This is a stock that moved above $100 in the late 1990s, was as high as $60 in 2007, was at $40 in early 2011 and now sits at just $15. The long selloff has made this into an intriguing turnaround play, if management can execute on its plans.
In a world in which department stores offer a huge range of items in just one location, other retailers need to seek out niche markets. That's what
(DXLG - Get Report)
does, offering a ling of clothes and accessories aimed squarely at large men (in terms of either height or weight).
Several years ago, Casual Male embarked upon a vast streamlining of its business, which led to firming gross margins and higher inventory turns. Trouble is, the slow economy blunted those efforts, and annual sales remain below the $460 million level seen back in 2007 and 2008.
But a perkier economy should start to help bolster results. Analysts predict that sales will rise around 6% in fiscal (January) 2014 to around $425 million, and by mid-decade, sales should return to their former heights. The key difference, this time around, Casual Male is likely to have more solid profit margins, and EPS may approach 50 cents a share -- or more.
It's not a stretch. This retailer earned 99 cents a share back in fiscal 2007, the last time the economy cooperated.
Investors have been anticipating an upturn in leisure spending by bidding up shares of
, from a low of $6 in late 2011 to a recent $19.
A similar move may be in the offing for Marine Max
(HZO - Get Report)
, which is a big player in the boating market. History shows that spending on recreational vehicles (RVs made by firms like Winnebago) tend to move in tandem with boat sales. In addition to boat sales at its company-owned marinas, management has boosted sales of services such as repairs, spare parts, insurance and financing, all of which carry robust profit margins.
As a result, sales and profit trends are improving, even as overall boat sales rebounding at a tepid pace. A firmer consumer economy in 2013 could finally turn this into a solid rebound play.
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