Casual Male expects to open 14-15 Destination XL stores

25 May '11

4 min read

Casual Male Retail Group Inc, the largest retailer of big & tall men's apparel and accessories, reported operating results for the first quarter ended April 30, 2011.

First Quarter Highlights (1QFY11 vs. 1QFY10)

• Net income, which was flat with the prior year's first quarter, was $4.2 million, or $0.09 per diluted share.
• Comparable sales increased 2.2% and total sales increased 0.9% to $95.8 million.
• Gross margin improved 100 basis points to 46.9%.

Sales

For the first quarter of fiscal 2011, total sales increased 0.9% to $95.8 million and comparable sales increased 2.2% as compared to the prior year's first quarter. During the first quarter of fiscal 2011, comparable sales for our Retail channel increased 1.6% while comparable sales for our Direct channel increased 4.7%.

For the first quarter of fiscal 2011, comparable sales for our northeast and midwest regions were over 3% lower than comparable sales for our southern and western regions, principally due to adverse weather in those regions. As a result, comparable sales for the first quarter of fiscal 2011 were 1.5% lower than expected.

Gross Profit Margin

For the first quarter of fiscal 2011, gross margin increased 100 basis points to 46.9%. The increase was the result of a 90 basis point improvement in merchandise margin and a 10 basis point improvement in occupancy costs.

SG&A

On a dollar basis, SG&A expenses increased 4.2% to $37.1 million for the first quarter of fiscal 2011. As a percentage of sales, SG&A expenses increased 120 basis points to 38.7% in the first quarter of fiscal 2011 as compared to 37.5% in the first quarter of fiscal 2010.

As planned, our SG&A expenses for the first quarter of fiscal 2011 increased by $1.5 million, primarily due to payroll-related costs, including bonus accruals, modest salary increases, severance payments and 401k matching contributions.

Interest Expense

Net interest expense of $0.1 million for the first quarter of fiscal 2011 was flat with the prior year. Net interest expense for the first quarter of fiscal 2011 was primarily unused line fees because the Company had essentially no borrowings during the quarter.

Cash Flow

Free cash flow from operations improved by $1.3 million to $1.2 million in the first quarter of fiscal 2011 as compared to $(0.1) million in the first quarter of fiscal 2010.

Balance Sheet & Liquidity

At April 30, 2011, the Company had no outstanding debt as compared to $12.0 million at end of the first quarter of fiscal 2010. In addition, the Company had full availability under its credit facility of $66.9 million.

Inventories decreased 1.1% to $97.6 million at the end of the first quarter of fiscal 2011 from $98.7 million at the end of first quarter of fiscal 2010.

Destination XL

The Company now expects to open 14-15 additional Destination XL stores during the second half of fiscal 2011. This is an increase from previously discussed 10-14 stores guidance for 2011. In addition, the Company anticipates opening 20-30 Destination XL stores in fiscal 2012. Depending on the real estate and market demographics for each of these store locations, we expect the size of each store to be between 6,000 to 12,000 square feet, to accommodate each market.

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