Destination XL Group, Inc., the largest multi-channel specialty retailer of big & tall men's apparel and accessories, reported operating results for the first quarter of fiscal 2013.
Highlights
- Total first quarter sales decreased to $93.6 million compared with $95.5 million in the first quarter of fiscal 2012.
- Net income, on a diluted basis, for the first quarter was $0.02 per share, compared with $0.05 per share for the first quarter of fiscal 2012.
- Opened six Destination XL stores and closed 17 Casual Male XL stores in the first quarter of 2013.
- The Company operated a total of 53 DXL stores at the end of the first quarter of fiscal 2013 in comparable established markets and one in a new market for a total of 54 DXL stores in operation toward its goal of 215 to 230 DXL stores by the end of fiscal 2015.
First-Quarter Fiscal 2013 Results
Sales
For the first quarter of fiscal 2013, total sales were $93.6 million compared with $95.5 million in the first quarter of fiscal 2012. Comparable sales for the first quarter decreased 0.5% compared with the same period of the prior year. On a comparable basis, sales from the retail stores increased 0.8% while the direct business decreased 6.0%.
The increase in the retail stores was primarily driven by the DXL stores that had a comparable increase of 17.7%, which represented 22.1% of the Company's comparable retail store sales. Comparable sales for the 23 DXL stores that have been open for more than one year increased 4.7%.
The 6.0% decrease in comparable direct sales during the first quarter was primarily related to a 60.0% decline from catalogs, which was partially offset by a 5.1% increase in e-commerce sales. In response to lower catalog sales, the Company has intensified its digital marketing efforts, which include emails, web searches, Internet banners, and affiliate sites. During the first quarter, the number of catalogs distributed and impressions were reduced by 56.0% and 70.0%, respectively. The catalog component of direct sales dropped to 6.4% from 15.2% during last year's first quarter.
Gross Profit Margin
For the first quarter of fiscal 2013, gross margin, inclusive of occupancy costs, was 47.5% compared with gross margin of 47.7% for the first quarter of fiscal 2012. The decrease of 20 basis points was the result of occupancy dollar growth of 2.6% and reduced sales, offset slightly by an increase of 50 basis points related to merchandise margins.
Selling, General & Administrative
SG&A expenses for the first quarter of fiscal 2013 were 41.0% of sales, compared with 39.5% in the first quarter of fiscal 2012. On a dollar basis, SG&A expenses increased to $38.3 million for the first quarter of fiscal 2013 from $37.8 million for the prior-year quarter.
The increase is primarily due to incremental payroll-related costs, including pre-opening payroll, training and store operations to support the new DXL stores and a net increase in marketing costs associated with the preparation for the launch of the national marketing campaign.
