Casual Male to close 55 Levi's/Docker outlet stores
CANTON, Mass.--Casual Male Retail Group, Inc., retail brand operator of Casual Male Big & Tall, Levi'sŪ Outlet by Designs, DockersŪ Outlet by Designs, and Ecko UnltdŪ outlet stores, announced this week that that to further its previously stated goal of focusing primarily on its Casual Male Big and Tall business, it plans to accelerate the closing of its Levi'sŪ and DockersŪ Outlet stores and ultimately exit the business.
In addition, the Company announced it has transferred the operations of its remaining seven Candie'sŪ outlet stores to Candie's, Inc.
David A. Levin, President and Chief Executive Officer of the Company commented, "We remain pleased with the progress of our Casual Male business and continue to identify opportunities to grow the top line and increase market share. Our decision to exit the Levi'sŪ/DockersŪ outlet business and the Candie'sŪ outlet business will enable us to focus our attention on, and utilize our resources for, expanding CMRG's profitable core Casual Male Big and Tall business."
The Levi'sŪ/DockersŪ sales base has continued to erode during the second half of fiscal 2003 and initiatives that the Company has been working on with Levi Strauss & Co. have been insufficient to offset these continuing negative sales trends. As a result, the Company will accelerate its previously announced downsizing of the Levi'sŪ and DockersŪ outlet business by closing up to 50-55 stores over the next 24 months, thus reducing the sales volume of the Levi'sŪ and
DockersŪ outlet business to less than 10% of CMRG's total sales. The remaining 30 stores will either be closed at the end of their respective lease terms, or otherwise be divested in a sale transaction.
In spite of continuing sales erosion, CMRG is forecasting the remaining Levi'sŪ and DockersŪ outlet business to generate positive operating income while the stores are open.
In connection with the closing of Levi'sŪ and DockersŪ outlet stores over the next twelve months, discontinuing its CandiesŪ outlet stores, and negotiating lease settlements on certain leases, results for the fourth quarter of fiscal year 2003 will include a charge of between $27-30 million relating to the impairment of fixed assets and write-off of deferred tax assets, liquidation costs of closing stores and lease settlement costs. The approximate impact of this charge upon
CMRG's net liquidity position is estimated to approximate $3-5 million.
With respect to the Candie'sŪ transition, Candie's, Inc. will now assume operations of 7 of the locations for the next 12-18 months, after which time Candie's, Inc. will either purchase the stores from the Company, or close the stores.
The Company plans to convert 4 of the 5 Candie'sŪ outlet stores not assumed by Candie's, Inc. to either its Casual Male outlet or Ecko Unltd.Ū outlet store concepts during fiscal 2004.
Dennis R. Hernreich, Executive Vice President, COO/CFO, stated, "While in the process of downsizing and exiting our non-core operations, we remain extremely focused on our Casual Male Big and Tall business. In fact, our goal to significantly improve operating margins has been progressing ahead of schedule, with over $20 million in annualized
cost savings achieved to date."
