Men's specialty retailer Casual Male (NASDAQ:CMRG) will report first quarter 2007 financial results on Thursday, May 24.

What analysts say:

  • Buy, sell, or waffle? Six of the eight analysts covering Casual Male rate it a buy, while two casually put it in the hold category.
  • Revenues. Sales of plus-sized men's clothing are expected to jump 8% in the quarter to $113 million.
  • Earnings. Profits are also expected to go extra large, doubling to $0.04 per share.

What management says:
As the dominant retailer catering to the big-and-tall segment of the men's clothing world, Casual Male has decided to stamp its brand on a number of different initiatives to capitalize on that preeminent position. It acquired specialty retailer Jared M., which focuses on the athletic individual willing to drop a few grand on a line of clothes, as well as an online retail presence with its LivingXL.com website catering to the plus-sized world. The danger, of course, as with any company that expands outside of its core competency, is that it will fumble the opportunity. While Jared M. makes sense, since it's another big-and-tall clothing store, LivingXL.com is really a new direction for the clothier and represents the greatest challenge to results.

What management does:
Certainly the retail side of Casual Male's business has been performing admirably, and it has been enjoying a return to health from what was once an ailing line. That, however, came from a focused outlook on improving its image, its stores, and its brand. While facing competition from both Jos. A. Bank (NASDAQ:JOSB) and Men's Wearhouse (NYSE:MW), as well as department stores, it has been able to excel thanks to the niche it operates in. Men's fashions are far less fickle than women's, and they change at a glacial pace, which allows for fatter profits for not having to invest in new inventory more frequently.

Margin

01/06

04/06

07/06

10/06

02/07

Gross

43.2%

43.8%

44.3%

44.9%

45.5%

Operating

3.9%

4.5%

5%

5.6%

5.9%

Net

2.6%

3.3%

3.5%

3.9%

9.1%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
While Jos. A. Bank reported a decent April in terms of same-store sales, the trend in men's clothing has been one of a weakening picture. Casual Male, however, has been able to buck the trend and report rising comps. Last quarter it found sales up 7.5% even when faced with a particularly tough 7.9% increase the year before. The spruced-up image is pushing the retailer toward greater profitability, but ranging outside soft goods to an online retail operation could end up dragging down the gains it has been achieving.

Related Foolishness:

•  Casual Male's Big Benefit

•  Casual Male Is Not Thinking Big

•  Casual Male Says "Supersize Me"

•  Foolish Fundamentals: Margins

Casual Male has earned a two-star rating from Motley Fool CAPS, the new investor intelligence community. You can add your voice to the new stock rating service by joining today. It's free!

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