Destination XL reduces losses, announces restructuring
today May 31, 2018
Canton, Massachusetts-based specialty big and tall menswear retailer Destination XL Group, Inc. reported on Wednesday narrowing losses in Q1 2018, driven by rising sales. The company also laid out the details of its restructuring strategy initiated after the end of the last quarter.
The retailer’s net sales increased 5.3% in the first quarter ended May 5, 2018, totaling $113.3 million, compared to the $107.6 million reported in Q1 2017. This growth was pushed by a comparable sales increase of 2.2% and a rise of $3.2 million in non-comparable sales.
The company’s net loss for the period came to $3.1 million, a solid improvement from the loss of $6.1 million reported in the first quarter of 2017.
Destination XL also announced that, following the end of the first quarter, the company committed to a corporate restructuring plan which it is hoping will result in savings of $5.6 million in fiscal 2018, and $10.3 million in annualized savings.
As part of the restructuring, some 56 positions – 15% of Destination XL’s corporate workforce – have been eliminated, leading to an expense of around $1.7 million due to severance and one-time termination benefits. The majority of other measures in the plan are slated to complete by July 1, 2018.
Commenting on the restructuring in a release, Destination XL President and CEO David Levin stated, “our leadership team is now better aligned to deliver a seamless experience for our customers across all of our distribution channels.”
“We are also announcing today that the Company has entered into a new $140 million 5-year, senior secured credit facility with Bank of America, N.A. The new facility not only enhances our access to capital on improved terms, but it also demonstrates the confidence that our bank group has in our vision. We expect to reduce our interest expense by approximately $700,000 on an annualized basis due to the improvement in terms,” he added.
Nonetheless, the company has revised down its guidance for fiscal 2018, due to an anticipated charge of $4.2 million related to CEO transition costs, as well as the negative impact of store closures on sales. Net loss is now expected to come to between $13.2 and $18.2 million, compared to a previous guidance predicting a loss of $8.3 to $14.3 million.
At $462.0 million to $472.0 million, the company’s sales guidance is consistent with that previously reported.
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