Destination XL Group Inc. won’t be on the airwaves this holiday season and the company is bracing for the impact.
In reporting a narrowed third-quarter loss on Friday morning, David Levin, president and chief executive officer of the Canton, Mass.-based men’s big-and-tall retailer, said: “We continually look to maximize the return we achieve on every dollar we spend, and that scrutiny is heightened in a difficult retail environment such as the one we are experiencing. Because of this disciplined approach, we have decided not to spend advertising dollars on television in the fourth quarter. Our marketing campaign in the fourth quarter will consist of radio, digital and social media, and we will continue to evaluate the use of television in the future.”
As a result, of this “lack of television exposure, coupled with the delayed arrival of cold weather,” Levin said the company now has “a more cautious outlook for sales and EBITDA.”
In the quarter, the company reported that due to the strength of its DXL store concept, its net loss was $4.5 million, or 9 cents a diluted share, compared to $5.5 million, or 11 cents a share, in the prior-year quarter. The retailer posted an overall comparable-store sales gain of 0.9 percent on a total sales gain of 2.3 percent to $101.9 million from $99.6 million the prior year. The DXL stores managed a 2.3 percent same-store sales increase in the period.
Levin said that “despite a very difficult retail environment, our DXL stores continue to perform, driven by increases in both transactions and average spend per guest. We also continue to grow EBITDA, delivering a year-over-year improvement of 57 percent.”
He said inventories heading into the fourth quarter “are in excellent shape, and we are well-positioned to capitalize on the coming holiday shopping season.”
In the period, the company opened its 200th DXL store and “we continue to see very strong cash-on-cash returns,” he said.
In the quarter, EBITDA (earnings before interest, taxes, depreciation and amortization) increased 57 percent to $3.9 million from $2.5 million in the prior-year quarter.
The company is now expecting a net loss of $44 million to breakeven in fiscal 2016 on total sales of $451 million to $457 million. Comparable-store sales are now projected to be up 1 to 2 percent. Earlier guidance had projected sales of $457 million to $463 million and a same-store sales gain of 2 to 4 percent.