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Sales up 2% at Casual Male Retail Group in Q2 FY'12

20
Aug '12
Casual Male Retail Group Inc. the largest multi-channel specialty retailer of big & tall men's apparel and accessories reported operating results for the second quarter of fiscal 2012.

Financial Highlights

  • Comparable sales increased 2.0% and total sales were essentially flat with the second quarter of fiscal 2011 at $100.5 million.
  • Gross margin was 46.4% compared with 48.4% for the prior-year quarter.
  • Effective tax rate for fiscal 2012 of approximately 40.4% compared with 9.4% for fiscal 2011 as a result of the reversal of the Company's valuation allowance in fiscal 2011.
  • Income from continuing operations was $3.0 million, or $0.06 per diluted share, compared with $7.1 million, or $0.15 per diluted share, in the prior year.  Assuming a normal tax rate of 40.0% for fiscal 2011, income from continuing operations for the second quarter of fiscal 2011 was $0.10 per diluted share.
  • Net income was $1.2 million, or $0.03 per diluted share, compared to net income of $6.6 million, or $0.14 per diluted share in the prior year's second quarter.  Assuming a normal tax rate of 40.0% for fiscal 2011, adjusted net income for the second quarter of fiscal 2011 was $0.09 per diluted share. See below for a reconciliation of these Non-GAAP measures.

Management Comments

"Based on the strong performance of our DestinationXL (DXL) stores, we are accelerating our roll-out strategy and more aggressively opening DXL stores and closing our traditional Casual Male XL locations," said President and CEO David Levin.

"We now plan to complete our roll out of 225 to 250 DXL stores by the end of fiscal 2015. To support the transition to DXL, we are undergoing a paradigm shift in our approach to improve awareness of DXL and fully capitalize on the concept.

“Of course, the accelerated investment in DXL will affect our bottom line and cash flow during this three year transition, but our projections, which are based on current economic conditions, suggest that this investment is expected to enhance revenues significantly and produce double digit operating margins for the longer term.

“Our financial modeling, based upon what has been learned to date, indicates that at the end of the three year accelerated investment period in the DXL concept, the Company's sales in fiscal 2016 should exceed $600 million with operating margins in excess of 10%.

“In addition, we expect that the three-year $150 million investment in the DXL roll out will be funded completely from operating cash flow."

"This year, we have opened 13 new DXL stores and are on schedule to have 51 DXL stores operating by year end," said Levin. "The DXL concept is more attractive to a wider customer audience due to the expansive private label and name-brand apparel selection, a broader range of sizes for the end-of-rack customer, and an appealing shopping environment.

“Average dollars per transaction at DXL stores is currently 41% higher than the average Casual Male XL purchase, which provides us an opportunity to capture greater wallet share and improve operating margins. We look forward to capitalizing on this exciting opportunity."

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Casual Male Retail Group Inc


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