Destination XL reports another quarter loss
While strong marketing efforts continued to propel sales for Destination XL in the second quarter, the specialty retailer of big and tall men's apparel still announced another net loss for the quarter ended July 29.
The omni-channel retailer announced on Thursday sales of $121.1 million for the second quarter, up 2.8 percent from $117.9 million in the prior year's second quarter.
"Early in the quarter, we benefited from our marketing efforts which included television advertising,” said President and CEO David Levin, in a news statement. “Traffic trends declined following our ad campaign, but our store teams executed well, delivering improved shopper conversion and driving a higher average spend per guest, resulting in positive sales productivity metrics.”
Net loss for the second quarter still totaled $3.7 million, compared with net income of $0.2 million, for the prior year's second quarter.
Gross margin decreased 46.1 percent from 46.5 percent primarily due to higher markdowns related to inventory productivity initiatives.
In addition, EBITDA was $6.7 million compared to $8.5 million in the prior-year quarter.
This quarter, the retailer also largely concluded the transformation of its store base from 440 Casual Male stores and 16 Rochester stores in 2010 to 225 new DXL stores, 114 Casual Male stores and 5 Rochester stores expected by the end of the year.
“At this point, our focus is on building the DXL brand and driving sales of apparel and accessories to the growing men's big & tall market through an integrated bricks-and-mortar and e-commerce strategy," added Levin. "We will continue to manage our store base strategically to optimize sales, brand awareness, inventory management and e-commerce distribution, while investing in customer acquisition and retention through enhanced digital marketing initiatives and increased television ad spend.”
To do so, the retailer additionally announced on Thursday the election of two new directors to its Board of Directors: Jack Boyle, President of Merchandising for Fanatics, Inc. and Oliver Walsh, former Chief Marketing Officer of Aritzia. Earlier this year, the company equally recruited Sahal Laher, the former CIO of Brooks Brothers, as Chief Digital and Information Officer.
“Sahal, Jack and Oliver have significant e-commerce experience, and Oliver has agreed to serve, on a temporary consulting basis, as our Interim Chief Marketing Officer," Levin said.
Following the second quarter results, Destination XL is increasing marketing expense for fiscal 2017 to approximately $29.0 million, an increase of approximately $4.0 million from previous guidance and an increase of approximately $10.8 million from last year.
For fiscal 2017, the company expects sales to range from $470 million to $480 million, and an adjusted net loss, on a non-GAAP basis, of $(0.14) to $(0.21) per diluted share (a decrease from previous guidance of $(0.06) to $(0.14) per diluted share).
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