Casual Male Says "Supersize Me"

With ever-stronger same-store sales, big-and-tall men's retailer Casual Male Retail Group (Nasdaq: CMRG  ) reported third-quarter revenues that jumped 14% year over year. Profitability seems right around the corner; excluding a $1.2 million charge for consolidating its Rochester division, the company would have broken even in earnings, instead of reporting a $0.02-per-share loss.

The sales figures beat analysts' forecasts, and while Men's Warehouse (NYSE: MW  ) had reported some late-quarter sales softness and fourth-quarter guidance, Casual Male seems to have remained strong. Similarly, Jos. A. Bank (Nasdaq: JOSB  ) is figuring on a fit and trim third quarter.

Catering to the larger-sized male physique -- the company calls the 3X size the "sweet spot" of its target market -- Casual Male has successfully rebranded its image, and it's now pursuing acquisitions to scale up the company and broaden its appeal.

Earlier this year, the plus-sized men's clothier acquired high-end custom retailer Jared M. Though that division recorded a quarterly loss, management expects the division to turn profitable in the first quarter of 2007.

The company also acquired an online large-sized lifestyle retailer called SuperSizeWorld.com, which offers products and accessories aimed at the big-and-tall man. Next year, Casual Male will rechristen the site ThinkBig.com. Need an extra-large toilet seat? You'll be able to find it at ThinkBig. Same with wider patio chairs, longer wristwatch bands, outdoor apparel, and other items that cater to the often-overlooked needs of big men.

It's an interesting strategy for Casual Male, which has typically focused on the clothing needs of the big and tall. When it emerged from bankruptcy a few years ago, it shed the Levi's and Dockers outlet stores it had been carrying, scooped up Rochester Big & Tall, and made a play for that demographic, which retailers had previously ignored.

Abercrombie & Fitch (NYSE: ANF  ) , for example, essentially stops at size 38; men in need of bigger clothes had to rely upon the seamstress at a department store like J.C. Penney (NYSE: JCP  ) or Federated's (NYSE: FD  ) Macy's to get alterations right. The average male proportions that define many clothing stores' sizes don't apply to the big and tall man. I found this out while shopping for a suit recently; I had to have it basically remade, since a size 48 jacket just doesn't come with pants that meet the needs of someone with a 36-inch waist.

The age demographic is also changing. American Eagle Outfitters (Nasdaq: AEOS  ) may pursue the more youthful market, but Casual Male's average customer is 47 years old. That's down from 48-1/2 years old last quarter, and the company says it continues to trend down. It wants to garner more of the market for larger, youthful customers and plans to grow its overall market share from 8% to 12% over the next few years.

That kind of opportunity has made Casual Male a popular destination for the larger-sized population. With its new website acquisition, Casual Male can now inundate its mailing list with promotions for items that its customers might have previously had trouble finding. It could also make the Casual Male name synonymous with the plus-size lifestyle, rather than just a place to get a decent suit that actually fits.

Over the past year, the stock has more than doubled in value, and though it sits about 8% below its 52-week high, I continue to see stronger opportunities for the company and the stock, which should result in some supersized profits for investors.

Further expansive Foolishness:

American Eagle Outfitters is a recommendation ofMotley Fool Stock Advisor. Try David and Tom Gardner's premium investing advice service free for 30 days.

Casual Male is also a favorite among investors ofMotley Fool CAPS, the new investor intelligence community, where the stock carries a four-star rating. Join now for this fun, new way to research stocks!

Fool contributor Rich Duprey owns shares of Casual Male but does not own any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.


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