EX-99 2 octearnrel.txt EX 99.1 PRESS RELEASE ANNOUNCING THIRD QUARTER FISCAL 2004 RESULTS For Information, Contact: Company Contact: Jeff Unger, Investor Relations (561) 514-0115 Andrew Bard, Weber Shandwick (212) 445-8368 CASUAL MALE RETAIL GROUP INC. ANNOUNCES THIRD QUARTER FISCAL 2004 RESULTS CANTON, Mass., November 18, 2004 -- Casual Male Retail Group, Inc. (NASDAQ/NMS: "CMRG"), retail brand operator of Casual Male Big & Tall and Rochester Big & Tall and the exclusive retailer of George Foreman's clothing collection, today announced its operating results for the third quarter and nine months ended October 30, 2004. On October 29, 2004, the Company completed its acquisition of substantially all of the assets of Rochester Big & Tall Clothing ("Rochester") and its operating results are included in the Company's results of operations for the third quarter and nine months of fiscal 2004 from that date. For the third quarter of fiscal 2004, the Company reported operating income of $0.8 million as compared to $2.3 million for the third quarter of fiscal 2003. The Company reported a loss from continuing operations for the third quarter of fiscal 2004 of $1.0 million, or $(0.03) per share, compared to a loss of $1.4 million, or $(0.04) per share, for the third quarter of fiscal 2003. Assuming a normalized tax rate of 37%, the loss from continuing operations for the third quarter of fiscal 2004 was $(0.02) per share as compared to $(0.03) per share for the third quarter of fiscal 2003. Net loss for the third quarter of fiscal 2004 was $1.4 million, or $(0.04) per share, compared to a net loss of $1.2 million, or $(0.03) per share, for the third quarter of fiscal 2003. For the nine months ended October 30, 2004, the Company reported a net loss of $6.4 million, or $(0.18) per share, as compared to a net loss of $3.3 million, or $(0.09) per share for the nine months of the prior year. Included in the net loss for the third quarter and nine months ended October 30, 2004, was a loss from discontinued operations of approximately $0.3 million, or $(0.01) per share, and $1.9 million, or $(0.05) per share, related to the continued closure of the Levi's(r)/Dockers(r) outlet stores. As previously reported, comparable store sales for Casual Male Big & Tall business increased 1.6% for the third quarter of fiscal 2004 and increased 5.1% for the nine months ended October 30, 2004. "While Casual Male's big and tall sales during the first nine months of the year benefited from the new merchandising strategies and our merchandise margins were steady in comparison to last year, higher occupancy costs resulted in a 60 basis point drop in Casual Male's gross margin rate during this year's third quarter. Meanwhile, operating expenses rose during the quarter primarily as a result of professional fees associated with compliance of Section 404 of Sarbanes-Oxley and the start-up losses of the opening of Casual Male stores at Sears-Canada. During the quarter, the Company benefited from the reversal of certain accrued liabilities as a result of revising estimates based on more recent experience," stated Dennis R. Hernreich, Executive Vice President, Chief Operating Officer and Chief Financial Officer of CMRG. The Company also announced today that the Company has signed a letter of intent, subject to the negotiation of a definitive agreement, buyer's due diligence and other normal closing conditions, to sell its remaining 32 Levi's(r)/Dockers(r) Outlet stores to an unnamed affiliate of a privately held United States retailer for an undisclosed purchase price. Although there can be no certainty, the sale is targeted to close on November 24, 2004, assuming the execution of a definitive agreement and the satisfaction of all closing conditions. The proceeds from the sale will be used to reduce Casual Male's outstanding debt under its revolving line of credit. Operating Results by Business Segment The following table reflects operating results by segment for the Company's third quarter and nine months of fiscal 2004 and for the corresponding periods of the prior year. These segment results have been prepared on a basis consistent with the presentation in the Company's recent Form 10-K and Form 10-Q filings. The Company's Casual Male Business segment includes the results of operations from its Rochester business from October 29, 2004. Historically, the Company has allocated its administrative expenses among its business segments. For the third quarter of fiscal 2004, the Company eliminated this allocation and as a result all administrative expenses will be reported as part of the Casual Male business. For comparability, all prior period allocations have been reclassified to conform to the third quarter fiscal 2004 presentation. For the three months ended: October 30, 2004 November 1, 2003 (in millions) Other Other Casual Branded Casual Branded Male Apparel Combined Male Apparel Combined business business Company business business Company ---------------------------------------------------------- Sales $ 74.6 $ 19.3 $ 93.9 $ 73.0 $ 24.9 $ 97.9 Gross margin, net of occupancy costs 30.3 5.0 35.3 30.1 8.2 38.3 Gross margin rate 40.6% 25.9% 37.6% 41.2% 32.9% 39.1% Selling, general and administrative 29.3 2.9 32.2 28.5 5.3 33.8 Provision (reversal) for impairment of assets, store closings and severance - (0.6) (0.6) - - - Depreciation and amortization 2.5 0.4 2.9 1.7 0.5 2.2 ---------------------------------------------------------- Operating income (loss) $ (1.5) $ 2.3 $ 0.8 $ (0.1) $ 2.4 $ 2.3 ========================================================== For the nine months ended: (in millions) October 30, 2004 November 1, 2003 Other Other Casual Branded Casual Branded Male Apparel Combined Male Apparel Combined business business Company business business Company ---------------------------------------------------------- Sales $ 234.3 $ 64.0 $ 298.3 $ 224.8 $ 61.1 $ 285.9 Gross margin, net of occupancy costs 96.2 15.3 111.5 92.5 16.1 108.6 Gross margin rate 41.1% 23.9% 37.4% 41.1% 26.4% 38.0% Selling, general and administrative 90.5 12.9 103.4 83.7 13.7 97.4 Provision (reversal) for impairment of assets, store closings and severance - (0.6) (0.6) - - - Depreciation and amortization 6.6 1.5 8.1 4.9 1.3 6.2 --------------------------------------------------------- Operating income (loss) $ (0.9) $ 1.5 $ 0.6 $ 3.9 $ 1.1 $ 5.0 ========================================================= In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), our above discussion refers to a normalized tax rate, which is a non-GAAP measure. Normalized tax basis reflects a 37% effective tax rate on pre-tax income. The Company believes that the inclusion of such non-GAAP measure helps investors to gain a better understanding of the Company's performance, especially when comparing such results to previous periods or forecasts. However, the non- GAAP financial measures included in this press release are not meant to be considered superior to or as a substitute for results of operations prepared in accordance with GAAP. The following table shows the reconciliation of the loss from continuing operations for the third quarter of fiscal 2004 and fiscal 2003 on a GAAP basis effected for the adjustment for normalized taxes: For the three months ended: October 30 ,2004 November 1, 2003 (in thousands, except per Per share Per share share data) basic and basic and diluted diluted ----------------------- --------------------- Loss from continuing operations $(1,044) $(0.03) $ (1,428) $(0.04) Income tax benefit, assuming normalized tax rate of 37% 386 0.01 528 0.01 ----------------------------------------------- Adjusted loss from continuing operations, after normalized tax rate $ (658) $(0.02) $ (900) $(0.03) =============================================== Weighted average number of common shares outstanding: basic and diluted 34,209 35,992 CMRG will conduct a conference call to discuss its third quarter earnings results today at 11:00 a.m. Eastern Time at www.casualmale.com/investor. The call will be archived online within one hour after its completion. Participating in the call will be David Levin, President and Chief Executive Officer and Dennis Hernreich, Executive Vice President, Chief Operating Officer and Chief Financial Officer. Casual Male will be reporting monthly comparable store sales for Rochester, which includes its 22 stores and its direct to consumer businesses, separately from the Casual Male Big & Tall stores beginning with November 2004 sales. CMRG, the largest retailer of big and tall men's apparel with retail operations throughout the United States and Canada, operates 496 Casual Male Big & Tall stores, the Casual Male e-commerce site, Casual Male catalog business, 13 Casual Male at Sears-Canada stores, 32 Levi's(r) Outlet by Designs and Dockers(r) Outlet by Designs stores and 22 Rochester Big & Tall stores and direct to consumer business. The Company is headquartered in Canton, Massachusetts and its common stock is listed on the NASDAQ National Market under the symbol "CMRG." This press release contains forward-looking statements within the meaning of the federal securities laws. 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 made by the Company in this press release and elsewhere as a result of numerous risks and uncertainties. The Company encourages readers to refer to its prior filings with the Securities and Exchange Commission, including, without limitation, its Current Report on Form 8-K filed on April 14, 2004, that set forth certain risks and uncertainties that may have an impact on future results and direction of the Company. [Tables to follow] CASUAL MALE RETAIL GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) For the three months ended For the nine months ended 10/30/2004 11/1/2003 10/30/2004 11/1/2003 ---------------------- ----------------------- Sales $ 93,922 $ 97,910 $ 298,239 $ 285,901 Cost of goods sold including occupancy 58,663 59,597 186,696 177,299 --------- --------- ---------- -------- Gross profit 35,259 38,313 111,543 108,602 Expenses: Selling, general and administrative 32,152 33,793 103,434 97,441 Provision (reversal) for impairment of assets, store closings and severance (591) - (591) - Depreciation and amortization 2,864 2,241 8,144 6,177 -------- --------- --------- --------- Total expenses 34,425 36,034 110,987 103,618 Operating income 834 2,279 556 4,984 Other income (expense), net - (425) 308 (425) Interest expense, net (1,878) (3,135) (6,035) (8,996) -------- --------- --------- --------- Loss from continuing operations before minority interest and income taxes (1,044) (1,281) (5,171) (4,437) Minority interest - 147 (701) 55 Income taxes - - - - --------- --------- -------- ------- Loss from continuing operations (1,044) (1,428) (4,470) (4,492) Income (loss) from discontinued operations (322) 224 (1,891) 1,192 ---------- --------- --------- -------- Net loss $ (1,366) $ (1,204) $ (6,361) $ (3,300) ========= ========= ========= ========= Net loss per share - basic and diluted Loss from continuing operations ($0.03) ($0.04) ($0.13) ($0.13) Income (loss) from discontinued operations ($0.01) $0.01 ($0.05) $0.03 ---------- --------- --------- --------- Net loss ($0.04) ($0.03) ($0.18) ($0.09) Weighted-average number of common shares outstanding: Basic and Diluted 34,209 35,992 34,607 35,855 CASUAL MALE RETAIL GROUP, INC. CONSOLIDATED BALANCE SHEETS October 30, 2004 and January 31, 2004 (In thousands) October 30, January 31, 2004 2004 ----------- ----------- ASSETS (unaudited) Cash and investments $ 6,387 $ 4,179 Note receivable 5,368 - Inventories 122,408 98,673 Other current assets 11,263 10,831 Property and equipment, net 72,584 68,345 Goodwill and other intangibles 88,391 81,306 Other assets 9,127 9,408 --------- --------- Total assets $ 315,528 $ 272,742 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable, accrued expenses and other liabilities $ 73,628 $ 59,155 Notes payable 51,498 3,623 Restructuring reserves 2,024 2,945 Long-term debt, net of current portion 119,430 122,374 Minority interest - 3,804 Stockholders' equity 68,948 80,841 ---------- --------- Total liabilities and stockholders' equity $ 315,528 $ 272,742 ========== =========