The DXL superstore division continues to be the key driver for Casual Male Retail Group Inc. as it saw its first-quarter profits decline on a small uptick in sales.
In the three months ended April 28, the big and tall men’s wear retailer matched analysts’ estimates with net income of $2.3 million, or 5 cents a diluted share, 46.1 percent below the $4.2 million, or 9 cents, reported for the 2011 quarter. A tax benefit inflated year-ago profits by $1.4 million, or 3 cents a share.
Sales improved 0.1 percent, to $95.9 million from $95.8 million in the prior-year period, and rose 2 percent on a same-store basis. With cost of goods sold down 1.3 percent, gross margin perked up to 47.7 percent of sales from 46.9 percent. Inventories at the end of the quarter stood at $112.2 million, 7.7 percent above their year-end mark of $104.2 million.
During a conference call with analysts Friday morning, David Levin, chairman and chief executive officer, said the company opened six DXL stores in the first quarter, bringing its total to 22, and plans to more than double that number by yearend. “For the quarter, the DXL stores delivered 116 percent of the sales of the stores that they replaced,” he said, adding that the company expects to have 51 of these stores in operation by the end of 2012.
“These 51 stores are expected to generate approximately 30 percent of the company’s sales on an annualized basis,” he said, noting that number should jump to approximately 50 percent by the end of 2013. “As we continue to refine the real estate rollout strategy, we now anticipate having 225 to 250 DXL stores when we complete the transition from Casual Male XL to DXL.”
One stumble for the company in the period was a DXL catalogue that was distributed in March and resulted in a “poor performance. The DXL catalogue was designed to eventually replace our existing Casual Male XL, Rochester clothing and B&T factory direct catalogues, as we will be rebranding our existing stores to Destination XL over the next several years. That alone contributed to a loss of $1.5 million in the month of March,” Levin said.
Levin declined to provide much detail on what caused the lack of interest from customers, citing competitive reasons, but hopes to address the issues with a redesigned and relaunched DXL catalogue in the third quarter.