Destination XL Group (DXLG) Q4 2016 earnings summary

Executive summary

• Fiscal 2015 sales rose to $442.2 million from $414.0 million; EBITDA from continuing operations increased to $23.3 million from $15.2 million, while GAAP net loss narrowed to $8.4 million.

• The DXL store model and disciplined rollout remained central to growth; the long-term domestic target was more than 400 DXL stores.

Financial highlights

• Sales increased 6.8% YoY to $442.2 million; comparable sales rose 4.8%, while non-comparable sales added $44.2 million, partly offset by $34.6 million in lost sales from closed or converted stores.

• Gross profit was $203.8 million; gross margin rate increased to 46.1% from 45.9% in fiscal 2014.

• SG&A rose 3.3% to $180.6 million, but declined to 40.8% of sales from 42.2%; operating loss improved to $5.1 million from $8.8 million.

• GAAP net loss was $8.4 million, or $0.17 per diluted share, versus $12.3 million, or $0.25; adjusted net loss was $4.9 million, or $0.10 per diluted share, versus $7.7 million, or $0.16.

Outlook and guidance

• Fiscal 2016 sales guidance: $465.0 million-$472.0 million; comparable sales growth 4.8%-5.5%; gross margin 46.2%-46.5%, up 10-40 bps YoY.

• EBITDA guidance was $31.0 million-$35.0 million; GAAP diluted EPS ranged from breakeven to a $0.09 loss, and adjusted diluted EPS from breakeven to a $0.05 loss.

• Plan: open 28 DXL retail and 3 outlet stores, close ~26 Casual Male XL retail and 3 outlet stores; fiscal 2016 capital expenditures forecast at $30.0 million, with $7.0 million-$8.0 million in tenant allowances.

• Fiscal 2016 operating cash flow forecast was $30.0 million-$35.0 million; free cash flow after DXL capital expenditures was expected at breakeven to $5.0 million, with year-end debt of $64.0 million-$69.0 million.