A Destination XL store.

The losses at Destination XL Group continued to mount in the fourth quarter, despite higher comparable-store sales. But a new wholesale strategy and a new chief executive officer are expected to help the company improve its fortunes in 2019.

At the same time, the company revealed that it will close the remaining five Rochester Clothing stores — a more-upscale brand that it acquired in 2004 — by the end of the fiscal year.

In an earnings call Friday morning, David Levin, acting chief executive officer, said: “The growth in our DXL brand has slowly eroded the sales volume and profitability in our remaining Rochester, N.Y., stores, which are located in high rent metro areas.

“Much of our Rochester assortment will continue to be available on DXL.com and many Rochester brands can be found in DXL stores. With the exception of London, all of our Rochester stores are located in markets within close proximity to one or more DXL stores. In the U.S. we’re working on a customer transfer strategy to encourage our Rochester customers to migrate to nearby DXL stores, and we’re confident that once our Rochester customers discover the DXL experience they will become DXL loyalists.”

On Friday morning, the Canton, Mass.-based men’s big and tall retailer reported net losses in the period of $7.2 million, more than double the $3.3 million net loss reported in the fourth quarter of last year. The net loss for the year was $13.5 million compared to a net loss of $18.8 million in the prior year.

On an adjusted basis, net loss for the quarter was $600,000, as compared to an adjusted net loss of $2.7 million in the prior-year quarter, while adjusted net loss for the year was $3.5 million as compared to a loss of $12.8 million in the prior year.

Comparable-store sales for the 52 weeks increased 3.1 percent in the fourth quarter and 3 percent for the year. Total sales dropped 3.2 percent to $131.2 million in the quarter from $135.5 million in the prior year’s quarter but rose 1.2 percent to $473.8 million as compared to $468 million for the 53-week prior year.

Levin focused on the positive, pointing to the company’s “fifth consecutive quarter of positive comparable sales growth,” and sales that were “consistent” both in stores and online.

“Fiscal 2018 was a pivotal year for our company and we believe our core business is well positioned for continued growth in fiscal 2019,” he said. “We completed a customer segmentation study that has provided better insights to focus our marketing strategies. We launched a new web site that is faster, more responsive and easier to navigate. We initiated a corporate reorganization that has lowered our SG&A expense, and we refinanced our credit facility with an extension through the middle of 2023.”

The company also officially launched a wholesale division in the fourth quarter, he said, to capitalize on its expertise in the big and tall market, which is expected to boost sales later this year. And after a long search, DXL named Harvey Kanter, the former ceo of Blue Nile, its new chief. Kanter joined the company as an adviser on Feb. 19, Levin said, and will assume the top role on April 1. At that point, Levin will exit the company after 19 years, in what he described as a “bittersweet transaction.”

In a call with analysts Friday morning, Levin said February “was a difficult month” and comps for the period are running down in the low-single digits. March is showing improvement and comps have “turned positive as spring weather has started to emerge across the country.”

For fiscal 2019, he said, the company is expected to post comps in the low-single digits and generate positive free cash flow, he said. But due to the ceo transition, the company declined to provide more-detailed earnings guidance at the point.

DXL’s newly launched e-commerce site is also a bright spot for the company, Levin said, noting that the direct business rose to 21.6 percent of overall revenues in 2018.

In terms of merchandise, the retailer launched two new brands last year, The North Face and Vineyard Vines. Levin said The North Face “exceeded our holiday expectations” with several styles selling out early in the season. And Vineyard Vines had some “encouraging reads,” which he expects to further improve in the pre-spring and summer.

For its store fleet, in addition to the planned closure of the Rochester Clothes units, Levin said the company will rebrand 60 of the remaining 96 Casual Male stores to DXL over the next several years, including 13 in 2019.

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