Maybe they’ll call it Destination L.
In reporting its first-quarter results Thursday morning, Casual Male Retail Group Inc. said it will accelerate the opening of its successful superstore, Destination XL, and will explore opening smaller-format units.
In a call with analysts, David Levin, chief executive officer, said: “We now have three-quarters of sales under our belt with our Destination XL concept and in 2011 it continues to demonstrate success. The DXL stores are about three times the size of a typical Casual Male store with over three times the selection of product. We’re extremely pleased how the four DXL stores have performed. They have been consistent month-to-month and their business continues to gain momentum as more big & tall consumers become familiar with these stores.”
Noting that the stores have “met and exceeded” plan, Levin said the company is “accelerating the rollout. We now plan on opening 14 to 15 stores this year, which is an increase from the previously discussed 10 to 14 stores which was already an increase over the four to five stores planned only six months ago. And for 2012, we’re now targeting to open between 20 to 30 stores compared to the previously announced 15 to 20 stores. With the continued rollout through 2015, DXL will evolve into a larger component of the overall CMRG business and drive growth in the coming years.”
The company said that depending upon the market, the stores will be between 6,000 and 12,000 square feet. Levin said that in smaller markets, “we really don’t need the 12,000 square feet” and the company will review the performance of the smaller stores. “If in fact we’re right that the 6,000-square-foot box works in secondary markets,” he continued, the original forecast of 75 to 100 DXL stores “could go up dramatically. So we’re going to be watching those smaller stores rather closely.”
Turning to the topic of price increases, the company raised prices in the first quarter around 5 percent and will “continue re-pricing through August,” according to Levin. Prices are expected to rise 5 percent to 10 percent throughout the year. But so far, customers have not balked. “We’ve now executed approximately 45 percent of our planned price increases and the analysis of the impact has not changed our sales outlook for the year,” Levin said.
In the three months ended April 30, the Canton, Mass.-based big & tall specialty chain posted net income of $4.21 million, or 9 cents a diluted share, 1 cent below analysts’ consensus estimates. The bottom line was 1.3 percent above the $4.15 million, or 9 cents, generated in the 2010 quarter.
Sales rose 0.9 percent to $95.8 million from $95 million in the year-ago period, with same-store sales up 1.6 percent and direct channel sales up 4.7 percent. Combined, comparable sales were up 2.2 percent, 1.5 percent below company expectations. Comparable sales in the Northeast and Midwest were 3 percent below those for the South and West, which the company attributed to poor weather.
Gross margin rose 100 basis points to 46.9 percent of sales from 45.9 percent in last year’s period.
Shares fell 28 cents, or 6.6 percent, to $3.94 in trading Thursday.
The firm reiterated its previous guidance for full-year EPS of between 40 cents and 45 cents on a comparable sales increase of between 4 percent and 4.5 percent. Sales are slated to finish at between $405 million and $410 million with gross margin of between 46.6 percent and 47.1 percent of sales.