Destination XL Group, Inc. (NASDAQ: DXLG), the largest omni-channel
specialty retailer of big and tall men’s clothing and shoes, today
reported financial results for the fourth quarter and fiscal year
2019.
Highlights
- Total sales for the fourth quarter of $131.2 million, an
increase of $0.1 million from prior year; total sales for fiscal
2019 were $474.0 million as compared to the total sales of $473.8
million for fiscal 2018.
- Total comparable sales increased 1.1% for the fourth quarter
and 0.1% for the year.
- Net income for the quarter was $2.4 million as compared to
prior-year quarter’s net loss of $(7.2) million; net loss for the
year was $(7.8) million as compared to $(13.5) million in the prior
year.
- On a non-GAAP basis, adjusted net income for the quarter was
$2.6 million as compared to an adjusted net loss of $(0.6) million
in the prior-year quarter; adjusted net loss for the year was
$(3.2) million as compared to $(3.5) million in the prior
year.
- On a non-GAAP basis, adjusted EBITDA for the quarter was $9.9
million as compared to $6.8 million in the prior-year quarter;
adjusted EBITDA for the year was $23.5 million as compared to $27.4
million in the prior year.
Management Comments
“At the top of everyone’s mind right now is the situation driven
by the COVID-19 global pandemic. Like all retailers, the
virus is having an unprecedented impact on top-line revenue and we
elected to close our stores temporarily through at least March
28th. The online experience at DXL.com is still in operation
and we are both receiving and fulfilling online orders while our
stores are closed. We began executing our contingency plans
around this event in the early part of February. We have greatly
intensified and accelerated our efforts in the last 2 weeks to
significantly reduce operating expenses and CAPEX spending, and the
cancellation of future inventory receipts. Most importantly,
we a have plan to navigate through this crisis and are working to
control our own destiny. Given our actions to date and the plan we
have, we believe we have sufficient excess availability under our
credit facility to weather the impact of this global event,” said
Harvey S. Kanter, President and Chief Executive Officer.
Kanter continued, “Despite these recent developments, we
reported that our fourth quarter continued to show improving comp
sales which accelerated further after the holiday selling period.
The Company’s performance improved the balance sheet, delivered
free cash flow, reduced our inventory balance by $4.4 million for
the year, reduced our clearance mix, reduced our total debt by $2.6
million for the year, and we finished the year with $48.5 million
of unused excess availability under our credit facility, which put
us in a critically important better liquidity position. This was a
year of significant transformation for DXL and, looking back, this
transformation was achieved while improving the balance
sheet. We revamped our management team and exited an
unprofitable line of business with the closure of our Rochester
division. We completed our first, full-year with our new
wholesale business that delivered $12.5 million in sales. We
invested in new CRM and data analytics capabilities. We
converted 14 Casual Male stores to the DXL format. This was
all accomplished without taking on any more debt. DXL has
made meaningful progress and while I remain energized by the
potential for DXL’s future, given the fluid and volatile situation,
I am both hopeful, but also cautiously optimistic for 2020,” Kanter
concluded.
Fourth-Quarter and Fiscal 2019 Results
Sales
For the fourth quarter of fiscal 2019, total sales increased
$0.1 million to $131.2 million as compared to the fourth quarter of
fiscal 2018. Comparable sales for the fourth quarter increased by
1.1%. The increase of $0.1 million in total sales was due to an
increase in comparable sales of $1.3 million and an increase in
wholesale revenue of $2.1 million, partially offset by closed
stores of $3.3 million.
For fiscal 2019, total sales increased 0.1% to $474.0 million
from $473.8 million in fiscal 2018. Comparable sales for the full
year increased by 0.1%. The increase in sales of $0.2 million was
driven by an increase in wholesale revenue of $9.7 million,
comparable sales of $0.3 million and non-comparable sales of $0.4
million. These increases were partially offset by sales from
closed stores of $8.7 million and a decrease in other revenue of
$1.5 million.
Gross Margin
For the fourth quarter of fiscal 2019, gross margin, inclusive
of occupancy costs, was 43.0%, compared with gross margin of 43.5%
for the fourth quarter of fiscal 2018. The decrease of 50 basis
points was the result of a decrease in merchandise margin of 90
basis points, partially offset by a decrease in occupancy costs as
a percentage of total sales of 40 basis points. The 90 basis
point decrease in merchandise margin was a combination of a 40
basis point decrease due to a shift in more branded merchandise as
well as increased promotional activity and a 50 basis point
decrease due to the impact of our wholesale segment, which by its
nature has lower merchandise margins than our retail business. On a
dollar basis, occupancy costs for the fourth quarter decreased
approximately 3.1% as compared to the prior-year’s fourth
quarter.
For the fiscal year, gross margin, inclusive of occupancy costs,
was 43.1%, compared to 44.6% for fiscal 2018. The decrease of
150 basis points was due to a decrease in merchandise margin of 200
basis points, partially offset by a decrease in occupancy costs as
a percentage of sales of 50 basis points. The 200 basis point
decrease in merchandise margin was primarily due to approximately
100 basis points related to higher clearance selling and
promotional activity and a shift to more branded apparel. The
remainder of the merchandise margin rate decrease came from an
inventory diagnostic that resulted in a 20 basis point decrease for
the write-off of certain aged inventory in the third quarter and 80
basis points due to the impact of our wholesale segment, which by
its nature has lower merchandise margins than our retail
business. During the third quarter of fiscal 2019, the
Company made a change to its inventory aging policy, principally
driven by a noticeable shift away from tailored clothing to
sportswear. Accordingly, we recorded a charge of $0.9 million
in the third quarter of fiscal 2019 in connection with this change
for the write-off of certain aged inventory. The $0.9 million
charge represented 0.8% of our total inventory cost. On a
dollar basis, occupancy costs for fiscal 2019 decreased 3.2% as
compared to the prior year, primarily related to closed stores.
Selling, General & Administrative
SG&A expenses for the fourth quarter of fiscal 2019 were
35.4%, compared with 38.3% of sales in the fourth quarter of fiscal
2018. On a dollar basis, SG&A expense decreased $3.8 million,
compared to the prior year fourth quarter, primarily due to reduced
payroll costs and incentive accruals of approximately $2.6 million,
a decrease in marketing costs of $1.3 million and reduced IT
operating costs of $0.5 million. In addition, as a
result of adopting the new lease accounting standard (ASC 842) at
the beginning of fiscal 2019, we are no longer receiving a $0.4
million quarterly benefit from amortizing a deferred gain related
to the sale-leaseback of our corporate office.
For fiscal 2019, SG&A expenses were 38.1% of sales, compared
to 38.8% in fiscal 2018. On a dollar basis, SG&A expense
decreased $3.2 million, primarily due to reduced payroll costs and
incentive accruals of approximately $3.5 million and a decrease in
marketing costs of $1.5 million. These decreases were
partially offset by an increase in expenses of $0.6 million related
to our wholesale segment and $1.5 million in deferred gain
recognized in fiscal 2018 related to the sale-leaseback.
Management views SG&A expenses through two primary cost
centers: Customer Facing Costs and Corporate Support
Costs. Customer Facing Costs, which include store payroll,
marketing and other store operating costs, represented 22.1% of
sales in the fourth quarter of fiscal 2019, compared to 23.8% of
sales in the fourth quarter of last year. Corporate Support
Costs, which include the distribution center and corporate overhead
costs, represented 13.3% of sales in the fourth quarter of fiscal
2019, compared to 14.5% of sales in the fourth quarter of last
year. For fiscal 2019, Customer Facing costs were 22.6%,
compared to 23.2% for fiscal 2018. Corporate Support Costs
for fiscal 2019 were 15.5%, compared to 15.6% for fiscal 2018.
Exit Costs Associated With London Operations
During the third quarter of fiscal 2019, the Company closed its
Rochester Clothing store located in London, England. In
connection with this store closure, the Company incurred a charge
of approximately $1.7 million, which included a non-cash expense of
$0.8 million related to the recognition of the accumulated foreign
currency translation adjustment. The remainder of the charge
primarily related to lease termination and inventory liquidation
costs.
Impairment of Assets
Impairment charges primarily represented impairment of store
assets, where the carrying value exceeded fair value, and the
write-down of right-of-use assets. In the fourth quarter of
fiscal 2019 and fiscal 2018, the Company recorded asset impairment
charges of $0.9 million and $4.6 million, respectively. The
asset impairment charge for fiscal 2018 also included the write-off
of the Company’s Rochester trademark for $1.5 million.
Net Income (Loss)
Net income for the fourth quarter of fiscal 2019 was $2.4
million, or $0.05 per diluted share, compared to a net loss of
$(7.2) million, or $(0.15) per diluted share, for the fourth
quarter of fiscal 2018.
Included in our results for the fourth quarter of fiscal 2019
was a charge of $0.9 million for asset impairments and $0.1 million
related to CEO transition costs. Results for the fourth
quarter of fiscal 2018 included a charge of $1.8 million for the
CEO transition costs and asset impairment charges of $4.6
million.
The net loss for fiscal 2019 was $(7.8) million, or $(0.16) per
diluted share, compared with a net loss of $(13.5) million, or
$(0.28) per diluted share, in fiscal 2018.
On a non-GAAP basis, before asset impairment charges, exit costs
associated with London operations, corporate restructuring, CEO
transition costs and assuming a normalized tax rate of 26%,
adjusted net income for the fourth quarter of fiscal 2019 was $0.05
per diluted share, compared to an adjusted net loss of $(0.01) per
diluted share for the fourth quarter of fiscal 2018. For fiscal
2019, the adjusted net loss was $(0.06) per diluted share, compared
to $(0.07) per diluted share for fiscal 2018.
Adjusted EBITDA
Earnings before interest, taxes, depreciation and amortization,
adjusted for asset impairments, exit costs associated with London
operations, corporate restructuring and CEO transition costs
(adjusted EBITDA), a non-GAAP measure, for the fourth quarter of
fiscal 2019 were $9.9 million, compared to $6.8 million for the
fourth quarter of fiscal 2018. For fiscal 2019, adjusted
EBITDA was $23.5 million, compared to $27.4 million for fiscal
2018.
Cash Flow
Cash flow provided by operations for fiscal 2019 was $15.8
million, compared to $15.7 million in fiscal 2018. Capital
expenditures for fiscal 2019 were $13.4 million as compared to
$13.0 million for fiscal 2018. Free cash flow, a non-GAAP measure,
decreased $0.4 million, from $2.8 million in 2018 to $2.4 million
in 2019. The decrease in free cash flow was primarily due to
a corresponding increase of $0.4 million in capital expenditures.
The positive free cash flow in fiscal 2019 was used to pay down our
total debt.
|
|
For the fiscal year ended |
|
(in millions) |
|
February 1, 2020 |
|
|
February 2, 2019 |
|
Cash flow from operating activities (GAAP basis) |
|
$ |
15.8 |
|
|
$ |
15.7 |
|
Capital expenditures,
infrastructure projects |
|
|
(9.7 |
) |
|
|
(10.8 |
) |
Free cash flow before DXL capital expenditures (non-GAAP) |
|
$ |
6.1 |
|
|
$ |
5 |
|
Capital expenditures for DXL
stores and the acquisition of the DXL domain name |
|
|
(3.7 |
) |
|
|
(2.2 |
) |
Free cash flow (non-GAAP basis) |
|
$ |
2.4 |
|
|
$ |
2.8 |
|
Non-GAAP Measures
Adjusted EBITDA, adjusted net income (loss), adjusted net income
(loss) per diluted share, free cash flow before DXL capital
expenditures and free cash flow are non-GAAP financial measures.
Please see “Non-GAAP Measures” below and reconciliations of these
non-GAAP measures to the comparable GAAP measures that follow in
the tables below.
Balance Sheet & Liquidity
At February 1, 2020, the Company had cash and cash equivalents
of $4.3 million. Total debt at February 1, 2020, was $54.1
million, and consisted of $39.3 million outstanding under the
Company’s credit facility and approximately $14.8 million
outstanding under its term loan, net of unamortized debt issuance
costs. At February 1, 2020, the Company had $48.5 million of
excess availability under its credit facility.
Inventory was $102.4 million at February 1, 2020, compared
to $106.8 million at February 2, 2019. The $4.4
million decrease in inventory was due primarily to the closings of
the Rochester Clothing stores in fiscal 2019. Inventory
levels in our wholesale business were down approximately $1.0
million from last year, primarily due to timing of in-transit
merchandise. We launched our wholesale business in the fourth
quarter of fiscal 2018 and therefore inventory levels were higher
at that point. At February 1, 2020, our clearance inventory
represented 10.0% of our inventory, as compared to 10.3% at
February 2, 2019.
Store Information
For fiscal 2019, the Company rebranded 12 Casual Male retail
stores and 2 Casual Male outlet stores to 11 DXL retail stores and
3 DXL outlet stores. The Company also opened two new DXL
stores and closed the corresponding Casual Male retail
stores. The Company closed its 5 Rochester Clothing stores,
one DXL retail store, one DXL outlet store and 2 Casual Male retail
stores during fiscal 2019.
|
Year End 2017 |
|
Year End 2018 |
|
Year End 2019 |
|
|
# of |
|
Sq Ft. |
|
# of |
|
Sq Ft. |
|
# of |
|
Sq Ft. |
|
Stores |
(000’s) |
Stores |
(000’s) |
Stores |
(000’s) |
DXL retail |
212 |
|
|
1,665 |
|
|
216 |
|
|
1,684 |
|
|
228 |
|
|
1,729 |
|
DXL outlets |
14 |
|
|
72 |
|
|
15 |
|
|
78 |
|
|
17 |
|
|
82 |
|
CMXL retail |
78 |
|
|
268 |
|
|
66 |
|
|
221 |
|
|
50 |
|
|
164 |
|
CMXL outlets |
33 |
|
|
103 |
|
|
30 |
|
|
91 |
|
|
28 |
|
|
85 |
|
Rochester Clothing |
5 |
|
|
51 |
|
|
5 |
|
|
51 |
|
|
- |
|
|
- |
|
Total |
|
342 |
|
|
2,159 |
|
|
332 |
|
|
2,125 |
|
|
323 |
|
|
2,060 |
|
E-Commerce Information
The Company distributes its licensed branded and private label
products directly to consumers through its stores, website and
third-party marketplaces. As the Company continues to invest in its
digital capabilities, management believes it is important to
monitor the total percentage of revenue that is facilitated by the
Company’s e-commerce systems, regardless of which channel
originates or fulfills the transaction. E-commerce sales,
which we also refer to as direct sales, are defined as sales that
originate online, whether through our website, at the store level
or through a third-party marketplace.
Our direct sales increased to 27.4% of retail segment sales for
the fourth quarter of fiscal 2019, as compared to 24.8% for the
fourth quarter of fiscal 2018. For fiscal 2019, our direct
sales increased to 23.1% of retail segment sales as compared to
21.6% for fiscal 2018.
Impact of New Lease Accounting Standard
At the start of fiscal 2019, we adopted the new lease accounting
standard, ASC 842 (Leases). As a result of the adoption, we
established our operating leases as right-of-use assets of $214.1
million and established corresponding lease liabilities of $254.5
million on our Consolidated Balance Sheet at February 3,
2019. The $40.3 million difference between the right-of-use
assets and lease liabilities was primarily attributable to the
elimination of certain existing lease-related assets and
liabilities as a net adjustment to the right-of-use assets.
In our results for fiscal 2019, we recognized a net increase
to opening retained earnings of approximately $5.3 million to
recognize: (i) the remaining deferred gain of $10.3 million from a
sale-leaseback transaction (ii) the recognition of impairments,
upon adoption, of certain right-to-use assets of $(3.8) million and
(iii) the write-off of initial direct costs of $(1.2) million.
Financial Outlook
Due to the rapidly changing environment with COVID-19, we are
not providing specific sales, earnings, or cash flow
guidance. We are evaluating potential business scenarios and
are currently taking actions which include reducing operating
expenses, reducing capital expenditures, and reducing inventory
purchases while remaining focused on liquidity preservation.
We expect to provide a more detailed outlook on our fiscal 2020
operating strategies after the impact on business from COVID-19 has
stabilized.
Conference Call
The Company will hold a conference call to review its financial
results today, Thursday, March 19, 2020 at 9:00 a.m. ET. To listen
to the live webcast, visit the "Investor Relations" section of the
Company's website. The live call also can be accessed by dialing:
(866) 680-2311. Please reference conference ID: 5948695. An
archived version of the webcast may be accessed by visiting the
"Events" section of the Company's website for up to one year.
During the conference call, the Company may discuss and answer
questions concerning business and financial developments and
trends. The Company’s responses to questions, as well as other
matters discussed during the conference call, may contain or
constitute information that has not been disclosed previously.
Non-GAAP Measures
In addition to financial measures prepared in accordance with
U.S. generally accepted accounting principles (“GAAP”), this press
release contains non-GAAP financial measures, including adjusted
EBITDA, adjusted net income (loss), adjusted net income (loss) per
diluted share and free cash flow. The presentation of these
non-GAAP measures is not in accordance with GAAP, and should not be
considered superior to or as a substitute for net income (loss),
net income (loss) per diluted share or cash flows from operating
activities or any other measure of performance derived in
accordance with GAAP. In addition, not all companies calculate
non-GAAP financial measures in the same manner and, accordingly,
the non-GAAP measures presented in this release may not be
comparable to similar measures used by other companies. The Company
believes the inclusion of these non-GAAP measures help investors
gain a better understanding of the Company’s performance,
especially when comparing such results to previous periods, and
that they are useful as an additional means for investors to
evaluate the Company's operating results, when reviewed in
conjunction with the Company's GAAP financial statements.
Reconciliations of these non-GAAP measures to their comparable GAAP
measures are provided in the tables below.
The Company believes that adjusted EBITDA (calculated as
earnings before interest, taxes, depreciation and amortization and
excluding exit costs related to our London operations, corporate
restructuring charges, CEO transition costs and any asset
impairment charges) are useful to investors in evaluating its
performance. With the significant capital investment over the past
several years associated with the DXL stores and, therefore,
increased levels of depreciation and interest, management uses
adjusted EBITDA as a key metric to measure profitability and
economic productivity.
The Company has fully reserved against its deferred tax assets
and, therefore, its net income (loss) is not reflective of earnings
assuming a “normal” tax position. In addition, we have added back
charges for exit costs related to our London operations, corporate
restructuring charges, costs associated with the CEO transition and
asset impairment charges, if applicable, because it provides
comparability of results without these charges. Adjusted net
income (loss) provides investors with a useful indication of the
financial performance of the business, on a comparative basis,
assuming a normalized effective tax rate of 26%.
Free cash flow is a metric that management uses to monitor
liquidity. Management believes this metric is important to
investors because it demonstrates the Company’s ability to
strengthen liquidity while supporting its capital projects and new
store growth. Free cash flow is calculated as cash flow from
operating activities, less capital expenditures and excludes the
mandatory and discretionary repayment of debt.
About Destination XL Group, Inc.
Destination XL Group, Inc. is the largest retailer of men’s
clothing in sizes XL and up, with operations throughout the United
States as well as in Toronto, Canada. In addition to DXL Big + Tall
retail and outlet stores, subsidiaries of Destination XL Group,
Inc. also operate Casual Male XL retail and outlet stores, and an
e-commerce site, DXL.com. DXL.com offers a multi-channel
solution similar to the DXL store experience with the most
extensive selection of online products available anywhere for Big +
Tall men. The Company is headquartered in Canton, Massachusetts,
and its common stock is listed on the NASDAQ Global Market under
the symbol "DXLG." For more information, please visit the
Company's investor relations website: https://investor.dxl.com.
Forward-Looking Statements Certain statements
and information contained in this press release constitute
forward-looking statements under the federal securities laws,
including statements regarding the impact of the coronavirus
outbreak on the Company’s business and results in fiscal 2020 and
actions being taken by the Company to mitigate the impact,
including to reduce operating expenses and capital expenditures,
cancel inventory receipts, and to preserve liquidity. The
discussion of forward-looking information requires management of
the Company to make certain estimates and assumptions regarding the
Company's strategic direction and the effect of such plans on the
Company's financial results. The Company's actual results and the
implementation of its plans and operations may differ materially
from forward-looking statements made by the Company. The Company
encourages readers of forward-looking information concerning the
Company to refer to its filings with the Securities and Exchange
Commission, including without limitation, its Annual Report on Form
10-K filed on March 22, 2019, that set forth certain risks and
uncertainties that may have an impact on future results and
direction of the Company, including risks relating to the impact of
the COVID-19 global pandemic on the Company’s business and the
global economy, the Company’s execution of its DXL strategy and
ability to grow its market share, predict customer tastes and
fashion trends, forecast sales growth trends and compete
successfully in the United States men’s big and tall apparel
market.
Forward-looking statements contained in this press release speak
only as of the date of this release. Subsequent events or
circumstances occurring after such date may render these statements
incomplete or out of date. The Company undertakes no obligation and
expressly disclaims any duty to update such statements.
DESTINATION XL GROUP, INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands, except per share data) |
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
For the fiscal year ended |
|
|
|
February 1, 2020 |
|
|
February 2, 2019 |
|
|
February 1, 2020 |
|
|
February 2, 2019 |
|
Sales |
|
$ |
131,239 |
|
|
$ |
131,150 |
|
|
$ |
474,038 |
|
|
$ |
473,756 |
|
Cost of goods sold including
occupancy |
|
|
74,825 |
|
|
|
74,134 |
|
|
|
269,837 |
|
|
|
262,467 |
|
Gross profit |
|
|
56,414 |
|
|
|
57,016 |
|
|
|
204,201 |
|
|
|
211,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
46,466 |
|
|
|
50,236 |
|
|
|
180,663 |
|
|
|
183,868 |
|
Exit costs associated with London operations |
|
|
— |
|
|
|
— |
|
|
|
1,737 |
|
|
|
— |
|
CEO transition costs |
|
|
41 |
|
|
|
1,844 |
|
|
|
743 |
|
|
|
2,404 |
|
Corporate restructuring charge |
|
|
— |
|
|
|
12 |
|
|
|
— |
|
|
|
1,904 |
|
Impairment of assets |
|
|
889 |
|
|
|
4,579 |
|
|
|
889 |
|
|
|
4,579 |
|
Depreciation and amortization |
|
|
5,686 |
|
|
|
6,786 |
|
|
|
24,563 |
|
|
|
28,653 |
|
Total expenses |
|
|
53,082 |
|
|
|
63,457 |
|
|
|
208,595 |
|
|
|
221,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
3,332 |
|
|
|
(6,441 |
) |
|
|
(4,394 |
) |
|
|
(10,119 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(712 |
) |
|
|
(820 |
) |
|
|
(3,297 |
) |
|
|
(3,462 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision
(benefit) for income taxes |
|
|
2,620 |
|
|
|
(7,261 |
) |
|
|
(7,691 |
) |
|
|
(13,581 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for income
taxes |
|
|
183 |
|
|
|
(31 |
) |
|
|
105 |
|
|
|
(50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
2,437 |
|
|
$ |
(7,230 |
) |
|
$ |
(7,796 |
) |
|
$ |
(13,531 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share -
basic and diluted |
|
$ |
0.05 |
|
|
$ |
(0.15 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
50,412 |
|
|
|
49,451 |
|
|
|
49,992 |
|
|
|
49,163 |
|
Diluted |
|
|
50,751 |
|
|
|
49,451 |
|
|
|
49,992 |
|
|
|
49,163 |
|
DESTINATION XL GROUP, INC. |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
February 1, 2020 and February 2, 2019 |
|
(In thousands) |
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 1, |
|
|
February 2, |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
4,338 |
|
|
$ |
4,868 |
|
Inventories |
|
|
102,420 |
|
|
|
106,837 |
|
Other current assets |
|
|
17,102 |
|
|
|
15,955 |
|
Property and equipment,
net |
|
|
78,279 |
|
|
|
92,525 |
|
Operating lease right-of-use
assets |
|
|
186,413 |
|
|
|
— |
|
Intangible assets |
|
|
1,150 |
|
|
|
1,150 |
|
Other assets |
|
|
1,215 |
|
|
|
4,741 |
|
Total assets |
|
$ |
390,917 |
|
|
$ |
226,076 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
31,763 |
|
|
$ |
34,418 |
|
Accrued expenses and other
liabilities |
|
|
23,390 |
|
|
|
66,095 |
|
Operating leases |
|
|
223,227 |
|
|
|
— |
|
Long-term debt |
|
|
14,813 |
|
|
|
14,757 |
|
Borrowings under credit
facility |
|
|
39,301 |
|
|
|
41,908 |
|
Deferred gain on
sale-leaseback |
|
|
— |
|
|
|
10,258 |
|
Stockholders' equity |
|
|
58,423 |
|
|
|
58,640 |
|
Total liabilities and stockholders' equity |
|
$ |
390,917 |
|
|
$ |
226,076 |
|
CERTAIN COLUMNS IN THE FOLLOWING TABLES MAY NOT FOOT DUE TO
ROUNDING |
|
GAAP TO NON-GAAP RECONCILIATION OF ADJUSTED NET INCOME
(LOSS) |
AND ADJUSTED NET INCOME (LOSS) PER DILUTED
SHARE |
(Unaudited) |
|
|
|
For the three months ended |
|
|
For the fiscal year ended |
|
|
|
February 1, 2020 |
|
|
February 2, 2019 |
|
|
February 1, 2020 |
|
|
February 2, 2019 |
|
|
|
$ |
|
|
Per diluted |
|
|
$ |
|
|
Per diluted |
|
|
$ |
|
|
Per diluted |
|
|
$ |
|
|
Per diluted |
|
share |
share |
share |
share |
(in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before tax
provision, on a GAAP basis |
|
$ |
2,620 |
|
|
|
|
|
|
$ |
(7,261 |
) |
|
|
|
|
|
$ |
(7,691 |
) |
|
|
|
|
|
$ |
(13,581 |
) |
|
|
|
|
Provision (benefit) for income
taxes |
|
|
183 |
|
|
|
|
|
|
|
(31 |
) |
|
|
|
|
|
|
105 |
|
|
|
|
|
|
|
(50 |
) |
|
|
|
|
Net income (loss), on
a GAAP basis |
|
$ |
2,437 |
|
|
$ |
0.05 |
|
|
$ |
(7,230 |
) |
|
$ |
(0.15 |
) |
|
$ |
(7,796 |
) |
|
$ |
(0.16 |
) |
|
$ |
(13,531 |
) |
|
$ |
(0.28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of assets |
|
$ |
889 |
|
|
$ |
0.02 |
|
|
$ |
4,579 |
|
|
$ |
0.09 |
|
|
$ |
889 |
|
|
$ |
0.02 |
|
|
$ |
4,579 |
|
|
$ |
0.09 |
|
Exit costs associated with
London operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,737 |
|
|
|
0.03 |
|
|
|
— |
|
|
|
— |
|
CEO transition costs |
|
|
41 |
|
|
|
0 |
|
|
|
1,844 |
|
|
|
0.04 |
|
|
|
743 |
|
|
|
0.01 |
|
|
|
2,404 |
|
|
|
0.05 |
|
Corporate restructuring
costs |
|
|
— |
|
|
|
— |
|
|
|
12 |
|
|
|
0 |
|
|
|
— |
|
|
|
— |
|
|
|
1,904 |
|
|
|
0.04 |
|
Actual provision (benefit) for
income taxes |
|
|
183 |
|
|
|
0 |
|
|
|
(31 |
) |
|
|
(0.00 |
) |
|
|
105 |
|
|
|
0 |
|
|
|
(50 |
) |
|
|
(0.00 |
) |
Adjusted income (loss) before
income taxes |
|
$ |
3,550 |
|
|
$ |
0.07 |
|
|
$ |
(826 |
) |
|
$ |
(0.02 |
) |
|
$ |
(4,322 |
) |
|
$ |
(0.09 |
) |
|
$ |
(4,694 |
) |
|
$ |
(0.10 |
) |
Income tax provision
(benefit), assuming normalized tax rate of 26% |
|
$ |
923 |
|
|
$ |
0.02 |
|
|
$ |
(215 |
) |
|
$ |
(0.00 |
) |
|
$ |
(1,124 |
) |
|
$ |
(0.02 |
) |
|
$ |
(1,220 |
) |
|
$ |
(0.02 |
) |
Adjusted net income
(loss), non-GAAP basis |
|
$ |
2,627 |
|
|
$ |
0.05 |
|
|
$ |
(611 |
) |
|
$ |
(0.01 |
) |
|
$ |
(3,198 |
) |
|
$ |
(0.06 |
) |
|
$ |
(3,474 |
) |
|
$ |
(0.07 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares outstanding on a diluted basis |
|
|
50,751 |
|
|
|
|
|
|
|
49,451 |
|
|
|
|
|
|
|
49,992 |
|
|
|
|
|
|
|
49,163 |
|
|
|
|
|
GAAP TO NON-GAAP RECONCILIATION OF ADJUSTED
EBITDA |
(Unaudited) |
|
|
|
For the three months ended |
|
|
For the fiscal year ended |
|
|
|
February 1, 2020 |
|
|
February 2, 2019 |
|
|
February 1, 2020 |
|
|
February 2, 2019 |
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss), on a GAAP
basis |
|
$ |
2.4 |
|
|
$ |
(7.2 |
) |
|
$ |
(7.8 |
) |
|
$ |
(13.5 |
) |
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for income
taxes |
|
|
0.2 |
|
|
|
(0.0 |
) |
|
|
0.1 |
|
|
|
(0.1 |
) |
Interest expense |
|
|
0.7 |
|
|
|
0.8 |
|
|
|
3.3 |
|
|
|
3.5 |
|
Depreciation and
amortization |
|
|
5.7 |
|
|
|
6.8 |
|
|
|
24.6 |
|
|
|
28.7 |
|
EBITDA (non-GAAP) |
|
|
9 |
|
|
|
0.3 |
|
|
|
20.2 |
|
|
|
18.5 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exit Costs associated with London operations |
|
|
- |
|
|
|
- |
|
|
|
1.7 |
|
|
|
- |
|
CEO transition costs |
|
|
0 |
|
|
|
1.8 |
|
|
|
0.7 |
|
|
|
2.4 |
|
Corporate restructuring |
|
|
- |
|
|
|
0 |
|
|
|
- |
|
|
|
1.9 |
|
Impairment charges |
|
|
0.9 |
|
|
|
4.6 |
|
|
|
0.9 |
|
|
|
4.6 |
|
Adjusted EBITDA
(non-GAAP) |
|
$ |
9.9 |
|
|
$ |
6.8 |
|
|
$ |
23.5 |
|
|
$ |
27.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP TO NON-GAAP RECONCILIATION OF FREE CASH
FLOW |
(Unaudited) |
|
|
|
For the fiscal year ended |
|
(in millions) |
|
February 1, 2020 |
|
|
February 2, 2019 |
|
Cash flow from operating activities (GAAP basis) |
|
$ |
15.8 |
|
|
$ |
15.7 |
|
Capital expenditures,
infrastructure projects |
|
|
(9.7 |
) |
|
|
(10.8 |
) |
Free cash flow before DXL capital expenditures (non-GAAP) |
|
$ |
6.1 |
|
|
$ |
5 |
|
Capital expenditures for DXL
stores and the acquisition of the DXL domain name |
|
|
(3.7 |
) |
|
|
(2.2 |
) |
Free cash flow (non-GAAP basis) |
|
$ |
2.4 |
|
|
$ |
2.8 |
|
Investor Contact:
ICR, Inc.
Tom Filandro
646-277-1200
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