Destination XL reduces loss and increases cash flow to end fiscal 2016

By

Obi Anyanwu

Published
Mar 20, 2017

Destination XL released on Monday its fourth quarter and full year results, following its soft holiday season.
 
The company closed the year with $450.3 million in total sales, an increase of 1.8% over the prior year, which was driven by comparable DXL sales growth of 2.4% and was partially offset by sales from closed Casual Male XL stores and comparable sales decreases. President and CEO David Levin said that the growth of its customer base is a priority for 2018.

 
“Six out of ten big and tall guys still do not know who we are and, therefore, our top priority in 2017 is customer retention and acquisition,” said Levin. “We intend to fuel that objective with a marketing dollar increase of approximately 40% this year, including reinstituting television advertising beginning April 2.”
 
Gross margin for the year decreased 60 basis points to 45.5%, due to a 40-basis-point decrease in merchandise margin, SG&A expenses decreased 4.0% to $173.3 million and EBITDA increased to $31.6 million, driven by an increase in sales and a decrease in SG&A expenses. Levin was pleased by the growth in EBITDA and cash flow, which increased from $18.4 million to $35 million.

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In addition, net loss for the year was $2.3 million, or $0.05 per diluted share, compared to a loss of $8.4 million, or $0.17 per diluted share in the previous year.
 
Destination XL in January reported a decrease in holiday sales and comparable sales to $97.9 million and 1.4%, respectively, due to a weak retail environment. The environment also impacted the fourth quarter total sales, which decreased 1.1% to $122.6 million, and comparable sales that fell 2.4%.
 
Fourth quarter SG&A expenses were 36.1%, gross margin decreased 90 basis points 44.9%, due to a 40-basis-point decrease in merchandise margin, and EBITDA increased to $10.8 million from $7.3 million.
 
The company expects its fiscal 2017 sales to range from $470.0 million to $480.0 million, comparable sales to increase between 1% and 4%, and net loss on a GAAP basis to range between $5.7 million and $11.7 million.