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Oct 31, 2020
DXL Q3 2020 Earnings Report
Total sales decreased but direct sales increased, and the company reduced operating costs.
Key Takeaways
Destination XL Group reported a decrease in total sales for the third quarter of fiscal 2020, but experienced growth in its direct business, particularly through DXL.com. The company also implemented cost reduction measures, including corporate restructurings, to improve financial flexibility and liquidity.
Total sales decreased by 20.1% to $85.2 million compared to the prior-year third quarter.
Comparable sales decreased by 20.5%, with stores down 31.5% but direct business up 18.2%.
The company's direct business increased due to a 28.4% increase in sales on DXL.com.
Net loss for the third quarter was $(7.0) million, similar to the prior year's $(7.2) million.
DXL
DXL
Forward Guidance
Destination XL Group expects business to be challenged until social gatherings and event-based shopping visits increase. The company is cautiously optimistic for continued improvement, focusing on digital transformation and cost structure adjustments to navigate changes in consumer behavior.
Positive Outlook
- Digital transformation efforts have positively impacted ability to serve core consumer.
- Solid improvement in core and basic categories due to more people staying home.
- Actions taken to position DXL for long-term recovery from COVID-19 and future growth.
- Ability to restructure has been critical as it creates operating leverage and allows to better withstand a decline in revenue.
- Focus on cash is relentless.
Challenges Ahead
- Business will continue to be challenged until social gatherings increase.
- Demand for event-based shopping visits hasn't increased.
- Sales momentum slowed in October due to resurgence of the virus, fires on the west coast and distractions from the election.
- Shipping costs continued to increase over the prior year and are expected to remain elevated in the fourth quarter.
- Store traffic during the third quarter of fiscal 2020 has been slow to rebound, and with the resurgence of the virus in much of the country, store traffic may continue to be down.