Destination XL Group (DXLG) Q4 2020 earnings summary

Executive summary

• FY19 sales edged up 0.1% to $474.0M; positive comparable sales and wholesale growth offset lower store sales, including Rochester closures. Net loss narrowed to $7.8M from $13.5M.

• Priorities included customer acquisition and retention, personalized digital marketing, store rebranding, direct-channel growth and measured wholesale expansion.

Financial highlights

• FY19 gross profit was $204.2M versus $211.3M; gross margin fell 150 bps to 43.1%, mainly from promotional activity, branded mix, wholesale growth and a $0.9M aged-inventory write-off.

• FY19 SG&A declined 1.7% to $180.7M; operating loss improved to $4.4M from $10.1M, and net loss narrowed to $7.8M from $13.5M.

• Q4 FY19 sales were $131.2M versus $131.2M; operating income was $3.3M versus a $6.4M loss, and net income was $2.4M versus a $7.2M loss.

• FY19 adjusted net loss was $3.2M, or $0.06/share, versus $3.5M, or $0.07/share; adjusted EBITDA was $23.5M versus $27.4M.

Outlook and guidance

• No FY20 sales, earnings or cash-flow guidance was issued amid COVID-19 uncertainty; a fuller outlook was deferred until business impacts stabilized.

• All 321 stores were temporarily closed from March 17, initially through at least March 28; e-commerce remained operational and distribution operations continued.

• Response actions included reducing operating costs and capital spending, canceling or reducing inventory receipts, and preserving liquidity.

• Longer-term plans emphasized targeted marketing, digital and CRM improvements, Casual Male XL-to-DXL conversions, and continued development of direct and wholesale channels.