Destination XL Group Inc. is hitting the accelerator again as it looks to take greater advantage of its DXL superstores.
Earlier slated for 250 units, the company has identified an additional 150 stores — 30 to 40 a year through 2020. The units include full-price retail as well as outlet stores.
In a conference call following the earnings release Thursday morning, David A. Levin, chairman and chief executive officer, said that in the period, the 111 DXL retail stores in operation at least 13 months had a same-store sales increase of 11.9 percent on top of an 11.3 percent gain in last year’s second quarter, with sales growth improving throughout the three months. Transactions at DXL rose 9.2 percent over the comparable period last year.
These results prompted the company to expand the rollout of the concept.
“We conducted a detailed market opportunity study of our Casual Male and DXL store portfolio,” Levin said, “[and] we have identified a total of approximately 400 DXL store opportunities nationwide, a mix of approximately 340 DXL retail stores and 60 DXL outlets, and that’s up sharply from our previous estimate of 250 DXL stores.”
The full-price stores will average 7,200 square feet and the outlets will average 4,500 square feet, he said. They are expected to produce $220 per square foot in sales, the company said.
The stores will be located in three types of markets: one is in areas that had formerly housed Casual Male units “that we had previously thought were too small for the larger format DXL stores,” he said. Second is “large unsaturated metropolitan areas, where we currently have DXL stores, but where there are still room for growth via additional smaller stores.
“And the third type is new smaller markets with no current store presences that fit our criteria for the smaller footprint stores,” Levin said.
In response to an analyst question about how the company came up with the 400-unit number, Levin said that at one point there were 600 Casual Male stores “so I think 400 is a reasonable number.”
Overall in the three months ended Aug. 1, the company exceeded earnings and sales expectations. The net loss shrank to $979,000, or 2 cents a diluted share, from a loss of $4 million, or 8 cents, a year ago.
On an adjusted basis, earnings per share was a 1 cent loss, compared to expectations of a 5 cent loss this year and a 5 cent loss in the year-ago period.
Sales rose 9.6 percent, to $114.1 million from $104.2 million, easily outpacing the $110.3 million in revenue expected by Wall Street. With improvements in occupancy costs and merchandise margin, gross margin hit 47.2 percent of sales versus 46.3 percent a year ago. Overall comps, including non-DXL operations, rose 6.7 percent.
The company reiterated its guidance for the full year.
As markets in the U.S. continued to recover from the tumult of earlier in the week, shares of the Canton, Mass.-based big-and-tall retailer jumped 19.86 percent to $5.31.
For the first half, the company’s net loss fell to $1.6 million, or 3 cents a diluted share, from a loss of $7.6 million, or 16 cents. Sales were up 8.8 percent to $218.6 million from $200.8 million.