Casual Male Plans $57M Sale-Leaseback of Canton HQ

CANTON, MA-Spirit Finance Corp. signed on to pick up Casual Male Retail Group's 755,000-sf headquarters and distribution center here. The $57-million sale-leaseback deal allows the men's retailer to pay down its debt, buy back a portion of its outstanding stock and reinvest in its business.

The transaction also gives the retailer a 20-year lease on the 555 Turnpike St. property for $4.6 million per year with six five-year options to renew, David A. Levin, Casual Male's president and chief executive officer, said during a presentation Tuesday at the at the Brean Murray, Carret & Co. Small Cap Institutional Investor Conference in New York City. Levin said the arrangement will allow the retailer, which struggled with losses in recent years before making a turnaround in 2004, to reduce its $140-million debt to about $100 million and cut back its interest payments from as high as $16 million a year to $5 million annually.

"This is very important to our balance sheet," says Levin, noting that the savings will allow for further debt reductions and give the firm about $14 million in working capital. "We [now] have cash in the bank."

The sale, which is subject to customary closing conditions, is expected to close shortly, the company said. Officials from Scottsdale, AZ-based Sprint did not return calls from GlobeSt.com seeking comment.

Levin said the men's retail group is redefining its image with more modern fashions, redesigned stores and a new logo aimed at attracting younger buyers. The company will roll out its new look at all of its stores by Father's Day, he noted. The retailer also plans to focus on its internet business, which increased 190% from 2002 to 2004. The company, which operates under the brands Casual Male XL, Casual Male Big and Tall and Rochester Big & Tall, has more than 496 specialty and outlet stores in 44 states.