WWD.com/business-news/financial/destination-xl-profits-fall-in-q1-6952748/
government-trade
government-trade

Destination XL Profits Fall in Q1

Results in the first quarter were impacted by colder-than-usual weather in the early part of the period.

The Destination XL store in Las Vegas.

Destination XL Group Inc. continues to move forward with its transformation from Casual Male, although results in the first quarter were impacted by colder-than-usual weather in the early part of the period.

Net income for the quarter ended May 4 slid 55.4 percent to $1 million, or 2 cents a diluted share, versus year-ago income of $2.3 million, or 5 cents a share. Sales fell 2 percent to $93.6 million from $95.5 million a year earlier.

Analysts were looking for earnings of a penny per share on sales of $99.6 million.

In a conference call Friday morning, David Levin, chief executive officer of the Canton, Mass.-based big and tall men’s wear retailer, said although sales in April rebounded, they were not enough to offset softness earlier in the quarter. Overall, consolidated comparable-store sales in the period were down 0.5 percent.

RELATED CONTENT: Click Here for More Earnings Coverage >>

On a more positive note, Levin said the company continues to make progress on its “accelerated three-year strategy” to roll out its DXL superstore concept. There are currently 54 stores in operation, and these units, which accounted for 22 percent of total sales in the quarter, posted comp-store increases of 17.7 percent in the period.

He said dollars per transaction also rose at these stores, increasing 17.6 percent in the first quarter to $154 from $131 last year. Dollars per transaction at Casual Male XL stores during the quarter were $110. Levin also pointed to “better sales productivity” at the DXL stores, with an “improved sales mix toward higher-end name brands and increased sales penetration in tailored clothing. Also, all DXL stores now have a custom made-to-measure department that offers a robust selection of suits, sport clothes along with dress pants and shirts.”

The company is expecting to achieve further traction at these stores as a new national marketing campaign gains steam. New commercials launched May 5, and the results so far appear to be “resonating with our customers,” he said.

He said the goal is to grow the company’s total customer base by 40 percent over the next three years.
Looking ahead, Levin said the company will expand the number of DXL stores in operation to between 105 and 112 this year, while closing 110 to 119 Casual Male stores. By 2015, all Casual Male stores are expected to be closed, replaced by 215 to 230 DXL units.

For fiscal 2013, the company is continuing to project comp-store sales increases of between 8.5 and 10 percent, total sales of $415 million to $420 million and diluted EPS that are break-even.