Small Cap Network's  Instablog

Casual Male Retail Group (CRMG) and Tuesday Morning Corp., (TUES) soar on earnings; Mercer Intl., (MERC) gains on a new line of credit and term loan.
 

Casual Male (CRMG) and Tuesday Morning (TUES) soared on 2009 earnings reports this morning and Mercer International (MERC) announced new financing in the forms of a new line of credit and a new term loan. The broad market bulls helped CRMG, TUES and MERC with a steady push into positive territory sparked by Obama's re-appointment of Fed Chairman Ben Bernanke.

Bernanke is widely credited with saving the economy during its darkest hours of the recession. Bernanke is a Republican. While Obama said there would be no news conferences during his family vacation, he and the Fed Chairman made the announcement together. It was reported by AP that both he and Bernanke sported the open-collar look.

And speaking of casual clothing...

Gaining over 20% ($0.45) this morning in early trading is Casual Male Retail Group Inc., (CMRG) http://www.casualmalexl.com/ currently trading in the $2.64 range. CMRG set a new market cap of $111 million. CMRG has a 3-Month average daily trading balance of 345,517 shares and easily surpassed that by mid-session.

The CMRG jump in price came on today's news that the clothing retailing nearly doubled its Q2 2009 profit. The reason given by management was bottom line cost cuts to offset sales (like so many companies this earnings season). CMRG management also noted they were happy with the better operating margins and the free cash flow given the realities of a lower top line. Fair enough.

CMRG earned $3.6 million, or 9 cents per share, up from $1.9 million, or 5 cents per share, in the year-ago period. CMRG sales dropped 13 percent to $98.3 million from $113.5 million. Same-store-sales (at stores open at least a year) dropped 13.9 percent.

CMRG total expenses fell 17 percent to $39.5 million, but the cost cutting performance was held against the actuality noted by management that they expect total 2009 sales to be down 10-12% from 2008.

CMRG operates as a specialty retailer of men's apparel in the United States, Canada, and Europe. CMRG operates 401 Casual Male XL full-price retail stores, 66 Casual Male XL outlet stores, and 27 Rochester Clothing stores in addition to its e-commerce sites.

At $2.64, CMRG is below its 52-week high of $4.95 set on 09-10-08 and is above its 52-week low of $0.26 set on 03-17-09. At $2.64, CMRG is above both its 50-day and 200-day moving averages. And speaking of valuations, it just amazes how many stocks we've seen this past quarter under $3 with huge revenues. For example, at $2.64, CMRG has $434 million in trailing twelve month revenues; nearly a half a billion. Amazing. CMRG is widely held by institutions and its shares out versus float ratio is near-parity.

Also posting a substantial jump in price this morning on earnings news is another retailer; Tuesday Morning Corp., (TUES) http://www.tuesdaymorning.com/ . The S&P SmallCap 600 company gained over 17% ($0.75) in early trading today. TUES is currently trading in the $5.19 range with a new market cap of $215 million. TUES has a 3-Month average daily trading volume of 150,275 shares and it sailed right past the number by 11 a.m. EST.

TUES is a discount house-wares chain and it too gave credit to its Q4 2009 numbers based on bottom cash and inventory management improvements.

TUES reported net sales for Q4 09 were $188.7 million compared to $196.5 million for the quarter ended June 30, 2008, a decrease of 4.0%. TUES said comparable store sales decreased 6.6% for the quarter. TUES net loss for Q4 was $1.6 million or $0.04 loss per diluted share, compared to a net loss of $2.5 million or $0.06 loss per diluted share for the same period last year.

...the FYE 2009 ...

For the fiscal year ended June 30, 2009, TUES net sales were $801.7 million compared to $885.3 million for the same year ended June 30, 2008, a decrease of 9.4%. TUES said comparable store sales decreased by 12.5% for the fiscal year. For the FYE, TUES had earnings per diluted share of $0.00 versus $0.35 for fiscal 2008. Not bad, not bad at all considering the beating retailers took during the worst sections of the recession.

Guidance

Now in its Q1 of 2010, TUES management said they anticipate 'the retail environment will continue to be economically difficult and uncertain.' TUES management said forecasted net sales to be $795-$805 million, comparable store stores to decrease in the low single digits and there would be a diluted loss of EPS of 2 cents.

TUES is an upscale retailer of home furnishings, house-wares and gifts in the U.S. and operates 857 stores in 45 states. During Q4 09, TUES opened eight stores, closed one store and relocated seven stores. During FY 2009, TUES opened 35 stores, closed 20 stores and relocated 34 stores. TUES expanded four stores.

TUES management also noted that the states with the largest sales declines in its stores continued to be the areas most affected by the deterioration of the housing market such as: Florida, California, Nevada and Arizona.

At $5.19, TUES is below its 52-week high of $5.30 set on 10-10-08 and above its 52-week low of $0.51 set on 03-09-09. At $5.19, TUES is above both its 50-day and 200-day moving averages. Again, the valuation amazes me... at $5.19, TUES has trailing twelve month revenues of $809 million; more than three quarters of a billion. TUES is also widely held by institutions. Its shares out versus float ratio is very stable and near-parity.

... a good time to re-finance and re-invest...

Also gaining over 17% this morning ($0.44), is Mercer International, Inc. (MERC) http://www.mercerint.com/ which is currently trading in the $2.97 range on the Nasdaq. MERC has a new market cap of $107 million. MERC has a 3-Month average daily trading balance of 316,481 shares and it had quadrupled that name by mid-session soaring past 1,689,025 shares traded at the time of this writing.

In an 8-k filed by MERC on August 19, 2009 and posted late yesterday, the Company reported that one of its wholly owned subsidiaries had completed the re-financing of its $40 million revolving capital line with a new line of $25 million that will mature December 31, 2012. The new line interest on cash is EURIBOR (the European bank-to-bank lending rate) plus 3.5%.

A Term Loan

MERC management also said in the filing, that the new line will arrange a term loan in the amount of $4,354,453.14 to the subsidiary for financing expenditures (maintenance and upgrades) at the Company's Rosenthal mill. Re-invest; that's the stuff! The Term Loan will mature on February 28, 2010. The interest is EURIBOR plus 2.75%.

On August 11, MERC, in an 8-k filing, also announced an extension of its offer to exchange any and all of its outstanding 8.5% Convertible Senior Subordinated Notes due 2010. The new deadline is: 5:00 p.m., New York City time, on August 25, 2009 (unless further extended or amended).

You have to like management that is re-tooling capital structures during this end-of-the-recession, beginning-of-the-recovery period. If not now? When?

MERC makes and sells pulp. MERC operates three pulp mills, including the Rosenthal mill and the Stendal mill in Germany, as well as Celgar mill in Canada. MERC sells its products primarily in Europe, Asia, and North America.

At $2.97, MERC is below its 52-week high of $6.54 set on 09-04-08 and above its 52-week low of $0.25 set on 03-11-09. At $2.97, MERC is ahead of both its 50-day and 200-day moving averages. MERC is widely held by insiders. Its shares out versus float ratio is close enough not to cause any worries about stability.

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