Destination XL Q3 turnover declines by 20.1 percent

Destination XL Group, Inc. reported total sales for the third quarter of 85.2 million dollars, down 20.1 percent, while net loss for the quarter was 7 million dollars compared to 7.2 million dollars in the prior year’s third quarter. Comparable sales for the quarter were down 20.5 percent to last year primarily driven by stores, which were down 31.5 percent from the prior year’s third quarter, partially offset our direct business, which was up 18.2 percent. The company said in a statement that adjusted EBITDA was negative 1.7 million dollars compared to positive 1.7 million dollars in the prior-year quarter.

“For the past eight months we’ve been pivoting to position DXL for the long-term recovery from Covid-19 and future growth. In the third quarter, comparable sales, which were down 20.5 percent improved from the second quarter, when comparable sales were down 38.6 percent. Our store performance has improved each month from June through September with improvements in both traffic and conversion. In Direct, DXL.com was up 28.4 percent, with total Direct up 18.2 percent and total Direct penetration at 33.4 percent,” said Harvey Kanter, the company’s President and Chief Executive Officer.

“We recently completed our second corporate restructuring in the past 9 months to provide the company with more financial flexibility. Together, the two restructurings have reduced our corporate workforce by 29 percent and our store workforce by 54 percent since the beginning of the year. We have also eliminated professional services and certain marketing costs to further right-size our cost structure. Our ability to restructure has been critical as it creates operating leverage and allows us to better withstand a decline in revenue,” added Kanter.

Wholesale business contributed 5 million dollars in sales during the third quarter, as compared to 2.9 million dollars in the prior year, principally due to Amazon Essentials. The company saw demand for masks, which was significant in the second quarter, drop during the third quarter. Gross margin rate, inclusive of occupancy costs, was 36.5 percent compared to 41.1 percent for the third quarter of fiscal 2019, down 4.6 percent from a decrease of 2.8 percent in merchandise margins and a decrease of 1.8 percent due to the deleveraging in occupancy costs.

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