Destination XL Group, Inc. Reports Third Quarter Financial Results

Destination XL Group, Inc., a leading retailer specializing in Big + Tall men's clothing and shoes, has released its financial results for the third quarter of fiscal 2024. The company reported a net loss and a decrease in total sales compared to the same period last year, reflecting ongoing challenges in consumer spending.

Financial Highlights

For the third quarter of fiscal 2024, Destination XL Group, Inc. reported:

• Total sales of $107.5 million, down 9.8% from $119.2 million in the third quarter of fiscal 2023.
• Net loss of $(0.03) per diluted share, compared to net income of $0.06 per diluted share in the third quarter of fiscal 2023.
• Adjusted EBITDA of $1.0 million, or 1.0% of sales, compared to $8.6 million, or 7.3% of sales in the third quarter of fiscal 2023.
• Total cash and investments of $43.0 million as of November 2, 2024, compared to $60.4 million as of October 28, 2023, with no outstanding debt for either period.
• Repurchased 3.6 million shares of common stock for $10.2 million, or an average cost of $2.85 per share, under a $15.0 million stock repurchase program approved during the third quarter of fiscal 2024.

Business and Operational Highlights

During the third quarter, the company faced significant headwinds in consumer spending, leading to lower traffic in stores and reduced online conversions. Despite these challenges, Destination XL maintained its operating discipline, avoiding significant erosion in merchandise margins and keeping inventory levels healthy.

Key operational highlights include:

• Opening two new stores, bringing the total to four new stores year-to-date, with plans to open four more in the fourth quarter.
• Progressing on a new eCommerce platform, with 100% of site traffic now on the new platform, aiming to improve the consumer experience and operational agility.
• Launching a DXL Big + Tall merchandise assortment on Nordstrom's digital marketplace, with 37 brands and over 1,400 styles available, and plans to add 500 more styles.

Strategic Initiatives and Corporate Developments

Destination XL has taken several strategic steps to navigate the challenging market conditions:

• Pausing its brand advertising campaign to focus on more productive traditional marketing channels, including a video campaign on social media platforms.
• Adjusting its store development plans, targeting eight new store openings in fiscal 2025, down from the previous expectation of ten.
• Continuing its stock repurchase program, with $10.2 million spent on repurchasing shares in the third quarter.

Management's Perspective

Harvey Kanter, President and CEO, commented on the results, stating, "DXL’s business continued to be challenged in the third quarter by consumer spending headwinds which resulted in lower traffic to our stores and lower conversion online. Despite these challenges, we have maintained our disciplined operating regimen, and we have avoided a material erosion in merchandise margin, while keeping our inventory position healthy and controlling our operating expenses."

He added, "As we head into the fourth quarter, we will remain focused on achieving profitable sales, generating free cash flow, and maintaining a healthy balance sheet."

Future Outlook

Looking ahead, Destination XL has revised its full-year guidance, expecting sales for fiscal 2024 to be at the low end of its previous guidance, approximately $470.0 million. The company has also lowered its adjusted EBITDA guidance to 4.5% from 6.0%, primarily due to the deleveraging of costs on a lower sales base. Sales guidance for fiscal 2024 reflects a comparable sales decrease of approximately 10%.

SEC Filing: DESTINATION XL GROUP, INC. [ DXLG ] - 8-K - Nov. 22, 2024