Plus-size men’s apparel retailer Destination XL announced on Thursday a 10.5% decrease in sales to $467 million for fiscal 2023, on the back of plunging sales in the fourth quarter.
The Canton, Massachusetts-based company said sales for the fourth quarter ending February 1 fell 13.1% to $119.2 million, hurt by a 8.7% decrease in comparable sales, with lower traffic levels and lower conversion online.
Following the drab sales outcome, the company swung to a net loss for the fourth quarter of $1.3) million, or a loss of $0.02 per diluted share, as compared to net income of $5.2 million, or $0.08 per diluted share, in the prior-year quarter.
However, the company remained in the black for the fiscal 2025 year, with income slashed to $3.1 million, compared to $27.9 million in the prior-year period.
“Our sales results reflect a difficult year for the men’s apparel sector where DXL has been challenged by lower traffic levels to our stores and lower conversion online. Men’s retail remains volatile, and we believe the Big + Tall consumer cut back on spending for himself in fiscal 2024. Despite this challenge, we maintained a strong operating regimen with our merchandise margin and controlled operating expenses to drive positive net earnings, positive free cash flow, and an adjusted EBITDA margin of 4.3%. Our balance sheet is solid with a healthy inventory position, no debt, and $48.4 million of cash and investments,” said Harvey Kanter, president and chief executive officer.
“In 2024, we conducted vital consumer research across the brand, exploring brand awareness, consumer trends and the potential impact of GLP-1 drugs. We believe these insights can be greater potential catalysts for inflection for the brand and to drive long-term sales growth. We successfully tested a DXL brand awareness campaign in a three-city matched market test. We extended our reach with the opening of seven new stores, and we upgraded our legacy website to a new, best-in-class eCommerce platform that should improve our customer experience. Additionally, we introduced an improved DXL Rewards program with compelling benefits to deepen engagement across the entire customer file and solidify DXL as the leading Big + Tall retailer in the sector.”
Looking ahead, the company warned that through the first six weeks of the year its comparable sales are already down 12.5%. However, it assured investors that it believes comparable sales will improve over the year, from a low double-digit negative in the first quarter, to single-digit negative in the second quarter and a return to a positive comp result in the second half of the year.
It also declined to provide a sales and earnings guidance for fiscal 2025, referring to the volatility of the market, and other macro uncertainties such as the implementation of tariffs, as its reason.
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