Destination XL continues to slash losses as CEO search intensifies
today Dec 1, 2018
Canton, Massachusetts-based big and tall menswear retailer Destination XL Group, Inc. reported strong progress in its quarterly sales and earnings on Friday, and provided an update on its ongoing search for a successor for CEO David Levin.
In the third quarter ended November 3, 2018, the company reported net sales of $107.1 million, up $3.4 million, or 3.2%, from the $103.7 million reported in the prior-year period, reflecting comparable sales growth of 3.4%.
Destination XL’s improved revenues, along with expenses savings made thanks to the restructuring announced by the company in May of this year, allowed the retail group to reduce its net loss for the third quarter to $2.0 million, compared to $5.7 million in Q3 2017.
“This was our fourth consecutive quarter of solid performance and progress in our business,” said Levin in a release. “Our sales momentum from the fourth quarter of last year has continued through the spring, summer and fall selling seasons. We registered another quarter of meaningful earnings improvement, while successfully executing against our strategic initiatives.”
Levin also pointed out the launch of the company’s new e-commerce website and the continued repositioning of the DXL brand as highlights in the quarter, going on to express his confidence in the label’s merchandise assortment as it heads into the all-important holiday season.
In March, the company announced that Levin would be stepping down from his position as CEO before the end of the year and contracted Heidrick & Struggles to lead the search for his replacement.
On Friday, however, Destination XL reported that it had terminated its search with Heidrick & Struggles in October and had engaged Russell Reynolds Associates to lead a new process. The company has also revised its agreement with Levin, who will now take on the role of acting CEO from January 1, 2019, should the company not find a suitable replacement beforehand.
This new arrangement is provisionally valid until the end of April but further extensions are possible up to June.
Year to date, the company reported net sales of $342.6 million, up from $332.5 million in the same period in the previous year, while its net loss totaled $6.3 million, compared to $15.5 million the year before.
In the light of its strong performance in Q3, Destination XL has revised up its full-year 2018 outlook. Sales are now expected to reach between $470.0 million and $474.0 million, reflecting a comparable sales increase of 2.5% to 3.5%, compared with the company’s previous guidance of between 462.0 million and $472.0 million in net sales, with comps growth of 1.0% to 3.0%
The company also expects to see improvement in its net loss, which is now predicted to be between $9.8 million and $12.8 million, compared to a previous guidance of $13.2 million to $18.2 million.
Destination XL’s new outlook takes into account approximately $1.5 million in charges related to its CEO transition process expected to be incurred in Q4, as well as an estimated total of $5.6 million in savings made over the course of the year, thanks to the company’s aforementioned restructuring strategy.
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