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May 02, 2020
DXL Q1 2020 Earnings Report
Destination XL Group reported a significant decrease in first-quarter sales due to COVID-19 store closures, while also focusing on preserving liquidity and adapting operations.
Key Takeaways
Destination XL Group reported a 49.3% decrease in first-quarter sales due to the closure of store locations in response to the COVID-19 pandemic. The company focused on preserving financial flexibility through various measures, including drawing down on its credit facility, amending the credit facility, and reducing operating expenses. Despite the sales decline, the company saw growth in its e-commerce business and launched a new wholesale line for protective masks.
Total sales decreased by 49.3% to $57.2 million due to store closures related to the COVID-19 pandemic.
The company drew down $30.0 million from its revolving credit facility and amended the facility to improve excess availability.
E-commerce sales increased, representing 41.4% of retail segment sales compared to 21.6% in the prior year.
A new wholesale line of business was launched for the design and sourcing of protective masks.
DXL
DXL
Forward Guidance
Destination XL Group anticipates all stores will reopen by the end of June and expects the direct business will continue to be a critical component of how they navigate through the next several months.
Positive Outlook
- All stores expected to reopen by the end of June.
- Direct business expected to continue to be critical.
- Comparable sales improving week-to-week.
- Year-to-date demand trending up 30% over the prior year.
- Fall inventory buys will be below fiscal 2019 levels.
Challenges Ahead
- Uncertainty regarding the length or severity of the pandemic.
- Consumer retail spending will remain substantially curtailed for a period of time.
- Store payroll costs are expected to trend lower than historical levels.
- There remains uncertainty regarding the impact of the COVID-19 pandemic on our future results of our operations, which could result in additional impairments.
- Negotiating with store and corporate office landlords on rent abatements and deferments for April through July, due to the impact of shelter-in-place orders and store closures.