On May 7, the U.S. Bankruptcy Court for the Southern District of New York approved the sale of Casual Male, a cataloger/retailer of big-and-tall men’s apparel, to Needham, MA-based apparel retailer Designs for $170 million in cash plus unspecified trade liabilities.
Although Canton, MA-based Casual Male had been operating under bankruptcy protection since May 2001, the transaction was hardly a fire sale. Designs outbid the $137 million that New York-based private equity firm Charlesbank Capital Partners had offered for the assets of Casual Male on March 22. The Charlesbank deal was subject to the receipt of any higher and better bids at the May 7 bankruptcy hearing — at which Designs came in with a $145 million offer. Charlesbank and Designs then went back and forth with slightly more than a dozen offers before the deal was finalized.
For the fiscal year ended Feb. 2, net sales at Designs totaled $195.1 million, flat with the previous year’s. Its net loss was $7.9 million compared with a net income gain of $3.2 million for 2000. The company expects the Casual Male acquisition to increase total annual revenue to more than $500 million.
A good fit
The sale includes the 473 Casual Male stores and the Casual Male catalog. Designs, operates 105 stores primarily in the eastern U.S, including the Levi’s Outlet by Designs, Dockers Outlet by Designs, and Candie’s chains. Casual Male also sells Levi’s and Dockers apparel, as well as clothes from such brands as Harbor Bay and Izod.
“The synergies offered in combining the two companies will create an efficient cost structure and is consistent with Designs’ strategic focus on managing businesses in a cost-effective manner” David Levin, Designs’ president/CEO, said in statement. “Given the close proximity of Casual Male’s main offices to our corporate headquarters in Needham, MA, we expect the combination to go very smoothly,”
Two months earlier, on March 13, Casual Male sold its uniforms catalog/retail business, Work ‘n Gear, for approximately $11 million to Sandy Point, a $40 million footwear manufacturer. (For more on that deal, see “Quality Rather Than Quantity,” page 8.)