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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the Quarterly Period Ended July 31, 2004

Commission File Number 0-15898

CASUAL MALE RETAIL GROUP, INC.

(Exact name of registrant as specified in its charter)

(781) 828-9300

(Registrant’s telephone number, including area code)

Indicate by “X” whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by “X” whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨

The number of shares of common stock outstanding as of September 1, 2004 was 34,208,094.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

CASUAL MALE RETAIL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

The accompanying notes are an integral part of the consolidated financial statements.

CASUAL MALE RETAIL GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

The accompanying notes are an integral part of the consolidated financial statements.

CASUAL MALE RETAIL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

The accompanying notes are an integral part of the consolidated financial statements.

CASUAL MALE RETAIL GROUP, INC,

Notes to Consolidated Financial Statements

1. Basis of Presentation

In the opinion of management of Casual Male Retail Group, Inc., a Delaware corporation (the “Company”), the accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair presentation of the interim financial statements. These financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with the notes to the Company’s audited consolidated financial statements for the fiscal year ended January 31, 2004 (included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on April 15, 2004).

The information set forth in these statements may be subject to normal year-end adjustments. The information reflects all adjustments that, in the opinion of management, are necessary to present fairly the Company’s results of operations, financial position and cash flows for the periods indicated. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s business historically has been seasonal in nature, and the results of the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Certain amounts for the three and six months ended August 2, 2003 have been reclassified to conform to the presentation for the three and six months ended July 31, 2004. These adjustments relate to the reclassification for discontinued operations in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS 144”). For further discussion regarding discontinued operations, see Note 5 below.

The Company’s fiscal year is a 52- or 53- week period ending on the Saturday closest to January 31. Fiscal 2004 is a 52-week period ending on January 29, 2005.

2. Debt

Credit Agreement with Fleet Retail Finance, Inc.

The Company has a credit facility (as amended from time to time, the “Credit Facility”) with Fleet Retail Finance Inc., (“Fleet”) which was most recently amended on November 3, 2003. The total commitment under the Credit Facility is $90.0 million, with a $20.0 million carve-out for standby and documentary letters of credit. Borrowings under the Credit Facility bear interest at variable rates based on FleetBoston, N.A.’s prime rate or the London Interbank Offering Rate (“LIBOR”) and vary depending on the Company’s levels of excess availability. The Company’s ability to borrow under the Credit Facility is determined using an availability formula based on eligible assets, with increased advance rates based on seasonality. Under the terms of the Credit Facility, which will expire on May 14, 2006, the Company is subject to prepayment penalties through May 14, 2005.

The Company’s obligations under the Credit Facility are secured by a lien on all of its assets. The Credit Facility includes certain covenants and events of default customary for credit facilities of this nature, including change of control provisions and limitations on payment of dividends by the Company. The Company is also subject to a financial covenant requiring minimum levels of EBITDA if certain minimum excess availability levels are not met. The Company was in compliance with all debt covenants under the Credit Facility at July 31, 2004.

At July 31, 2004, the Company had borrowings outstanding under the Credit Facility of $33.9 million and outstanding standby letters of credit of $2.0 million and documentary letters of credit of $0.4 million. Average borrowings outstanding under this facility during the first six months of fiscal 2004 were approximately $19.2 million, resulting in an average unused excess availability of approximately $42.8 million.

The fair value of amounts outstanding under the Credit Facility approximate the carrying value at July 31, 2004. At the Company’s option, any portion of the outstanding borrowings can be converted to LIBOR-based contracts; the remainder bears interest based on prime. At July 31, 2004, the prime-based borrowings interest rate was 4.25% and the LIBOR contracts had interest rates which ranged from 3.38% to 3.60%.

Other Long-Term Debt

Components of other long-term debt are as follows (in thousands):

12% senior subordinated notes due 2010

During fiscal 2003, the Company issued through private placements approximately $29.6 million principal amount of 12% senior subordinated notes due 2010. Interest on such notes was paid semi-annually. Together with these notes, the Company also issued, through such private placements, detachable warrants to purchase 1,182,400 million shares of Common Stock at exercise prices ranging from $4.76 to $7.32 per share. The assigned value of $5.6 million for these warrants was reflected as a component of stockholder’s equity to be amortized over the seven-year life of the notes as additional interest expense. Although the Company’s 12% senior subordinated notes due 2010 were not redeemable until July 3, 2004, the Company sought early redemption from the respective note holders in the fourth quarter of fiscal 2003. As a result, the Company prepaid approximately $21.8 million of such notes through the end of fiscal 2003.

During the second quarter of fiscal 2004, the Company prepaid the remaining $7.8 million outstanding on the notes. In connection with the early redemption, the Company incurred $1.9 million of additional expense related to prepayment charges and the write-off of remaining deferred costs associated with the warrants. The $1.9 million is included in the Consolidated Statement of Operations for the three and six months ended July 31, 2004 as a component of “Other income, net.”

3. Equity

Earnings Per Share

SFAS No. 128, Earnings per Share, requires the computation of basic and diluted earnings per share. Basic earnings per share is computed by dividing net income (loss) by the weighted average number of shares of Common Stock outstanding during the respective period. Diluted earnings per share is determined by giving effect to the exercise of stock options and certain warrants using the treasury stock method. The following table provides a reconciliation of the number of shares outstanding for basic and diluted earnings per share (in thousands):

In addition, the following potential Common Stock equivalents were also excluded from the computation of diluted earnings per share in each period because the exercise price of such options, warrants and convertible notes was greater than the average market price per share of Common Stock for the respective periods:

The above options, warrants and convertible notes which were outstanding and out-of-the-money at July 31, 2004 expire from June 13, 2005 to April 27, 2024.

Stock-Based Compensation

The Company accounts for stock option plans in accordance with the provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations in accounting for its plans.

The Company has elected the disclosure-only alternative prescribed in SFAS 123, Accounting for Stock-Based Compensation, and, accordingly, no compensation cost has been recognized. The Company has disclosed the pro forma net income or loss and per share amounts using the fair value based method. Had compensation costs for the Company’s grants for stock-based compensation been determined consistent with SFAS 123, the Company’s net loss and loss per share would have been as indicated below:

The effects of applying SFAS 123 in this pro forma disclosure are not likely to be representative of the effects on reported net income or loss for future years.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option Pricing Model with the following weighted-average assumptions used for grants for the six months ended July 31, 2004 and August 2, 2003:

The weighted-average fair value of options granted in the first six months of fiscal 2004 and fiscal 2003 were $4.55 and $4.46, respectively.

4. Restructuring, Store Closings and Impairment of Assets

In fiscal 2002, the Company implemented an aggressive plan to downsize its Levi’s^®/Dockers^® business, with the intention to eventually exit it completely. Under the plan, the Company planned to close between 50 to 55 stores over a 24 month period, thereby reducing the sales base of its Levi’s^®/Dockers^® outlet business to less than 10% of the

Company’s total sales. In fiscal 2002, the Company closed 20 of its Levi’s^®/Dockers^® Outlet stores pursuant to this plan and an additional 25 stores in fiscal 2003. During the first six months of fiscal 2004, the Company has closed 10 additional stores, resulting in 48 remaining Levi’s^®/Dockers^® outlet stores at July 31, 2004.

At July 31, 2004, the remaining reserve for Levi’s^®/Dockers^® store closings was $3.2 million. The reserve consisted of inventory reserves of $586,000 and accruals for landlord settlements and other costs of $2.6 million. These remaining reserves are for stores identified in fiscal 2002.

5. Discontinued Operations

In accordance with the provisions of SFAS 144, the Company’s discontinued operations reflect the operating results for stores which have been closed as part of the Company’s plan to exit its Levi’s^®/Dockers^® business. The results for the three and six months ended July 31, 2004 and August 2, 2003 have been reclassified to show the results of operations for closed stores.

Discontinued operations for the second quarter of fiscal 2004 resulted in a loss of $1.0 million compared to a loss of $0.3 million in the second quarter of fiscal 2003. For the six months ended July 31, 2004, discontinued operations resulted in a loss of $2.1 million as compared to a loss of $0.4 million for the six months ended August 2, 2003. Due to the consolidated tax position, no tax benefit or provision was realized on discontinued operations. Below is a summary of the results of operations for closed stores for the three and six months ended July 31, 2004 and August 2, 2003:

6. Income Taxes

At July 31, 2004, the Company had total gross deferred tax assets of approximately $45.8 million, which are fully reserved. These tax assets principally relate to federal net operating loss carryforwards that expire from 2017 through 2024. The ability to reduce the Company’s corresponding valuation allowance of $45.8 million in the future is dependent upon the Company’s ability to achieve sustained taxable income.

Due to the circumstances described above, no tax benefit or provision has been recognized for the three and six months ended July 31, 2004 and August 2, 2003.

7. Segment Information

The Company operates its business under two reportable segments: (i) the Casual Male business and (ii) the Other Branded Apparel businesses.

Casual Male business: This segment includes the Company’s 420 Casual Male Big & Tall retail stores, its 69 Casual Male Big & Tall outlet stores, and its Casual Male catalog and e-commerce businesses.

Other Branded Apparel businesses: This segment includes the Company’s remaining 48 Levi’s^®/Dockers^® outlet stores, 17 of which are expected to close by the end of fiscal 2004. This segment also includes the results of operations

through July 30, 2004 of the 29 Ecko Unltd.^® outlet stores, which were owned and operated through a joint venture with Ecko.Complex, LLC. As discussed below in Note 8, on July 30, 2004, the Company sold its 50.5% interest in the joint venture to Ecko.Complex, LLC.

The accounting policies of the reportable segments are consistent with the consolidated financial statements of the Company. The Company evaluates individual store profitability in terms of a store’s “Operating Income,” which is defined by the Company as gross margin less occupancy costs, direct selling costs and an allocation of indirect selling costs. Below are the results of operations on a segment basis for the three and six months ended July 31, 2004 and August 2, 2003, respectively.

The Casual Male business segment also includes corporate assets.

8. Sale of Interest in Ecko Joint Venture and Mark-Down Allowance Agreement

Beginning in March 2002 and through July 30, 2004, the Company operated a joint venture with Ecko.Complex, LLC (“Ecko”) under which the Company, a 50.5% partner, owned and managed retail outlet stores bearing the name Ecko Unltd.^® and featuring Ecko^® brand merchandise. Ecko, a 49.5% partner, contributed to the joint venture the use of its trademark and the merchandise requirements, at cost, of the retail outlet stores. Under the joint venture arrangement, the Company contributed all real estate and operating requirements for the retail outlet stores, including, but not limited to, the real estate leases, payroll needs and advertising. Each partner shared in the operating profits of the joint venture, after each partner had received reimbursements for its cost contributions. For financial reporting purposes, Ecko’s 49.5% ownership in the joint venture was included in the Company’s consolidated financial statements as a minority interest, through July 30, 2004.

On July 30, 2004, the Company sold to Ecko its 50.5% interest in the joint venture for a purchase price of $800,000 in cash and a secured promissory note in the principal amount of $6.2 million. The secured promissory note accrues interest at 8% annually and is secured by all of the membership interests of the former joint venture and substantially all of its assets. This note requires Ecko to make monthly principal payments to the Company of $516,667 plus interest, commencing August 31, 2004. In July 2004, Ecko made a prepayment against this note in the amount of $0.7 million, thereby reducing the balance of the note to $5.5 million at July 31, 2004. The Company will also continue to receive fees based on a percentage of sales for providing transitional services to the joint venture related to its operating and accounting systems, as needed until June 30, 2005.

The above transaction resulted in a gain of approximately $3.1 million, which is included in the Consolidated Statements of Operations as a component of “Other income, net” for the three and six months ended July 31, 2004.

Pursuant to a mark-down allowance agreement entered into on July 30, 2004, Ecko also executed and delivered an additional secured promissory note for $1.0 million as a markdown allowance with respect to purchases of certain goods made by the Company from Ecko. The secured promissory note accrues interest at 8% annually and is also secured by all of the membership interests of the former joint venture and substantially all of its assets. This note requires Ecko to make monthly principal payments in the amount of $83,333 plus interest commencing August 31, 2004.

9. Completion of Stock Repurchase Program

As part of the Company’s $100 million convertible debt offering in November 2003, the Board of Directors approved a stock repurchase program, whereby the Company could repurchase up to 2,000,000 shares of its Common Stock in open market and negotiated transactions. The Company previously purchased 1,000,000 shares in the fourth quarter of fiscal 2003 at a weighted average price of $7.90 per share.

On May 24, 2004 and May 25, 2004, the Company completed the stock repurchase program by repurchasing an aggregate of 1,000,000 shares of Common Stock at a weighted average price of $6.33 per share through open market and negotiated transactions.

10. Related Parties

As discussed in Note 2, the Company prepaid the remaining $7.8 million due on its 12% Senior Subordinated Notes due 2010. The following is a listing of the participation by related parties in the early redemption of the notes.

11. Subsequent Event – Pending Acquisition

On August 18, 2004, the Company signed an asset purchase agreement to acquire substantially all of the assets of Rochester Big & Tall Clothing, Inc., a privately held company headquartered in San Francisco, California (“Rochester”). The purchase price is $15 million in cash plus the assumption of bank and subordinated debt of approximately $5 million, in addition to the assumption of identified operating liabilities such as accounts payable and accrued liabilities. There is a potential payment of an additional $4 million, to be paid over a three-year period subject to an earn-out provision. The transaction is subject to the Company’s due diligence and other customary closing conditions. Assuming satisfaction of all closing conditions, the Company expects that the acquisition will close on or about October 31, 2004. The Company expects to secure a $7.5 million term loan which, together with borrowings from its $90 million Credit Facility, will be used to finance the acquisition. The Company does not expect this acquisition to have any significant impact on the Company’s liquidity position.

Rochester, a premier big and tall operator specializing in suits and sportswear, currently has 21 locations in major cities in the United States, one in London, England and a growing catalog and e-commerce business.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “estimate,” “intend,” “plan,” “continue,” “believe,” “expect” or “anticipate” or the negatives thereof, variations thereon or similar terminology. The forward-looking statements contained in this Quarterly Report are generally located in the material set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but may be found in other locations as well. These forward-looking statements generally relate to plans and objectives for future operations and are based upon management’s reasonable estimates of future results or trends. The forward-looking statements in this Quarterly Report should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved. Numerous factors could cause the Company’s actual results to differ materially from such forward-looking statements. The Company encourages readers to refer to the Company’s Current Report on Form 8-K, previously filed with the Securities and Exchange Commission on April 14, 2004, which identifies certain risks and uncertainties that may have an impact on future earnings and the direction of the Company.

All subsequent written and oral forward-looking statements attributable to the Company or to persons acting on the Company’s behalf are expressly qualified in their entirety by the foregoing. These forward-looking statements speak only as of the date of the document in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances in which the forward-looking statement is based.

BUSINESS SUMMARY

Casual Male Retail Group, Inc. together with its subsidiaries (the “Company”) is the largest specialty retailer of big and tall men’s apparel in the United States. The Company operates 489 Casual Male Big & Tall stores, the Casual Male catalog business and an e-commerce site. The Company is also the exclusive retailer of the Comfort Zone by George Foreman^™, GF Sport by George Foreman^™ and Signature Collection by George Foreman^™. The Company operates 48 Levi’s^®/Dockers^® Outlet stores, which are located throughout the United States and Puerto Rico.

Unless the context indicates otherwise, all references to “we,” “ours,” “our,” “us” and “the Company” refer to Casual Male Retail Group, Inc. and its consolidated subsidiaries. The Company refers to its fiscal years which end on January 29, 2005 and January 31, 2004 as “fiscal 2004” and “fiscal 2003,” respectively.

SUMMARY OF SIGNIFICANT EVENTS

Pending Acquisition of Rochester Big & Tall

Subsequent to the end of the second quarter of fiscal 2004, on August 18, 2004, the Company signed an asset purchase agreement to acquire substantially all of the assets of Rochester Big & Tall Clothing, Inc., a privately held company headquartered in San Francisco, California (“Rochester”). The purchase price is $15 million in cash plus the assumption of bank and subordinated debt of approximately $5 million, in addition to the assumption of identified operating liabilities such as accounts payable and accrued liabilities. There is a potential payment of an additional $4 million, to be paid over a three-year period subject to an earn-out provision. The transaction is subject to the Company’s due diligence and other customary closing conditions. Assuming satisfaction of all closing conditions, the Company expects that the acquisition will close on or about October 31, 2004. The Company expects to secure a $7.5 million term loan which, together with borrowings from its $90 million Credit Facility, will be used to finance the acquisition. The Company does not expect this acquisition to have any significant impact on the Company’s liquidity position.

Rochester, a premier big and tall operator specializing in suits and sportswear, currently has 21 locations in major cities in the United States, one in London, England and a growing catalog and e-commerce business.

Sale of Interest in Ecko Joint Venture and Mark-Down Allowance Agreement

On July 30, 2004, the Company sold to Ecko its 50.5% interest in the joint venture for a purchase price of $800,000 in cash and a secured promissory note in the principal amount of $6.2 million. The secured promissory note accrues interest at 8% annually and is secured by all of the membership interests of the former joint venture and substantially all of its assets. This note requires Ecko to make monthly principal payments to the Company of $516,667 plus interest, commencing August 31, 2004. In July 2004, Ecko made a payment against this note in the amount of $0.7 million thereby reducing the balance of the note to $5.5 million at July 31, 2004. The Company will also continue to receive fees based on a percentage of sales for providing transitional services to the joint venture related to its operating and accounting systems, as needed until June 30, 2005.

The above transaction resulted in a gain of approximately $3.1 million, which is included in the Consolidated Statements of Operations as a component of “Other income, net” for the three and six months ended July 31, 2004.

Pursuant to a mark-down allowance agreement entered into on July 30, 2004, Ecko also executed and delivered an additional secured promissory note for $1.0 million as a markdown allowance with respect to purchases of certain goods made by the Company from Ecko. The secured promissory note accrues interest at 8% annually and is also secured by all of the membership interests of the former joint venture and substantially all of its assets. This note requires Ecko to make monthly principal payments in the amount of $83,333 plus interest commencing August 31, 2004.

Early Redemption of 12% Senior Subordinated Notes due 2010

During the second quarter of fiscal 2004, the Company prepaid the remaining $7.8 million outstanding on its Senior Subordinated Notes due 2010. In connection with the early redemption, the Company incurred $1.9 million of additional expense in the second quarter of fiscal 2004 related to prepayment charges and the write-off of remaining deferred costs. The $1.9 million is included in the Company’s Consolidated Statements of Operations for the three and six months ended July 31, 2004 as a component of “Other income, net.”

Extension of George Foreman agreement

During the second quarter of fiscal 2004, the Company extended its exclusive licensing agreement with George Foreman beyond the United States and Canada to include worldwide rights to the George Foreman Clothing Collection. As part of the extension, Casual Male also expanded the George Foreman line to include footwear. As part of the extended licensing agreement, Casual Male has two additional 3-year options to extend the relationship from 2012 to 2018.

SEGMENT REPORTING

The Company operates its business in two reportable business segments: (i) the Casual Male business and (ii) Other Branded Apparel businesses. The Company’s “Other Branded Apparel businesses” segment includes the operations of the Company’s Levi’s^®/Dockers^® outlet stores and through July 30, 2004, its Ecko Unltd.^® outlet and retail stores. See Note 7 of the Notes to Consolidated Financial Statements for a complete disclosure of financial results for each segment.

STORE CLOSINGS/DISCONTINUED OPERATIONS

In accordance with the provisions of Statement of Financial Accounting Standard (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”), results of operations for stores closed since 2003 have been presented as discontinued operations. Accordingly, the Company has reclassified all prior year results for such closed stores to conform with the current period presentation of discontinued operations.

RESULTS OF OPERATIONS

Because of the materiality of the Casual Male business to the Company’s consolidated operations, the following discussion of results of operations will first review the segment results of the Casual Male business and will conclude with a consolidated review of the Company’s results. The discussion of the Company’s consolidated results of operations begins on page 17 of this Form 10-Q. Management believes that this presentation helps investors gain a better understanding of the Company’s core operating results and future prospects, consistent with how management measures and forecasts the Company’s performance, especially when comparing such results to previous periods.

CASUAL MALE BUSINESS – SEGMENT OVERVIEW

Sales

For the second quarter of fiscal 2004, sales for the Casual Male business, which includes sales from its e-commerce and catalog businesses increased 3.3% to $81.5 million compared to sales for the second quarter of fiscal 2003 of $78.9 million. Comparable store sales for the second quarter and six months ended July 31, 2004 for the Casual Male business increased 4.8% and 6.9%, respectively. Comparable stores include not only stores that have been open for at least one full fiscal year, but also include e-commerce and catalog sales. In March 2004, Casual Male launched its new George Foreman product lines, Comfort Zone by George Foreman^™, George Foreman Signature Collection^™ and GF Sport^™, which represented approximately 15% of the Company’s sales during the first six months of fiscal 2004 and are expected to increase to approximately 25% by the fall of 2004.

Sales for only the Casual Male stores increased 4.7% to $75.0 million for the second quarter of fiscal 2004 as compared to $71.6 million for the second quarter of the prior year. Sales from the Casual Male catalog and e-commerce business decreased 11.8% to $6.1 million, as the Company anticipated due to the elimination of the REPP Big & Tall catalog which represented approximately $2.5 million in sales for the second quarter of fiscal 2003. Through the first six months, the conversion rate of its REPP customers to the Casual Male catalog has been approximately 25%.

Gross Profit Margin

For the second quarter of fiscal 2004, the gross margin rate for the Casual Male business, inclusive of occupancy costs, was 42.0%, which was an increase of 1.2 percentage points as compared to a gross margin rate of 40.8% for the second quarter of fiscal 2003. This increase was attributable to continued increases in initial markup and, as a result of a good inventory position, a lower markdown rate than the prior year. Occupancy costs as a percentage of sales were flat for the second quarter of fiscal 2004 as compared to the prior year second quarter.

For the six months ended of fiscal 2004, the gross margin rate for the Casual Male business, inclusive of occupancy costs, was 41.4% as compared to 41.1% for the prior period. This increase of 0.3 percentage points was due to 0.4 percentage point increase in merchandise margins offset by a 0.1 percentage point increase in occupancy costs as a percentage of sales.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses as a percentage of sales for the second quarter of fiscal 2004 were 35.3% of sales as compared to 33.3% for the second quarter of fiscal 2003. This increase of approximately $2.5 million or 9.5% is primarily related to continued marketing costs associated with the national launch of the George Foreman lines as well as new store growth.

For the six months ended July 31, 2004, SG&A expenses as a percentage of sales were 37.3% as compared to 34.7% for the six months ended August 2, 2003. This increase of $7.0 million or 13.3% was primarily related to Casual Male’s planned national marketing campaign of George Foreman and the introduction of the George Foreman product lines of clothing during the first quarter of fiscal 2004. The Company planned an incremental $5.0 million in marketing and advertising expenses for this national launch for fiscal 2004, of which approximately $4.5 million was incurred during the first half of fiscal 2004.

Operating Income

For the second quarter of fiscal 2004, the Casual Male business incurred operating income of $3.2 million compared to operating income of $4.3 million for the second quarter of fiscal 2003. For the six months ended July 31, 2004, operating income for the Causal Male business was $2.3 million as compared to $6.7 million for the six months ended August 2, 2003. As discussed above, the primary reason for the decrease in operating income was due to the up front marketing costs of $4.5 million incurred in the first half of fiscal 2004 to promote the George Foreman product lines.

OTHER BRANDED APPAREL BUSINESS – SEGMENT OVERVIEW

Other Branded Apparel business includes the results of operations, on a continuing basis, for the Company’s Levi’s^®/Dockers^® outlet stores and, through July 30, 2004, its Ecko Unltd.^® outlet and retail stores. In fiscal 2002, the Company announced that it would be winding down its Levi’s^®/Dockers^® business with the intention to eventually exit the business completely. To date, the Company has closed 55 Levi’s^®/Dockers^® Outlet stores. Accordingly, the operating results of these stores have been reclassified to discontinued operations and are discussed in more detail under “Consolidated Results of Operations- Discontinued Operations.”

Included in the table below are the operating results for the 48 Levi’s^®/Dockers^® outlet stores and, through July 30, 2004, the 29 Ecko Unltd.^® stores which, as discussed above, were sold on July 30, 2004. The Company intends to close another 17 Levi’s^®/Dockers^® stores through the remainder of fiscal 2004.