the sole reason for doing so is to keep the lights on

As long as SSS remain flat, there is value here.  Cash from ops has increased fairly substantially since 2016.  I suppose looking at Q/Q changes to cash flow relative to business pivots will be more telling than comparing figures from the 10-Ks? 

Risk-reward here isn't so bad, lose $5 for a possible gain of $15?  Then again, feels like gambling?

AlanS

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Re: TLRD - Tailored Brands
« Reply #43 on: September 14, 2019, 06:18:50 PM »
For Tailored Brands, FCF was positive since 2016 (3 yrs), after the disastrous purchase of JoS. A. Bank. Sales revenue has not fallen off a cliff, but would probably decline. It has committed and paid down its debt by 400m since 2017. Eliminated its dividend, saving about 30+m a year. While committing to buying back shares which would further increase its EPS.

In other words TLRD seems safer now than previously. Management so far made a few good choices during the short time they were elected, with the NFL deal, the share buyback and dividend elimination.

The concern is whether it could be able to catch its own fall from the mistakes of the previous management.

mwtorock

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Re: TLRD - Tailored Brands
« Reply #44 on: September 16, 2019, 06:55:56 AM »
For Tailored Brands, FCF was positive since 2016 (3 yrs), after the disastrous purchase of JoS. A. Bank. Sales revenue has not fallen off a cliff, but would probably decline. It has committed and paid down its debt by 400m since 2017. Eliminated its dividend, saving about 30+m a year. While committing to buying back shares which would further increase its EPS.

In other words TLRD seems safer now than previously. Management so far made a few good choices during the short time they were elected, with the NFL deal, the share buyback and dividend elimination.

The concern is whether it could be able to catch its own fall from the mistakes of the previous management.

The management was clearly under pressure from activist for share buyback and dividend elimination. If they did that on their own, it would be much better. The CFO said on cc that their focus is still debt reduction(eg. all the cash they get hands on probably go there first). It sounds like that share buybacks are for additional cash flows if any in 2020 (a bit of step child treatment). They are not aggressive enough in terms of buybacks at multi-age low prices, and it just does not look like they are confident in the business at all.
« Last Edit: September 16, 2019, 07:06:14 AM by mwtorock »

5xEBITDA

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Re: TLRD - Tailored Brands
« Reply #45 on: September 16, 2019, 07:14:38 AM »
For Tailored Brands, FCF was positive since 2016 (3 yrs), after the disastrous purchase of JoS. A. Bank. Sales revenue has not fallen off a cliff, but would probably decline. It has committed and paid down its debt by 400m since 2017. Eliminated its dividend, saving about 30+m a year. While committing to buying back shares which would further increase its EPS.

In other words TLRD seems safer now than previously. Management so far made a few good choices during the short time they were elected, with the NFL deal, the share buyback and dividend elimination.

The concern is whether it could be able to catch its own fall from the mistakes of the previous management.

The management was clearly under pressure from activist for share buyback and dividend elimination. If they did that on their own, it would be much better. The CFO said on cc that their focus is still debt reduction(eg. all the cash they get hands on probably go there first). It sounds like that share buybacks are for additional cash flows if any in 2020 (a bit of step child treatment). They are not aggressive enough in terms of buybacks at multi-age low prices, and it just does not look like they are confident in the business at all.

I don't really think there is a good reason to be confident about this business. Paying down debt is 100% the right move...a lot of good a big buyback will do everyone when their debt comes due in a few years and they can't deal with it.

Foreign Tuffett

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Re: TLRD - Tailored Brands
« Reply #46 on: September 16, 2019, 07:22:40 AM »

I don't really think there is a good reason to be confident about this business. Paying down debt is 100% the right move...a lot of good a big buyback will do everyone when their debt comes due in a few years and they can't deal with it.

This

AlanS

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Re: TLRD - Tailored Brands
« Reply #47 on: September 26, 2019, 06:05:41 PM »
Agreed on that. Paying down debt should be the main aim of the company if it aims to remain solvent.

Also since TLRD eliminated the dividend. A buyback wouldn't really reduce its cost of capital.

A buyback would only make sense if the company has the resources and feels its share price is undervalued. Alternatively, an optimal situation would be to do a share buyback with the earmarked 48m for share repurchases, get the company on even keel by paying down debt and improving cashflow and margins and then reissuing the shares at a much higher price once this is accomplished. But I have seen more disastrous share buybacks than good ones and it works better if the company has less debt.