Item 2.05 Costs Associated with Exit or Disposal Activities.
As previously reported, on August 2, 2020, Tailored Brands, Inc. (the "Company")
and certain of its subsidiaries (together with the Company, the "Debtors")
commenced voluntary cases (the "Chapter 11 Cases") under chapter 11 of title 11
of the United States Code in the United States Bankruptcy Court for the
Southern District of Texas (the "Bankruptcy Court"). The Chapter 11 Cases are
being jointly administered under the caption In re: Tailored Brands, Inc., et
al., Case No. 20-33900 (MI).
On August 27, 2020, the Company received approval from the Bankruptcy Court to
provide notice to applicable landlords that the Company is rejecting certain
operating leases primarily related to the Company's stores and vacating such
stores.
Subject to the foregoing approval, the Company has committed to a plan to close
up to 500 stores to be completed over the next several weeks. In connection
with these store closures and the corresponding store organization and supply
chain infrastructure and organization realignment, the Company expects to incur
total cash charges of $25 million to $40 million, primarily consisting of $20
million to $30 million for severance and employee-related costs and $5 million
to $10 million for other store closing costs including labor and supplies and
transportation costs to move inventory from closed stores to the Company's
distribution centers. The estimate of total charges to be incurred may vary
based on various factors including timing of the closures, outcome of
negotiations with third parties and changes in management assumptions.
Cautionary Statement Regarding Forward-Looking Information
The Company has included statements in this Current Report on Form 8-K that may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as "expect" and similar
expressions identify forward-looking statements. Forward-looking statements are
based only on the Company's current assumptions and views of future events and
financial performance. They are subject to known and unknown risks and
uncertainties, many of which are outside of the Company's control that may cause
the Company's actual results to be materially different from planned or expected
results. Those risks and uncertainties include, but are not limited to, risks
attendant to the bankruptcy process, including the Company's ability to obtain
court approval from the Bankruptcy Court with respect to motions or other
requests made to the Bankruptcy Court throughout the course of the Chapter 11
Cases, including with respect to any proposed debtor-in-possession financing;
the ability of the Company to negotiate, develop, confirm and consummate a plan
of reorganization; the effects of the Chapter 11 Cases, including increased
legal and other professional costs necessary to execute the Company's
reorganization, on the Company's liquidity (including the availability of
operating capital during the pendency of the Chapter 11 Cases), results of
operations or business prospects; the effects of the Chapter 11 Cases on the
interests of various constituents; the length of time that the Company will
operate under Chapter 11 protection; risks associated with third-party motions
in the Chapter 11 Cases; Bankruptcy Court rulings in the Chapter 11 Cases and
the outcome of the Chapter 11 Cases in general; conditions to which any
debtor-in-possession financing is subject and the risk that these conditions may
not be satisfied for various reasons, including for reasons outside the
Company's control; the effects of the COVID-19 pandemic and uncertainties about
its depth and duration, including the health and well-being of our employees and
customers, temporary store closures, increases in the unemployment rate,
furlough or temporary layoffs of our employees, our ability to increase our
liquidity and preserve financial flexibility, and social distancing measures or
changes in consumer spending behaviors; actions or inactions by governmental
entities; domestic and international macro-economic conditions; inflation or
deflation; the loss of, or changes in, key employees; success, or lack thereof,
in formulating or executing our internal strategies and operating plans
including new store and new market expansion plans; cost reduction initiatives
and revenue enhancement strategies; changes to our capital allocation policy;
changes in demand for our retail clothing or rental products, including changes
in apparel trends and changing consumer preferences; market trends in the retail
or rental business; customer confidence and spending patterns; changes in
traffic trends in our stores; customer acceptance of our merchandise strategies,
including custom clothing; performance issues with key suppliers; disruptions in
our supply chain; severe weather; regional or national civil unrest or acts of
civil disobedience; public health crises, including the recent coronavirus
outbreak; foreign currency fluctuations; government export and import policies,
including the enactment of duties or tariffs; advertising or marketing
activities of competitors; the impact of cybersecurity threats or data breaches;
legal proceedings and the impact of climate change.
Please refer to the Company's Annual Report on Form 10-K for the year ended
February 1, 2020 and its Current Report on Form 8-K filed on June 10, 2020 for a
further discussion of risks and uncertainties. Investors should take such risks
into account and should not rely on forward-looking statements when making
investment decisions. Any forward-looking statement made by us in this Current
Report on Form 8-K is based only on information currently available to us and
speaks only as of the date on which it is made. We do not undertake to update
these forward-looking statements as of any future date.
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