Hoping to grab a larger share of the more than $5.5 billion big-and-tall menswear market, Canton, MA-based Casual Male Retail Group has agreed to buy $65 million cataloger/retailer Rochester Big & Tall. Casual Male, whose primary business is cataloger/retailer Casual Male Big & Tall, will pay $15 million in cash and assume $5 million of bank and subordinated debt for the privately held Rochester. The deal is expected to close by Oct. 31. Rochester’s management team, including president/CEO Robert L. Sockolov, is joining the Casual Male board of directors.
San Francisco-based Rochester carries high-end brands such as Versace, Ermenegildo Zegna, Burberry, and Polo Ralph Lauren, while the $319.2 million Casual Male specializes in moderately priced casual clothing. Casual Male’s direct sales account for about 10% of its revenue, evenly split between catalog and Internet, says president/CEO David Levin. Rochester’s direct business makes up about 20% of its sales. Casual Male operates 485 Casual Male Big & Tall stores nationwide, while Rochester has 21 U.S. stores.
Christina de Marval, a research analyst with New York-based equity research firm Sidoti & Co., estimates that Casual Male stands to take in an additional $75 million from Rochester in 2005, assuming Rochester opens six more stores. “Strategically this a good fit for both,” she says. “Casual Male will be able to take advantage of merchandising and marketing synergies in order to expand into international markets, for example.” Rochester already has a small international presence, with a store in London.
The deal should help the Rochester brand continue to grow as well. “We’re giving them a database of 200,000 names right off the bat,” Levin says. “Nowadays the cost to acquire a new customer is huge. So that’s a big advantage in trying to grow the catalog business.”
The 200,000 names were collected from Casual Male’s Repp by Mail business, which it folded last year. Repp had been Casual Male’s previous attempt to gain a foothold into the upscale big-and-tall market.
Casual Male was unable to make a go of the business, says Gary Giblen, director of research for New York-based equity research firm C.L. King, in part because “there was no connection” between the middle-income Casual Male buyers and the upscale audience Repp hoped to reach. Casual Male has a better chance of succeeding with Rochester, Giblen says, because the latter brand is better known among its target market than Repp had been.