- Prachi Singh |
Total sales for the first quarter of fiscal 2018 increased 5.3 percent to 113.3 million dollars at Destination XL. The increase of 5.7 million dollars in total sales, the company said, was primarily due to a comparable sales increase of 2.2 percent and an increase in non-comparable sales of 3.2 million dollars.
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"We are pleased to report that the positive sales momentum we experienced at the end of fiscal 2017 has continued into fiscal 2018. On May 16th, we took an important step towards achieving acceptable EBITDA margins by reorganizing and rightsizing our corporate workforce. Together with previously targeted expense reductions, we expect this corporate restructuring to deliver annualized savings of approximately 10 million dollars," said David Levin, the company’s President and Chief Executive Officer in a statement.
Destination XL’s first quarter performance
For the first quarter, gross margin rate, inclusive of occupancy costs, was 44.7 percent as compared to a gross margin rate of 45.2 percent for the first quarter of fiscal 2017. The decrease of 50 basis points, the company added, was due to a decrease in merchandise margins of 120 basis points partially offset by a 70 basis point improvement in occupancy costs as a percent of sales. The decrease in merchandise margin was related to an increase in promotional markdowns and related shipping costs, primarily in direct business.
Net loss for the quarter was 3.1 million dollars or 0.06 dollar per diluted share, compared with 6.1 million dollars or 0.12 dollar per diluted share, for the first quarter of fiscal 2017. On a non-GAAP basis, assuming a normalized tax rate of 26 percent for both periods, adjusted net loss per share was 0.05 dollar per diluted share, as compared to 0.09 dollar per diluted share for the first quarter 2017.
EBITDA were 5.1 million dollars compared to 2.5 million dollars for the first quarter of fiscal 2017, driven by sales growth as well as reduced SG&A expenses related to lower marketing costs. For the first quarter of fiscal 2018, the company opened three new DXL stores, rebranded two Casual Male XL stores to DXL and closed four Casual Male XL stores and two Casual Male XL outlets.
Destination XL undertakes corporate restructuring
Subsequent to the end of the first quarter, on May 16, 2018 the company said that it committed to a corporate restructuring to accelerate the company's path to profitability by aligning its expense structure with its revenues. The company eliminated approximately 56 positions, which represents 15 percent of the corporate work force or 2 percent of our total work force. As a result of this restructuring, the company expects to realize savings of approximately 5.6 million dollars in SG&A expenses in fiscal 2018.
The company has revised its earnings guidance to reflect the 3.2 million dollars expense savings that it expects from the corporate restructuring. Compared to fiscal 2017, the company projecting that its total sales for the year will be negatively impacted by one less week of sales and a net decrease in store count of nine stores, worth approximately 5.3 million dollars in sales. Fiscal 2017 included a 53rd week, with sales of 6.9 million dollars and operating income of 1.6 million dollars.
Based on a 52-week year, the company now expects sales of 462 million to 472 million dollars, with a total company comparable sales increase of approximately 1 percent to 3 percent gross margin rate of approximately 44.5 percent, a decrease from previous guidance of 45 percent. Net loss, on a GAAP basis, of 13.2 dollars to 18.2 million dollars or 0.27 dollar to 0.37 dollars per diluted share, an increase in net loss from previous guidance of 8.3 to 14.3 million dollars or 0.17 dollar to 0.29 dollar per diluted share.
Adjusted net loss of 0.11 dollar to 0.18 dollar per diluted share, a decrease in the net loss from previous guidance of 0.12 dollar to 0.22 dollar per diluted share.
Picture:Destination XL website