Destination XL Group, Inc. Announces Preliminary Fourth-Quarter 2012 Results
in Advance of KeyBanc Consumer Conference
Destination XL Retail Store and E-commerce Platform Deliver Increased Sales
Comps; Company to Launch DXL Marketing Campaign in Spring 2013 Following
Successful Test Marketing; Expects 2013 to be Year of Accelerated Progress in
DXL Transformation; Full Fourth-Quarter and Full-Year Results to be Announced
Friday, March 15
CANTON, Mass., Feb. 27, 2013
CANTON, Mass., Feb. 27, 2013 /PRNewswire/ --Destination XL Group, Inc.
(NASDAQ: DXLG), the largest retailer of big & tall men's apparel and
accessories, announced today preliminary operating results for the fourth
quarter of 2012.
oComparable fourth-quarter sales increased approximately 0.5% – the
Company's 11^th consecutive quarter of positive comparable sales – and
total sales increased to approximately $114.9 million compared with $111.1
million in the fourth quarter of fiscal 2011. Full year comparable sales
increased approximately 1.5%, and 2012 total sales were approximately
$399.6 million compared with $395.9 million in 2011.
oComparable fourth quarter sales for Destination XL^® (DXL^®) stores were
up approximately 15.0%, while comparable fourth quarter sales for Casual
Male XL retail and outlet stores decreased approximately 2.3%. In the
quarter, the DXL stores represented approximately 18% of the Company's
comparable retail business. Comparable fourth quarter sales from the
e-commerce platform increased approximately 13%.
oIncome from continuing operations, on a diluted basis, for the fourth
quarter is expected to be approximately $0.08 per share, flat with
adjusted income from continuing operations for the fourth quarter of 2011.
Without adjusting for the reversal of the Company'svaluation allowance
and trademark impairment, income from continuing operations was $0.71 per
share for the fourth quarter of fiscal 2011. (See below for non-GAAP
oFor the full year, income from continuing operations, on a diluted basis,
is expected to be approximately $0.16 per share compared with adjusted
income from continuing operations of $0.22 per share in 2011. Without
adjusting for the reversal ofthe Company'svaluation allowance and
trademark impairment, income from continuing operations was $0.93 per
share for fiscal 2011. (See below for non-GAAP reconciliation).
oFor the full year, loss from discontinued operations, associated with the
Company's exiting of its International direct business in the second
quarter of fiscal 2012, is expected to be $0.04 per share for both fiscal
2012 and fiscal 2011.
oThe Company opened 14 DXL stores and closed 34 Casual Male XL stores
during the fourth quarter of 2012. For the year, the Company opened 32
DXL stores, and closed 68 Casual Male XL retail and outlet stores and 2
Rochester Clothing stores.
"Our financial results for the quarter were essentially in line with our
expectations," said President and CEO David Levin. "Sales and net income
growth would have been stronger but for mild winter weather that affected
sales of seasonal apparel and some delays in DXL store openings. We continue
to be encouraged by the success of our new DXL stores, for which we expect to
report very positive comparable sales of approximately 15.6% for the full
year. In addition, while our direct business decreased year-over-year due to
lower catalog sales, our web sales are growing at an accelerated rate as we
shift marketing dollars from catalog to digital."
"We expect 2013 to be a critical year of accelerated progress in our
transformation to the DXL concept. With the acceleration of DXL store openings
and Casual Male XL closings, the implementation of our new marketing campaign,
and enhancements to certain aspects of our infrastructure to support the DXL
rollout, we expect our SG&A costs to increase approximately $17 million in
2013,which will have a negative short-term effect on 2013 earnings. At the
same time, our substantial investments this year will yield vastly improved
profitability and cash flow beginning in 2014. Because we will have a
significantly greater number of DXL stores in operation, our new marketing
campaign should have a much greater impact on our performance in 2014 and
beyond," said Levin.
"During 2013 we plan to more than double the number of DXL stores in operation
to between 105 to 112 by opening between 57 and 64 stores," said Levin. "At
the same time, we have an aggressive schedule to close between 110 and 119
Casual Male XL and Rochester stores. Our expected 2013 financial results
include an approximate 10% increase in expenses to fund the marketing
campaign as well as other necessary SG&A, real estate and capital expenditure
support for the accelerated DXL transformation this year."
For 2013, the Company now expects revenue to increase to a range of $415 to
$420 million, with an operating margin in the range of breakeven to 0.5%,
EBITDA (non-GAAP) in the range of $20 to $23 million, and EPS of approximately
breakeven with a negative free cash flow such that revolver borrowing is
expected to be, at the end of the year, between $10-$15 million. Following
the execution of its DXL strategy in 2013, the Company expects to leverage an
increasing proportion of sales from its new DXL stores, which will result in
operating margins rapidly expanding to approximately 4% in 2014 and
approximately 8% in 2015, on annual sales growth of approximately 10-15%. The
Company's free cash flow at the end of 2014 is anticipated to be breakeven,
with $10-$15 million revolver debt while, at the end of 2015, the Company
anticipates positive free cash flow such that the revolver debt will be
extinguished with cash-on-hand estimated to be between $5-$10 million.
Longer-term, the Company expects to grow revenues beyond $600 million and
operating margins to more than 10%, while generating free cash flow in the
range of $60 to $70 million in fiscal 2016. Projection of free cash flow
(non-GAAP) for fiscal 2016 is based on expected cash flow from operating
activities of $77.0-$87.0 million, less expected capital expenditures of $17.0
million. See Non-GAAP measures below.
"To accomplish our long-term financial goals, we are combining an aggressive
DXL store opening schedule with a comprehensive national marketing campaign
designed to define the DXL brand more clearly, expand market awareness and
grow our active customer base," said Levin. "The marketing campaign we are
launching this spring is the result of the highly successful test marketing
that we conducted in the fall of 2012 around the DXL brand in five geographic
markets. The test marketing included TV, radio and digital advertisements
which generated very positive results around brand awareness, store and web
sales, traffic and new customers to the brand. Consequently, we are
enthusiastic about the prospects for our marketing campaign and for the
long-term profit potential generated by the DXL transformation."
KeyBanc Capital Markets Consumer Conference
Management will be meeting with investors and presenting tomorrow at 10:00
a.m. ET at the 2013 KeyBanc Capital Markets Consumer Conference at the
InterContinental New York Barclay in New York City. A PDF version of the
updated investor presentation is available for download on the "Investor
Relations" section of Company's website.
Fourth-Quarter 2012 Financial Results Conference Call
The Company will release its fourth-quarter and year-end 2012 financial
results before the market opens on Friday, March 15, 2013. President and
Chief Executive Officer David Levin and Executive Vice President, Chief
Operating Officer and Chief Financial Officer Dennis Hernreich will host a
conference call to discuss the financial results and provide an outlook for
2013 the same morning at 9:00 a.m. ET. 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.
Those who wish to listen to the live webcast should visit the "Investor
Relations" section of the Company's website. The live call also can be
accessed by dialing: (888) 503-8169. For interested parties unable to
participate live, an archived version of the webcast may be accessed by
visiting the "Events & Presentations" section of the Company's website for up
to one year.
This preliminary financial information is subject to change and is based on
management's estimates derived from the information available at this time. In
addition, the financial information provided has not yet been reviewed by the
Company's independent registered public accounting firm and is subject to that
review and may change before filing on Form 10-K, which the Company expects to
file in March 2013.
About Destination XL Group, Inc.
Destination XL Group, Inc. is the largest multi-channel specialty retailer of
big & tall men's apparel with operations throughout the United States, Canada
and Europe. The retailer operates under six brands: Destination XL^®, Casual
Male XL, Rochester Clothing, B&T Factory Direct, ShoesXL and LivingXL.
Several catalogs and e-commerce sites, including www.destinationxl.com, make
up the Company's direct-to-consumer business. With more than 2,000 private
label and name brand styles to choose from, 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:
In addition to financial measures prepared in accordance with generally
accepted accounting principles (GAAP), the above discussion refers to non-GAAP
adjusted income from continuing operations and adjusted income from
continuing operations, per diluted share ("non-GAAP" or "adjusted"). These
measures should not be considered superior to or as a substitute for income
from continuing operations per diluted share and diluted earnings per share
derived in accordance with GAAP. The Company believes that these non-GAAP
measures 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. The Company believes the inclusion of these
non-GAAP measures enhances an investor's understanding of the underlying
trends in the Company's business and provide for better comparability between
different periods in different years.
Below is a table showing the reconciliation to adjusted income from continuing
operations for the fourth quarter and fiscal year 2011.
The above discussion refers to free cash flow and EBITDA (Earnings before
income taxes and depreciation and amortization), both of which are non-GAAP
measures. The presentation of these non-GAAP measures are not measures
determined by GAAP and should not be considered superior to or as a substitute
for operating income 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 measures, "free cash flows" and "EBITDA", presented in this
release may not be comparable to similar measures used by other companies.
The Company calculates free cash flows as cash flow from operating activities
less capital expenditures and less discretionary store asset acquisitions, if
applicable. For fiscal 2016, free cash flow of $60.0 to $70.0 million was
calculated by subtracting forecasted capital expenditures of $17.0 million
from forecasted cash flow from operating activities of $77.0-$87.0 million.
The Company calculates forecasted EBITDA for fiscal 2013 of $20.0-$23.0
million as forecasted operating income of breakeven to $3.0 million plus the
add-back of depreciation and amortization of $20.0 million.
Certain information contained in this press release including cash flows,
operating margins, store counts, revenue and earnings expectations for the
fourth quarter and full-year of fiscal 2012, full-year fiscal 2013 and
longer-term, including through fiscal 2016, constitute forward-looking
statements under the federal securities laws. 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. These factors
include, without limitation, the following: the risk that additional
information may arise during the Company's close process or as a result of
subsequent events that would require the Company to make adjustments to the
financial information; the risk that adjustments to the Company's financial
statements may be identified through the course of the Company's independent
registered public accounting firm completing its integrated audit of the
Company's financial statements and financial controls; the risk that the
Company will be unsuccessful in implementing its strategic plans with respect
to store openings and closings in fiscal 2013; and the risk that such
strategic plans and related marketing campaign will not have the expected
impact on profitability, cash flow and performance. The Company encourages
readers of forward-looking information concerning the Company to refer to its
prior filings with the Securities and Exchange Commission, including without
limitation, its Annual Report on Form 10-K filed on March 16, 2012, that set
forth certain risks and uncertainties that may have an impact on future
results and direction of the Company. 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.
GAAP TO NON-GAAP RECONCILIATION
OF INCOME FROM CONTINUING OPERATIONS
Fourth quarter ended Fiscal year ended
January 28, 2012 January 28, 2012
Income from continuing $ $
operations, GAAP basis, before (17,034) (5,274)
Add back: Provision for $ $
trademark impairment 23,110 23,110
Adjusted income from continuing $ $
operations, non-GAAP, before 6,076 17,836
Assumed income tax provision at $ $
40% (1) (2,430) (7,134)
Adjusted income from continuing $ $
operations, non-GAAP 3,646 10,702
Adjusted income from continuing $ $
operations per diluted share, 0.08 0.22
Weighted average number of
outstanding on a diluted 48,131 48,044
(1) In the fourth quarter of fiscal 2011, the Company reversed substantially
all of its valuation allowance against its deferred tax assets, which resulted
in an income tax benefit of $50.1 million for fiscal 2011. Accordingly, for
comparative purposes, the non-GAAP income from continuing operations has been
adjusted to assume no income tax benefit from such allowance and an assumed
tax rate of 40% was used.
DESTINATION XL GROUP, INC.
GAAP TO NON-GAAP EPS RECONCILIATION
Fiscal 2012 Fiscal 2011
Fourth Fiscal Year Fourth Fiscal Year
Income from continuing $ $ $ $
operations, GAAP basis 0.08 0.16 0.71 0.93
Add back: Provision for $ $ $ $
trademark impairment, - 0.29 0.29
Adjusted income from
continuing operations, $ $ $ $
non-GAAP, before income 0.08 0.16 1.00 1.22
Deduct: Valuation allowance $ $
reversal (0.88) (0.88)
Add: additional income tax $ $ $ $
provision to 40% - (0.04) (0.12)
Adjusted income from $ $ $ $
continuing operations, 0.08 0.16 0.08 0.22
Weighted average number of
outstanding on a diluted 48,504 48,385 48,131 48,044
SOURCE Destination XL Group, Inc.
Contact: Jeff Unger, Vice President Investor Relations, +1-561-482-9715
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