Casual Male Retail Group, Inc. Announces Second Quarter Results; Projects Annualized Cost Savings of $20 to $25 Million to be Fully Achieved in Next 18 Months.Business Editors CANTON Canton, cities, United States Canton. 1 City (1990 pop. 13,922), Fulton co., W central Ill., in the corn belt; inc. 1849. It is a trade and industrial center for a coal and farm area. 2 Town (1990 pop. 18,530), Norfolk co. , Mass.--(BUSINESS WIRE)--Aug. 23, 2002 Casual Male Retail Group, Inc. ("CMRG CMRG Case Management Resource Guide ") (NASDAQ/NMS: "CMRG"), formerly Designs, Inc., retail brand operator of Casual Male Big & Tall(R), Levi's(R) Outlet by Designs, Dockers
Dockers is a brand of Levi Strauss & Co. Levi Strauss & Co. (R) Outlet by Designs, Candies(R) and Ecko Unltd(R) outlet stores An outlet store or factory outlet is a retail store in which manufacturers sell their stock directly to the public through their own branded stores. The stores can be can be brick and mortar or online. , today announced financial results for the second quarter and six months ended August 3, 2002. The results for the second quarter of fiscal 2003 include the results, since May 14, 2002, of the Company's recent acquisition of substantially all of the assets of Casual Male Corp. and its subsidiaries ("Casual Male"). David A. Levin lev·in n. Archaic Lightning. [Middle English levene, levin; see leuk- in Indo-European roots.] , President and Chief Executive Officer, stated, "Our Company has experienced a significant transformation over this past quarter with the acquisition of Casual Male. The men's big and tall apparel business is the key driver of our Company's future growth and therefore, our name change to Casual Male Retail Group, Inc. more accurately reflects our long-term focus. We are working to increase our share of the big and tall men's apparel market by leveraging the Casual Male brand name through the opening of 30-40 new Casual Male Big & Tall stores over the next eighteen months, conducting marketing tests this fall to improve upon our existing stores' productivity and grow the catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. and e-commerce business. At the same time, we are working closely with Levis Strauss and Company to address the performance and merchandise assortment assortment /as·sort·ment/ (ah-sort´ment) the random distribution of nonhomologous chromosomes to daughter cells in metaphase of the first meiotic division. as·sort·ment n. issues of our Levi's(R) and Dockers(R) outlet stores and expect to see improvements beginning in the spring of fiscal 2004, which we believe will improve our outlet stores' competitiveness in the marketplace. However, these discussions have not been finalized See finalization. and the Levi's(R) and Dockers(R) business continues to show significant negative trends during our important Back to School selling season and as a result the Company is taking aggressive actions to downsize Downsize Reducing the size of a company by eliminating workers and/or divisions within the company. Notes: When a company downsizes, it is attempting to find ways to improve efficiency and increase profitability. It is sometimes referred to as trimming the fat. the business." For the second quarter of fiscal 2003, the Company reported a net loss of $12.9 million, which includes restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. totaling $11.0 million, primarily related to the previously announced restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of the Company's Levi's(R)/Dockers(R) business and the integration of the Casual Male operations. This compares to a net income of $0.7 million in the corresponding period of the prior year. For the six months ended August 3, 2002, the Company reported a net loss of $14.7 million, of which $11.0 million relates to the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. restructuring charges recorded in the second quarter of fiscal 2003. This compares to a net loss of $0.7 million in the corresponding period of the prior year. As a result of the restructuring charge, the income tax benefit previously recorded in the first quarter of the current year was reversed in the second quarter, such that no income tax benefit has been recognized in the year-to-date results. Without the impact of the $11.0 million restructuring charge, the Company would have reported a net loss of $0.5 million for the second quarter of fiscal 2003 and a net loss of $2.3 million for the six months ended August 3, 2002. On an operating basis, the Casual Male business of CMRG reflected operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of approximately $4.9 million during the second quarter, since the acquisition date of May 14, 2002, while CMRG's Levi's(R)/Dockers(R) business generated an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of approximately $3.1 million for the full second quarter of fiscal 2003. The operations of the Candies(R) and Ecko Unltd.(R) businesses were not significant in the second quarter. Dennis R. Hernreich, Senior Vice President and Chief Financial Officer, said, "We are pleased with the performance of our Casual Male business, which reported a solid 4% comparable store sales increase for the quarter. We are also pleased with the significant progress we have made thus far in implementing our cost reduction and synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. initiatives. We believe ultimate cost savings of the combined companies will be in the range of approximately $20-$25 million on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis and will be fully achieved within the next 18 months. During the second quarter and subsequent to the acquisition in May 2002, almost half of the total expected savings were realized and will begin to be reflected in the Company's operating results during the second half of this year. At the same time, due primarily to the continued erosion of the Levi's brand in the marketplace, Levi Strauss
Levi Strauss, born Löb Strauß & Company's inability to provide a consistent assortment of product for our Levi's(R)/Dockers(R) stores, and the significant sales declines in our Levi's(R)/Dockers(R) stores, we are aggressively implementing our plan to downsize the Levi's(R) and Dockers(R) outlet business, which we expect will result in an acceptable level of profitability for this business going forward. During the second quarter of fiscal 2003, we recorded an $11.0 million charge, of which $7.5 million relates specifically to the downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing of the Levi's(R) and Dockers(R) business." Of the total $11.0 million in restructuring charges, $4.5 million relates to the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of assets of the 34-40 Levi's(R) and Dockers(R) stores that the Company intends to close over the next several years and $3.0 million relates to inventory costs to close the initial 15-20 Levi's(R) and Dockers(R) outlet stores over the next twelve to eighteen months. Since the $3.0 million relates to inventory losses, this amount is shown as a reduction in gross margin on the statement of operations See Income statement. for the three and six months ended August 3, 2002. In addition, the restructuring charge includes $3.5 million related to the integration plan to combine the operations of Casual Male with that of the Company, this includes relocating the Company's distribution facility and corporate offices to Canton, Massachusetts Canton is a town in Norfolk County, Massachusetts, United States. The population was 20,775 at the 2000 census. The headquarters of Reebok, Baskin Robbins, Computershare (North American HQ), Allied Domecq Quick Service Restaurants Interpolymer Corporation and Tweeter are . Of the total charge of $11.0 million, the total non-cash costs represent approximately $7.5 million of the charge, with the remainder consisting of the cash costs for integration expenses and the inventory costs of liquidating stores. The Company will host a conference call today to report on its second quarter financial results which will be broadcast live via webcast at 10:00 a.m. Eastern Time. Participants can access the webcast via the Company's website: www.designsinc.com or http://www.firstcallevents.com/service/ajwz364686925gf12.html. An archive of the webcast will be available one hour after the call has taken place and through September 5, 2002. Additional Investor Relations Investor relations The process by which the corporation communicates with its investors. information is also available on the Company's web site. Casual Male Retail Group, Inc. operates 472 Casual Male Big & Tall stores, 100 Levi's(R) Outlet by Designs and Dockers(R) Outlet by Designs stores, 11 Candies(R) Outlet stores and 3 Ecko Unltd.(R) outlet stores located throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. . The Company will be opening another Candies(R) Outlet store and 3 additional Ecko Unltd.(R) outlet stores through the remainder of August, bringing the total to 12 Candies(R) Outlet stores and 5 Ecko Unltd.(R) outlet stores. The Company is headquartered in Canton, Massachusetts and its common stock, which was previously listed under the symbol "DESI", is now listed on the Nasdaq National Market under the symbol "CMRG". The discussion of forward-looking information requires management of the Company to make certain estimates and assumptions regarding the Company's strategic direction and the effect of such plans on the Company's financial results. The Company's actual results and the implementation of its plans and operations may differ materially from forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made by the Company. The Company encourages readers of forward-looking information concerning the Company to refer to its prior filings with the Securities and Exchange Commission that set forth-certain risks and uncertainties that may have an impact on future results and direction of the Company. The Company does not report on its progress during a quarter until after the quarter has been completed and appropriately disclosed its results.
CASUAL MALE RETAIL GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
August 3, August 4, August 3, August 4,
2002 2001 2002 2001
Sales $ 115,691 $ 47,698 $ 152,132 $ 87,093
Cost of goods sold including
occupancy 79,345 34,683 107,793 64,673
Gross profit 36,346 13,015 44,339 22,420
Expenses:
Selling, general and
administrative 34,539 10,065 43,616 19,771
Provision for restructuring,
store closings and
impairment of assets 7,985 - 7,985 -
Depreciation and amortization 2,978 1,418 4,389 2,814
Total expenses 45,502 11,483 55,990 22,585
Operating (loss) profit (9,156) 1,532 (11,651) (165)
Interest expense, net 2,706 534 3,059 1,081
(Loss) income before income
taxes (11,862) 998 (14,710) (1,246)
Provision (benefit) for income
taxes 1,053 283 - (591)
Net (loss) income $ (12,915) $ 715 $ (14,710) $ (655)
(Loss) earnings per share-
Basic $ (0.80) $ 0.05 $ (0.95) $ (0.05)
Diluted $ (0.80) $ 0.05 $ (0.95) $ (0.05)
Weighted average number of
common shares outstanding:
Basic 16,050 14,477 15,421 14,468
Diluted 16,050 15,524 15,421 14,468
CASUAL MALE RETAIL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
August 3, 2002 and February 2, 2002
(In thousands)
August 3, February 2,
2002 2002
(unaudited)
ASSETS
Cash and investments $ 3,420 $ -
Inventories 135,009 57,734
Property and
equipment, net 73,174 20,912
Deferred and
refundable
income taxes 52 7,978
Other assets 99,149 4,277
Total assets $ 310,804 $ 90,901
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable
and other liabilities $ 71,028 $ 20,735
Notes payable 70,121 27,752
Long-term debt,
net of current portion 52,369 0
Stockholders' equity 117,286 42,414
Total liabilities
and stockholders' equity $ 310,804 $ 90,901
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