By and  on May 22, 2009

Shares of Casual Male Retail Group Inc. jumped 12.1 percent Thursday after the company surprised investors with a profit and lifted its guidance for the full year.Net income for the three months ended May 2 hit $336,000, or 1 cent a share, better than the 3-cent loss projected by analysts. In the prior-year period, net income was $96,000, or zero cents a share.Sales declined 9.4 percent to $97.6 million from $107.6 million in last year’s quarter. Comparable-store sales fell 10.7 percent, with a 6.7 percent decline at Casual Male and a 26.9 percent drop at the higher-end Rochester division. Gross margin fell to 42.6 percent of sales from 44.9 percent a year ago, but above the 38.8 percent registered in the fourth quarter.In a conference call Thursday morning, David Levin, president and chief executive officer, told analysts that he sees sales trends improving.“For the year, we anticipated business to continue to be challenging and planned the year at a negative 10 percent comp, which was consistent with our performance in Q4 last year,” he said. “We reported a minus 10.7 percent [comp] for Q1 of this year, but we have encountered a stabilization of the business, which has been a positive for the company. Now we have a better sense of how to react in this difficult environment.”Levin said going into 2009, the goal was “not to try and drive top-line sales in this type of economy. Our focus was to improve cash flow, continue to lower our inventory levels, reduce our debt and improve our gross margins. All these metrics are forecasted to improve throughout the year, even with the negative comp performance.”He also reiterated the company will reduce its marketing expenses by $13 million this year and will move ahead with its plan to convert five of the upper-tier Rochester Big & Tall stores to a hybrid model incorporating Casual Male and Rochester merchandise by July.Based on Rochester’s performance, the company is in the midst of “rebalancing” its assortment by boosting the amount of opening price point goods at the division.Revising previous guidance for the year upward, the company now expects merchandise margins to improve by 275 to 325 basis points, 50 points above projections provided in March. Casual Male also expects to reduce debt by $20 million to $25 million, $10 million more than previously forecast.The company’s stock Thursday closed at $1.48, ahead 16 cents. That’s up from a 52-week low of 26 cents, reached on March 17, against a 52-week high of $4.95 dating back to Sept. 10.

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