CANTON, Mass., Nov. 18, 2010 /PRNewswire-FirstCall/ -- Casual
Male Retail Group, Inc. (Nasdaq: CMRG), the largest retailer of
big & tall men's apparel and accessories, today reported
operating results for the third quarter and nine month period ended
October 30, 2010.
Third Quarter Highlights (2010 vs. 2009)
- Net income increased to $0.3
million, or $0.01 per diluted
share, from a net loss of $(1.4)
million, or $(0.03) per
diluted share
- Comparable sales increased 3.0% and total sales increased 1.4%
to $89.9 million
- Gross margin increased 300 basis points to 45.7%
Nine Month Highlights (2010 vs. 2009)
- Net income increased to $10.0
million, or $0.21 per diluted
share, from net income of $2.6 million, or $0.06 per diluted share
- Comparable sales increased 0.9% and total sales decreased 0.8%
to $282.2 million
- Gross margin increased 270 basis points to 46.0%
David Levin, President and CEO,
stated, "CMRG's business has strengthened throughout the year with
a comparable sales increase of 3% this quarter. This performance
has resulted in our raising earnings expectations by almost 40%
from the beginning of the year. Furthermore, we continue to
be pleased with our customers' response to the DXL stores opened
over the past two quarters. We are currently planning for
improved business trends in 2011, including opening between 8-12
more DXL stores in locations throughout the US."
Sales
For the third quarter of fiscal 2010, comparable sales increased
3.0% and total sales increased 1.4% to $89.9
million as compared to the prior year's third quarter.
During the third quarter of fiscal 2010, comparable sales for our
Casual Male XL business increased 2.6% and comparable sales from
our Rochester business increased
3.9%. On a comparable basis, sales from our direct businesses
increased by 2.2% while sales from the Company's retail stores
increased 3.2% for the third quarter of fiscal 2010. The
sales improvement in the third quarter of fiscal 2010 is largely
attributable to improved traffic trends. While traffic was
still down 2.7% for the third quarter, it was a substantial
improvement from the -6.3% to -12.7% realized in the four previous
quarters. In addition, during the third quarter and first
nine months of fiscal 2010, the Company's other store metrics, such
as customer conversion rate and average transactions, have
continually strengthened, contributing to the comparable sales
increase this quarter.
For the first nine months of fiscal 2010, comparable sales
increased 0.9% while total sales declined 0.8% to $282.2 million as compared to the prior year's
first nine months. For the first nine months of fiscal 2010,
comparable sales from our Rochester business increased 2.1% while
comparable sales from our Casual Male XL business were flat.
On a comparable basis, sales from our direct businesses
increased by 2.8% and sales from the Company's retail stores
increased by 0.5% for the first nine months of fiscal 2010.
Gross Profit Margin
For the third quarter of fiscal 2010, gross margin increased 300
basis points to 45.7%. The increase was the result of a 190
basis point improvement in merchandise margin and a 110 basis point
improvement in occupancy costs. For the first nine months of
fiscal 2010, gross margin increased 270 basis points to 46.0%.
The increase was the result of a 190 basis point improvement
in merchandise margin and an 80 basis point improvement in
occupancy costs.
SG&A
On a dollar basis, SG&A expenses increased 10% for the third
quarter of fiscal 2010 as compared to last year's third quarter. As
a percentage of sales, SG&A expenses for the third quarter of
fiscal 2010 were 43.1% of sales as compared to 39.8% of sales in
the third quarter of fiscal 2009.
The SG&A increase of approximately $3.5 million in the third quarter of fiscal 2010
was due to: (i) additional SG&A costs, primarily advertising
and store payroll, associated with our newly opened DXL stores and
(ii) bonus accruals of approximately $1.9
million for both the Company's annual incentive plan and
senior management long-term incentive plan. In the prior
year, the Company did not accrue for its bonus plans until the
fourth quarter of fiscal 2009, when the achievement of the bonus
plans became probable.
For the first nine months of fiscal 2010, on a dollar basis,
SG&A expenses increased 1.8% as compared to the first nine
months of fiscal 2009. As a percentage of sales, SG&A
expenses for the first nine months were 38.9% of sales as compared
to 37.9% of sales for the first nine months of fiscal 2009.
For fiscal 2010, the Company expects that SG&A costs will
increase slightly, less than 1%, from the prior year. The
Company continues to benefit from the cost reductions taken in
fiscal 2009, which are principally offsetting the additional
SG&A expenses in fiscal 2010.
Interest Expense
Net interest expense for the third quarter of fiscal 2010
decreased by $0.1 million to $0.2
million from $0.3 million in
the prior year. For the first nine months of fiscal 2010, net
interest expense was $0.5 million, a
decrease of $0.4 million from
$0.9 million for the first nine
months of the prior year. This decrease was primarily the
result of a decrease in total indebtedness over the prior year.
Provision (Benefit) for Income Taxes
Net income for the third quarter and first nine months of fiscal
2010 was positively impacted by $0.8
million, or $0.02 per diluted
share due to the reversal of previously reserved tax matters.
Cash Flow
Free cash flow from operations decreased by $6.2 million to $(2.4) million for the first nine
months of fiscal 2010 as compared to $3.8
million for the first nine months of fiscal 2009. This
decrease was partially due to the expected increase in capital
expenditures for the Company's new DXL stores.
Balance Sheet & Liquidity
Total debt decreased 58%, or $20.0
million, to $14.5 million at
the end of the third quarter of fiscal 2010 from $34.5 million at the end of the third quarter of
fiscal 2009. At October 30, 2010, the
Company had $69.1 million available
under its credit line facility.
Subsequent to the end of the third quarter, on November 10, 2010, the Company amended and
restated its current credit facility with Bank of America, N.A., as
Agent. The new agreement provides for a maximum committed borrowing
of $75 million, which, pursuant to an
accordion feature, may be increased to $125
million upon the request of the Company and the agreement of
the lender(s) participating in the increase. The maturity date
of the amended and restated credit facility is November 10, 2014.
Inventory levels of $109.6 million
at the end of the third quarter of fiscal 2010 increased 1.3% from
$108.2 million at the end of the
third quarter of fiscal 2009.
Destination XL
During the first nine months of fiscal 2010, the Company has
opened its first four Destination XL™ (also called DXL™) stores
located in the following test markets: Schaumburg, IL;
Memphis, TN; Houston, TX; and Las
Vegas, NV.
Through the third quarter of fiscal 2010, the four DXL stores
have shown double digit improvements in sales over the prior year's
predecessor stores from the respective DXL store market area.
Based on the strong performance of these four stores thus
far, the Company anticipates expanding the testing further in
fiscal 2011, by opening an additional 8-12 new DXL stores. If
the Company continues to have success with the DXL stores in fiscal
2011, the long-range plan currently envisions 75-100 DXL store
locations by fiscal 2015.
Updated Fiscal 2010 Outlook
Based on the Company's performance during the third quarter of
fiscal 2010, the Company has further revised its earnings guidance
to $0.32-$0.34 per diluted share.
As of November 18, 2010, the
Company is projecting the following for the fiscal year ending
January 29, 2011:
- Comparable sales +1% with total sales of $393 - $396 million (slightly up from a low of
flat comps and total sales of $390
million)
- Gross profit margin of 45.9% to 46.2% (previous range 45.3% to
45.6%)
- SG&A expenses to increase by less than 1.0% (previous
estimate was a 2.0% decrease) This increase relates to incremental
expenses associated with slightly higher sales and expected higher
payouts under the Company's incentive plans, as a result of higher
than expected earnings performance.
- Diluted earnings per share of $0.32 -
$0.34 (previous range $0.29-$0.32)
- Free cash flow of approximately $24
million, which is based on operating cash flow of
approximately $34 million less
capital expenditures of approximately $10
million
- The Company's cash balance at the end of the year is expected
to be between $15-$20 million
Non-GAAP Measures
In addition to the financial measures prepared in accordance
with generally accepted accounting principles (GAAP), the above
discussion also refers to non-GAAP free cash flow of $(2.4) million and $3.8
million for the nine months ended October 30, 2010 and October 31, 2009, respectively, and estimated
non-GAAP free cash flow of $24.0
million for fiscal 2010. The presentation of non-GAAP
free cash flow is not a measure determined by GAAP and should not
be considered superior to or as a substitute for net income or cash
flows from operating activities or any other measure of performance
derived in accordance with GAAP. In addition, all companies do not
calculate non-GAAP financial measures in the same manner and,
accordingly, "free cash flows" presented in this release may not be
comparable to similar measures used by other companies. The Company
calculates free cash flows as cash flow from operating activities
less capital expenditures and less discretionary store asset
acquisitions.
|
|
|
For the nine
months ended
|
Projected Cash
Flow
|
|
(in
millions)
|
October 30,
2010
|
October 31,
2009
|
Fiscal
2010
|
|
|
|
|
|
|
Cash flow from operating
activities
|
$ 4.9
|
$ 7.2
|
$ 34.0
|
|
Less: Capital
expenditures
|
(7.3)
|
(3.4)
|
(10.0)
|
|
Less: Discretionary store asset
acquisitions
|
-
|
-
|
-
|
|
|
|
|
|
|
Estimated Free Cash
Flow
|
$ (2.4)
|
$
3.8
|
$ 24.0
|
|
|
|
|
|
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Investors are invited to listen to a broadcast of the Company's
conference call to discuss its earnings results for the third
quarter and first nine months of fiscal 2010. The conference
call will be broadcast live today, Thursday,
November 18, 2010 at 9:00 a.m.
Eastern Standard Time and can be accessed at
www.casualmalexl.com by clicking on the investor relations icon.
The call will be archived online within one hour after its
completion. Participating in the call will be David Levin, President and Chief Executive
Officer, and Dennis Hernreich,
Executive Vice President, Chief Operating Officer and Chief
Financial Officer.
During the conference call, the Company may discuss and answer
questions concerning business and financial developments and
trends. The Company's responses to questions, as well as
other matters discussed during the conference call, may contain or
constitute information that has not been disclosed previously.
Casual Male Retail Group, Inc., the largest retailer of big and
tall men's apparel with operations throughout the United States, Canada and Europe, operates 445 Casual Male XL retail and
outlet stores, 4 Destination XL stores, 17 Rochester Clothing
stores, and direct-to-consumer businesses which include several
catalogs and e-commerce sites. The Company is headquartered in
Canton, Massachusetts, and its
common stock is listed on the NASDAQ Global Market under the symbol
"CMRG."
Certain information contained in this press release,
including the Company's expectations regarding fiscal 2010,
constitutes forward-looking statements under the federal securities
laws. The discussion of forward-looking information requires
management of the Company to make certain estimates and assumptions
regarding the Company's strategic direction and the effect of such
plans on the Company's financial results. The Company's actual
results and the implementation of its plans and operations may
differ materially from forward-looking statements made by the
Company. The Company encourages readers of forward-looking
information concerning the Company to refer to its prior filings
with the Securities and Exchange Commission, including without
limitation, its Annual Report on Form 10-K filed on March 19, 2010, that set forth certain risks and
uncertainties that may have an impact on future results and
direction of the Company.
Forward-looking statements contained in this press release
speak only as of the date of this release. Subsequent events or
circumstances occurring after such date may render these statements
incomplete or out of date. The Company undertakes no obligation and
expressly disclaims any duty to update such statements.
CASUAL MALE
RETAIL GROUP, INC.
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|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
three months ended
|
|
For the nine
months ended
|
|
|
October 30,
2010
|
|
October 31,
2009
|
|
October 30,
2010
|
|
October 31,
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
Sales
|
$
89,936
|
|
$
88,689
|
|
$
282,171
|
|
$
284,502
|
|
Cost of goods sold, including
occupancy
|
48,802
|
|
50,826
|
|
152,360
|
|
161,256
|
|
Gross
profit
|
41,134
|
|
37,863
|
|
129,811
|
|
123,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
38,802
|
|
35,287
|
|
109,864
|
|
107,951
|
|
Depreciation and
amortization
|
3,159
|
|
3,885
|
|
9,847
|
|
11,662
|
|
Total
expenses
|
41,961
|
|
39,172
|
|
119,711
|
|
119,613
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
(827)
|
|
(1,309)
|
|
10,100
|
|
3,633
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
323
|
|
94
|
|
531
|
|
280
|
|
Interest expense,
net
|
(177)
|
|
(256)
|
|
(485)
|
|
(881)
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
(681)
|
|
(1,471)
|
|
10,146
|
|
3,032
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for income
taxes
|
(970)
|
|
(61)
|
|
107
|
|
480
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
289
|
|
$
(1,410)
|
|
$
10,039
|
|
$
2,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share -
basic
|
$0.01
|
|
($0.03)
|
|
$0.21
|
|
$0.06
|
|
Net income (loss) per share -
diluted
|
$0.01
|
|
($0.03)
|
|
$0.21
|
|
$0.06
|
|
|
|
|
|
|
|
|
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|
Weighted-average number of
common shares outstanding:
|
|
|
|
|
|
|
|
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Basic
|
47,041
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|
44,761
|
|
46,895
|
|
42,554
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|
Diluted
|
47,548
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|
44,761
|
|
47,435
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|
42,949
|
|
|
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CASUAL MALE
RETAIL GROUP, INC.
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
October 30,
2010 and January 30, 2010
|
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(In
thousands)
|
|
|
|
|
|
|
October
30,
|
|
January
30,
|
|
|
2010
|
|
2010
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Cash and investments
|
$
6,043
|
|
$
4,302
|
|
Inventories
|
109,591
|
|
89,977
|
|
Other current assets
|
14,894
|
|
10,874
|
|
Property and equipment,
net
|
40,080
|
|
41,888
|
|
Intangible assets
|
32,425
|
|
32,809
|
|
Other assets
|
1,377
|
|
1,189
|
|
Total
assets
|
$
204,410
|
|
$
181,039
|
|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued
expenses
|
|
|
|
|
and other liabilities
|
$
61,447
|
|
$
52,550
|
|
Deferred taxes
|
1,346
|
|
769
|
|
Deferred gain on
sale-leaseback
|
22,347
|
|
23,446
|
|
Notes payable
|
10,589
|
|
3,475
|
|
Long-term debt, including
current portion
|
3,921
|
|
7,576
|
|
Stockholders' equity
|
104,760
|
|
93,223
|
|
Total liabilities
and stockholders' equity
|
$
204,410
|
|
$
181,039
|
|
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SOURCE Casual Male Retail Group, Inc.