A decline in promotional activity and improved margins led Casual Male Retail Group Inc. to move to profitability from a year-ago loss in the fourth quarter despite continuing declines in sales.
In the three months ended Jan. 30, the Canton, Mass.-based big and tall specialty chain posted net income of $3.6 million, or 8 cents a diluted share, 3 cents better than the consensus estimate carried by Yahoo Finance. In the final quarter of 2008, the firm registered a net loss of $108 million, or $2.61 a share. Stripping away charges for impairment of goodwill and other one-time items, the year-ago loss came to 14 cents a share.
Sales fell 10.1 percent to $110.7 million from $123.1 million in the prior-year quarter and declined 8.2 percent on a comparable-store basis, although gross margin shot up to 46.4 percent of sales from 38.8 percent.
On a conference call Thursday morning, David A. Levin, president and chief executive officer, said the company is expecting improvement in the new year as store traffic rises and the retailer prepares to unveil a new store concept, Destination XL, a superstore that will incorporate all of its divisions, including the more upscale Rochester.
Levin said that, in the first quarter, “we are seeing sales flat now for the first time in two years. With the relatively flat sales plan for 2010 seeing greater improvement in the back half of the year, we should be able to deliver higher earnings based on a combination of continued improvement in our gross margins and reduced expense structure.”
The company said it expects net income of between 23 cents and 26 cents a diluted share on sales of between $385 million to $395 million. Comps are expected to come in between off 1 percent and up 1 percent.
For the full year, net income totaled $6.1 million, or 14 cents a diluted share, versus a loss, including charges, of $109.3 million, or $2.64. Sales declined 11 percent to $395.2 million from $444.2 million and fell 10.8 percent on a comp basis.
Casual Male shares slid 34 cents, or 8.7 percent, to close at $3.57 on Thursday.
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