Destination XL raises outlook on strong Q3

Destination XL Group, Inc. reported total sales for the third quarter of 121.5 million dollars, up 42.6 percent from the third quarter of fiscal 2020 and up 14 percent from 106.6 million dollars in the third quarter of fiscal 2019. Compared to the third quarter of fiscal 2019, comparable sales increased 22.9 percent.

“I am very pleased to report that our business continued to grow across all customer channels and we believe we are actively growing our market share. Our primary focus is on customer acquisition, which was up 34 percent this quarter over fiscal 2019 and then generating repeat visits driving greater lifetime value,” said Harvey Kanter, the company’s president and chief executive officer.

Highlights of Destination XL’s third quarter results

Net income for the quarter was 13.7 million dollars or 20 cents per diluted share compared to a net loss of 7 million dollars or 14 cents per diluted share, in the third quarter of fiscal 2020 and a net loss of 7.2 million dollars or 14 cents per diluted share, in the third quarter of fiscal 2019.

Adjusted EBITDA was 19 million dollars compared to negative 1.7 million dollars in the third quarter of fiscal 2020 and 1.7 million dollars in the third quarter of fiscal 2019.

As compared to the third quarter of fiscal 2019, comparable sales for the third quarter were up 22.9 percent driven primarily by the direct business, which was up 56.5 percent and stores, which were up 12.9 percent. The increase in our direct business, the company said, was principally due to our DXL.com e-commerce site, which had a sales increase of 66.8 percent as compared to the third quarter of fiscal 2019.

The comparable sales growth in stores of 12.9 percent was driven by strong conversion rates and an increase in dollars per transaction. All regions reported a comparable sales increase for the third quarter, as compared to the third quarter of fiscal 2019, with the strongest improvements in the Southeast, Midwest, and South Central parts of the country, which exceeded the Pacific Northwest, Northeast and Mid-Atlantic by approximately 500 basis points.

Sales from the wholesale business was 0.9 million dollars for the third quarter, as compared to 5 million dollars in the third quarter of 2020 and 2.9 million dollars in the third quarter of 2019 primarily due to supply chain challenges and their impact on order volume.

Destination XL revises full year outlook

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 the company’s direct business representing approximately 30 percent of our total retail sales.

The company expects gross margin rate to decrease slightly in the fourth quarter of fiscal 2021 as a result of holiday promotions, resulting in an expected gross margin rate for the full year in the range of 48 percent to 49 percent.

Sales for the year are expected to range between approximately 500 million dollars to 510 million dollars, (an increase from the previously revised guidance of approximately 490 million dollars to 505 million dollars.

Adjusted EBITDA is expected to be approximately 70 million dollars to 75 million dollars, an increase from previously revised guidance of approximately 65 million dollars to 72 million dollars.

The company said, net income is expected to be 72 cents to 80 cents per diluted share, an increase from our previously revised guidance of approximately 64 cents to 76 cents per diluted share.