Destination XL reports 49% decline in sales, pins hopes on wholesale and e-commerce
Jun 6, 2020
Canton, Massachusetts-based big and tall menswear retailer Destination XL Group, Inc. has announced that its quarterly sales were almost halved by disruptions linked to the ongoing coronavirus pandemic, but remains optimistic about the potential of its wholesale and direct channels.
For the first quarter ended May 2, 2020, the company announced total sales of $57.2 million, down 49.3% from $113.0 million in the prior-year period, a decline largely related to the temporary closure of all of the retailer’s brick-and-mortar stores, implemented on March 17.
Since the start of these closures, Destination XL, which operates under the DXL Big + Tall and Casual Male XL banners, has been “highly promotional” in its efforts to encourage customers to shop online as it attempts to avoid a build-up of seasonal inventory.
These activities look to have borne fruit, with the company’s e-commerce sales accounting for 41.4% of retail segment revenues, compared to 21.6% in the Q1 2019. The group began reopening its stores at the end of April but expects its digital channel to play an important role in its strategy for navigating the coming months.
Destination XL also pointed out that driving growth in its wholesale business is still one of its key initiatives for fiscal 2020, a strategy led by the company’s business with Amazon Essentials, which was launched in early 2019 and contributed $2.0 million of Destination XL’s sales in the first quarter of 2020.
During the pandemic, the company has also launched a new wholesale line of business focused on the design and sourcing of protective masks, sales of which began in the second quarter.
Destination XL’s quarterly net loss came to $41.7 million, or $0.82 per diluted share, expanding significantly from a net loss of $3.1 million, or $0.06 per diluted share, in the first quarter of 2019.
“At the end of the first quarter of fiscal 2020, we had a cash balance of $26.1 million, total debt of $96.5 million and remaining availability under our credit facility of $16.8 million,” explained Destination XL president and CEO Harvey Kanter in a release. “While we cannot estimate with certainty the length or severity of this pandemic, given our assumptions we have a plan and we believe we have sufficient liquidity to navigate the working capital needs to get to the other side and into 2021.”
In order to safeguard its business during and after the Covid-19 pandemic, the company has implemented a number of measures including the furloughing of all store staff and approximately 60% of corporate employees, the permanent elimination of 34 corporate positions, and the reduction of management salaries by 10% to 20%.
The group has also eliminated capital improvement programs for discretionary and non-essential expenditures, and drawn down $30.0 million of cash against its revolving credit facility.
As of June 2, Destination XL has reopened 201 of its stores across the country and expects to have reopened all of its brick-and-mortar locations by the end of the month.
The company has not provided fiscal guidance for fiscal 2020.
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