Destination XL moved back into the black in the second quarter.
The Canton, Mass.-based men’s big and tall retailer posted net income of $200,000, compared with net loss of $1 million in the prior-year quarter. The improvement was driven by the company’s DXL division, which managed a 4.6 percent gain in comparable-store sales.
Total comparable-store sales rose 2.4 percent in the quarter to $117.9 million from $114.1 million in the second quarter of fiscal 2015.
Additionally, EBITDA increased to $8.5 million from $6.8 million in the prior-year quarter.
“Our positive second-quarter results reflect the fundamental strength of the DXL transformation, which drove growth in sales and profitability even as uncertainty weighed on consumer spending,” said president and chief executive officer David Levin. “DXL retail stores delivered a sales comp of 4.6 percent on top of 11.9 percent in the second quarter last year.”
He noted that brand awareness of the nameplate continues to grow. Destination XL is converting its fleet of Casual Male stores to the DXL superstore concept. Levin said the company experienced a 9 percent increase in the rate of Casual Male customers converting to DXL in the second quarter.
“Our belief in the DXL transformation has never been stronger,” he said. “The DXL customer is buying more and spending more per transaction, while our average sales per square foot continue to climb.”
Even so, Levin said the company is not immune to market conditions and has “started to see a slowdown in traffic in the second quarter. Due to the macro headwinds in the current environment, we are taking a more cautious view of sales in the second half of the year. However, we are confident in our ability to leverage our operating model, and we are maintaining our guidance in earnings and EBITDA.”
Peter Stratton, chief financial officer, said that while EBITDA and earnings per share guidance remains unchanged, total sales are now expected to be in the range of $457 million to $463 million, down from the original projection of $465 million to $472 million. Comparable-store sales are also expected to be lower — 2 percent to 4 percent as compared with the previous guidance of 4.8 percent to 5.5 percent. Gross profit margin is also expected to be at the low end of the range of 46.2 percent to 46.5 percent. He reiterated that EBITDA is expected to be in the range of $31 million to $35 million and the company is expecting an adjusted net loss of 5 cents a diluted share to break even.