Destination XL Group, Inc. (NASDAQ: DXLG), the leading
integrated-commerce specialty retailer of Big + Tall men’s clothing
and shoes, today reported operating results for the third quarter
of fiscal 2023, and updated sales and earnings guidance for the
fiscal year.
Third Quarter Financial Highlights
- Total sales for the third quarter were $119.2 million, down
8.1% from $129.7 million in the third quarter of fiscal 2022.
Comparable sales for the third quarter of fiscal 2023 decreased
6.7% as compared to the third quarter of fiscal 2022.
- Net income for the third quarter was $0.06 per diluted share,
as compared to net income of $0.16 per diluted share in the third
quarter of fiscal 2022.
- Adjusted EBITDA (a non-GAAP measure) for the third quarter was
$8.6 million, or 7.3% of sales, as compared to $16.4 million, or
12.7% of sales in the third quarter of fiscal 2022.
- Cash flow from operations for the nine months ended October 28,
2023 of $33.1 million, as compared $30.2 million for the nine
months ended October 29, 2022, with free cash flow increasing from
$22.3 million to $22.7 million. Total cash and investments
were $60.4 million at October 28, 2023, as compared to $23.5
million at October 29, 2022, with no outstanding debt for either
period.
- Utilized free cash flow to repurchase 0.8 million shares of
common stock for $4.0 million, or an average cost of $4.82 per
share. Amended stock repurchase program to increase amount
authorized from $15.0 million to $25.0 million.
Management’s Comments
"Despite this challenging quarter, we remain disciplined and
committed to the strategy and initiatives of which we have spoken
previously. Since we repositioned DXL in fiscal 2019, we have grown
comparable sales by more than 25% and more than doubled our
Adjusted EBITDA margin rate. This trajectory supports our
strong belief in the longer-term opportunity for DXL in the men’s
big & tall apparel category. This belief in our future is
emboldened by our strong financial position. We have no debt
and $60 million of cash, and over $150 million of stockholders'
equity, which provides a greater opportunity to invest and drive
our strategic initiatives, which include opening productive new
stores, deploying a new web platform, launching a brand awareness
campaign, and pursuing greater exclusive merchandise collaborations
and alliances,” said Harvey Kanter, President, and Chief Executive
Officer.
"As we look forward to fiscal 2024, we need to drive share of
voice, build greater awareness, and generate trial. We know if
consumers experience DXL, given our conversion, repeat rates,
Lifetime Value, and net promoter scores, we will win and grow
market share. That being said, we will be both pragmatic and
thoughtful about the investments we make in the context of market
challenges. We will determine appropriate investment levels as the
landscape becomes clearer. We remain incredibly enthusiastic about
our prospects and the opportunity to serve a big & tall
consumer who needs and wants something better than any other
retailer has to offer,” Kanter concluded.
Our Future Growth Strategy
We believe we can capture a greater share of what we estimate is
a $23.0 billion total addressable market in the domestic men’s big
& tall apparel category. Since 2019, we have further
strengthened and fortified our balance sheet which gives us the
financial flexibility to execute our plans. We remain relentlessly
focused on controlling what we can control, which includes a
commitment to meaningfully accelerate the growth trajectory of the
company by focusing on four specific growth objectives:
Store Development: We opened our first new DXL store since
2018 in Queens, NY. We expect to open two more stores by the
end of 2023 and ten more stores in 2024. We have converted
seven Casual Males stores to DXL this year and expect to convert
three more by the end of 2023. Over the next three to five years,
we believe we could potentially open 50 net new stores across the
country.
Website Replatform: We are upgrading our website from
legacy infrastructure to a modern commerce platform, with features
and functionality launching throughout 2024. We believe this
modernization will offer immediate performance improvements and
customer experience benefits, while positioning us to deliver a
greater pace of change in the future.
Marketing & Brand Building: We have begun our search for a
creative agency to develop, build, and execute a campaign that will
drive an emotional connection to the brand and drive brand
awareness. We are targeting a campaign launch for late Spring
2024 and we are prepared to conservatively spend another 1.0% to
2.0% of sales to initially fund that initiative and, with results,
fund our marketing and brand building initiatives at greater levels
over time.
Alliances & Collaborations: We launched a new
collaboration with UNTUCKit and added two more iconic brands to our
assortment with Faherty and Hugo Boss in the third quarter.
All three programs have exceeded our initial expectations and we
will look for door expansions in all three for
2024.
Third Quarter Results
Sales
Total sales for the third quarter of fiscal 2023 were $119.2
million, as compared to $129.7 million in the third quarter of
fiscal 2022. Comparable sales for the third quarter decreased
6.7% with comparable sales from our stores down 8.1% and our direct
business down 3.2%. The remainder of the decrease was due to
sales from closed stores and a decrease in non-comparable
sales.
During the third quarter, we saw a further slowdown in store
traffic and dollars per transaction as consumer spending continued
to be negatively impacted by the economy and inflationary
pressures. Sales were particularly softer in categories that
outperformed last year due to a resurgence of back-to-work and
social events. The decrease of 3.2% in the direct business was
primarily due to a decrease in marketplace sales. The DXL
website, which was down 1.5%, performed better as a result of
improvements in email marketing and growth from our mobile app.
Gross Margin
For the third quarter of fiscal 2023, our gross margin rate,
inclusive of occupancy costs, was 47.5% as compared to a gross
margin rate of 50.0% for the third quarter of fiscal 2022.
Our gross margin rate decreased by 250-basis points, with a
decrease in merchandise margin of 110-basis points and an increase
of 140-basis points in occupancy costs primarily due to the
deleveraging of sales and increased rents as a result of lease
extensions. The decrease in merchandise margin of 110-basis
points was due to continued cost pressures on certain private-label
merchandise, much of which we continued to absorb rather than
passing on to the customer through price increases. We also
experienced increased shipping costs related to direct-to-consumer
shipments and costs related to our loyalty program with more sales
tendered with loyalty certificates, as compared to the third
quarter of fiscal 2022. These cost increases were partially offset
by lower inbound freight costs. For the year, we expect gross
margin rates to be approximately 180-basis points lower than fiscal
2022, of which approximately half of this decrease being
attributable to the expected deleveraging of occupancy costs on the
lower sales base.
Selling, General & Administrative
As a percentage of sales, SG&A (selling, general and
administrative) expenses for the third quarter of fiscal 2023 were
40.2% as compared to 37.3% for the third quarter of fiscal
2022.
On a dollar basis, SG&A expenses decreased by $0.4 million
as compared to the third quarter of fiscal 2022. The decrease was
primarily due to a decrease in store payroll and performance-based
incentive accruals, partially offset by an increase in
payroll-related costs from new positions added in the past year to
support our long-range growth initiatives.
Management views SG&A expenses through two primary cost
centers: Customer Facing Costs and Corporate Support
Costs. Customer Facing Costs, which include store payroll,
marketing and other store and direct operating costs, represented
22.5% of sales in the third quarter of fiscal 2023 as compared to
21.6% of sales in the third quarter of fiscal 2022. Corporate
Support Costs, which include the distribution center and corporate
overhead costs, represented 17.7% of sales in the third quarter of
fiscal 2023 as compared to 15.7% of sales in the third quarter of
fiscal 2022. Marketing costs were 6.3% of sales for the third
quarter of fiscal 2023 as compared to 5.9% of sales for the third
quarter of fiscal 2022. For fiscal 2023, marketing costs are
expected to be approximately 5.7% of sales.
Loss from Termination of SERP Plan
During the third quarter of fiscal 2023, the Company terminated
its frozen Supplemental Executive Retirement Plan ("SERP"), taking
advantage of the current high-interest rate environment. We
completed the termination in the third quarter through the purchase
of an annuity. We made a cash contribution to the plan in the
third quarter of $0.4 million and recognized a charge of $0.1
million, representing the loss on settlement.
Interest Income (Expense), Net
Net interest income for the third quarter of fiscal 2023 was
$0.6 million, as compared to interest expense of $0.1 million for
the third quarter of fiscal 2022. For the third quarter of fiscal
2023, interest income was earned from investments in U.S.
government-backed investments and money market accounts.
Interest costs for both periods were minimal because we had no
outstanding debt and no borrowings under our credit facility during
either period.
Income Taxes
As a result of releasing substantially all of the valuation
allowance against our deferred tax assets during fiscal 2022, we
have returned to a normal tax provision for fiscal 2023. Our
tax provision for income taxes for interim periods is determined
using an estimate of our annual effective tax rate, adjusted for
discrete items, if any. Each quarter, we update our estimate of the
annual effective tax rate and make a year-to-date adjustment to the
provision.
For the third quarter of fiscal 2023, the effective tax rate was
30.2%. For the third quarter of fiscal 2022, the effective
tax rate was 16.6% and primarily reflected a $2.0 million discrete
tax expense to adjust the release of valuation allowance.
Net Income
For the third quarter of fiscal 2023, net income was $4.0
million, or $0.06 per diluted share, as compared to net income for
the third quarter of fiscal 2022 of $10.5 million, or $0.16 per
diluted share.
On a non-GAAP basis, assuming a normalized tax rate of 27% and
adjusting for the loss on termination of the retirement plans and
asset impairment (gain), if any, adjusted net income for the third
quarter of fiscal 2023 was $4.2 million, or $0.07 per diluted
share, as compared to $9.2 million, or $0.14 per diluted share, for
the third quarter of fiscal 2022.
Adjusted EBITDA
Adjusted EBITDA, a non-GAAP measure, for the third quarter of
fiscal 2023 was $8.6 million, as compared to $16.4 million for the
third quarter of fiscal 2022.
Cash Flow
Cash flow from operations for the first nine months of fiscal
2023 was $33.1 million as compared to $30.2 million for the first
nine months of fiscal 2022. Free cash flow, a non-GAAP
measure, was $22.7 million for the first nine months of fiscal 2023
as compared to $22.3 million for the first nine months of fiscal
2022. The increase in free cash flow was primarily due to a
decrease in merchandise purchases as we continue to drive more
productive inventory utilization partially offset by a decrease in
operating income.
We expect our capital expenditures to range from $15.5 million
to $17.5 million in fiscal 2023, of which approximately $7.8
million is discretionary spending for new or improved stores with
the remaining for non-discretionary, infrastructure
improvements.
|
|
For the nine months ended |
(in millions) |
|
October 28, 2023 |
|
|
October 29, 2022 |
|
Cash flow from operating activities (GAAP basis) |
|
$ |
33.1 |
|
|
$ |
30.2 |
|
Capital expenditures |
|
|
(10.4 |
) |
|
|
(7.9 |
) |
Free Cash Flow (non-GAAP basis) |
|
$ |
22.7 |
|
|
$ |
22.3 |
|
Non-GAAP Measures
Adjusted net income, adjusted net income per diluted share,
adjusted EBITDA, adjusted EBITDA margin and free cash flow are
non-GAAP financial measures. Please see “Non-GAAP Measures” below
and reconciliations of these non-GAAP measures to the comparable
GAAP measures that follow in the tables below.
Balance Sheet & Liquidity
As of October 28, 2023, we had cash and investments of $60.4
million as compared to $23.5 million as of October 29, 2022, with
no outstanding debt in either period. We did not have any
borrowings under our credit facility during the third quarter and,
as of October 28, 2023, the availability under our credit facility
was $87.6 million, as compared to $90.2 million as of October 29,
2022.
As of October 28, 2023, our inventory decreased approximately
$7.0 million to $99.9 million, as compared to $106.8 million as of
October 29, 2022. Based on the sales trends we started to see
in March 2023, we began taking proactive measures to manage our
inventory and adjust our receipt plan. At October 28, 2023,
our clearance inventory was 9.7% of our total inventory, as
compared to 6.7% at October 29, 2022 and still below our historical
benchmark of approximately 10.0%.
Stock Repurchase Program
In March 2023, our Board of Directors approved a stock
repurchase program. Under the stock repurchase program, we were
initially authorized to repurchase up to $15.0 million of our
common stock through open market and privately negotiated
transactions. On November 15, 2023, our Board amended the program,
effective today, to increase the authorization from $15.0 million
to $25.0 million.
The timing and the amount of any repurchases of common stock
will be determined based on the Company’s evaluation of market
conditions and other factors. The stock repurchase program will
expire on March 16, 2024, but may be suspended, terminated or
modified at any time for any reason. The Company expects to finance
any repurchases from cash generated from operations.
During the first nine months of fiscal 2023, we completed the
stock repurchase plan with the repurchase of 3.1 million shares at
an aggregate cost, including fees, of $14.9 million, or an average
cost of $4.81 per share. Shares of repurchased common stock are
held as treasury stock.
Retail Store Information
The following is a summary of our retail square footage since
the end of fiscal 2020:
|
At October 28, 2023 |
|
Year End 2022 |
|
Year End 2021 |
|
Year End 2020 |
|
|
# of Stores |
|
Sq Ft. (000’s) |
|
# of Stores |
|
Sq Ft. (000’s) |
|
# of Stores |
|
Sq Ft. (000’s) |
|
# of Stores |
|
Sq Ft. (000’s) |
|
DXL retail |
|
226 |
|
|
1,694 |
|
|
218 |
|
|
1,663 |
|
|
220 |
|
|
1,678 |
|
|
226 |
|
|
1,718 |
|
DXL outlets |
|
16 |
|
|
80 |
|
|
16 |
|
|
80 |
|
|
16 |
|
|
80 |
|
|
17 |
|
|
82 |
|
CMXL retail |
|
21 |
|
|
68 |
|
|
28 |
|
|
92 |
|
|
35 |
|
|
115 |
|
|
46 |
|
|
152 |
|
CMXL outlets |
|
19 |
|
|
57 |
|
|
19 |
|
|
57 |
|
|
19 |
|
|
57 |
|
|
22 |
|
|
66 |
|
Total |
|
282 |
|
|
1,899 |
|
|
281 |
|
|
1,892 |
|
|
290 |
|
|
1,930 |
|
|
311 |
|
|
2,018 |
|
During the third quarter of fiscal 2023, we opened
a new DXL store in Queens, New York and expect to open two
additional new stores with one in the Cincinnati market and one in
the Los Angeles market by the end of fiscal 2023. During the first
nine months of fiscal 2023, we completed the conversion of seven
Casual Male stores to the DXL store format and completed the
remodel of one existing DXL store. By the end of fiscal 2023,
we expect to have opened a total of 3 new DXL stores and 10 Casual
Male-to-DXL conversion stores and to have begun construction on at
least 5 DXL remodels. Over the next three to five years, we believe
we could potentially open 50 net new DXL stores across the country,
which could average 6,000 square feet or 300,000 sq. ft. in total,
a 15% increase over our current square footage.
Digital Commerce Information
We distribute our national brands and own brand merchandise
directly to consumers through our stores, website, app, and
third-party marketplaces. Digital commerce sales, which we
also refer to as direct sales, are defined as sales that originate
online, whether through our website, at the store level or through
a third-party marketplace. Our direct business is a critical
component of our business and an area of significant growth
opportunity for us. For the third quarter of fiscal 2023, our
direct sales were $36.2 million, or 30.4% of retail segment sales,
as compared to $37.9 million, or 29.2% of retail segment sales in
the third quarter of fiscal 2022.
Financial Outlook
Based on our results for the third quarter of fiscal 2023 and
given the persisting economic pressures that are impacting consumer
spending, we are revising our full year guidance. For fiscal
2023, we expect sales to be approximately $520.0 million to $530.0
million, net income to be approximately $0.39 to $0.46 per diluted
share and adjusted EBITDA margin to be approximately 10.0% to
11.0%. Adjusting for the expected loss on the termination of the
retirement plans, we expect adjusted net income to be approximately
$0.45 to $0.52 per diluted share.
Conference Call
The Company will hold a conference call to review its financial
results on Friday, November 17, 2023, at 9:00 a.m. ET.
To participate in the live webcast, please pre-register
at: https://register.vevent.com/register/BI07bdb256778248b784758fb683dd7914.
Upon registering, you will be emailed a dial-in number, and unique
PIN.
For listen-only, please join and register at:
https://edge.media-server.com/mmc/p/2gjvzeh9. An archived
version of the webcast may be accessed by visiting the "Events"
section of the Company's investor relations website for up to one
year.
During the conference call, the Company may discuss and answer
questions concerning business and financial developments and
trends. The Company’s responses to questions, as well as other
matters discussed during the conference call, may contain or
constitute information that has not been disclosed previously.
Non-GAAP Measures
In addition to financial measures prepared in accordance with
U.S. generally accepted accounting principles (“GAAP”), this press
release contains non-GAAP financial measures, including adjusted
net income, adjusted net income per diluted share, adjusted EBITDA,
adjusted EBITDA margin, and free cash flow. The presentation of
these non-GAAP measures is not in accordance with GAAP and should
not be considered superior to or as a substitute for net income,
net income per diluted share or cash flows from operating
activities or any other measure of performance derived in
accordance with GAAP. In addition, not all companies calculate
non-GAAP financial measures in the same manner and, accordingly,
the non-GAAP measures presented in this release may not be
comparable to similar measures used by other companies. The Company
believes the inclusion of these non-GAAP measures help investors
gain a better understanding of the Company’s performance,
especially when comparing such results to previous periods, and
that they are useful as an additional means for investors to
evaluate the Company's operating results, when reviewed in
conjunction with the Company's GAAP financial statements.
Reconciliations of these non-GAAP measures to their comparable GAAP
measures are provided in the tables below.
Adjusted net income and adjusted net income per diluted share is
calculated by excluding any asset impairment charge (gain) and the
loss from the termination of the retirement plans, subtracting the
actual income tax provision (benefit) and applying an effective tax
rate of 27%. The Company believes that this comparability is
useful in comparing the actual results period to period.
Adjusted net income per diluted share is then calculated by
dividing the adjusted net income by the weighted average shares
outstanding for the respective period, on a diluted basis.
Adjusted EBITDA is calculated as earnings before interest,
taxes, depreciation and amortization and adjusted for the loss from
the termination of the retirement plans and asset impairment charge
(gain), if any. Adjusted EBITDA margin is calculated as adjusted
EBITDA divided by total sales. The Company believes that providing
adjusted EBITDA and adjusted EBITDA margin is useful to investors
to evaluate the Company’s performance and are key metrics to
measure profitability and economic productivity.
Free cash flow is a metric that management uses to monitor
liquidity. Management believes this metric is important to
investors because it demonstrates the Company’s ability to
strengthen liquidity while supporting its capital projects and new
store growth. Free cash flow is calculated as cash flow from
operating activities, less capital expenditures and excludes the
mandatory and discretionary repayment of debt.
About Destination XL Group, Inc.
Destination XL Group, Inc. is the leading retailer of Men’s Big
+ Tall apparel that provides the Big + Tall man the freedom to
choose his own style. Subsidiaries of Destination XL Group, Inc.
operate DXL Big + Tall retail and outlet stores and Casual Male XL
retail and outlet stores throughout the United States, and an
e-commerce website, DXL.COM, and mobile app, which offer a
multi-channel solution similar to the DXL store experience with the
most extensive selection of online products available anywhere for
Big + Tall men. The Company is headquartered in Canton,
Massachusetts, and its common stock is listed on the Nasdaq Global
Market under the symbol "DXLG." For more information, please visit
the Company's investor relations website:
https://investor.dxl.com.
Forward-Looking Statements
Certain statements and information contained in this press
release constitute forward-looking statements under the federal
securities laws, including statements regarding our guidance for
fiscal 2023, including expected sales, net income, gross margin and
adjusted EBITDA margin; expected sales trends for fiscal 2023;
marketing costs for fiscal 2023; expected capital expenditures in
fiscal 2023; expected store openings and store conversions in
fiscal 2023; our long-range strategic growth plan and our ability
to achieve accelerated growth in the future; the expected impact of
our strategic initiatives, including with respect to raising brand
awareness, store development and future alliances and
collaborations; our ability to manage inventory; the timing of any
repurchases under our stock repurchase program; and expected
changes in our store portfolio and long-term plans for new or
relocated stores. The discussion of forward-looking information
requires the management of the Company to make certain estimates
and assumptions regarding the Company's strategic direction and the
effect of such plans on the Company's financial results. The
Company's actual results and the implementation of its plans and
operations may differ materially from forward-looking statements
made by the Company. The Company encourages readers of
forward-looking information concerning the Company to refer to its
filings with the Securities and Exchange Commission, including
without limitation, its Annual Report on Form 10-K filed on March
16, 2023, its Quarterly Reports on Form 10-Q and other filings with
the Securities and Exchange Commission that set forth certain risks
and uncertainties that may have an impact on future results and
direction of the Company, including risks relating to: changes in
consumer spending in response to economic factors; the impact of
rising inflation; the Israel-Hamas conflict and the ongoing Russian
invasion of Ukraine on the global economy; potential labor
shortages; and the Company’s ability to execute on its digital and
store strategies, ability to grow its market share, predict
customer tastes and fashion trends, forecast sales growth trends
and compete successfully in the United States men’s big and tall
apparel market.
Forward-looking statements contained in this press release speak
only as of the date of this release. Subsequent events or
circumstances occurring after such date may render these statements
incomplete or out of date. The Company undertakes no obligation and
expressly disclaims any duty to update such statements occurring
after such date may render these statements incomplete or out of
date. The Company undertakes no obligation and expressly disclaims
any duty to update such statements.
DESTINATION XL GROUP, INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands, except per share data) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
For the nine months ended |
|
|
|
October 28, 2023 |
|
|
October 29, 2022 |
|
|
October 28, 2023 |
|
|
October 29, 2022 |
|
Sales |
|
$ |
119,188 |
|
|
$ |
129,671 |
|
|
$ |
384,673 |
|
|
$ |
401,960 |
|
Cost of goods sold including
occupancy |
|
|
62,577 |
|
|
|
64,856 |
|
|
|
196,767 |
|
|
|
197,960 |
|
Gross profit |
|
|
56,611 |
|
|
|
64,815 |
|
|
|
187,906 |
|
|
|
204,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
47,962 |
|
|
|
48,383 |
|
|
|
143,689 |
|
|
|
144,441 |
|
Impairment (gain) of assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(398 |
) |
Depreciation and amortization |
|
|
3,393 |
|
|
|
3,769 |
|
|
|
10,338 |
|
|
|
11,748 |
|
Total expenses |
|
|
51,355 |
|
|
|
52,152 |
|
|
|
154,027 |
|
|
|
155,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
5,256 |
|
|
|
12,663 |
|
|
|
33,879 |
|
|
|
48,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on termination of
retirement plans |
|
|
(57 |
) |
|
|
— |
|
|
|
(4,231 |
) |
|
|
— |
|
Interest income (expense),
net |
|
|
564 |
|
|
|
(107 |
) |
|
|
1,408 |
|
|
|
(350 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision
(benefit) for income taxes |
|
|
5,763 |
|
|
|
12,556 |
|
|
|
31,056 |
|
|
|
47,859 |
|
Provision (benefit) for income
taxes |
|
|
1,743 |
|
|
|
2,083 |
|
|
|
8,436 |
|
|
|
(32,944 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
4,020 |
|
|
$ |
10,473 |
|
|
$ |
22,620 |
|
|
$ |
80,803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.07 |
|
|
$ |
0.17 |
|
|
$ |
0.37 |
|
|
$ |
1.28 |
|
Diluted |
|
$ |
0.06 |
|
|
$ |
0.16 |
|
|
$ |
0.35 |
|
|
$ |
1.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
60,169 |
|
|
|
62,016 |
|
|
|
61,612 |
|
|
|
62,928 |
|
Diluted |
|
|
63,464 |
|
|
|
66,229 |
|
|
|
64,995 |
|
|
|
67,106 |
|
DESTINATION XL GROUP, INC. |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
October 28, 2023, January 28, 2023 and October 29, 2022 |
|
(In thousands) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 28, |
|
|
January 28, |
|
|
October 29, |
|
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
10,723 |
|
|
$ |
52,074 |
|
|
$ |
23,485 |
|
Short-term investments |
|
|
49,632 |
|
|
|
— |
|
|
|
— |
|
Inventories |
|
|
99,858 |
|
|
|
93,004 |
|
|
|
106,816 |
|
Other current assets |
|
|
10,287 |
|
|
|
8,934 |
|
|
|
9,523 |
|
Property and equipment, net |
|
|
38,429 |
|
|
|
39,062 |
|
|
|
39,617 |
|
Operating lease right-of-use assets |
|
|
139,907 |
|
|
|
124,356 |
|
|
|
125,903 |
|
Intangible assets |
|
|
1,150 |
|
|
|
1,150 |
|
|
|
1,150 |
|
Deferred tax assets, net of valuation allowance |
|
|
22,223 |
|
|
|
31,455 |
|
|
|
33,480 |
|
Other assets |
|
|
451 |
|
|
|
563 |
|
|
|
563 |
|
Total assets |
|
$ |
372,660 |
|
|
$ |
350,598 |
|
|
$ |
340,537 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
28,256 |
|
|
$ |
27,548 |
|
|
$ |
26,564 |
|
Accrued expenses and other liabilities |
|
|
33,297 |
|
|
|
41,581 |
|
|
|
38,821 |
|
Operating leases |
|
|
160,340 |
|
|
|
144,241 |
|
|
|
147,708 |
|
Stockholders' equity |
|
|
150,767 |
|
|
|
137,228 |
|
|
|
127,444 |
|
Total liabilities and stockholders' equity |
|
$ |
372,660 |
|
|
$ |
350,598 |
|
|
$ |
340,537 |
|
CERTAIN COLUMNS IN THE FOLLOWING TABLES MAY NOT
FOOT DUE TO ROUNDING
GAAP TO NON-GAAP RECONCILIATION OF ADJUSTED NET INCOME
ANDADJUSTED NET INCOME PER DILUTED SHARE(unaudited) |
|
|
|
For the three months ended |
|
|
For the nine months ended |
|
|
|
October 28, 2023 |
|
|
October 29, 2022 |
|
|
October 28, 2023 |
|
|
October 29, 2022 |
|
|
|
$ |
|
|
Per diluted share |
|
|
$ |
|
|
Per diluted share |
|
|
$ |
|
|
Per diluted share |
|
|
$ |
|
|
Per diluted share |
|
(in millions, except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (GAAP basis) |
|
$ |
4.0 |
|
|
$ |
0.06 |
|
|
$ |
10.5 |
|
|
$ |
0.16 |
|
|
$ |
22.6 |
|
|
$ |
0.35 |
|
|
$ |
80.8 |
|
|
$ |
1.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjust for impairment (gain)
of assets |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
(0.4 |
) |
|
|
|
Add back loss on termination
of retirement plans |
|
|
0.1 |
|
|
|
|
|
|
— |
|
|
|
|
|
|
4.2 |
|
|
|
|
|
|
— |
|
|
|
|
Add back actual income tax
provision (benefit) |
|
|
1.7 |
|
|
|
|
|
|
2.1 |
|
|
|
|
|
|
8.4 |
|
|
|
|
|
|
(32.9 |
) |
|
|
|
Add income tax provision,
assuming a normal tax rate of 27% |
|
|
(1.6 |
) |
|
|
|
|
|
(3.4 |
) |
|
|
|
|
|
(9.5 |
) |
|
|
|
|
|
(12.8 |
) |
|
|
|
Adjusted net income (non-GAAP
basis) |
|
$ |
4.2 |
|
|
$ |
0.07 |
|
|
$ |
9.2 |
|
|
$ |
0.14 |
|
|
$ |
25.8 |
|
|
$ |
0.40 |
|
|
$ |
34.6 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding on a diluted basis |
|
|
|
|
|
63.5 |
|
|
|
|
|
|
66.2 |
|
|
|
|
|
|
65.0 |
|
|
|
|
|
|
67.1 |
|
GAAP TO NON-GAAP RECONCILIATION OF ADJUSTED
EBITDA(unaudited) |
|
|
|
For the three months ended |
|
|
For the nine months ended |
|
|
|
October 28, 2023 |
|
|
October 29, 2022 |
|
|
October 28, 2023 |
|
|
October 29, 2022 |
|
(in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (GAAP basis) |
|
$ |
4.0 |
|
|
$ |
10.5 |
|
|
$ |
22.6 |
|
|
$ |
80.8 |
|
Add
back: |
|
|
|
|
|
|
|
|
|
|
|
|
Impairment (gain) of assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.4 |
) |
Loss on termination of retirement plans |
|
|
0.1 |
|
|
|
— |
|
|
|
4.2 |
|
|
|
— |
|
Provision (benefit) for income taxes |
|
|
1.7 |
|
|
|
2.1 |
|
|
|
8.4 |
|
|
|
(32.9 |
) |
Interest (income) expense |
|
|
(0.6 |
) |
|
|
0.1 |
|
|
|
(1.4 |
) |
|
|
0.4 |
|
Depreciation and amortization |
|
|
3.4 |
|
|
|
3.8 |
|
|
|
10.3 |
|
|
|
11.7 |
|
Adjusted EBITDA (non-GAAP basis) |
|
$ |
8.6 |
|
|
$ |
16.4 |
|
|
$ |
44.2 |
|
|
$ |
59.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
119.2 |
|
|
$ |
129.7 |
|
|
$ |
384.7 |
|
|
$ |
402.0 |
|
Adjusted EBITDA margin (non-GAAP), as a percentage of sales |
|
|
7.3 |
% |
|
|
12.7 |
% |
|
|
11.5 |
% |
|
|
14.8 |
% |
GAAP TO NON-GAAP RECONCILIATION OF FREE CASH
FLOW(unaudited) |
|
|
|
|
|
|
|
|
|
For the nine months ended |
(in
millions) |
|
October 28, 2023 |
|
|
October 29, 2022 |
|
Cash flow from operating activities (GAAP basis) |
|
$ |
33.1 |
|
|
$ |
30.2 |
|
Capital expenditures |
|
|
(10.4 |
) |
|
|
(7.9 |
) |
Free Cash Flow (non-GAAP basis) |
|
$ |
22.7 |
|
|
$ |
22.3 |
|
FISCAL 2023 FORECASTGAAP TO NON-GAAP ADJUSTED EBITDA AND
ADJUSTED EBITDA MARGIN RECONCILIATIONGAAP to NON-GAAP ADJUSTED NET
INCOME AND ADJUSTED NET INCOME PER SHARE
RECONCILIATION(unaudited) |
|
|
Projected |
|
|
|
|
|
|
Fiscal 2023 |
|
|
|
|
(in
millions, except per share data and percentages) |
|
|
|
|
per diluted share |
|
|
|
|
|
|
|
|
Net income (GAAP basis) |
|
$24.9 - $29.5 |
|
|
|
|
Add
back: |
|
|
|
|
|
|
Loss from termination of retirement plans |
|
|
5.7 |
|
|
|
|
Provision for income taxes |
|
9.2 - 10.9 |
|
|
|
|
Interest income, net |
|
|
(1.9 |
) |
|
|
|
Depreciation and amortization |
|
|
14.3 |
|
|
|
|
Adjusted EBITDA (non-GAAP basis) |
|
$52.2 - $58.5 |
|
|
|
|
|
|
|
|
|
|
|
Sales (53-week basis) |
|
$520.0 - $530.0 |
|
|
|
|
Adjusted EBITDA margin as a percentage of sales (non-GAAP
basis) |
|
10.0%-11.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (GAAP basis) |
|
$24.9 - $29.5 |
|
|
$0.39 -$0.46 |
|
Add
back: |
|
|
|
|
|
|
Loss from termination of retirement plans, tax effected |
|
|
4.2 |
|
|
|
0.06 |
|
Adjusted net income (non-GAAP basis) |
|
$29.1 - $33.7 |
|
|
$0.45-$0.52 |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - diluted (1) |
|
|
64.5 |
|
|
|
|
(1)
No share repurchases have been assumed for the fourth quarter of
fiscal 2023 |
|
Contact:
Investor Contact:Investor.relations@dxlg.com603-933-0541
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