Destination XL Group (DXLG) Q4 2022 earnings summary

Executive summary

• Fiscal 2021 delivered record sales, cash flow, profitability and customer counts after extensive business restructuring and recovery from pandemic disruption.

• Strategy centers on growing market share through digital expansion, targeted marketing, exclusive assortments and a differentiated fit-focused customer experience.

Financial highlights

• Sales rose 58.3% YoY to $505.0 million and 6.5% vs. FY2019; net income was $56.7 million vs. losses of $64.5 million in FY2020 and $7.8 million in FY2019.

• Diluted EPS was $0.83 vs. losses of $1.26 in FY2020 and $0.16 in FY2019; adjusted EBITDA was $76.9 million vs. $(24.2) million and $23.5 million, respectively.

• Operating cash flow was $75.5 million and free cash flow $70.3 million; FY21 ended with $15.5 million cash and no debt.

• Gross margin was 49.5%, up 1,660 bps YoY and 640 bps vs. FY2019; lower markdowns and occupancy costs supported improvement.

Outlook and guidance

• FY22 priorities include customer acquisition and retention, expanding distribution channels, greater personalization, a new loyalty program and customer data platform.

• FY22 gross margin could face pressure of upwards of 200 bps from freight, markdowns and higher raw-material costs; FY21 supply-chain disruption reduced gross margin by ~84 bps.

• FY22 marketing costs expected at ~6% of sales, compared with 4.7% in FY21; capital expenditures expected at $10.0–$12.0 million.

• Preliminary three-to-five-year store plan indicates potential for up to 50 new or relocated stores; investments will include technology and store portfolio improvements.