Destination XL Group, Inc. (NASDAQ: DXLG), the largest omni-channel
specialty retailer of big & tall men’s apparel in the United
States, today reported financial results for the fourth quarter and
fiscal year 2018.
Highlights
- Total sales for the 13-week fourth quarter of $131.2 million as
compared to the 14-week fourth quarter in the prior year of $135.5
million; total sales for the 52-week year of $473.8 million as
compared to the total sales of $468.0 million for the 53-week prior
year.
- Total comparable sales (on a 52-week basis) increased 3.1% for
the fourth quarter and 3.0% for the year.
- Net loss for the quarter was $(7.2) million as compared to
prior-year quarter’s net loss of $(3.3) million; net loss for the
year was $(13.5) million as compared to $(18.8) million in the
prior year.
- Adjusted net loss for the quarter was $(0.6) million as
compared to an adjusted net loss of $(2.7) million in the
prior-year quarter; adjusted net loss for the year was $(3.5)
million as compared to $(12.8) million in the prior year.
- On a non-GAAP basis, adjusted EBITDA for the quarter was $6.8
million as compared to $5.0 million in the prior-year quarter;
adjusted EBITDA for the year was $27.4 million as compared to $17.1
million in the prior year.
Management Comments
“We are pleased to report our fifth consecutive quarter of
positive comparable sales growth with a fourth quarter increase of
3.1%,” said Acting Chief Executive Officer, David Levin.
“Sales performance both in-store and online was consistent
throughout the quarter.”
Levin continued, “Fiscal 2018 was a pivotal year for our Company
and we believe our core business is well positioned for continued
growth in fiscal 2019. We completed a customer segmentation
study that has provided better insights to focus our marketing
strategies. We launched a new website that is faster, more
responsive, and easier to navigate. We initiated a corporate
reorganization that has lowered our SG&A expense, and we
refinanced our credit facility with an extension through the middle
of 2023.
“The fourth quarter also marked a major strategic shift at our
Company as we officially launched a wholesale division. DXL
is the industry expert in men’s big and tall apparel.
Wholesale allows us to leverage that expertise and offer a turn-key
solution to other retailers who cater to the big and tall
customer.
“Finally, we are very excited to have recruited Harvey Kanter,
the former CEO of Blue Nile, to serve as our new CEO. Harvey
joined the Company as an advisor on February 19, 2019, and will
take over as CEO and join the Board as a director on April 1,
2019. Harvey has a distinguished track record of developing
consumer-centric brands and growing their revenue and
profitability. Our management team has already begun to
engage with Harvey as we begin charting the next phase of DXL
growth,” Levin concluded.
Fourth-Quarter and Fiscal 2018 Results
The Company’s 2018 fiscal year included 52 weeks, compared with
53 weeks in fiscal 2017. Accordingly, year-over-year comparisons of
total sales for the fourth quarter and full year are affected by an
extra week of sales in fiscal 2017. However, for comparable sales,
the Company is reporting on a comparable-week basis (i.e., the 13
and 52 weeks ended February 2, 2019 compared with the 13 and 52
weeks ended February 3, 2018, respectively).
Sales
For the 13-week fourth quarter of fiscal 2018, total sales
decreased 3.2% to $131.2 million from $135.5 million for the
14-week fourth quarter of fiscal 2017. Comparable sales for the
fourth quarter increased by 3.1%. The decrease of $4.3 million in
total sales was due to the shift in comparable weeks and one less
week of sales of $8.4 million and closed stores of $2.1 million,
partially offset by an increase in comparable sales of or $3.8
million, an increase in wholesale revenue of $2.0 million and an
increase in non-comparable sales and other revenue of $0.4
million.
For fiscal 2018, total sales increased 1.2% to $473.8 million
from $468.0 million in fiscal 2017. Comparable sales for the full
year increased by 3.0%. The increase in sales of $5.8 million was
driven by an increase in comparable sales of $13.3 million, an
increase in non-comparable sales of $6.6 million and wholesale
revenue of $2.4 million. These increases were partially offset by
the shift in comparable weeks and one less week of sales of $6.3
million, closed stores of $8.6 million and other revenue of $1.6
million.
Gross Margin
For the fourth quarter of fiscal 2018, gross margin, inclusive
of occupancy costs, was 43.5%, compared with gross margin of 45.0%
for the fourth quarter of fiscal 2017. The decrease of 150 basis
points was the result of a decrease in merchandise margin of 160
basis points, partially offset by a decrease in occupancy costs as
a percentage of total sales of 10 basis points. The decrease
in merchandise margin was primarily due to a shift in revenues from
core private label to fashion and branded merchandise and 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 3.8%
as compared to the prior-year’s fourth quarter.
For the fiscal year, gross margin, inclusive of occupancy costs,
was 44.6%, compared to 45.0% for fiscal 2017. The decrease of
40 basis points was due to a decrease in merchandise margin of 80
basis points, partially offset by a decrease in occupancy costs as
a percentage of sales of 40 basis points. The decrease in
merchandise margin was similarly due to a shift in revenues toward
fashion and branded merchandise and our wholesale segment. On
a dollar basis, occupancy costs for the full year decreased 1.4% as
compared to fiscal 2017.
Selling, General & Administrative
SG&A expenses for the fourth quarter of fiscal 2018 were
38.3%, compared with 41.3% of sales in the fourth quarter of fiscal
2017. On a dollar basis, SG&A expense decreased $5.8 million,
compared to the prior year fourth quarter, primarily due to a $3.0
million decrease in marketing costs, savings from the corporate
restructuring of approximately $1.8 million and approximately $2.5
million of expenses in the prior year for the additional 53rd week.
These savings were partially offset by increases in incentive
accruals and IT operating costs.
For fiscal 2018, SG&A expenses were 38.8% of sales, compared
to 41.3% in fiscal 2017. On a dollar basis, SG&A expense
decreased $9.4 million, primarily due to savings from the corporate
restructuring of $6.0 million, a decrease in marketing costs of
$5.1 million and one less week of expenses of $2.5 million.
These decreases were partially offset by an increase in incentive
accruals and IT operating costs.
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 23.8% of
sales in the fourth quarter of fiscal 2018, compared to 26.5% of
sales in the fourth quarter of last year. Corporate Support
Costs, which include the distribution center and corporate overhead
costs, represented 14.5% of sales in the fourth quarter of fiscal
2018, compared to 14.8% of sales in the fourth quarter of last
year. For fiscal 2018, Customer Facing costs were 23.2%,
compared to 24.7% for fiscal 2017. Corporate Support Costs
for fiscal 2018 were 15.6%, compared to 16.6% for fiscal 2017.
Corporate Restructuring
In May 2018, the Company executed a corporate restructuring to
accelerate the Company's path to profitability by better aligning
its expense structure with its revenues. We eliminated 56
positions, which represented approximately 15% of our corporate
work force, or 2% of our total work force. Of the 56
positions, 36 positions were terminations and 20 positions were
open positions that were not filled. As a result, we incurred
an aggregate charge of $1.9 million in fiscal 2018, for employee
severance and one-time termination benefits, as well as other
employee-related costs. Approximately $1.6 million of the $1.9
million restructuring charge were cash expenditures.
As a result of this restructuring, we realized savings of $6.0
million in SG&A expenses in fiscal 2018. The savings
primarily related to corporate payroll, travel, benefits and
non-essential project expenses, and are expected to be
approximately $10.0 million on an annualized basis. The
Company will continue to address its SG&A cost structure to
improve its EBITDA margins and overall profitability.
CEO Search and Transition Costs
We announced in March 2018 that Mr. Levin planned to retire on
December 31, 2018. Pursuant to the terms of the Transition
Agreement between the Company and Mr. Levin dated March 20, 2018,
as amended (the “Transition Agreement”), Mr. Levin resigned as
President, Chief Executive Officer and director of the Company on
January 1, 2019, and assumed the role of Acting CEO. On April
1, 2019, Mr. Levin will resign as Acting CEO, and Mr. Kanter will
become the Company’s President, Chief Executive Officer and a
director of the Company.
In connection with this transition, we incurred an aggregate
charge of $2.4 million in fiscal 2018 related to expenses incurred
pursuant to the Transition Agreement and the CEO search.
The Company expects to incur additional charges of
approximately $1.7 million for CEO transition costs in fiscal 2019,
related primarily to potential incentive awards payable pursuant to
the Transition Agreement.
Impairment of Assets
For the fourth quarter and fiscal year 2018, we recorded asset
impairment charges of $4.6 million. These charges consisted
of $3.1 million for impairment of store assets, where the carrying
value exceeded fair value and $1.5 million for the write-off of our
Rochester trademark.
We expect to close our five remaining Rochester Clothing stores
in fiscal 2019. The growth in our DXL brand has slowly eroded
the sales volume and profitability in our remaining Rochester
stores, which are predominately located in high-rent, metropolitan
areas. Most of our Rochester merchandise assortment will
continue to be available on dxl.com, and many Rochester brands can
be found in DXL stores. With the exception of London, all of
our Rochester stores are located in close proximity to one or more
DXL stores.
In the fourth quarter of 2017, we recorded asset impairment
charges of $2.4 million, which consisted of $0.5 million for the
impairment of long-lived assets, related to stores where the
carrying value exceeded fair value, and $1.9 million for the
write-off of certain costs associated with technology projects,
which were abandoned in fiscal 2017. For fiscal 2017,
impairment charges totaled $4.1 million, which consisted of $2.2
million for the impairment of store assets and $1.9 million for the
write-off of technology projects.
Income Taxes
There was no significant income tax benefit recognized in fiscal
2018 or fiscal 2017 due to the full valuation allowance against our
deferred tax assets. For fiscal 2017, we recognized an income
tax benefit of $2.1 million related to the recognition of the
majority of our AMT credit, which became refundable under the 2017
Tax Act. The income tax benefit for fiscal 2018 of $0.2
million is primarily related to the recognition of the remaining
AMT credit not recognized in fiscal 2017.
Net Loss
Net loss for the fourth quarter of fiscal 2018 was $(7.2)
million, or $(0.15) per diluted share, compared to a net loss of
$(3.3) million, or $(0.07) per diluted share, for the fourth
quarter of fiscal 2017.
Included in our results for the fourth quarter of fiscal 2018
was a charge of $1.8 million, or $(0.04) per diluted share for the
CEO transition costs and asset impairment charges of $4.6 million,
or $(0.09) per diluted share. The fourth quarter of the prior
year benefited from the 53rd week, which contributed $1.6 million,
or $0.03 per diluted share, and an income tax benefit related to
the recognition of an AMT tax credit of $2.1 million, or $0.04 per
diluted share, partially offset by an asset impairment charge of
$2.4 million, or $(0.05) per diluted share.
The net loss for fiscal 2018 was $(13.5) million, or $(0.28) per
diluted share, compared with a net loss of $(18.8) million, or
$(0.39) per diluted share, in fiscal 2017.
On a non-GAAP basis, before impairment charges, corporate
restructuring, CEO transition costs and assuming a normalized tax
rate of 26%, adjusted net loss for the fourth quarter of fiscal
2018 was $(0.01) per diluted share, compared to a net loss of
$(0.05) per diluted share for the fourth quarter of fiscal 2017.
For fiscal 2018, the adjusted net loss was $(0.07) per diluted
share, compared to $(0.26) per diluted share for fiscal 2017.
Adjusted EBITDA
Earnings before interest, taxes, depreciation and amortization,
adjusted for asset impairments, corporate restructuring and CEO
transition costs (adjusted EBITDA), a non-GAAP measure, for the
fourth quarter of fiscal 2018 were $6.8 million, compared to $5.0
million for the fourth quarter of fiscal 2017. For fiscal
2018, adjusted EBITDA was $27.4 million, compared to $17.1 million
for fiscal 2017.
Cash Flow
Cash Flow provided by operations for fiscal 2018 was $15.7
million, compared to $31.0 million in fiscal 2017. Capital
expenditures for fiscal 2018 were $13.0 million as compared to
$22.6 million for fiscal 2017. Free cash flow, a non-GAAP measure,
decreased $5.6 million, from $8.4 million in 2017 to $2.8 million
in 2018. The decrease in free cash flow was primarily due to
prior year inventory reduction initiatives of $14.1 million that
have now annualized, and an inventory increase in the current year
for our wholesale segment. The addition of our wholesale segment
will create a temporary shift in free cash flow due to the nature
of inventory lead times and wholesale account payment terms.
For fiscal 2018, our free cash flow was negatively impacted by
approximately $5.0 million related to an increase in inventory and
accounts receivable for our wholesale segment. These
decreases were partially offset by improved earnings and a decrease
in capital expenditures. Capital expenditures for fiscal 2018
included the purchase of the dxl.com domain name for $1.2
million.
|
|
For the fiscal year ended |
|
(in millions) |
|
February 2, 2019 |
|
|
February 3, 2018 |
|
Cash flow from operating
activities (GAAP basis) |
|
$ |
15.7 |
|
|
$ |
31.0 |
|
Capital expenditures,
infrastructure projects |
|
|
(10.8 |
) |
|
|
(9.7 |
) |
Free Cash
Flow before DXL capital expenditures (non-GAAP) |
|
$ |
5.0 |
|
|
$ |
21.3 |
|
Capital expenditures
for DXL stores and the acquisition of the DXL domain name |
|
|
(2.2 |
) |
|
|
(12.9 |
) |
Free Cash
Flow (non-GAAP basis) |
|
$ |
2.8 |
|
|
$ |
8.4 |
|
Non-GAAP Measures
Adjusted EBITDA, adjusted net loss, adjusted net 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 2, 2019, the Company had cash and cash equivalents
of $4.9 million. Total debt at February 2, 2019, was $56.7 million,
and consisted of $41.9 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
2, 2019, the Company had $45.6 million of excess availability under
its credit facility.
Inventory was $106.8 million at February 2, 2019, compared to
$103.3 million at February 3, 2018. The increase in inventory
was due to the acceleration of receipts from February to January as
well as increased inventory levels for our wholesale segment due to
the longer lead times.
Store Information
For fiscal 2018, the Company opened 2 DXL retail stores and 1
DXL outlet, and rebranded 3 Casual Male XL stores to DXL retail
stores. The Company also closed 9 Casual Male XL retail
stores, 3 Casual Male outlets stores and 1 DXL retail store:
|
Year End 2016 |
|
Year End 2017 |
|
Year End 2018 |
|
Year End 2019E |
|
|
# ofStores |
|
Sq Ft.(000’s) |
|
# ofStores |
|
Sq Ft.(000’s) |
|
# ofStores |
|
Sq Ft.(000’s) |
|
# ofStores |
|
Sq Ft.(000’s) |
|
DXL retail |
192 |
|
|
1,542 |
|
|
212 |
|
|
1,665 |
|
|
216 |
|
|
1,684 |
|
|
229 |
|
|
1,733 |
|
DXL outlets |
13 |
|
|
66 |
|
|
14 |
|
|
72 |
|
|
15 |
|
|
78 |
|
|
16 |
|
|
82 |
|
CMXL retail |
97 |
|
|
340 |
|
|
78 |
|
|
268 |
|
|
66 |
|
|
221 |
|
|
49 |
|
|
159 |
|
CMXL outlets |
36 |
|
|
113 |
|
|
33 |
|
|
103 |
|
|
30 |
|
|
91 |
|
|
29 |
|
|
88 |
|
Rochester Clothing |
5 |
|
|
51 |
|
|
5 |
|
|
51 |
|
|
5 |
|
|
51 |
|
|
- |
|
|
- |
|
Total |
|
343 |
|
|
2,112 |
|
|
342 |
|
|
2,159 |
|
|
332 |
|
|
2,125 |
|
|
323 |
|
|
2,062 |
|
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
24.4% of retail segment sales for the fourth quarter of fiscal
2018, compared to 23.1% for the fourth quarter of fiscal
2017. For fiscal 2018, our direct sales represented 21.6% of
retail segment sales as compared to 21.0% for fiscal 2017.
Impact of New Lease Accounting Standard
The Company will be adopting a new lease accounting standard,
ASC 842 (Leases) in the first quarter of fiscal 2019. While
our analysis is not fully complete, we expect the most significant
impact, as a result of this adoption, will be the recognition of
leases as right-of-use assets of approximately $217 million and
corresponding lease liabilities of approximately $255 million on
our Consolidated Balance Sheet. The $38 million difference
between the right-of-use assets and lease liabilities upon adoption
of the new lease standard will be primarily attributable to the
elimination of certain existing lease-related assets and
liabilities as a net adjustment to the right-of-use assets.
While we do not expect the adoption of this new lease
accounting standard to have a material impact on earnings for
fiscal 2019, we do expect to recognize in the first quarter of
fiscal 2019 an adjustment to opening retained earnings to recognize
the remaining deferred gain of $10.3 million from a sale-leaseback
transaction of our corporate headquarters and distribution center
that was completed on January 31, 2006.
Financial Outlook
Our core business remains strong, and we expect to deliver low
single-digit comparable sales growth in our omni-channel retail
business and to generate free cash flow in fiscal 2019. The Company
will continue to provide forward-looking commentary on business
trends. As previously announced in mid-February, Mr. Kanter will
assume the role of President and Chief Executive Officer of the
Company as of April 1, 2019. Upon joining the Company, Mr. Kanter
will conduct a strategic review to assess and address the current
and go-forward execution strategy for the business. The Company and
Mr. Kanter continue to believe that (i) increasing our customer
base, (ii) improving returns on investment in our marketing and
digital initiatives, (iii) enhancing our in-store and online
experience, and (iv) managing our cost structure are essential to
achieving a 10% EBITDA margin over time. Additionally, as
previously announced, the Company has created a new wholesale
segment, the impact of which on the Company’s financial results
needs to be fully assessed. Given the CEO transition, the strategic
review and the launch of a new wholesale segment, the Company is
not providing detailed earnings or cash flow guidance until we have
increased visibility in the effectiveness of our initiatives.
In fiscal 2019, we plan to open 2 new DXL retail stores, rebrand
12 Casual Male XL retail stores to DXL retail stores, and rebrand 1
Casual Male XL outlet to a DXL outlet store. We also plan to
close 5 Casual Male XL retail stores (two of which will be closed
in connection with the opening of the two DXL stores), 1 DXL store
and our 5 remaining Rochester Clothing stores.
Conference Call
The Company will hold a conference call to review its financial
results today, Friday, March 22, 2019 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: 4166989. 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, free cash flow before DXL expenditures 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 loss, net loss per diluted share or cash
flows from operating activities or any other measure of performance
derived in accordance with GAAP. In addition, all companies do not
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 helps
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,
adjusted to exclude asset impairment charges, corporate
restructuring and CEO transition costs) are useful to investors in
evaluating its performance. With the significant capital investment
associated with the DXL transformation 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 loss is not reflective of earnings assuming
a “normal” tax position. In addition, we have added back charges
related to the impairment of assets, our corporate restructuring
and CEO transition costs because it provides comparability of
results without these non-cash charges. Adjusted net 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 and free cash flow before DXL capital
expenditures are metrics that management uses to monitor liquidity.
The Company has stated that it expects to fund its ongoing DXL
capital expenditures with cash flow from operations. Management
believes this metric is important to investors because it
demonstrates the Company’s ability to strengthen liquidity while
also contributing to the funding of the DXL store growth and other
capital projects. 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
apparel in sizes XL and up, with operations throughout the
United States as well as in London, England,
and Toronto, Canada. In addition to DXL Men’s Apparel retail
and outlet stores, subsidiaries of Destination XL Group,
Inc. also operates Rochester Clothing stores, Casual Male XL
retail and outlet stores, and an e-commerce site at www.dxl.com.
With more than 2,000 private label and name brand styles to
choose from, big & tall customers are provided with a unique
blend of wardrobe solutions not available at traditional retailers.
The Company is headquartered in Canton, Massachusetts. For
more information, please visit the Company's investor relations
website: http://investor.destinationxl.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 Company’s store counts, cash
flow and comparable sales growth for fiscal 2019; its objective of
achieving a 10% EBITDA margin over time; the impact of its
corporate restructuring on future profitability and expected
annualized savings from the corporate restructuring; and continued
growth of its core business in fiscal 2019. 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 23, 2018, 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 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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
For the fiscal year ended |
|
|
|
February 2,2019 |
|
|
February 3,2018 |
|
|
February 2,2019 |
|
|
February 3,2018 |
|
Sales |
|
$ |
131,150 |
|
|
$ |
135,522 |
|
|
$ |
473,756 |
|
|
$ |
467,976 |
|
Cost of goods sold
including occupancy |
|
|
74,134 |
|
|
|
74,483 |
|
|
|
262,467 |
|
|
|
257,619 |
|
Gross profit |
|
|
57,016 |
|
|
|
61,039 |
|
|
|
211,289 |
|
|
|
210,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative |
|
|
50,236 |
|
|
|
56,026 |
|
|
|
183,868 |
|
|
|
193,230 |
|
CEO
transition and restructuring costs |
|
|
1,856 |
|
|
|
— |
|
|
|
4,308 |
|
|
|
— |
|
Impairment of assets |
|
|
4,579 |
|
|
|
2,377 |
|
|
|
4,579 |
|
|
|
4,095 |
|
Depreciation and amortization |
|
|
6,786 |
|
|
|
7,736 |
|
|
|
28,653 |
|
|
|
31,073 |
|
Total expenses |
|
|
63,457 |
|
|
|
66,139 |
|
|
|
221,408 |
|
|
|
228,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(6,441 |
) |
|
|
(5,100 |
) |
|
|
(10,119 |
) |
|
|
(18,041 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net |
|
|
(820 |
) |
|
|
(860 |
) |
|
|
(3,462 |
) |
|
|
(3,357 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before benefit for
income taxes |
|
|
(7,261 |
) |
|
|
(5,960 |
) |
|
|
(13,581 |
) |
|
|
(21,398 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit for income
taxes |
|
|
(31 |
) |
|
|
(2,636 |
) |
|
|
(50 |
) |
|
|
(2,572 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(7,230 |
) |
|
$ |
(3,324 |
) |
|
$ |
(13,531 |
) |
|
$ |
(18,826 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share -
basic and diluted |
|
$ |
(0.15 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.39 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number
of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
49,451 |
|
|
|
48,666 |
|
|
|
49,163 |
|
|
|
48,888 |
|
Diluted |
|
|
49,451 |
|
|
|
48,666 |
|
|
|
49,163 |
|
|
|
48,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DESTINATION XL GROUP, INC. |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
February 2, 2019 and February 3, 2018 |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
February 2, |
|
|
February 3, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
4,868 |
|
|
$ |
5,362 |
|
Inventories |
|
|
106,837 |
|
|
|
103,332 |
|
Other current
assets |
|
|
15,955 |
|
|
|
12,973 |
|
Property and equipment,
net |
|
|
92,525 |
|
|
|
111,032 |
|
Intangible assets |
|
|
1,150 |
|
|
|
1,821 |
|
Other assets |
|
|
4,741 |
|
|
|
5,885 |
|
Total
assets |
|
$ |
226,076 |
|
|
$ |
240,405 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
34,418 |
|
|
$ |
33,987 |
|
Accrued expenses and
other liabilities |
|
|
66,095 |
|
|
|
65,263 |
|
Long-term debt |
|
|
14,757 |
|
|
|
12,061 |
|
Borrowings under credit
facility |
|
|
41,908 |
|
|
|
47,385 |
|
Deferred gain on
sale-leaseback |
|
|
10,258 |
|
|
|
11,723 |
|
Stockholders'
equity |
|
|
58,640 |
|
|
|
69,986 |
|
Total
liabilities and stockholders' equity |
|
$ |
226,076 |
|
|
$ |
240,405 |
|
|
|
|
|
|
|
|
|
|
CERTAIN COLUMNS IN THE FOLLOWING TABLES MAY NOT
FOOT DUE TO ROUNDING
GAAP TO NON-GAAP RECONCILIATION OF
ADJUSTED NET LOSSAND ADJUSTED NET LOSS PER DILUTED
SHARE
|
|
For the three months ended |
|
|
For the fiscal year ended |
|
|
|
February 2, 2019 |
|
|
February 3, 2018 |
|
|
February 2, 2019 |
|
|
February 3, 2018 |
|
|
|
$ |
|
|
Per dilutedshare |
|
|
$ |
|
|
Per dilutedshare |
|
|
$ |
|
|
Per dilutedshare |
|
|
$ |
|
|
Per dilutedshare |
|
(in thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before tax
provision, on a GAAP basis |
|
$ |
(7,261 |
) |
|
|
|
|
|
$ |
(5,960 |
) |
|
|
|
|
|
$ |
(13,581 |
) |
|
|
|
|
|
$ |
(21,398 |
) |
|
|
|
|
Benefit for income
taxes |
|
|
(31 |
) |
|
|
|
|
|
|
(2,636 |
) |
|
|
|
|
|
|
(50 |
) |
|
|
|
|
|
|
(2,572 |
) |
|
|
|
|
Net loss, on a
GAAP basis |
|
$ |
(7,230 |
) |
|
$ |
(0.15 |
) |
|
$ |
(3,324 |
) |
|
$ |
(0.07 |
) |
|
$ |
(13,531 |
) |
|
$ |
(0.28 |
) |
|
$ |
(18,826 |
) |
|
$ |
(0.39 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
assets |
|
$ |
4,579 |
|
|
$ |
0.09 |
|
|
$ |
2,377 |
|
|
$ |
0.05 |
|
|
$ |
4,579 |
|
|
$ |
0.09 |
|
|
$ |
4,095 |
|
|
$ |
0.08 |
|
CEO transition
costs |
|
|
1,843 |
|
|
$ |
0.04 |
|
|
|
— |
|
|
|
— |
|
|
|
2,404 |
|
|
$ |
0.05 |
|
|
|
— |
|
|
|
— |
|
Restructuring
costs |
|
|
13 |
|
|
$ |
0.00 |
|
|
|
— |
|
|
|
— |
|
|
|
1,904 |
|
|
$ |
0.04 |
|
|
|
— |
|
|
|
— |
|
Actual benefit for
income taxes |
|
|
(31 |
) |
|
$ |
(0.00 |
) |
|
|
(2,636 |
) |
|
$ |
(0.05 |
) |
|
|
(50 |
) |
|
$ |
(0.00 |
) |
|
|
(2,572 |
) |
|
$ |
(0.05 |
) |
Adjusted loss before
income taxes |
|
$ |
(826 |
) |
|
$ |
(0.02 |
) |
|
$ |
(3,583 |
) |
|
$ |
(0.07 |
) |
|
$ |
(4,694 |
) |
|
$ |
(0.10 |
) |
|
$ |
(17,303 |
) |
|
$ |
(0.35 |
) |
Income tax benefit,
assuming normalized tax rate of 26%, with no AMT benefit in 2017 or
2018 |
|
$ |
(215 |
) |
|
$ |
(0.00 |
) |
|
$ |
(932 |
) |
|
$ |
(0.02 |
) |
|
$ |
(1,220 |
) |
|
$ |
(0.02 |
) |
|
$ |
(4,499 |
) |
|
$ |
(0.09 |
) |
Adjusted net
loss, non-GAAP basis |
|
$ |
(611 |
) |
|
$ |
(0.01 |
) |
|
$ |
(2,651 |
) |
|
$ |
(0.05 |
) |
|
$ |
(3,474 |
) |
|
$ |
(0.07 |
) |
|
$ |
(12,804 |
) |
|
$ |
(0.26 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
on a diluted
basis |
|
|
49,451 |
|
|
|
|
|
|
|
48,666 |
|
|
|
|
|
|
|
49,163 |
|
|
|
|
|
|
|
48,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP TO NON-GAAP RECONCILIATION OF
ADJUSTED EBITDA
|
|
For the three months ended |
|
|
For the fiscal year ended |
|
|
|
February 2, 2019 |
|
|
February 3, 2018 |
|
|
February 2, 2019 |
|
|
February 3, 2018 |
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss, on a GAAP
basis |
|
$ |
(7.2 |
) |
|
$ |
(3.3 |
) |
|
$ |
(13.5 |
) |
|
$ |
(18.8 |
) |
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit for income
taxes |
|
|
(0.0 |
) |
|
|
(2.6 |
) |
|
|
(0.1 |
) |
|
|
(2.6 |
) |
Interest expense |
|
|
0.8 |
|
|
|
0.9 |
|
|
|
3.5 |
|
|
|
3.4 |
|
Depreciation and
amortization |
|
|
6.8 |
|
|
|
7.7 |
|
|
|
28.7 |
|
|
|
31.1 |
|
EBITDA (non-GAAP) |
|
|
0.3 |
|
|
|
2.6 |
|
|
|
18.5 |
|
|
|
13.0 |
|
Add back: CEO
transition costs |
|
|
1.8 |
|
|
|
- |
|
|
|
2.4 |
|
|
|
- |
|
Add back: Restructuring
costs |
|
|
- |
|
|
|
- |
|
|
|
1.9 |
|
|
|
- |
|
Add back: Impairment
charges |
|
|
4.6 |
|
|
|
2.4 |
|
|
|
4.6 |
|
|
|
4.1 |
|
Adjusted EBITDA
(non-GAAP) |
|
$ |
6.8 |
|
|
$ |
5.0 |
|
|
$ |
27.4 |
|
|
$ |
17.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP TO NON-GAAP RECONCILIATION OF FREE
CASH FLOW
|
|
For the fiscal year ended |
|
(in millions) |
|
February 2, 2019 |
|
|
February 3, 2018 |
|
Cash flow from operating
activities (GAAP basis) |
|
$ |
15.7 |
|
|
$ |
31.0 |
|
Capital expenditures,
infrastructure projects |
|
|
(10.8 |
) |
|
|
(9.7 |
) |
Free Cash Flow
before DXL capital expenditures (non-GAAP) |
|
$ |
5.0 |
|
|
$ |
21.3 |
|
Capital expenditures
for DXL stores and the acquisition of the DXL domain name |
|
|
(2.2 |
) |
|
|
(12.9 |
) |
Free Cash Flow
(non-GAAP basis) |
|
$ |
2.8 |
|
|
$ |
8.4 |
|
|
|
|
|
|
|
|
|
|
Investor Contact:
ICR, Inc.
Tom Filandro, 646-277-1235
Tom.Filandro@icrinc.com
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