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 us or any other person that our objectives or plans will be achieved. Numerous factors could cause our actual results to differ materially from such forward-looking statements. We encourage readers to refer to Part I, Item 1A of our Annual Report on Form 10-K for the year ended January 31, 2009, filed with the Securities and Exchange Commission on March 23, 2009, and Part II, Item 1A of this Quarterly Report which identify certain risks and uncertainties that may have an impact on our future earnings and the direction of our Company.

All subsequent written and oral forward-looking statements attributable to us or to persons acting on our 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. We disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our 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 our subsidiaries is the largest specialty retailer of big & tall men's apparel with retail operations throughout the United States, Canada and London, England. We operate 466 Casual Male XL retail and outlet stores, 27 Rochester Big & Tall stores and a direct to consumer business, which includes several catalogs and e-commerce sites.

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. We refer to our fiscal years which end on January 30, 2010 and January 31, 2009 as "fiscal 2009" and "fiscal 2008," respectively.

When discussing sales growth, we refer to the term "comparable sales." Comparable sales for all periods discussed include our retail stores that have been open for at least one full year together with our e-commerce and catalog sales. Stores that may have been remodeled, expanded or re-located during the period are also included in our determination of comparable sales. We include our direct businesses as part of our calculation of comparable sales because we are a multi-channel retailer, offering our customers convenient alternatives for their shopping. The method of calculating comparative store sales varies across the retail industry and, as a result, our calculation of comparable sales is not necessarily comparable to similarly titled measures reported by other companies.

RESULTS OF OPERATIONS

Financial Summary

We reported net income for the first quarter of fiscal 2009 of $336,000, or $0.01 per diluted share, as compared to net income of $96,000, or $0.00 per diluted share, for the first quarter of fiscal 2008.

As we had anticipated, our sales trend for the first quarter of fiscal 2009 continued to be negatively impacted by the weakened economy. However, despite the expected sales decrease of 9.4% and as a result of carefully managing inventory levels, maintaining healthy gross margins and successfully reducing our selling, general & administrative ("SG&A") cost structure, our profitability exceeded last year's levels, by $240,000, or $0.01 per diluted share.

Our initial forecast for fiscal 2009 included planned SG&A reductions of $15.0 million. However, in response to the continued economic uncertainty and in order to align our operating infrastructure to the expected decline in top-line sales, in the first quarter of fiscal 2009, we further reduced our annual SG&A costs by an additional $15.0 million by reprioritizing business activities and functions. These cost savings, in combination with the originally planned reductions, will result in a 17% decrease from SG&A levels from fiscal 2008, or $30 million on an annualized basis, of which $26 million is expected to be realized in fiscal 2009. The cost reductions implemented during the first quarter relate primarily to re-focusing our marketing spend on our most productive customer base, reductions in our corporate headcount, store and distribution productivity improvements, and renegotiations of numerous service and supply contracts. In total, these reductions will bring our 2009 SG&A back to 2005 levels.

Although our primary focus has shifted to maintaining and strengthening our financial condition, we remain committed to our overall objective to catering to our target market and increasing our market share by:

• continuing to transform our cultural focus towards creating an enhanced customer experience by providing our store sales associates and management with better sales training, development tools and monitoring capabilities;

• improving upon our methodology of planning and allocating appropriate assortments to each store, considering the demographics and lifestyle tendencies of our customers in each store location;

• testing a hybrid store format, a combination Casual Male XL/Rochester Clothing store, to better capitalize upon the higher-end customer and to improve store productivity and overall profitability for the long term;

• building our primary brands, Casual Male XL and Rochester Clothing, on web sites in the European Union which were launched in the third quarter of fiscal 2008; and

• focusing on growing our market share within the smaller size component of the big & tall target market.

Fiscal 2009 Outlook

Given the continued uncertainty in the economy, we continue to expect sales for fiscal 2009 to be approximately 10% less than fiscal 2008. We expect our merchandise margins to improve 275 to 325 basis points, an increase of 50 basis points from our guidance provided in March 2009. However, as a result of the sales shortfall, our merchandise margin improvement will be partially offset by unfavorable leveraging of fixed occupancy costs by approximately 150 basis points. With our total expected cost savings in SG&A of approximately $26.0 million, we anticipate that SG&A for the year will approximate $151.0 million, or a decrease of 15% over the prior year, representing an $11 million improvement from our previous guidance. Free cash flow for fiscal 2009 is expected to approximate $25 million and overall debt levels are anticipated to decline to between $20-$25 million, an improvement of approximately $10 million in each case from our last guidance.

Presentation of Non-GAAP Measure

The presentation of non-GAAP free cash flow is not a measure determined by generally accepted accounting principles ("GAAP") and should not be considered superior to or as a substitute for net income or cash flows from operating activities or any other measure of performance derived in accordance with GAAP. In addition, all companies do not calculate non-GAAP financial measures in the same manner and, accordingly, "free cash flows" presented in this report may not be comparable to similar measures used by other companies. We calculate free cash flows as cash flow used for operating activities less capital expenditures. We believe that inclusion of this non-GAAP measure helps investors gain a better understanding of our performance, especially when comparing such results to previous periods. The following table reconciles our non-GAAP free cash flow measure:

                                               For the three months ended:             Projected Cash Flow
                                           May 2, 2009            May 3, 2008              Fiscal 2009
(in millions)
Cash flow from operating activities       $        (2.1 )       $          (8.1 )     $                30.0
Less: Capital expenditures                         (0.7 )                  (2.7 )                      (5.0 )

Free Cash Flow                            $        (2.8 )       $         (10.8 )     $                25.0

For the first quarter of fiscal 2009, total sales decreased by 9.4% to $97.6 million when compared to total sales of $107.6 million for the first quarter of fiscal 2008. Comparable sales for the first quarter decreased 10.7% when compared to the same period of the prior year. This decrease consisted of a 6.7% decrease in sales from our Casual Male business and a 26.9% decrease in our Rochester business. Similar to other high-end retailers, our Rochester division has been significantly impacted by the recession.

Our non-core businesses, which include LivingXL, ShoesXL and B&T Factory Direct, generated sales of $3.1 million for the first quarter of fiscal 2009 as compared to sales of $3.6 million for the first quarter of fiscal 2008.

Gross Profit Margin

For the first quarter of fiscal 2009, our gross margin rate, inclusive of occupancy costs, was 42.6% as compared to a gross margin rate of 44.9% for the first quarter of fiscal 2008. The decrease in gross margin rate was the result of a 50 basis point decrease in merchandise margins and a 180 basis point increase in occupancy costs as a percentage of sales. The 180 basis point increase is the result of a relatively fixed occupancy cost over a decreased sales base; actual occupancy costs in dollars increased 1.8% over the prior year quarter. The decrease in merchandise margin during the first quarter includes the impact of some residual fourth quarter 2008 clearance merchandise. Gross margins in the first quarter improved by over 380 basis points from the fourth quarter of 2008.

As stated above, we anticipate our merchandise margins for fiscal 2009 to increase by 275 to 325 basis points over fiscal 2008 partially offset by unfavorable deleveraging of fixed occupancy costs by approximately 150 basis points.

Selling, General and Administrative Expenses

SG&A expenses for the first quarter of fiscal 2009 were 38.1% of sales as compared to 40.3% for the first quarter of fiscal 2008. On a dollar basis, SG&A expenses decreased $6.2 million, or 14.2%, for the first quarter of fiscal 2009 as compared to the first quarter of fiscal 2008. Approximately half of the savings in the first quarter were as a result of our revised marketing objectives, which have been refined to focus on our most productive customer base. The remainder of the savings resulted from our cost reduction efforts throughout our organization, including corporate overhead, distribution and field productivity improvements and staff reductions.

With the weakness in sales continuing this quarter, strong expense control has been a significant priority for us and will be for the remainder of the fiscal year. We continue to be committed to managing our SG&A costs, while continuing to invest in our marketing campaigns and growing our direct businesses. As mentioned above, we expect to reduce our annual SG&A expenses for fiscal 2009 by 15% to $151.0 million, or $26.0 million less than fiscal 2008.

Interest Expense, Net

Net interest expense was $0.3 million for the first quarter of fiscal 2009 as compared to $0.8 million for the first quarter of fiscal 2008. The reduction in interest costs for the first three months of fiscal 2009 as compared to the prior year was due to an overall reduction of 21.5% in total debt as well as favorable interest rates on our credit facility. The average interest rate on our credit facility at the end of the first quarter of fiscal 2009 was approximately 2.5% compared to approximately 4.6% at the end of the first quarter of fiscal 2008.

At May 2, 2009, our total deferred tax assets were approximately $59.5 million, with a corresponding valuation allowance of $59.5 million. These tax assets principally relate to federal net operating loss carryforwards that expire through 2028.

The effect of the weakening economy on our retail business, especially in fiscal 2008, has had a significant impact upon our revenue and profitability. Further, the conditions of the economy also negatively impacted our market value as a result of the deterioration of the capital markets and resulted in substantial impairments in fiscal 2008. Accordingly, due to our cumulative operating losses as well as our uncertainty regarding the economy and our ability to generate future taxable income to realize all of our deferred tax assets, in the fourth quarter of fiscal 2008, we established a valuation allowance against our deferred tax assets.

Net Income

For the first quarter of fiscal 2009, we had net income of $0.3 million, or $0.01 per diluted share, as compared to net income of $96,000, or $0.00 per diluted share, for the first quarter of fiscal 2008.

Inventory

At May 2, 2009, total inventory was $105.6 million compared to $98.6 million at January 31, 2009 and $123.6 million at May 3, 2008.

Inventory at the end of the first quarter of fiscal 2009 decreased $17.9 million, or 14.5%, as compared to May 3, 2008. Similar to the end of fiscal 2008, we are continuing to make a concerted effort to manage our inventory levels during this economic recession.

SEASONALITY

Historically and consistent with the retail industry, we have experienced seasonal fluctuations in revenues and income, with increases traditionally occurring during our third and fourth quarters as a result of the "Fall" and "Holiday" seasons.

LIQUIDITY AND CAPITAL RESOURCES

Our primary cash needs are for working capital (essentially inventory requirements) and capital expenditures. As discussed below, our capital expenditure program for fiscal 2009 is $5.0 million and is considerably less than in prior years. For fiscal 2009, we have no plans for new store growth and will only pursue those capital projects which we deem imperative to our business and to promote improved customer service.

The current retail environment has been impacted by the recent volatility in the financial markets and the uncertainty in the economy, all of which could result in unanticipated adverse effects on our business. However, we currently believe that our existing cash generated by operations together with our availability under our credit facility will be sufficient within current forecasts for us to meet our foreseeable liquidity requirements. In determining future liquidity and cash flow for fiscal 2009, we factored in potential decreases in comparable sales for fiscal 2009 of 10%. We anticipate that we will be able to generate free cash flow of approximately $25 million in fiscal 2009 despite a lower sales base. See "Presentation of Non-GAAP Measures" above regarding non-GAAP free cash flow.

For the first three months of fiscal 2008, cash used for operating activities was $(2.1) million as compared to cash used for operating activities of $(8.1) million for the corresponding period of the prior year. The improvement in cash flows from operations was primarily due to the continued reduction in inventory, which we are closely managing in response to current sales trends as well as cost reductions in SG&A.

In addition to cash flow from operations, our other primary source of working capital is our Credit Facility which has a total commitment of $110.0 million, although the amounts that can be borrowed is limited to the borrowing base as defined by the Credit Facility, which is comprised primarily of the liquidation value of our inventory. The maturity date of the Credit Facility is October 29, 2011. Borrowings under the Credit Facility bear interest at variable rates based on

We had outstanding borrowings under the Credit Facility at May 2, 2009 of $43.8 million. Outstanding standby letters of credit were $2.1 million and outstanding documentary letters of credit were $2.2 million. Average monthly borrowings outstanding under this facility during the first three months of fiscal 2009 were approximately $43.1 million, resulting in an average unused excess availability of approximately $27.4 million. Unused excess availability at May 2, 2009 was $30.8 million. Our obligations under the Credit Facility are secured by a lien on all of our assets.

At May 2, 2009, we have reduced our total debt, including our long-term debt, by $15.1 million, or 21.5%, to $55.0 million from $70.1 million at May 3, 2008.

Master Loan and Security Agreement

On July 20, 2007, we entered into a Master Loan and Security Agreement (the "Master Agreement") with Banc of America Leasing & Capital, LLC ("BALC") for equipment financing. In conjunction with the Master Agreement, we entered into an Equipment Security Note (the "First Secured Note"), whereby we borrowed an aggregate of $17.4 million from BALC. The First Secured Note is due July 20, 2011.

On January 16, 2008, we entered into a second Equipment Security Note (the "Second Secured Note"), pursuant to the same terms and provisions of the Master Agreement, whereby we borrowed an additional $2.1 million. The Second Secured Note is due January 16, 2012.

Both secured notes accrue interest at a per annum rate of 1.75% plus the rate of interest equal to the 30-day published LIBOR rate. Principal and interest, in arrears, are payable monthly on each note, commencing one month after issuance of such note. We are subject to a prepayment penalty on both secured notes equal to 1% of the prepaid principal until the first anniversary of the respective secured note, 0.5% of the prepaid principal from the first day after the first anniversary through the end of the second anniversary and no prepayment penalty thereafter. At May 2, 2009, the outstanding balance of the secured notes was $11.2 million.

Both notes are secured by a security interest in all of our rights, title and interest in and to certain equipment.

Capital Expenditures

The following table sets forth the stores opened and related square footage at
May 2, 2009 and May 3, 2008, respectively:



                                         At May 2, 2009        At May 3, 2008
                                       Number of   Square    Number of   Square
       Store Concept                    Stores     Footage    Stores     Footage
       (square footage in thousands)
       Casual Male XL                        466     1,638         466     1,616
       Rochester Big & Tall                   27       220          26       216

       Total Stores                          493     1,858         492     1,832

Total cash outlays for capital expenditures for the first three months of fiscal 2009 were $0.7 million as compared to $2.7 million for the first three months of fiscal 2008.

Our capital expenditures for fiscal 2009 are expected to approximate $5.0 million, which we believe to be an adequate level of expenditures to maintain our infrastructure, the condition of our stores, conduct certain number of necessary real estate relocations and advance its technology projects for further productivity enhancements. Our capital projects will be limited to those that we believe will provide a substantial financial benefit, such as our inventory integration project. With the exception of $0.5 million for the conversion and development of five hybrid Rochester/Casual Male XL stores, we do not plan on opening any new store locations during fiscal 2009.

                                                Rochester
                                  Casual Male   Big & Tall   Total stores
            At January 31, 2009           467           27            494
            New outlet stores              -            -              -
            New retail stores              -            -              -
            Closed stores                   1           -               1

            At May 2, 2009                466           27            493

            Relocations                     2           -               2

CRITICAL ACCOUNTING POLICIES

There have been no material changes to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended January 31, 2009 filed with the SEC on March 23, 2009.