Tailored Brands (NYSE: TLRD) shares are rallying over the past eight months on improving fundamentals and financial numbers; TLRD stock rose more than 130% since hitting the 52-week low of $9 a share in the second half of last year. Its stock has also been getting the support from its expansions strategies.

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Tailored Brands is working on three key strategies:

•         Expand its custom business
•         Strengthen its brands and grow the overall market share
•         Enhance its omnichannel experience

Its business strategies are working considering a massive revenue growth in the final quarter of fiscal 2017. Its revenue rose 8% Y/Y in Q4 of fiscal 2017 to $859 million, supported by growth from retail businesses. On top, the company turned robust revenue growth into big profits, due to operational efficiencies and lower general and selling expenses.

Its SG&A expense declined $1.7 million Y/Y to $252.8 million in Q4, and the expense dropped almost 270 basis points as a percent of sales from the past year period.

“Our performance reflects the progress we are making on our key growth strategies.  We more than doubled our custom business to over $100 million in 2017,” said Tailored Brands CEO Doug Ewert.

The company posted adjusted earnings per share of $2.20 in fiscal 2018, up 28% from $1.79 per share in FY2016. Improving sales and earnings has also strengthened its cash generating potential. Despite the debt reduction of $200 million last year, its cash and cash equivalents increased by $32 million to $103.6 million by the end of last year.

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Tailored Brands Dividends Are Safe

Tailored Brands offer the quarterly dividend of $0.18 per share, yielding above 3%. Its dividends are safe considering the cash flow generating potential. It generated operating cash flow of $350.8 million in fiscal 2017, while its capital requirements were standing close to $95 million. Thus the company was left with free cash flows of $250 million, which are more than enough to cover the dividend payments $35 million. Overall, strengthening cash position and improving sales growth prospects supports the uptrend in Tailored Brands stock.

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