Knobias Clip Report (11-20-2008) CMRG
Submitted By Knobias ClipReport
CMRG: Shares Fall Again on Q3 Results and 5.3% Decline in Comp Sales
By Fain Hughes, fhughes@knobias.com
Casual Male Retail Group, Inc. (CMRG) continued its decline to another multi-year low on Thursday after the Company reported its financial results for the third quarter ended November 1, 2008. Total sales decreased by 5.7% to $100.0 million as compared to $106.1 million for the third quarter of fiscal 2007. the Company had a net loss of $3.2 million, or $0.08 per share, compared to net loss for the third quarter of fiscal 2007 of $3.8 million, or $0.09 per share. Comparable sales decreased 5.3% for the thirteen week period.
Due to the current economic conditions and overall volatility of the markets, the Company said that it finds it difficult to predict traffic and sales trends with a reasonable degree of certainty to provide a revised earnings guidance, and therefore will not provide revised earnings guidance for the fourth quarter and fiscal year 2008.
David Levin, President and CEO of Casual Male, commented in a conference call today, “A significant decline in traffic during October contributed to the decline in our Q3 comp sales. We are confident that the loss in comp sales is not a result of losing market share. We are seeing the effects of the macro economic conditions that have caused an erosion in customer confidence and spending.”
He continued, “As the retail world has been turned upside down in the last 60 days, we have been quick and diligent to take appropriate actions where we can. Managing our inventory has become the central focus of our activities as we adjust to the slowdown in retail. Even with the shortfall in sales to our forecast, today our inventory is 7% less than a year ago in total and 10% less on a store-average basis. We believe that by the end of our fiscal year, our total inventory will be 5-10% less than year-ago levels.”
Mr. Levin concluded, “Our priorities have shifted as we have experienced the most difficult retail environment of our generation. We will not drive top line sales at the expense of gross margins and carrying excess inventory. We are not motivated to drive down our gross margins when we are not losing market share. We are not motivated in this current environment to spend a lot of capital to grow our business. We will continue to grow market share by utilizing the improvements that we have made in our inventory management systems and our strong planning and allocation teams. We will continue on our path to increase market share in the smaller sizes that we have to offer. We are motivated by keeping a healthy balance sheet, increasing our cash flow and reducing our debt. When we see the business turning in our favor again, we will be ready to get back on track on the growth potential that we have always believed in for this company.”
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