Men's Wearhouse and Jos. A. Bank are closing hundreds of stores

New York(CNN Business) Tailored Brands, which owns suit sellers Men's Wearhouse and Jos. A. Bank, is shuttering hundreds of stores and drastically reducing its corporate workforce as the coronavirus pandemic continues to decimate the retail industry.

The company has identified 500 stores for closures and said it's cutting 20% of its corporate positions in hopes of strengthening its "financial position and enable it to compete more effectively in the challenging retail environment," according to a release. The company has around 1,500 stores in the United States, with about half operating under the Men's Wearhouse name.

"Unfortunately, due to the Covid-19 pandemic and its significant impact on our business, further actions are needed to help us strengthen our financial position so we can navigate our current realities," said Tailored Brands CEO Dinesh Lathi.

The store closures and resulting layoffs will cost the company $6 million in severance payments and other termination costs, Tailored Brands said. The stores will close "over time" and it has not "yet quantified the expense savings and costs related to potential store closures."

Shares of Tailored (TLRD) soared nearly 10% following the news.

Tailored was reportedly nearing bankruptcy and talking with advisers for the past few months. One analyst previously told CNN Business that the odds of it filing for bankruptcy eventually are "pretty high" because of reduced demand for dressier clothes as much of the country continues to work from home. Many working-from-home employees have opted for far more relaxed looks of T-shirts and sweatpants rather than pinstripe suits and custom shirts.

Although most of its stores have reopened, sales have been declining. For the week ended June 5, sales at locations open for at least one week fell 65% at Men's Wearhouse. They were down 78% at Jos. A. Bank and 40% at K&G. Sales declined 60% in its fiscal first quarter, which ended May 2. All of its stores were closed for about half the quarter, and its online operations halted for two weeks in March.

Tailored is the second menswear company in July to hit trouble. Earlier, Brooks Brothers filed for bankruptcy, citing the pandemic and men giving up dressy clothes.

GlobalData Retail said in a recent note that year-over-year sales of men's formal clothing fell by 74% between April and June.

"While this deterioration will ease over time, demand will remain suppressed for the rest of 2020 and well into 2021 as office working, business meetings, and socializing are all reduced," the firm said.

--CNN Business' Chris Isidore contributed to this report.