Casual Male Keeps Slimming Down

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Being the big guy on the block hasn't helped big-and-tall retailer Casual Male (Nasdaq: CMRG) much in pulling in the big bucks. Despite a dearth of meaningful competition, the big-and tall retailer -- or "XL," as they prefer to call it nowadays -- reported flat sales of $113.5 million. Its $0.05 in earnings per share fell a penny below what it gained last year, but more or less met analysts' expectations.

If nothing else, Casual Male was able to squeak out a 0.3% same-store sales increase over last year. However, that might have been more a product of its Internet initiatives than its bricks-and-mortar stores; comps fell more than 2% at its namesake and Rochester stores, while the direct businesses saw a 15% increase over last year. The company's outlook for the full fiscal year seems weak; management scaled back its guidance by $0.03 per share.

The men's fashion leaders represent a mixed bag. While analysts expect nominal competitor Jos. A. Bank (Nasdaq: JOSB) to boost earnings per share by 7% this quarter, Men's Wearhouse (NYSE: MW) is expected to take a 30% hit.

That might have more to do with the current seasonal slowness for menswear sales. Casual Male says August is typically a weak month, with sales not picking up toward September. Although the company has been steadily reducing the age of its consumer from 50 to 45 over the past few years, it's still finding it difficult to bring in younger shoppers to the stores, which means Casual Male doesn't benefit from the back-to-school rush.

Part of that might have to do with Casual Male's focus on image. To lure in a more lucrative demographic, Casual Male did away with the big-and-tall moniker, replacing it with bold XL graphics. The company also unleashed a series of Internet initiatives, and it's been using marketing that includes the likes of pro football players and others with an athletic -- albeit stocky -- physique. They've also been inching their way into smaller waistlines, trying to bulk up on the 42- to 46-inch sizes to which retailers like J.C. Penney (NYSE: JCP) and Kohl's (NYSE: KSS) are more likely to cater.

The company's had some notable misses, too. It completely removed television from its marketing plan, only to reintroduce it later, and Casual Male only runs sales around Thanksgiving. That keeps margins strong, but its customer reach might be limited. It bought custom pro sports tailor Jared M., only to quickly get rid of it. It also got rid of the Cutter & Buck brand after some legal wrangling, but it's decided to bring it back because of customer demand. Management's game plan seems to involve throwing a bunch of ideas at a wall and seeing which ones stick.

This patchwork approach has been haphazard. Admittedly, these are difficult times for retail, and a few of Casual Male's initiatives should succeed. But until there is a more cohesive plan, a valuation across several metrics that exceeds those of its competitors seems too high to justify investors' interest here.

Further full-sized Foolishness:

• No Plus-Size Sales at Casual Male
• Casual Male Fights a Flabby Image
• It's Still Going to Get Worse