Casual Male Retail Group Inc. has chopped $13 million out of its anticipated marketing spending for 2009, president and CEO David A. Levin said last week during an earnings call.
“Most of the reduction has come from prospecting for new customers,” Levin said, according to a transcript from Seeking Alpha. “We’ve eliminated our television spend for the year – a $5 million expenditure in 2008. In addition, we’ve cut back on prospecting catalog circulation; the number of catalog drops; page counts and often the size of the catalog itself, representing another $5 million.”
Levin continued, “We’ve introduced this year smaller catalogs for the pure Internet shopper and diverted some of those dollars into more efficient online media. This initiative of reducing print and investing more in the Internet follows the trend of the consumer, as we see our customers naturally shift from the traditional catalog shopper to the Internet.”
Last month, Casual Male reported first-quarter revenue of $97.6 million, down from $107.6 million. Despite the drop in revenue, during the quarter the company’s net income rose from $96,000 in first-quarter 2008 to $336,000 in the quarter ended May 2 of this year. During the first quarter, selling, general and administrative expenses fell from $43.3 million a year ago to $37.2 million.
On an annualized basis, the company anticipates cropping $30 million from its selling, general and administrative expenses, pulling them back to 2005’s level, CFO/CEO Dennis R. Hernreich said during the call.
“The brief explanation of the source of these reductions are: 40% of which came from marketing and were achieved by reducing less productive promotions and new customer acquisition activities such as catalog prospecting; 20% of the reductions from store labor productivity improvements…20%...from corporate payroll reductions [including] a 5% pay reduction..10% from distribution productivity improvements mostly driven by technology enhancements; and finally another 10% from renegotiated service contracts and volume-related expenses,” Hernreich added.
The company’s current business model is being driven increasingly by service enhancements to customers within its market, and less by promotional marketing and discounting, Hernreich said.
