By  on March 20, 2017
A Destination XL store.

Destination XL Group Inc. plans to reinstitute TV advertising to grab the attention of big and tall guys after noting the elimination of a fall marketing campaign hurt fourth-quarter sales.For the three months ended Jan. 28, net income was $1.8 million, or 4 cents a diluted share, against a net loss of $1.4 million, or 3 cents, a year ago. On an adjusted basis, diluted earnings per share were 2 cents, compared with an adjusted loss of 2 cents a year ago. Net sales slipped 1.1 percent to $122.6 million from $124 million. The company said DXL comparable-store sales were down 1.9 percent for the quarter.Wall Street was expecting EPS of 1 cent on sales of $125.77 million.Shares of Destination XL fell 4.2 percent to $2.30 at 11:31 a.m.The company attributed the decline in sales to the “overall weakness in the retail environment, as well as the company decision to eliminate its fall marketing campaign."David Levin, president and chief executive officer, said, “Despite the 2016 retail environment being one of the most challenging in recent memory, we were very pleased to deliver strong growth in EBITDA and free cash flow.”The company said earnings before interest, taxes, depreciation and amortization for the quarter rose 48.2 percent to $10.8 million from $7.3 million a year ago. Levin said the company “fully funded our DXL store expansion from free cash flow and grew EBITDA nearly 36 percent.” The company opened its 200th DXL store in 2016.Levin said, “Six out of 10 big and tall guys still do not know who we are and, therefore, our top priority in 2017 is customer retention and acquisition. We intend to fuel that objective with a marketing dollar increase of approximately 40 percent this year, including reinstituting television advertising beginning April 2.”Levin said the company also is planning to elevate its digital distribution channel to help grow its customer base. Destination XL has a new chief digital and information officer, Sahal Laher.Wunderlich Securities Inc. analyst Eric Beder has a “buy” rating for shares of Destination XL, and a $4 target price.“With store growth inevitably decelerating, and with a majority of big and tall males still not aware of the company, we view the marketing spend as an appropriate strategy and believe the returns can be impressive,” Beder said. He noted that the company will open only 20 doors for fiscal year 2018.

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