NEW YORK — The first quarter wasn’t pretty for Casual Male Retail Group Inc., but things may be looking up.
On Thursday, the company said net income in the period ended May 3 plummeted 91.5 percent to $96,000, or zero cents, from $1.1 million, or 3 cents, in the same year-ago quarter. The company said results from a year ago included a $400,000 loss from the Jared M discontinued operations.
Sales for the period declined 2.7 percent to $107.6 million from $110.6 million as comparable-store sales fell 2 percent.
In a conference call with analysts, David Levin, president and CEO, attributed the rough showing to “the slowdown in traffic in all of our retail channels. We are pleased, however, that our sales have been stronger relative to the traffic issue. Traffic for the quarter was off in the mid-single digits but our comps were only off 2 percent due to a continued improvement in our conversions and the increase in our average ticket out the door. We continue to believe that the difficulty of the top line is a result of a challenging macroeconomic environment where consumer spending has slowed down in the apparel sector. We are, however, encouraged that when the customer does come in to buy he is pleased with the product we are offering and is spending more than a year ago.”
Levin also noted that April and May sales “have been trending with modest positive comps even though we still haven’t experienced a good shot of warm weather yet in the Northeast.”
He also singled out the company’s new marketing campaign, which launched three weeks ago, as a potential sales booster going forward. The commercials are designed to appeal to men with 42- to 44-inch waists who are frustrated in the lack of assortment in available in those sizes that are being offered to him in the traditional retail channels. These two sizes represent 65 percent of the Big & Tall market, yet represent less than 25 percent of Casual Male’s business.
Turning to the company’s Rochester division, Levin said the chain is in “a state of transition. We are in the process of upgrading the Rochester franchise. We took a significant write-down of inventory last four quarters and pulled out approximately 40,000 units out of the 20 store chain.”
These moves are expected to “position Rochester as the luxury specialty retailer for Big & Tall customers.” For spring, the company launched John Varvatos, “which is proving to be very successful, while premium denim has also been a big driver. And in the fall season, we are launching Michael Kors, Affliction and Ed Hardy all exclusive to Rochester. Our product assortments for fall will be much better balanced and we believe we’ll start to see improved results in the back half of the year,” Levin predicted.
Lastly, the company is testing the waters with a limited assortment of women’s wear. Living XL, its catalog of assorted products for the Big & Tall customer, is now offering activewear, swimwear and other casual items.
Levin said he believes it “will be a small part of the business but we are trying some things [without] having to make a major commitment. It’s something we’re watching.”
The company said it expects earnings per share for fiscal 2008 of approximately 25 cents to 30 cents a share based on an estimated total sales level of $470 to $480 million