Results for the fourth quarter and year show Destination XL Group Inc. is moving in the right direction as it transitions away from its former nameplate, Casual Male Retail Group.
On Friday, the company said net income for the fourth quarter ended Feb. 2 was $4.2 million, or 9 cents a diluted share, compared with $33.5 million, or 70 cents, last year. Excluding the year-ago one-time nonrecurring tax benefit of $42.5 million and the noncash impairment charge of $23.1 million against the Casual Male trademark, the current quarter’s $4.2 million in net income would have represented a 35.5 percent rise compared with the $3.1 million, or 6 cents a diluted share, last year.
Net sales increased 3.4 percent to $114.9 million from $111.1 million. Comparable-store sales rose 0.5 percent for the quarter.
But in the quarter, comparable sales for the Destination XL stores rose 15 percent while those for the Casual Male XL retail and outlet sales dropped 2.3 percent. In the quarter, the DXL stores represented 18 percent of sales.
There are currently 48 DXL stores and the company has said it will convert exclusively to DXL stores by 2016, when it expects to operate between 215 and 230 units under that nameplate.
“Our fourth-quarter results were consistent with those that we announced in our preliminary fourth-quarter news release on Feb. 27,” said president and chief executive officer David Levin. “We are at a critical juncture in our transformation to Destination XL. This year we are accelerating the opening of DXL stores and the closing of Casual Male XL locations in order to begin realizing the benefit of this strategy much earlier than we initially anticipated. We expect to have between 105 and 112 DXL stores open by the end of the fiscal year. While our SG&A costs will increase by approximately $15 million to $17.1 million in 2013 over 2012 due to the accelerated store openings and closings, enhancements to certain aspects of our infrastructure and the implementation of our new marketing campaign, we expect these investments to result in significant financial improvement beginning in 2014.”
The company will launch a national marketing campaign this spring designed to “define the DXL brand more clearly, expand market awareness and grow our active customer base,” said Levin. A test of the campaign last fall resulted in a 15 percent increase in sales, 24 percent growth in traffic, 64 percent new-customer purchases, an 84 percent increase in Web traffic and 7 percent higher Web sales, he revealed.
As a result of the conversion, Levin said the company expects a “significant and positive effect on our performance in 2014 and beyond.”
For the full year, DXL’s net profits fell 85.6 percent to $6.1 million, or 13 cents a diluted share, from 2011 earnings of $42.7 million, or 89 cents. Sales for the year inched up 1 percent to $399.6 million from $395.9 million.
It expects sales to exceed $600 million by 2016 with operating margins over 10 percent and cash flow generation of $60 million to $70 million.