By  on May 25, 2007

NEW YORK — From extender seat belts to a new private label for the traditional customer, Casual Male is further entrenching itself with the big & tall community through several new initiatives.

In reporting its first-quarter earnings last week, the Canton, Mass.–based retailer said it will launch a new private brand under the Oak Hill name for fall. The lifestyle sportswear label will be the highest-priced collection offered in Casual Male’s 500-plus stores, and complements its other existing brands.

“We felt that we have the 626 Blue label for the young customer, Synrgy, which is a more contemporary line with a Banana/Kenneth Cole influence, and Harbor Bay, which is our bread-and-butter basic commodity product,” David Levin, president and CEO, told DNR last Thursday. “We felt there was a need for an upgraded, Polo-ish product line, with better fabrics and higher price points.”

Levin said the “signature piece” under the Oak Hill label is a “three-for-one pant.” That item was tested “very successfully” in the fourth quarter, Levin said. “It has all the bells and whistles. It’s wrinkle-free, stain-resistant and colorfast.”

Two colors of the pant, which retails for $55, will be in Casual Male stores for Father’s Day. The full collection—which will include knit and woven shirts, sweaters, sport coats and bottoms—is expected to roll into stores in the August/September time frame. Prices will be in the $40 to $50 price range, Levin said. “The customer is getting a hell of a garment,” he added. “We’re really excited about it. It fits well with our other brands.” He noted that the price points will be the highest of any of Casual Male’s own-label merchandise.

Private label at the Casual Male stores has increased to more than 70 percent, Levin said.

Young men’s is also performing well at the Casual Male stores. In fact, Levin said, young men’s is the classification that is driving comp-store improvements at the chain. “The average age of our customer has dropped five years since we acquired the company in 2002,” he said. “And we see that trend continuing as we go forward.” For back-to-school the company will offer three fits in denim, up from one last year, Levin said, noting that this has been identified as “a missing part of our business.” The denim will be spotlighted in the company’s August catalog.

In addition to young men’s, Casual Male is also seeing good results from three new businesses, the company said during a conference call to analysts. Jared M., the high-end collection and clothing brand, has shown success since it was purchased by Casual Male last May, while Big & Tall Factory Direct, a retail and e-commerce concept with prices 25 percent below Casual Male, is also exhibiting good early response from customers. But Levin seemed most excited about LivingXL, a catalog of non-apparel products for “people of size.” The company recently mailed 350,000, 48-page catalogs offering such items as scales, seat-belt extenders, wraparound towels and other products for the big & tall customer—“products that relate to their daily needs,” Levin said.

“It’s not apparel but it scored really well.” The catalogs have been out for less than two weeks and the company is planning an even larger mailing for fall. Levin told analysts that LivingXL represents “big potential” for the corporation in the future.

All told, these new businesses accounted for sales of $1.2 million in the first quarter, the company said. The businesses are expected to break even this year.
Turning to the Rochester Big & Tall division, Levin said the visual presentation within the company’s 25 stores will be enhanced this year to be more in line with its focus as “a high-end luxury men’s clothing store.” He said the stores should be “positioned where we want them to be by spring ’08.”

Rochester’s New York and Chicago stores have already been updated, he said, and results have been positive. As part of Rochester’s upgrading program, all new stores will offer a Polo Ralph Lauren concept shop, Levin said.

Private label at this division has been increased from nothing to around 10 percent, he said, a number he expects to double within the next year. Currently the company offers Rochester 1906, a classic, traditional label, and Castagne, a line featuring Italian design sensibilities, and these labels are “already in the top five in unit sales,” Levin said. As a result, the company will expand into more classifications this year.

In the first quarter ended May 5, Casual Male Retail Group reported earnings fell 19 percent to $1.1 million from $1.4 million during the prior-year period. The company’s diluted earnings per share declined to 3 cents, compared to 4 cents last year. On the call, the company reported a gain in operating income to $2.5 million from $2.4 million in the prior year. Dennis Hernreich, CFO, said earnings were impacted by $1 million in losses from the new businesses.

In the quarter, the company reported a sales increase of 8.2 percent to $111.3 million from $102.9 million during the same period last year. Same-store sales for the company were also up during the quarter, 6.2 percent over last year’s first quarter.

Levin said he was pleased with the comp-store gain that came despite the challenging weather in the period. He also pointed to the company’s “consistent improvement in gross margin performance,” which rose 200 basis points in the first quarter and 600 basis points over the past three years.

Levin said the company expects “challenging comps” in the second and third quarters, but sees “the best opportunity to deliver the strongest results” in the fourth quarter.

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