US: Casual Male to shutter European Direct business
- Adjusted Q4 profit was $5.0m, from $5.3m last time
- Total sales were flat at $111.5m
- Comparable sales increased 0.8%
Casual Male Retail Group Inc, which sells apparel for big and tall men, is to shutter its online business in Europe, which it says has been unprofitable since being launched more than three years ago.
The decision to discontinue the European Direct business will also see the firm terminate its contract with GSI Commerce Inc, which provides the design, order processing, fulfilment and customer call centre services for the web stores.
Casual Male says its European operations booked net losses of $2.1m in the year to 28 January - and expects to incur another $1.5m in termination charges.
The decision was announced today (15 March) as the retailer saw its fourth quarter profit surge to $33.5m, or $0.70 per share, from $5.3m, or $0.11 per share in the same period last year. However, adjusted for a tax benefit and impairment charge, net income was $5.0m, or $0.10 per share.
Total sales were flat at $111.5m, while comparable sales increased 0.8%. But gross margin decreased 70 basis points to 44.7%.
The retailer said the results proved its DXL superstore concept which brings all of the company's brands together under one roof, as "the optimal vehicle to service [its] marketplace."
"For the next several years, the company's focus will be on completing the transition by accelerating DXL store openings, closing Rochester and Casual MaleXL stores and maximising its business on DestinationXL.com, all of which we believe will result in significantly enhanced sales, profitability and cash flow," said president and CEO David Levin.
The firm currently operates 16 DXL stores, and saw same-store sales at the format rise 9.0% and 12.8% for the fourth quarter and fiscal year respectively. It expects to have 150-175 DXL stores by the end of fiscal 2015.
For the full year, net income nearly tripled to $42.7m, or $0.89 per share, from $15.4m, or $0.32 per share last year. On an adjusted basis it was $14.2m, or $0.30 per share.
Total sales for the year increased 1.0% to $397.7m, and comparable sales rose 2.1%. Gross margin improved 40 basis points to 46.2%.
Looking to the year ahead, Casual Male is forecasting earnings of $0.22 to $0.27 per share, total sales of $416.5m to $423.9m and a same-store sales increase of 4.7%-6.6%.
Casual Male Retail Group has seen its second-quarter net profit plunge 81.1% after an increase in promotions and higher occupancy cost hurt margins - prompting the men's wear retailer to lower its ful...
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