Americans' waistlines are growing more rapidly each year -- thank you, extra-biggie value meals -- and Casual Male Retail Group (NASDAQ:CMRG) wants to capitalize on the growth in girth.

At the CIBC World Markets Consumer Growth Conference last week, Casual Male President and CEO David Levin discussed the fragmented nature of the big-and-tall market. To bulk up its share, Casual Male wants to update its image and attract younger customers. Essentially, it plans to sell to anyone who's big and tall, without regard to income or age.

Levin said that no one else caters exclusively toward the entire big-and-tall population. That's a hard claim to verify, but with most department stores devoting just a small portion of their retail space to big-and-tall sizes, and with dedicated chains not being as big as Casual Male, it may be true.

In any event, it makes sense for Casual Male to aim for a bigger share, because even though it's the leading player in its segment, it carries only 8% of the market. Levin didn't give a timeframe to meet the expansion goals but wants to eventually grow to control 12% of the market.

Younger and smaller?
The move to bring in younger customers appears to be working. According to Levin, the average Casual Male shopper's age has dropped to 46, from 51 a few years ago. The company credits its private-label 626 Blue clothing, which is designed for younger men and sells items such as washed denim and T-shirts. Levin compared the line to the type of clothing sold at American Eagle (NYSE:AEO) and Abercrombie & Fitch (NYSE:ANF).

The company is also targeting some smaller sizes that other retailers in the big-and-tall niche are ignoring. There are more men with 42-inch waists than with 46- to 50-inch waists combined, yet many retailers don't cater to 42s and 44s, and traditional stores generally stop at 38 or 40. This is a large market, even if it represents some numbers I'm desperate to avoid.

By any other name ...
Casual Male says its same-store sales spiked 10% and 13% in the two quarters after it changed its store moniker to Casual Male XL, from Casual Male Big & Tall. Studies showed that younger customers preferred the new name. But could a new advertising blitz have been responsible, rather than a simple name change? After all, how often do you go into a store because of its name? Since when is the word "big" an insult -- at least for a man?

In any event, it's true that comps have been steadily growing, delivering 15 consecutive quarters of increases. For the next two years, Casual Male expects a steady and solid mid-single-digit growth.

Big guys, big spenders
Rochester -- the business, not the city -- has represented the company's biggest growth opportunity since Casual Male acquired the chain more than two years ago. Rochester attracts a higher-end clientele -- in particular, customers earning more than $100,000 a year. The average store does $2 million in business a year, four times the amount of a Casual Male store, and its average transaction is more than four times that in a Casual Male store. Rochester expects to open 50 more stores over the next several years.

A year ago, the company also acquired Jared M, a specialty line of clothes currently targeting NBA athletes. Levin said that when his company acquired the brand, the average spend per year was $40,000. That's a serious closet of clothes! Next year, the line will be expanding to Major League Baseball and putting a private-label brand in the Rochester stores. Eventually, it hopes to create a custom clothing line in its Casual Male stores.

New frontiers
In May, Casual Male began offering what it calls "lifestyle products," such as patio furnishings, personal-care items, and healthy-living products, through its Living XL brand. The concept is currently in the red, but it does fit nicely with the company's plans.

September, for example, will see the launch of Shoes XL, which will offer well-known brands such as Steve Madden (NASDAQ:SHOO), Skechers (NYSE:SKX), and Kenneth Cole (NYSE:KCP), almost exclusively through catalogs and the Internet, though the top-selling products will also be available in selected stores. Shoes XL will, naturally, feature wide widths and bigger sizes, from 10 to a whopping 20. (Even Ronald McDonald needs to buy shoes.) This is yet another area where no one caters specifically to the targeted group.

Casual Male has created an Internet catalog, slugged B&T Factory Direct, that offers products designated for its factory outlets. It may seem that Casual Male is undercutting itself here, but new business is new business. Although unprofitable at the moment, it has a promising future.

Growing the right way
Casual Male wants to succeed. Watching many retailers fail by expanding too much, too quickly, it is taking the slow and steady route, even given all of its new concepts. I especially applaud its decision not to open new stores too rapidly. It hopes to open 100 to 130 new Casual Male stores, and I don't think this is too aggressive.

Casual Male has used the Internet and catalogs very astutely, too, in creating a three-channel approach that includes its bricks-and-mortar stores. It's smart for Casual Male to expand into these areas, because studies show that customers using two out of the three channels spend three times more than someone that only uses one. Over the past five years, Internet sales have been growing at 50% per year and the company still expects 20%-30% increases going forward. The Internet, after all, takes the pressure out of fitting rooms, which I personally despise.

But on the other hand, how much room is there for such a specialized market? There are already 475 stores in 44 states. Most real estate decisions will involve relocating stores to a fresher part of town, from older strip malls that are only half-filled.

Not-so-gross margins
Back on the bright side, management has found that core customers are not price-sensitive. By reducing promotions and putting the focus back on products and stocking key items, the company has seen its gross margins improve 600 basis points over the past two years at Casual Male XL. Private labels contributed to the improved margin, and management expects gross margins to increase another 100 basis points this year and next, for a 200-basis-point increase over two years. Bigger is indeed better!

An XL Fool's final thoughts
The company is on the right path, by expanding its product lines in a rational way and truly listening to its customers. With the stock trading at a trailing P/E of 12, investors could see huge returns from this company.

Related Foolishness:

American Eagle Outfitters is a Motley Fool Stock Advisor recommendation. For more on the best-performing newsletter at The Motley Fool, we invite you to check it out free for 30 days.

Fool contributor Larry Rothman is happy to receive feedback and promises to read it when not being wrestled by his three children. Feel free to email him at rothmanviews@comcast.net. He doesn't have any positions in the companies mentioned. The Fool has a disclosure policy.