Casual Male plans to maximize DestinationXL biz

19 Mar '12

4 min read

Casual Male Retail Group Inc, the largest retailer of big & tall men's apparel and accessories, reported operating results for the fourth quarter and fiscal year ended January 28, 2012 ("fiscal 2011").

Fourth Quarter Highlights (4QFY11 vs. 4QFY10)

• Comparable sales increased 0.8% and total sales of $111.5 million were flat to last year.
• Gross margin decreased 70 basis points to 44.7%.
• Net income increased to $33.5 million, or $0.70 per diluted share, from net income of $5.3 million, or $0.11 per diluted share. Included in net income are two one-time, non-cash transactions:
- The Company reversed a significant portion of its valuation allowance, which resulted in a non-recurring income tax benefit of $42.5 million, or $0.88 per diluted share.
- The Company recorded a partial, non-cash impairment charge of $23.1 million, or $0.29 per diluted share, after tax, against the "Casual Male" trademark.
• Adjusted Net Income for the fourth quarter of fiscal 2011, excluding the impact of the non-recurring tax valuation allowance and the impairment charge, was $5.0 million, or $0.10 per diluted share, compared to net income of $5.3 million, or $0.11 per diluted share, in fiscal 2010.

Fiscal 2011 Highlights (FY11 vs. FY10)

• Comparable sales increased 2.1% and total sales increased 1.0% to $397.7 million.
• Gross margin improved 40 basis points to 46.2%.
• Net income increased to $42.7 million, or $0.89 per diluted share, from $15.4 million, or $0.32 per diluted share last year.
- Includes a non-recurring income tax benefit of $42.5 million, or $0.88 per diluted share, as discussed above.
- Includes an impairment charge on the "Casual Male" trademark of $23.1 million, or $0.29 per diluted share, after tax, as discussed above.
• Adjusted Net Income for fiscal 2011, excluding the impairment charge and the non-recurring reversal of the tax valuation allowance, was $14.2 million, or $0.30 per diluted share, compared to net income of $15.4 million, or $0.32 per diluted share in fiscal 2010.
• Debt-free and cash positive at January 28, 2012, the Company has full availability of $65.8 million under its credit facility and cash on hand of $10.4 million. Cash on hand increased $6.2 million versus fiscal 2010.

Fiscal 2012 Outlook

For the fiscal year ending February 2, 2013, the Company is projecting, inclusive of the opening of an estimated 35 DestinationXL stores, earnings per share of $0.22 to $0.27, based on the following:

• Comparable sales increase of 4.7%-6.6%, primarily driven by DXL openings, and total sales of $416.5 - $423.9 million.
• Gross profit margin of 46.8% to 47.2%.
• SG&A expenses to increase by approximately 2.0-3.0% to an approximate range of $158.5 to $159.5 million on a comparable 52 week basis. As a percentage of sales, total SG&A expenses are expected to improve 30 to 70 basis points.
• Operating margin is expected to improve by between 20-110 basis points after including depreciation and amortization charges of approximately $15.4 million which includes amortization expense of approximately $1.8 million on the "Casual Male" trademark, which has a remaining estimated useful life of 7 years.

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