By Debra Borchardt
with contributions from Jean E. Palmieri
 on March 18, 2016
Casual Male’s Destination XL concept.

Destination XL Group Inc. delivered inline fourth-quarter results and gave a positive outlook for 2016, but investors zeroed in the quarter’s loss.

The men’s big and tall apparel retailer reported a net loss of $1.4 million for the quarter, or negative 3 cents a diluted share, down from net income of $1.6 million, or 3 cents, a year ago. The adjusted net loss per share totaled 2 cents and was inline with the FactSet estimate. The loss helped pushed the stock down more than 10 percent to $4.70 in early trading.

Sales for the three months increased 3.8 percent to $124 million from $119 million a year earlier and inline with the FactSet estimate. Comparable sales for the quarter increased 3.1 percent versus last year’s increase of 8.9 percent. For fiscal 2015, total sales increased 6.8 percent to $442.2 million compared to $414 million for 2014.

“The quarter actually started out slowly with a very warm November,” said chief executive officer David Levin. “[Then] typical winter weather returned in December, as did strong demand in our cold-weather categories, and sales continued to accelerate through the end of January.”

Gross margins fell for the fourth quarter to 45.8 percent from 47.9 percent for the prior year. The drop was due to a one-time $2.5 million payment received in the fourth quarter of 2014 to exit a lease agreement early. Excluding that payment margins were flat.

For the full year, the company’s net loss of $8.4 million was an improvement over 2014’s net loss of $12.3 million.

Looking ahead, Destination XL expects total sales to be in the range of $465 to $472 million for fiscal 2016. Comp sales are forecast to increase in the range of 4.8 percent to 5.5 percent. The company expects a net loss of between 9 cents and break even.

“We are very pleased with our fourth quarter and full-year performance, which exceeded our initial 2015 plan across the board,” said Levin on the earnings conference call. “These excellent results are the product of a consistent, predictable model of investing in new DXL stores with a high return objective. And we expect continued improvement in 2016 with a substantial increase in sales and [earnings before interest, taxes, depreciation and amortization].”

Levin noted that the company will open 31 DXL stores this fiscal year, with roughly two-thirds being smaller format and outlet stores. He also said the corporation is moving ahead with its plan to expand internationally through a retail franchising model. “International expansion in the form of store franchising presents a tremendous potential growth opportunity,” he said on the call. “We’re currently gathering data and creating the infrastructure for this franchise in licensing strategy. We have one franchise store open today in Kuwait City and expect to open additional DXL franchise stores in the spring of 2017.”