Destination XL comparable sales up 21.6 percent against 2019, raises outlook

Total sales for the second quarter of fiscal 2021 at Destination XL (DXL) were 138.6 million dollars compared to 76.4 million dollars in the second quarter of fiscal 2020 and 123.2 million dollars in the second quarter of fiscal 2019.

As compared to the second quarter of fiscal 2019, comparable sales rose 21.6 percent driven primarily by the company’s direct business, which was up 52.2 percent and stores, which were up 13.1 percent. The company said that the increase in direct business was due to DXL.com e-commerce site, which had a sales increase of 66.4 percent as compared to the second quarter of fiscal 2019.

“We are very pleased to report second quarter results that far surpassed our internal expectations,” said Harvey Kanter, the company’s president & chief executive officer, adding, “We believe we are increasing our market share in the big + tall market. The transformative strategic changes that we have authored over the past two years around digital engagement, customer-first orientation, and repositioning the brand are coming to life and driving sales.”

DXL posts compatible store sales increase across Q2

Against fiscal 2019, comparable sales in stores increased 6.9 percent in May, 14.7 percent in June and 18.2 percent in July. Regionally, the strongest improvements were in the Southeast, Midwest, and South Central parts of the country, which exceeded the Pacific Northwest, Northeast and Mid-Atlantic by approximately 600 basis points.

The company’s direct business saw month-over-month improvement against fiscal 2019 sales, with a 48.8 percent increase in May, 53.4 percent in June and 54.6 percent in July. For the second quarter of fiscal 2021, the direct business represented 28.1 percent of total retail sales compared to 21.1 percent of retail sales in the second quarter of fiscal 2019.

Sales from wholesale business were 0.9 million dollars for the second quarter compared to 5 million dollars in the second quarter of 2020 and 2.7 million dollars in the second quarter of 2019.

DXL reports net income of 24.5 million dollars in Q2 Gross margin rate, inclusive of occupancy costs, was 51.7 percent compared to a gross margin rate of 28.1 percent for the second quarter of fiscal 2020 and 44.3 percent for the second quarter of fiscal 2019. As compared to fiscal 2019, our gross margin rate improved by 740 basis points, driven by a 350 basis point improvement in merchandise margins and a 390 basis point improvement in occupancy costs.

The company recorded net income of 24.5 million dollars or 36 cents per diluted share, compared with a net loss of 10.7 million dollars or 21 cents per diluted share, for the second quarter of fiscal 2020.

On a non-GAAP basis, adjusted net income was 27 cents per diluted share compared to an adjusted net loss of 15 cents per diluted share for the second quarter of fiscal 2020.

Adjusted EBITDA, for the quarter was 29.8 million dollars compared to negative 4.3 million dollars for the second quarter of fiscal 2020 and 7.1 million dollars for the second quarter of fiscal 2019.

DXL ups guidance

The company added that the high-end of its revised guidance is based on achieving a comparable sales increase for the year in the low double-digits as compared to fiscal 2019 with direct business representing approximately 30 percent of the total retail sales.

The company expects gross margin rate to decrease slightly in the second half of fiscal 2021 as a result of holiday promotions and for the full year, DXL expects a gross margin rate in the range of 45 percent to 50 percent.

While the updated guidance considers the supply chain challenges we have been facing, the company said, sales could be negatively affected if these challenges intensify in the second half of fiscal 2021. Additionally, the current sales trend could be affected by the increased spread of variants of the Covid-19 virus that may result in prolonged restrictions, store closures, supply chain challenges, increased commodity costs and reduced demand for apparel.

For fiscal 2021, the company expects sales of approximately 490 million dollars to 505 million dollars, adjusted EBITDA of approximately 65 million dollars to 72 million dollars and net income is expected to be 64 cents to 76 cents per diluted share.