Menswear retailer swings to loss in Q1

Destination XL Group Inc. posted disappointed earnings and sales in its first quarter, but sounded a confident note that it was back on track.



In its quarterly earnings release, the big-and-tall apparel retailer also refuted a recent report, which it said had been repeated by various media outlets, that called into question the company’s ability to repay its debt.



“This report inaccurately assesses our financial position and business outlook,” said Destination XL president and CEO David Levin. “We ended fiscal 2016 with over $57.0 million of unused, excess availability under our credit facility and a Debt to EBITDA ratio of 2.0x. We remain on track to generate free cash flow of $15 to $20 million which will be used to repay our debt and repurchase our shares in the open market.”



The retailer reported a loss of $6.1 million for the quarter ended April 29, versus income of $0.2 million in the year-ago period. The company attributed the decline primarily to a combination of higher planned marketing costs related to its new television advertising campaign as well as lower gross margin dollar contribution due to occupancy de-leverage.



Revenue totaled $107.6 million, compared to $107.9 million in the prior-year quarter. Same-store sales fell 2.1%.



The company noted that its sales momentum has accelerated since the beginning of April.



“We experienced a challenging sales environment in February and March, but we anticipated a strong April with the launch of our spring advertising campaign on April 2,” Levin said. “Since the campaign launch, not only has our April performance exceeded our expectations with positive comp of 6.4%, the positive trend has continued in May. Our top priorities for fiscal 2017 are customer acquisition and retention, which we are fueling by reinvesting in marketing and in our digital capabilities.”