The owner of Men's Wearhouse and Jos. A. Bank, Tailored Brands spiked 5.8% to $7.17 before trading of its shares was halted for the day around 2:30.
But after the company released its second-quarter earnings report, the shares dropped more than 26% in after-hours trading to $5.28 as Tailored Brands announced plans to suspend dividend payments while also forecasting a tough third quarter ahead.
The men's clothing chain said it would suspend payment of its 18-cents-a-share dividend in the fourth quarter in order to pay down corporate debt and repurchase shares.
Tailored Brands also forecast lower third-quarter sales, with earnings per share to drop to between 40 to 45 cents. The retailer is also bracing for a drop in same-store sales of 3% to 5% at Men's Wearhouse and 2% to 4% at Jos. A. Bank.
The retailer beat analyst expectations with its second-quarter earnings. GAAP diluted EPS was 68 cents a share. Adjusted EPS was 82 cents, coming in above the 74 cents expected by analysts surveyed by Zacks Investment Research.
Revenue for the quarter was roughly in line with analyst expectations, dropping 4.1% to $789.5 million.
Comparable sales were "in line with our guidance and adjusted earnings per share above our guidance," said Tailored Brands President and CEO Dinesh Lathi in a statement.
Tailored Brands' stock price has taken a battering over the past year as the men's apparel chain struggles to deal with a shift toward business-casual attire and with foreign-currency fluctuations.
In mid-September 2018, the shares were trading above $25.
Activist investment firm Scion Asset Management, which now owns more than 5% of Tailored Brand's stock, last month urged the clothing chain's management to spend $50 million buying back shares.
"Given the quarter-century lows in the common stock, we believe the best use of funds from the sale, in good part or in full, is for a share repurchase," wrote Scion's chief, Michael Burry.
And Tailored Brands saw an 11% spike on Aug. 21 after an industry publication reported a private equity firm had approached the retailer.