Destination XL sales marginally drop in light of ‘broader macro headwinds’
Destination XL group, the specialty retailer of Big + Tall men’s clothing and shoes, has outlined its operating results for Q1 of FY23, where its sales marginally dropped by 1.7 percent, from 127.7 million dollars in the same period of 2022 to 125.4 million dollars.
Sales began strong in the quarter, with a 9.1 percent increase in February, however ultimately declined in March and April, to 2.8 and 1.9 percent respectively. Destination XL said the slow down was driven by decreases in traffic in both stores and online, however its retail network had performed better than its direct business.
While net income also took a slight hit, falling from 0.2 dollars per diluted share to 0.11 dollars, or seven million dollars, its adjusted net income was 0.11 dollars for Q1, down from its previous 0.14 dollars.
Its gross margin came in at 48.6 percent compared to 50 percent in the year prior, decreasing by 140-basis points, with another 110-basis point drop on its merchandise margin due to increased costs on certain private-label merchandise.
For the year, the company is expecting its gross margin rates to be approximately 100-basis points lower than fiscal 2022.
Adjusted EBITDA for the first quarter was 12.6 million dollars, or 10.1 percent of sales, compared to 17.3 million dollars in the same period last year.
Meanwhile, its total cash and investments were 46 million dollars at April 29, up from 7.5 million dollars, with no outstanding debt for either period. The availability under its credit facility was 93.8 million dollars, up from 85 million dollars.
In Destination XL’s filing, Harvey Kanter, president and chief executive officer, said: “We believe the work that we have done over the past two years to transform and reposition the DXL brand has enabled us to mitigate some of the inherent risk in the broader economy.
“We believe that our positive comp for the quarter is outperforming the overall retail apparel market, which gives us confidence that the DXL concept is still resonating in the minds of Big + Tall consumers. On an operating level and from a consumer-facing perspective, we plan to continue driving marketing initiatives to engage the consumer more profoundly and in more personalised and more relevant ways.”
For FY23, Destination XL said that it was currently trending toward the lower end of its previously reported guidance for the period for sales, net income and adjusted EBITDA margin.