NASDAQ:DXLG Destination XL Group Q1 2024 Earnings Report $0.98 +0.01 (+1.16%) Closing price 04/25/2025 04:00 PM EasternExtended Trading$1.00 +0.01 (+1.52%) As of 04/25/2025 05:04 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Destination XL Group EPS ResultsActual EPS$0.11Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/ADestination XL Group Revenue ResultsActual Revenue$125.44 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ADestination XL Group Announcement DetailsQuarterQ1 2024Date5/25/2023TimeN/AConference Call DateThursday, May 25, 2023Conference Call Time9:00AM ETUpcoming EarningsDestination XL Group's Q1 2026 earnings is scheduled for Thursday, May 29, 2025, with a conference call scheduled at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Destination XL Group Q1 2024 Earnings Call TranscriptProvided by QuartrMay 25, 2023 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Destination XL Group Incorporated's First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. You will then hear an automated message advising your hands raised. Please be advised that today's conference is being recorded. Operator00:00:27I would now like to hand the conference over to your speaker today, Celine Mogas, Vice President of Financial Reporting, SEC. Please go ahead. Speaker 100:00:36Thank you, Norma, and good morning, everyone. Thank you for joining us on Destination XL Group's Q1 fiscal 2023 earnings call. On our call today are our President and Chief Executive Officer, Hari Kantor and our Chief Financial Officer, Peter Stratton. During today's call, we will discuss some non GAAP metrics to provide investors with useful information about our financial performance. Please refer to our earnings release, which was filed this morning and is available on our Investor Relations website at investor. Speaker 100:01:02Dxl.com for an explanation and reconciliation of such measures. Today's discussion also contains certain forward looking statements concerning the company's sales and earnings guidance and other expectations for fiscal 2023. Such forward looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those assumptions mentioned today due to a variety of factors that affect the company. Information regarding risks and uncertainties is detailed in the company's filings with the Securities and Exchange Commission. I would now like to turn the call over to our CEO, Harvey Kanter. Speaker 100:01:35Harvey? Speaker 200:01:38Thank you, Shelly, and good morning, everyone. I am grateful for the opportunity to speak with you today about our Q1 results and our thoughts on how our business is developing this year. We posted a comp sales increase for the Q1 of +0.6 percent, while our overall growth has slowed from our record breaking Double digit comparable sales increases of the past 2 years, we remain encouraged by our ability to deliver our 9th consecutive quarter of comp sales growth. On our last earnings call in March, we talked about how our comp sales expectations for the full year was to be somewhere between flat to plus 5%. But for the first half of the year, we expect it to be closer to the lower end of that range. Speaker 200:02:29As most of you have already seen, 1st quarter sales results for most apparel retailers have been affected by broader macro challenges. Our slowing comp store growth was in line with what we expected and the question we have been trying to answer is what should we expect for the remainder of the year. I'll come back to that shortly, but I do want to acknowledge how very proud I am of how team DXL has managed the business during a period of harsh economic realities. The Q1 news cycle has been dominated by bike failures, Rising interest rates, tighter credit standards, inflation and fears of a recession, all of which are impacting consumer spending. Retailers are fighting for a share of an ever tightening consumer wallet and while DXL is an exception on many levels, We are still impacted by the volatility, consumer psyche and sentiments of the economic reality. Speaker 200:03:29We do believe that our Q1 results have outperformed the broader retail market on a relative basis, Because we serve a consumer with limited options and given our clear differentiated positioning, we believe we have continued to take market share And therefore, we remain as optimistic as ever about our growth trajectory over time. For many retailers, The Q1 has been punctuated by double digit comparable sales decreases. We've been fortunate to avoid that outcome and post another quarter with a comp sales Increase, albeit a small increase. While the consumer climate in May is certainly more challenging than it was in February, We believe the reason we have been able to outperform many of our peers is that our differentiated positioning is structurally unique. Our brand is built on a positioning that leverages fit, assortment and experience and for consumer that at best Has limited options and dare I say perhaps only one truly immersive option and that is DXL. Speaker 200:04:38Well, many of you have heard this before, the three elements I have referred to are what set DXL apart from our competition. At DXL, big and tall isn't just a rack in our store. It isn't just a page in our website. It's all we do. We believe that the total addressable men's big and tall market is more than $23,000,000,000 And while we currently hold a meaningful slice Of the better and best market share, we have far greater opportunity. Speaker 200:05:07Going forward, we believe that over the next 2 to 3 years, We can grow top line and take market share profitably by driving unique, more personalized and more relevant communication while maintaining our shift away from discounting. The result is driving gross margins in the upper 40s and EBITDA in the lowtomiddoubledigits in direct comparison to our historic margin in the lower 40s and EBITDA in the low single digits. Our results over the last 2 plus years have been solid and these results have been driven by DXL's strategic And transformational structural changes. This stands in direct contrast to results in apparel retail more broadly, which were driven in many ways because of government stimulus, low interest rates and the like. We believe the strategic transformational changes we have made are increasing our share of wallet and attracting and retaining new customers who you have not yet experienced the DXL difference. Speaker 200:06:15We consistently hear from big and tall consumers that fit and style are the most important factors in their purchase journey. And we believe our proprietary fit and expertise is a strategic asset along with a curated and mostly exclusive offer. We have dedicated teams focused solely on developing precise specifications to deliver a unique, ownable and authentic fit And an assortment that looks, feels and moves great for the big and tall consumer. Assortment refers to our thoughtfully curated Offering of designer collections and our own brands, including many exclusive brands and styles that can only be found at DXL. In fact, between our own brands and exclusive arrangements with national brands, over 80% of our assortment is exclusive to DXL. Speaker 200:07:10This delivers a product array and quality that stands in stark contrast to our competitors' offerings and is one of the biggest elements of the DXL difference. Lastly is the signature experience. We call it the DXL factor. Whether in store or online, DXL is a brand built solely with the big and tall man in mind and we're engaging him in ways no one else can deliver. With TXL, he can satisfy all his wardrobe needs, feel valued, respected and throughout his shopping experience And Emerge looking great and feeling even better and all in one place. Speaker 200:07:50We exist To provide the Big and Tall man the freedom to choose his own style, we relentlessly strive to serve his fit and style needs. And when we do this, we are a haven for him with the largest assortment of brands and sizes accompanied by unrivaled expertise that creates an experience like no other. A testament to this and an objective metric that underlines the success we have in creating this experience is our net promoter score metric, which in stores is solidly in the mid-70s. For those of you familiar with NPS scores, This is a retail industry leading metric and one which we are appropriately proud. Our vision of becoming a haven for the big and tall man is Crystal clear and it is what we believe is why so many men have tried DXL for the first time over the last few years. Speaker 200:08:44So let me get right to the specifics and details for our Q1 performance. As I just mentioned, comp sales in the Q1 were up 0.6%. I am pleased that this is our 9th consecutive quarter of positive comp sales growth, But clearly, this is not where we want to be. The quarter started out very strong with a comp sales growth rate of 9.1% in February. We fell back to minus 2.8% in March and then finished out the quarter with a minus 1.9% in April. Speaker 200:09:18As I'm sure many of you are wondering where is May's performance. Month to date, we are currently tracking to a low to mid single digit comp sales decrease. In terms of the overall high level KPIs, The comp sales slowdown in March April was primarily traffic related with conversion and average order values We're roughly flat to last year. And to provide a little more color around traffic, what I can share is we literally can see differing levels of performance I do events and context happening in the world around the consumer. I referenced earlier the consumer psyche and specifically how performance is tied to moments. Speaker 200:10:04For example, the SVP banking crisis was just such a moment where in the days following, we saw business immediately change. Likewise, the looming debt ceiling discussion of late, where again we can see and feel the consumer sentiment falling off. Correlation or causation, we really cannot say, but a clear indication that consumers are affected and this just adds the overall malaise of consumer sentiment and reduced spending inclusive of apparel. Conversely, in our core company owned channels, it is worth noting that we continue to see a nice lift in AOV from increased penetration in tailored clothing. We expect that lift will continue through the Q2, but starting in fall, we will begin to anniversary that impact. Speaker 200:10:56Within our marketplace, we've seen sales growth from our Big and Tall Essentials program, but this comes at the cost of a lower price point and consequently lower margins. The bottom line is we've experienced a discernible difference And the velocity of traffic to both the stores and the website for the Q1. Regarding pricing and promotions, We continue to be very selective in how we utilize promotion and we have not taken any meaningful price increases. While it can be very tempting to lean on promotions to attempt to drive sales in a weaker economy, we have resisted that temptation. The work we have done around the structural positioning in the brand with the consumer is a critically important structural element supporting our transformational strategy. Speaker 200:11:46We continue to prioritize the greater development and building of more personalized relationships with consumers over the next 2 to 3 years. Over the past 2 years, we have worked very hard to reposition our brand around the pillars of fit, Assortment and exclusivity, inclusive of the experience in stores. Price is important to our customers, The price is not how we differentiate. We have seen some small level of erosion in the gross margin relative to last year, which was driven by loyalty, shipping and product costs. I'll talk more about our loyalty program in a minute, but there is a cost associated with the program that is impacting the margin. Speaker 200:12:27Let me now share some thoughts on Q1 performance in the context of our merchandise assortment. As a reminder, Our current merchandise assortment is approximately 55% our owned brands and 45% national brands. And our sales penetration for the Q1 was relatively consistent with that inventory position. Tailored clothing accounted for 21% of the Q1 business compared to 18% in the Q1 of last year. This is an area where we have been improving our in stock position as demand for event driven shopping and continued return to office gains momentum. Speaker 200:13:05In sportswear, The top selling brands in our assortment continue to see slightly higher selling velocity, including Polo Ralph Lauren, Nautica and Reebok. In the spring 2023 season, Life is Good and Original Penguin Golf officially joined DXL's growing exclusive brand portfolio, further reinforcing us as the number one destination for desirable national designer brands In big and tall sizes. And as I've already communicated in our prior quarterly call, we have 2 more iconic brands joining our portfolio of exclusive offerings in the fall. We aren't yet ready to reveal who those brands are, but they are household names that our customers are going to love. Next up, inventory. Speaker 200:13:55Inventory continues to be a key priority for us and we are in a better stock position today as compared to the Q1 of 2022. We have a very strong orientation to try to turn faster and we are making great progress here. Compared to 2022, our inventory levels are up 3%, but compared to 2019, our inventory levels are down 11%. We have been working to improve our inventory turnover for years and I'm happy to report that our inventory turnover is up 25% to pre pandemic levels. Our clearance inventory at the end of Q1 2023 is 7.8% as compared to 6.9% at the end of Q1 and 2022 and we are very comfortable with clearance inventory levels in total, which are still less that our historic target of 10%. Speaker 200:14:49From a marketing perspective, throughout the quarter, We continue to employ an eye on the road and an eye on the horizon approach to ensure we deliver solid results while continuing to build momentum and a modern marketing organization for the future. As such, we have continued to make good progress after we rolled out our campaign of wear what you want. The brand positioning launched in early March. As a reminder, this new approach invites our customers To finally shop like everyone else by choosing the style of apparel that they want that reflects who they are and fits each of them uniquely versus simply accepting whatever they can find that covers their body. We continue to believe we are uniquely positioned Deliver this through our brand pillars of industry leading fit expertise, the broadest assortment of national and owned brands, The highest standards of construction and quality, the most style options and an experience you cannot find anywhere else. Speaker 200:15:54I am happy to report that the work has been well received by our customers and our DXL associates alike. We have seen increased engagement in our social channels, Increased revenue in our email program and as a result a more unified message to customers to wear what they want, Our Wear What You Want campaign. We will continue to build on the success of the launch in the coming quarter With an integrated push around the key Father's Day period that includes all our owned and paid channels as well as introducing new videos, And truly shown via streaming video that will target new customers. Additionally, we have Continue to engage customers with our DXL Rewards Club loyalty program since launching it in late October of last year. We are seeing particularly strong results among our gold and platinum tiers in both certificate redemptions and sales. Speaker 200:16:51In Q2, we have plans to further engage customers and drive acquisition with a focus on the value the program delivers every time you shop. Further, we plan to improve awareness, improve engagement and customer experience with a more pronounced loyalty emphasis on our site to ensure our customers are taking advantage of this program. But building brand loyalty does not come without a cost And our program features new ways to engage with the brand and leads to more loyalty certificates being issued. This is an extension of our marketing efforts that allows us to stay more connected to our best customers. In Q1, we continued our efforts to build a more robust Modern Marketing Organization. Speaker 200:17:38As we have previously discussed, we've continued to work to better position DXL for the future regarding more personalized personalization at scale, building our analytic capabilities and deepening customer engagement. In April, we launched our customer data platform or CDP as planned and on schedule. Over time, this new capability will further improve our customer targeting with ability with a more sophisticated approach to segmentation through audience creation, deeper customer insights and a path to even greater relevant personalization at scale. Throughout the coming quarter, we will be utilizing this tool across our marketing channels to better engage our customers based on shopping behavior, insights and predictive modeling. In addition to launching the CDP, we also brought in a new email partner to help manage our remarketing program based on individual shopping behavior. Speaker 200:18:41These trigger emails have historically been a significant revenue driver and we believe they become even greater part of our mix in the near term. The combination of better segmentation, audience identification with the CDP and a more robust remarketing program should benefit us later in the year. We've also begun foundational improvements on our analytic capabilities, Moving to the near term to an improved holistic cloud based architecture will enable a more robust data infrastructure that delivers complex analytics at significantly greater speed. This will enable a democratization of data across the organization, leading to a greater unlock of customer understanding, new ways to think about our business and make better investment decisions behind marketing drivers. As I already mentioned, we saw store traffic begin to soften throughout the quarter. Speaker 200:19:44To combat this, we have leveraged data to better utilize our digital investment to drive both online and offline traffic and revenue. Additionally, we will be bolstering traffic by highlighting local store inventory to meet customer demand in any given trade area. We believe we have made significant progress in Q1 And while our work is not done, we have laid out where we are going in the coming months and the balance of the year to deliver sustained marketing improvement. I also want to touch on our real estate and store development objectives. Earlier this year, we talked about the opportunity to grow our store base And I'm pleased to report we are starting to see movement on this front. Speaker 200:20:30We have come to terms and executed our first lease agreement for a new store in Los Angeles. We are very close to our 2nd new store, which will be in New York market, and we expect to sign at least one more lease for a third store that we expect to open by the end of 2020 3, we've also begun construction work on 4 of our casual mail stores that are converting to DXL And there are 6 additional casual mail stores that we expect to begin and complete conversion to our DXL store format by the end of the year. This would bring us to 13 new doors operating under the DXL brand nameplate by the end of 2023. And finally, we have begun work on remodeling 1 of our DXL stores in the Chicago market and we are looking to begin work On remodeling at least 4 additional existing DXL stores before the end of 2023. Over the next 3 to 5 years And to provide you with an estimate of scale, we believe we could potentially open up to 50 net new DXL stores. Speaker 200:21:36We intend to continue to convert casual mail locations and we continue to evaluate the DHL remodels For incrementality and productivity, the bottom line is we see store development leading to more customers And we are pursuing these three avenues and we'll adjust our tactics as we learn. It's an incredibly exciting time for us at DXL And I'm honored and humbled to speak with you about these opportunities yet ahead of us. In summary, I am very proud of our team and what we have achieved this quarter. None of this would be possible without the hard work and dedication of all our people in the stores, in the distribution center, In the corporate office and in the guest engagement center, I want to take a moment to just say thank you. I truly believe that all we have accomplished is because of who we are as a team. Speaker 200:22:31Thank you for all your hard work and your commitment in our pursuit of serving the big and tall consumer and making DXL the place where they can best satisfy the desire to wear what they want. And now, I'm going to turn it over to Peter for an update on the Q1 financials and how we are thinking about guidance for the remainder of the year. Peter? Speaker 300:22:57Thank you, Harvey, and good morning, everyone. Net sales for the Q1 were 100 and $400,000 as compared to $127,700,000 in the Q1 of last year. On a comparable basis, adjusting for closed stores, Sales grew by 0.6 percent. Our stores, which make up about 70% of our total business, We're up by 1.5% and our direct business, which makes up the other 30% was down 1.6%. As Harvey noted, our sales growth slowed in March April due to a slowdown in traffic, which We believe is consistent with the overall macro environment. Speaker 300:23:38Although our direct channel was down slightly overall, We continue to see sales growth in our mobile app and online marketplaces. The mobile app customer tends to be a more loyal customer We shops more frequently, so we are excited to see growth in this channel. Moving over to gross margin, Our gross margin rate inclusive of occupancy costs was 48.6% as compared to 50% in the Q1 of last year. This 140 basis point decrease was a combination of 110 basis points in merchandise margin and 30 basis points in occupancy costs, primarily due to the deleveraging of sales. The decline from last year's record high margin rate was generally in line with our expectations. Speaker 300:24:30We have maintained a non promotional posture that emphasizes our superior quality, fit and experience rather than discount prices and our margin rate in the high 40s remained significantly higher than our historical rate. However, on a year over year basis, merchandise margins decreased due to a combination of higher costs in 3 areas. First, we decided to absorb the cost increases on certain private label merchandise, especially those at an opening price point level rather than passing these on to our customers through price increases. 2nd, we have seen an increase in costs related to the fulfillment of our direct to consumer orders. And third, the success of our new loyalty program means that there are more customers redeeming loyalty certificates for a discount on their purchase. Speaker 300:25:24These three factors were partially offset by lower inbound freight costs on receipts from overseas. Although these elements will all persist at varying levels through the rest of the year, we expect them to moderate to the point where gross margin rates for the year should be approximately 100 basis points lower than last year as compared to the 140 basis points we saw in Q1. Most importantly, we feel very good about our inventory position, both in terms of total inventory balance at the end of the quarter and in relation to our turnover rates as well as our clearance levels. Inventory management is especially critical in our business with a variety of styles and sizes that we offer. I won't repeat the numbers, which Harvey already covered, but we feel like our inventory position at the end of Q1 That sets us up for future success and we have adjusted our receipt plan to reflect our sales expectations. Speaker 300:26:23Moving on to selling, general and administrative expenses, Our SG and A as a percentage of sales increased to 38.5% as compared to 36.5% in the prior year's Q1. On a dollar basis, SG and A expense increased by $1,700,000 approximately split between customer facing costs and corporate supporting costs. The increase was primarily due to payroll related costs from new positions added in the past year to support our long term growth initiatives, including new store development. Last year's annual merit adjustments in the healthcare costs also contributed to the increase. Our add to sales ratio also increased slightly to 5.5% from 5.3% in Q1 of last year. Speaker 300:27:15For the year, we expect to spend about 5.7 percent of sales on advertising. As you might expect, we are beginning we are being very judicious with expense management, but we remain committed to investing in the people and technology necessary for future growth and success. With gross margin at 48.6 percent and SG and A expense at 38.5 percent, this brings our EBITDA in at 10.1 or $12,600,000 for the Q1. Although lower than last year's 13.5 percent or 17,300,000 We are pleased to be able to deliver another quarter of double digit EBITDA performance in the current macroeconomic environment. I want to spend a moment on income taxes, since this is an area where our year over year results require adjustment to be comparable. Speaker 300:28:10Last year, we had virtually no tax expense in the Q1 because our taxable income was offset by our fully reserved net operating loss carry forwards. With the release of our valuation allowance in the Q2 of last year, We have now returned to a more normal tax rate of approximately 26%. However, we are still able to utilize Our remaining net operating loss carry forwards to reduce our cash taxes and as a result, we will pay very little in federal or state income Cash tax in fiscal 2023. Moving on to liquidity, we feel very good about our cash position and the overall strength of our balance sheet. At the end of Q1, we had cash and short term investments of $46,000,000 as compared to $7,500,000 a year ago, with no outstanding debt in either period and availability of $93,800,000 under our revolving credit facility. Speaker 300:29:11With the seasonality of inventory builds and payments of prior year incentive accruals, View 1 is typically a quarter with a net cash outflow. This quarter, our free cash flow, which we define as cash flow from operating activities less capital expenditures, was a use of 5.9 We are keeping most of our excess cash or $29,200,000 in short term U. S. Government treasury bills, which are earning interest at approximately 5%. In March, our Board of Directors authorized a $15,000,000 stock repurchase program And we expect to begin to execute purchases of our common stock on the open market in the Q2 of this year. Speaker 300:29:58We believe this is a prudent use of our cash and at our current stock price and allows us to put our free cash flow to work for our shareholders by reducing the number of shares outstanding. I'll close with an update on our financial outlook for fiscal 2023. Based on our results for the Q1 and considering the macroeconomic challenges and uncertainties regarding consumer spending seen throughout the retail industry, We are currently trending towards the lower end of our previously reported guidance for fiscal 2023. How we get there is through a low single digit negative comp for Q2. We are optimistic that we can be flat in Q3 and back to a low single digit positive comp in Q4. Speaker 300:30:45Accordingly, for the 53 week period, We are guiding to sales of approximately $550,000,000 and an adjusted EBITDA margin of approximately 12.5%. Our outlook assumes that the sales trends we have seen in March, April May will continue to persist through the Q2, but we are expecting to see small sequential improvement from consumer driven marketing initiatives, which come online over the months ahead. We believe these efforts will drive a return to positive comps in the second half of the year. We remain focused executing the strategies we have spoken about today, and we are optimistic that this will allow us to outperform the broader apparel market. I would now like to turn it back over to Harvey for some closing thoughts. Speaker 300:31:33Harvey? Speaker 200:31:34Thanks, Peter. Before I move on to Q and A, I'd like to just briefly summarize what we believe are the most critically important elements for us and hopefully you as investors as you think about investment in DXL as We posted a comp sales increase for the Q1 of plus 0.6% and remain encouraged by our ability to drive another quarter of comp growth and that growth is now over 9 consecutive quarters. While DXL is unique on many levels, we are still impacted by volatility, consumer psyche and sentiment But we believe that our Q1 results have outperformed the broader retail market on a relative basis And because we can serve by consumer, we're bringing to market a clearly differentiated brand driven by more personalized, more relevant communication, structurally built on a positioning that leverages fit, assortment and experience. And for that, we remain optimistic for our long term ability to take market share. We believe that the strategic transformational changes we have made are increasing our share of wallet and attracting and retaining new customers We've not yet experienced the DXL factor from a sales and profit from a marketing and strategic planning perspective, We continue to employ an eye on the road and eye on the horizon in our approach to driving outcomes this year, but also investing for the future. Speaker 200:32:54At an operating level, we continue to have a very strong operating process, structure and discipline and proven out as an example by our lean inventory, which at quarter end was 11% below pre pandemic levels and turnover which was up 25% over pre pandemic levels in 2019. We are maintaining our shift away from discounting, driving gross margins in the upper 40s and EBITDA in the low to mid double digits. And we believe we are setting ourselves up to continue to navigate meaningful growth over the next 2 to 3 years and are prepared to weather this most recent round of volatility. We remain incredibly excited and enthusiastic about DXL's prospects in the year ahead And as a market leader, as an incredibly important brand serving an incredibly underserved consumer. And with that, operator, we will now take questions. Operator00:33:49Thank you. One moment for our first question. And our first question comes from the line of Jeremy Hamlin with Craig Hallum Capital Group. Your line is now open. Speaker 400:34:20Thanks and congrats on the strong results in a tough environment. So I wanted to just start by asking about your gross margin and making sure that I understood in terms of the Roughly 140 basis points or so year over year decline. You noted a couple of reasons for that, including the loyalty program costs, Higher shipping costs and some occupancy deleverage as well. Wanted to see if you could It'll be a little bit or provide us more color in terms of splits Of how those components factored into the year over year decline? And what you expect to have on that guidance for down 100 basis points of the year. Speaker 300:35:13Sure. So I'll take that one, Jeremy. I think the biggest Part of the decline in the merchandise margin, it really came in the IMU deterioration. Across the board, we saw that it was most impactful in wovens and knits. I think the other three pieces, The loyalty costs and the shipping costs, which are Really what we saw on the direct to consumer side, those were more or less offset by the savings that we saw On the ocean freights and the container freight costs that we saw. Speaker 300:35:54So the piece that I would point to the most is, Again, it's the product cost. And keep in mind, the product, we recognize that cost when we sell through the product. So this is product that We would have taken receipts on upwards of it could have been a year ago, even as much as a year and a half ago when cotton prices were higher and some of the other prices were a bit higher. But hopefully that gives you just a little more clarity on where some of the splits are coming from. Speaker 400:36:23Yes, that's definitely helpful. And then in terms of your same store sales color And expectation for the year, I think you said Q2 down low single digits, flattish for Q3 And then returning to positive low single digit in Q4. In terms of getting there, Again, tough environment out there. You guys are clearly doing a lot better than most of the competition. What does it assume in terms of performance on a relative basis to where we are today? Speaker 400:37:03Is this kind of factor in? We know that traffic has been the big driver here. Your conversion remains strong. And as Harvey noted, average order value is still strong as well. What are you building into that? Speaker 400:37:19And then How does how are you factoring in, let's say, the new stores and some of these conversions, which I would assume would also have a positive benefit here in the second half of the year. Speaker 200:37:33Jeremy, it's Harvey. I'll address that from a customer facing perspective and then Peter might add a little value In terms of some of the underlying KPIs, but we, as you know, have been very oriented around transformationally restructuring how we engage consumers and whether it's The things we've already done like the beginning of the loyalty program, which I'll remind you is literally not going to anniversary itself until really the 1st November. It It was mid October when we did that. We believe there's upside in elements such as that. We also believe that the new trigger email program is another example As well as the CDP and I use the words more personalized, more relevant marketing communication and ultimately We have some small expectation we might be able to impact traffic by things like localized inventory advertising, Where we can literally advertise based on searches and local inventory in stores and then serve that up to consumers On one level, pretty tactical, but important, but on another level at a higher, more strategic perspective, The concept of more personalized marketing and more relevant communication to consumers to ultimately accomplish What we want to engage consumers about why we are so different is what's really driving the change. Speaker 200:38:50And as more of those things come online, We're hopeful what we'll see is greater level of conversion, greater level of potential AOV and not material change in traffic, although We're hopeful that there's some level of moving on that regard. And unfortunately, that's the kind of the Element that is unknown, right? Where we are overall in a business climate, are things going to get worse, are things going to get better? We believe at some level we'll be able to push water uphill By some of our own initiatives and if they're just neutral to where we are today, we'll win. If they deteriorate, there's obviously the potential fall short And if they improve, there's actually the opportunity to be upside. Speaker 200:39:31So it's a challenge. As one of our board members says often, if we could predict future we probably wouldn't be doing what we're doing. And I think if anyone could truly predict the future at this moment in time, it would be remarkable. So Hopefully, I've given you a little bit of perspective around the consumer facing elements, which we think are meaningful. Speaker 300:39:51The one piece that I'll add to that is, we did deliberately try to give you a little more direction on what we're expecting to see quarter by quarter. And we typically don't do that. We typically just stick with an assumption for the year, but we felt it was important to just show how we're thinking of the year. Relative to other performance, as we said, it's we're talking low single digits either negative or positive, which is where we've been trending for the last few months. And it's not we're not looking for a Herculean change in the business, but we definitely are expecting that the second half of the year for all of the reasons that Harvey just laid out that we're trying Control from a micro level, plus we're hoping we get a little bit of tailwind from hopefully an improving macro environment. Speaker 300:40:46But There are elements that we are focusing on deploying here within the company that we think are going to help lead to a better second half. Speaker 400:40:56Yes, that's great context, especially on top of last year's plus 11 comps. I wanted to also just get into your customer support costs, so inclusive of your DC, your corporate overhead. That's up, I think it was up 110 basis points year over year in Q1. In terms of thinking about the environment We've had enough retailers report now that there's been a softening across the board. In terms of thinking about the ability, if you felt it was necessary that there was some additional slippage in the economy, that You know, employment rates fell a little bit. Speaker 400:41:42Do you feel like is there a little bit of wiggle room in terms of being able Pull a little bit out of that if you felt like you needed to, but I wanted to just understand, I know that you're In a different phase for this company that you're now entering in a phase with some unit growth when You're generating these conversions that are going to be helpful overall, but what's your ability to potentially nip That if you felt like you had to pull back a little on the structural cost side. Speaker 300:42:18So again, I'll take this one and it's a really good question and we talk about this a lot. I think that we've been pretty with what we're trying to achieve with the company in terms of growing our analytics capabilities, growing our store base. We've been upgrading our roster and bringing on great people that are going to help really propel the business. On the other side of the coin, you could say, all right, well, if we really do we really want to stop doing those things And maybe save another $500,000 or $1,000,000 of expense. I really don't think that we get The credit for making those kinds of difficult decisions and then we come out of this a year from now And we just have to restart everything all over again. Speaker 300:43:12So I think that it's important to just be Clear that we do believe this is a moment in time with where the economy is and we think that what we've done with the brand and the transformation and Creating this haven for big and tall guys, that's going to get us past this moment. And so I don't think we're looking at we're not looking at making drastic cuts, because it's Just going to leave us empty and not have those initiatives when we do come out of this. Speaker 200:43:44Yes, Jeremy, I want to underline what Peter said And make sure you heard the most important thing. We are trying to position ourselves for growth and it's in the public markets, it's a little challenging to say the least Navigating quarter to quarter, but our Board and management team is very oriented towards growth. And we believe that I've said this before, we believe why aren't we a $1,000,000,000 company, let alone something greater than that and that's not guidance In any shape, manner or form, but I definitely want to express the fact that our actions and strategy is oriented towards growth over the next 2 to 3 years and the challenges managing quarter to quarter. Speaker 400:44:28Got it. No message I heard loud and clear. All right. Best wishes. Thanks for taking the questions guys. Speaker 200:44:35Thanks so much. Have a great day. Operator00:44:38Thank you. One moment for our next question please. Question comes from the line of Michael Baker with D. A. Davidson. Operator00:44:48Your line is now open. Speaker 500:44:51Good morning, Mike. Thanks, Scott. Hi, how are you? I wanted to ask you a couple of questions, but one, let's start. I'm curious what you're seeing in some of the remodel efforts that you've done. Speaker 500:45:00I think You talked about doing 1 in Chicago. I think you already you're doing a remodel or did a remodel in Warwick, Rhode Island, I believe. What did you change here and what are you seeing in terms of the sales lift versus cost? Speaker 300:45:16So in terms of the remodels, we've opened up we've remodeled 2 stores. 1 is in Warwick, Rhode Island. The other is in Troy, Michigan. The 3rd store that we're doing, which is currently underway is in the Chicago market. We do believe that We're going to get 4 more underway in this year. Speaker 300:45:36I'm hoping we can get 4 finished this year, but I'm not sure we'll have them all By the end of January, but we're definitely going to get 4 more started and see where they are. The thing I'll say about performance Is that in both Warwick and in Troy, they have outperformed both their regional store peers and the chain in total. So I think it's still early for us to make any real definitive Because again, it's only 2 stores and that's why we want to get 5 more open. So we'll have a little bit broader of a sample to make some judgment on. But in both cases, traffic's improved, our net promoter score has improved in those stores And our new to files improved in those stores. Speaker 300:46:25So we're encouraged, but we still need to learn more. Speaker 200:46:29The only other thing I'll add, Mike, is the Strategic intent of our remodel is to create a stronger relationship with consumers. And the best example of that It's literally if you've been in our stores, which obviously I know you have in most stores, the cash wrap for lack of a better way to say it where you check out where Speaker 400:46:47the cash registers are, if you will, the POS Speaker 200:46:47terminals are at the front of the store. And we If you will, the POS terminals are at the front of the store. And we've actually dismantled that entire front of the store. It is now all window. It is open to the world. Speaker 200:46:59We have great lighting and great visibility into the store. And what we've done is Embed in the store, for lack of other ways, they had 2 small kitchens. And when I say kitchens, as most people recognize that when they have a party at their house, everyone seems to All hang out in the kitchen around the island and we have 2 islands embedded deeper in the stores and those islands given the opportunity with a POS terminal, A digital consumer interface to show our universe offering, which is all of the things offered online where color extensions and size extensions and Style extensions exist and the ability to be right near the fitting room so that we can interact with consumer in a more one on And actually create that relationship by sitting down. So that center island has bar stools, it has a computer terminal and we literally look to Kind of share a cup of coffee and talk about the product, we present the product on that island. It's a much more engaging relationship and We're obviously looking to drive AOV, we're looking to drive UPTs and ultimately become stickier And so that they remember not just they purchased something and made a transaction, but they worked with Bob and had incredible experience and Might even refer to Bob as their friend at DXL. Speaker 200:48:17It's a different way to think about it, but in the business that we do with Such an underserved consumer and such a inferior relationship in most retail stores where they don't serve this consumer the way we do, We think the strategic intent of the remodel is really an important variable. Speaker 500:48:35Yes, it makes sense. I think they look great. Couple of other questions. One, let me ask a short term question and then a long term question. In the short term, with all the factors you highlighted that have impacted comps, I think are pretty well known. Speaker 500:48:48But what about tax refunds? Do you have any data to suggest that that impacts your customer? I know your customer is Typically a little bit higher end, but any impact there, is that sort of now phased into the background, that whole tax refund issue? Speaker 300:49:06So I'll take that one, Mike. I think, to some degree, yes, that's impacting us, but not nearly as much as What I've heard other retailers talking about relative to that, I think one of the things that Harvey talked about in his prepared remarks was that All retailers are fighting for that ever tightening share of the consumer's wallet and that gets impacted by what's the cash Coming in so that he can make his discretionary purchases. I don't think it's as pronounced for us as it is at other retailers, but I would say there's certainly some elements of that, that we saw in the Q1 results. Speaker 500:49:47Fair enough. And then a longer term question, you talked first of all, you said gross margins high 40s. I think in the past, you had said About $50,000,000 subtle change, but what's did something change in your long term, even this year and then long term gross margin perspective, But then you talked about growing sales over the next couple of years. Can you frame what you think a proper top line sales number should be over the next couple of years? And then the third part of that is, you said EBITDA lowtomidsing sorry, lowtomidteens. Speaker 500:50:21I think that mid is higher than you're guiding certainly this year. What can drive you back to that mid teen number? Thanks. Speaker 300:50:32Sure. So on the EBITDA The low to mid teens, we've said from day 1 many years ago, we want to have sustained EBITDA margin in excess of 10%. We've clearly been well beyond that. I think As we've talked about with the investments that we're making in marketing and real estate and store development, that comes at the short term expense Of margin. So I would expect that in these years where we're continuing to try to build out 50 stores and build out our analytics practice, It will be in the I don't want to get into specific numbers, but if we're saying low to mid double digits, that's 10% to 15%. Speaker 300:51:18So we're going to continue to be floating in that space as we continue to build out. But the whole purpose of that is to make the right investments now so that we emerge a few years from now with a bigger, stronger store portfolio, Digital practice, direct to consumer business that makes us a more powerful company. Speaker 500:51:44Yes. Fair enough. What about gross margins a little bit lower? Speaker 300:51:49Sorry. So for gross margins, yes, I mean, we said for this year, we're expecting them to be down about 100 basis points from last year. So I think last year we were right at 50%. So this year we're thinking we're going to be around 49%. Right. Speaker 300:52:06Again, it's all three factors that I mentioned before. It's the lower IMU, It's the cost of loyalty. Those are the bigger pieces of it, That's what we're assuming this year. Speaker 500:52:25Well, yes, I guess just to push on that though, I think on your last call, correct if I'm wrong, but the target was closer to 50. So it's down a little bit. And so of all those things that you outlined, I guess, a lot of those you could have What has changed? What is making it worse? Is it just less leverage on the occupancy if you're at the lower end of sales or Just trying to figure out what changed versus a few months ago on the Speaker 200:52:51gross margin? Speaker 300:52:53Yes. So there's no I wouldn't point to any one thing. I would say all three of them have come in a little bit lower than what our initial expectations were. That and combined with lower leverage on lower of a sales base, initially, we were at $550,000,000 to $570,000,000 range and now we're coming in at the low end of that. So there's no one Silver bullet that suddenly blew up in our face. Speaker 300:53:25It was all a lot of little things that altogether have just led us to we think we're going to be down about 100 basis points. Speaker 200:53:32And Mike, I would stress that that 100 basis points from the 50 basis points is in direct comparison to, Let's just say $43,000,000 and change. So it's not like we're in any shape, manner, or form suggesting we're going back to where we've historically. But To Peter's point, there's a lot of variables that were challenged to address and there were high watermarks at 50. Speaker 500:53:57Yes, makes sense. Understood. Thank you. Operator00:54:01Thank you. Our next question comes from Raffi Savitz with he's a private investor. Your line is now open. Speaker 600:54:16Hey, Harvey. I guess you've been at the helm for 4 years or so. And can you maybe take a moment to reflect What's gone according to plan and what hasn't met your expectations in your time there? Speaker 200:54:31Yes, I think there's 3 things that I'm incredibly excited about. 1, a recognition of our place in the market and building a strategy To execute against that, we have a customer that historically has not been honored and respected in a way that most Individuals that are, let's say, more of average bills can shop anywhere they want with the clothes that fit them and styles they want. And we have, I think, Not evolved the assortment as much because I think the assortment was pretty powerful, but we've really evolved the way we engage And communicate and marketed the business and whether it's the lack of promotion with the recognition that the DXL factor is Driven by the experience and a unique fit that Close really fit them in ways that they didn't recognize before, We have really done a good job. We're not where we end up ultimately want to be, but we're continuing to work against that marketing element. And that It's a really important strategic element and shift from the way we've communicated and marketed the business before. Speaker 200:55:33If you have tracked literally the business prior to my arrival, we were very promotional, maybe almost 100% promotional on most of the things we did for the 2 or 3 years prior to my arrival. The second thing is really, I think, really engage And empower the team. We have an incredible group of people today that are doing really a yeoman's work. And the fact of the matter is that In the accountability and ownership, we've spread that throughout the organization. So our stores group is Incredibly passionate, they know what they're responsible for, they are bonus and insensitive against those elements. Speaker 200:56:10We provide them a different level of tools and marketing messaging and Execution that we haven't done before. And then last but not least is obviously I think the investments we're making. I think we've made Really important investments. One might say that we had technical debt. We've addressed so many of those elements with changes in the CRM system and the loyalty program The technical debt and the other investments with stores and marketing, you look at the shift in marketing, we've historically been a 4% and change marketing company today, we're closer to 6%. Speaker 200:56:45We've done what we needed to do, I think, to really engage and communicate in the ways I just So I think when you kind of sort of the way Peter talked about margin, there's no one silver bullet. I believe that it's The combination of multiple elements and a lot of heavy lifting and I might even go so far as to say a greater level of blocking and tackling To recognize execution is everything. So we have a plan. We know what it is. We have objectives for every person in the company to execute against those. Speaker 200:57:15We empower them the folks and then we hold them accountable and inclusive of myself. So hopefully that was some sense of what it is we've done. Speaker 600:57:24Yes, that's helpful, Harvey. And maybe on that point, you think about kind of the go forward strategy here. What would you say the major risks are in that strategy and how are you doing your best to mitigate those? Speaker 200:57:39I think that I would say that the most major risk is really the economy. I think we believe we're in the first The 4th year of a non normal year. The unfortunate reality is in my 1st 7 months, we had a strategy. We executed against the way I just referred to it. We made small but meaningful growth. Speaker 200:58:01So we went from a negative comp to a positive comping went from single digit growth online to double digit growth online and then the pandemic hit. And literally since basically February, March of 2020, No year, 1 year to the next has looked the same. And so we're trying to navigate this an incredible level of ambiguity. And mind you, we've gone from a $23,000,000 EBITDA to a $75,000,000 EBITDA. We've gone from $473,000,000 of revenue to $500,000,000 and let's say $550,000,000 And we have measurably moved EBITDA from 10% to double digits excuse me, single digits 10% and north of that. Speaker 200:58:37So, it's just an incredibly challenging period of time for every retailer and Quite honestly, probably every business in humanity to navigate the issues that we're all facing, no matter whether you're in business or not in business, just navigating the world today. Speaker 600:58:54And maybe my last question here. I guess in terms of kind of market share growth either kind of where you're getting that growth today or where you think you'll get that growth in the future. I mean, is it primarily taking it from, let's say, department stores That aren't servicing these men as well as you are or is it or is the expectation that You think you're creating a much better experience and ultimately these folks that aren't really shopping and aren't really buying that much will be buying Those will be spending more of their disposable income on clothing because of DXL. Speaker 200:59:28Yes. Our belief is that there are a lot of players in this space That dabble in this, we've often referred to they have a fixture or some version of number of web pages that represent product to Serve the underserved consumer, but in reality, we're the only ones literally that have the full service across stores and web, And we believe we'll take share from a lot of different places. But we asked the question and I didn't flippantly say why aren't we $1,000,000,000 We asked the question why aren't We have a meaningful market share, but I often say we're an 800 pound gorilla, but the reality is we're probably a 100 pound gorilla With a lot of £20 chimpanzees around us, we're just not as big as we should be and there's incredible opportunity to grow and I think we started that process. So I really appreciate the question. Speaker 601:00:19Thanks Harvey. Speaker 201:00:21You bet. You bet. Operator, I think we have time for one last question and then we'll have to roll. Operator01:00:26Thank you. Our next question comes from the line of Pete Johnson with Johnson Inc. Your line is now open. Speaker 701:00:35Yes, good morning. You have a fair amount of cash in the balance sheet and I think you've said that you didn't buy back any shares recently. Is part of the concern perhaps that the overhang from 2 of your biggest investors, AWM and Wolf Health have been Selling shares recently and you want to wait for that overhang to pass? Speaker 301:01:00So I'll take that one. And I guess the only comment I'll make on The buyback is, as I said, we plan to start executing that in Q2. When we started the quarter, I think our stock was up over $7 at the beginning of the year. And so as it's been slowly coming down, it's certainly a much more attractive Price for us to acquire at. So it's really been the last 4 or 5 weeks, 6, 7 weeks that it's come down much more meaningfully. Speaker 301:01:32So we do fully intend to start executing on that very soon. Speaker 701:01:37Okay. And has either AWM or Wolf Given you any sense of their sort of medium to long term plans? Speaker 201:01:49Yes, that's just something unfortunately we wouldn't comment on. And I thank you for the question, but we just won't make a comment on that. Speaker 701:01:57Okay, fair enough. But you certainly have enough cash on your balance sheet to be able to put some aside for the buyback at this point, I would say. Speaker 201:02:05Indeed. And that's why the Board has supported that initiative and we expect we'll be more than likely in market. Speaker 701:02:11Excellent. Thank you. Speaker 201:02:14Operator, with that, we are a little over. We really appreciate everyone's support. I wish you all a wonderful Memorial Day safe And we look forward to talking to you within our next quarterly earnings call. Operator01:02:25This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallDestination XL Group Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Destination XL Group Earnings HeadlinesRiverdale Welcomes DXL: Because Offering Big + Tall Men's Clothes That Fit Shouldn't Be Remarkable, But It IsApril 12, 2025 | finance.yahoo.comRiverdale Welcomes DXL: Because Offering Big + Tall Men's Clothes That Fit Shouldn't Be Remarkable, But It IsApril 12, 2025 | prnewswire.comFrom Social Security to Social Prosperity?In less than a decade, Social Security could be out of money. But a surprising plan from Trump’s inner circle may not just save the system — it could unlock a major opportunity for savvy investors. Financial insider Jim Rickards calls it “Social Prosperity,” and says those who act now could see the biggest gains.April 26, 2025 | Paradigm Press (Ad)NEW Fit Exchange by DXL + Military & First Responders Discount Offers New Savings for All Big + Tall MenApril 2, 2025 | prnewswire.comDestination XL Group Reports Fourth Quarter and Fiscal Year 2024 Financial ResultsMarch 22, 2025 | nasdaq.comDestination XL Group, Inc. (NASDAQ:DXLG) Q4 2024 Earnings Call TranscriptMarch 22, 2025 | insidermonkey.comSee More Destination XL Group Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Destination XL Group? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Destination XL Group and other key companies, straight to your email. Email Address About Destination XL GroupDestination XL Group (NASDAQ:DXLG), together with its subsidiaries, operates as a specialty retailer of big and tall men's clothing and shoes in the United States. The company's stores offer sportswear and dresswear; fashion-neutral items, including jeans, casual pants, T-shirts, polo shirts, dress shirts, and suit separates; and casual clothing. It also provides vintage-screen T-shirts and wovens under various private labels. The company offers its products under the trade names of Destination XL, DXL, DXL Men's Apparel, DXL outlets, Casual Male XL, and Casual Male XL outlets. The company was formerly known as Casual Male Retail Group, Inc. and changed its name to Destination XL Group, Inc. in February 2013. 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There are 8 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Destination XL Group Incorporated's First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. You will then hear an automated message advising your hands raised. Please be advised that today's conference is being recorded. Operator00:00:27I would now like to hand the conference over to your speaker today, Celine Mogas, Vice President of Financial Reporting, SEC. Please go ahead. Speaker 100:00:36Thank you, Norma, and good morning, everyone. Thank you for joining us on Destination XL Group's Q1 fiscal 2023 earnings call. On our call today are our President and Chief Executive Officer, Hari Kantor and our Chief Financial Officer, Peter Stratton. During today's call, we will discuss some non GAAP metrics to provide investors with useful information about our financial performance. Please refer to our earnings release, which was filed this morning and is available on our Investor Relations website at investor. Speaker 100:01:02Dxl.com for an explanation and reconciliation of such measures. Today's discussion also contains certain forward looking statements concerning the company's sales and earnings guidance and other expectations for fiscal 2023. Such forward looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those assumptions mentioned today due to a variety of factors that affect the company. Information regarding risks and uncertainties is detailed in the company's filings with the Securities and Exchange Commission. I would now like to turn the call over to our CEO, Harvey Kanter. Speaker 100:01:35Harvey? Speaker 200:01:38Thank you, Shelly, and good morning, everyone. I am grateful for the opportunity to speak with you today about our Q1 results and our thoughts on how our business is developing this year. We posted a comp sales increase for the Q1 of +0.6 percent, while our overall growth has slowed from our record breaking Double digit comparable sales increases of the past 2 years, we remain encouraged by our ability to deliver our 9th consecutive quarter of comp sales growth. On our last earnings call in March, we talked about how our comp sales expectations for the full year was to be somewhere between flat to plus 5%. But for the first half of the year, we expect it to be closer to the lower end of that range. Speaker 200:02:29As most of you have already seen, 1st quarter sales results for most apparel retailers have been affected by broader macro challenges. Our slowing comp store growth was in line with what we expected and the question we have been trying to answer is what should we expect for the remainder of the year. I'll come back to that shortly, but I do want to acknowledge how very proud I am of how team DXL has managed the business during a period of harsh economic realities. The Q1 news cycle has been dominated by bike failures, Rising interest rates, tighter credit standards, inflation and fears of a recession, all of which are impacting consumer spending. Retailers are fighting for a share of an ever tightening consumer wallet and while DXL is an exception on many levels, We are still impacted by the volatility, consumer psyche and sentiments of the economic reality. Speaker 200:03:29We do believe that our Q1 results have outperformed the broader retail market on a relative basis, Because we serve a consumer with limited options and given our clear differentiated positioning, we believe we have continued to take market share And therefore, we remain as optimistic as ever about our growth trajectory over time. For many retailers, The Q1 has been punctuated by double digit comparable sales decreases. We've been fortunate to avoid that outcome and post another quarter with a comp sales Increase, albeit a small increase. While the consumer climate in May is certainly more challenging than it was in February, We believe the reason we have been able to outperform many of our peers is that our differentiated positioning is structurally unique. Our brand is built on a positioning that leverages fit, assortment and experience and for consumer that at best Has limited options and dare I say perhaps only one truly immersive option and that is DXL. Speaker 200:04:38Well, many of you have heard this before, the three elements I have referred to are what set DXL apart from our competition. At DXL, big and tall isn't just a rack in our store. It isn't just a page in our website. It's all we do. We believe that the total addressable men's big and tall market is more than $23,000,000,000 And while we currently hold a meaningful slice Of the better and best market share, we have far greater opportunity. Speaker 200:05:07Going forward, we believe that over the next 2 to 3 years, We can grow top line and take market share profitably by driving unique, more personalized and more relevant communication while maintaining our shift away from discounting. The result is driving gross margins in the upper 40s and EBITDA in the lowtomiddoubledigits in direct comparison to our historic margin in the lower 40s and EBITDA in the low single digits. Our results over the last 2 plus years have been solid and these results have been driven by DXL's strategic And transformational structural changes. This stands in direct contrast to results in apparel retail more broadly, which were driven in many ways because of government stimulus, low interest rates and the like. We believe the strategic transformational changes we have made are increasing our share of wallet and attracting and retaining new customers who you have not yet experienced the DXL difference. Speaker 200:06:15We consistently hear from big and tall consumers that fit and style are the most important factors in their purchase journey. And we believe our proprietary fit and expertise is a strategic asset along with a curated and mostly exclusive offer. We have dedicated teams focused solely on developing precise specifications to deliver a unique, ownable and authentic fit And an assortment that looks, feels and moves great for the big and tall consumer. Assortment refers to our thoughtfully curated Offering of designer collections and our own brands, including many exclusive brands and styles that can only be found at DXL. In fact, between our own brands and exclusive arrangements with national brands, over 80% of our assortment is exclusive to DXL. Speaker 200:07:10This delivers a product array and quality that stands in stark contrast to our competitors' offerings and is one of the biggest elements of the DXL difference. Lastly is the signature experience. We call it the DXL factor. Whether in store or online, DXL is a brand built solely with the big and tall man in mind and we're engaging him in ways no one else can deliver. With TXL, he can satisfy all his wardrobe needs, feel valued, respected and throughout his shopping experience And Emerge looking great and feeling even better and all in one place. Speaker 200:07:50We exist To provide the Big and Tall man the freedom to choose his own style, we relentlessly strive to serve his fit and style needs. And when we do this, we are a haven for him with the largest assortment of brands and sizes accompanied by unrivaled expertise that creates an experience like no other. A testament to this and an objective metric that underlines the success we have in creating this experience is our net promoter score metric, which in stores is solidly in the mid-70s. For those of you familiar with NPS scores, This is a retail industry leading metric and one which we are appropriately proud. Our vision of becoming a haven for the big and tall man is Crystal clear and it is what we believe is why so many men have tried DXL for the first time over the last few years. Speaker 200:08:44So let me get right to the specifics and details for our Q1 performance. As I just mentioned, comp sales in the Q1 were up 0.6%. I am pleased that this is our 9th consecutive quarter of positive comp sales growth, But clearly, this is not where we want to be. The quarter started out very strong with a comp sales growth rate of 9.1% in February. We fell back to minus 2.8% in March and then finished out the quarter with a minus 1.9% in April. Speaker 200:09:18As I'm sure many of you are wondering where is May's performance. Month to date, we are currently tracking to a low to mid single digit comp sales decrease. In terms of the overall high level KPIs, The comp sales slowdown in March April was primarily traffic related with conversion and average order values We're roughly flat to last year. And to provide a little more color around traffic, what I can share is we literally can see differing levels of performance I do events and context happening in the world around the consumer. I referenced earlier the consumer psyche and specifically how performance is tied to moments. Speaker 200:10:04For example, the SVP banking crisis was just such a moment where in the days following, we saw business immediately change. Likewise, the looming debt ceiling discussion of late, where again we can see and feel the consumer sentiment falling off. Correlation or causation, we really cannot say, but a clear indication that consumers are affected and this just adds the overall malaise of consumer sentiment and reduced spending inclusive of apparel. Conversely, in our core company owned channels, it is worth noting that we continue to see a nice lift in AOV from increased penetration in tailored clothing. We expect that lift will continue through the Q2, but starting in fall, we will begin to anniversary that impact. Speaker 200:10:56Within our marketplace, we've seen sales growth from our Big and Tall Essentials program, but this comes at the cost of a lower price point and consequently lower margins. The bottom line is we've experienced a discernible difference And the velocity of traffic to both the stores and the website for the Q1. Regarding pricing and promotions, We continue to be very selective in how we utilize promotion and we have not taken any meaningful price increases. While it can be very tempting to lean on promotions to attempt to drive sales in a weaker economy, we have resisted that temptation. The work we have done around the structural positioning in the brand with the consumer is a critically important structural element supporting our transformational strategy. Speaker 200:11:46We continue to prioritize the greater development and building of more personalized relationships with consumers over the next 2 to 3 years. Over the past 2 years, we have worked very hard to reposition our brand around the pillars of fit, Assortment and exclusivity, inclusive of the experience in stores. Price is important to our customers, The price is not how we differentiate. We have seen some small level of erosion in the gross margin relative to last year, which was driven by loyalty, shipping and product costs. I'll talk more about our loyalty program in a minute, but there is a cost associated with the program that is impacting the margin. Speaker 200:12:27Let me now share some thoughts on Q1 performance in the context of our merchandise assortment. As a reminder, Our current merchandise assortment is approximately 55% our owned brands and 45% national brands. And our sales penetration for the Q1 was relatively consistent with that inventory position. Tailored clothing accounted for 21% of the Q1 business compared to 18% in the Q1 of last year. This is an area where we have been improving our in stock position as demand for event driven shopping and continued return to office gains momentum. Speaker 200:13:05In sportswear, The top selling brands in our assortment continue to see slightly higher selling velocity, including Polo Ralph Lauren, Nautica and Reebok. In the spring 2023 season, Life is Good and Original Penguin Golf officially joined DXL's growing exclusive brand portfolio, further reinforcing us as the number one destination for desirable national designer brands In big and tall sizes. And as I've already communicated in our prior quarterly call, we have 2 more iconic brands joining our portfolio of exclusive offerings in the fall. We aren't yet ready to reveal who those brands are, but they are household names that our customers are going to love. Next up, inventory. Speaker 200:13:55Inventory continues to be a key priority for us and we are in a better stock position today as compared to the Q1 of 2022. We have a very strong orientation to try to turn faster and we are making great progress here. Compared to 2022, our inventory levels are up 3%, but compared to 2019, our inventory levels are down 11%. We have been working to improve our inventory turnover for years and I'm happy to report that our inventory turnover is up 25% to pre pandemic levels. Our clearance inventory at the end of Q1 2023 is 7.8% as compared to 6.9% at the end of Q1 and 2022 and we are very comfortable with clearance inventory levels in total, which are still less that our historic target of 10%. Speaker 200:14:49From a marketing perspective, throughout the quarter, We continue to employ an eye on the road and an eye on the horizon approach to ensure we deliver solid results while continuing to build momentum and a modern marketing organization for the future. As such, we have continued to make good progress after we rolled out our campaign of wear what you want. The brand positioning launched in early March. As a reminder, this new approach invites our customers To finally shop like everyone else by choosing the style of apparel that they want that reflects who they are and fits each of them uniquely versus simply accepting whatever they can find that covers their body. We continue to believe we are uniquely positioned Deliver this through our brand pillars of industry leading fit expertise, the broadest assortment of national and owned brands, The highest standards of construction and quality, the most style options and an experience you cannot find anywhere else. Speaker 200:15:54I am happy to report that the work has been well received by our customers and our DXL associates alike. We have seen increased engagement in our social channels, Increased revenue in our email program and as a result a more unified message to customers to wear what they want, Our Wear What You Want campaign. We will continue to build on the success of the launch in the coming quarter With an integrated push around the key Father's Day period that includes all our owned and paid channels as well as introducing new videos, And truly shown via streaming video that will target new customers. Additionally, we have Continue to engage customers with our DXL Rewards Club loyalty program since launching it in late October of last year. We are seeing particularly strong results among our gold and platinum tiers in both certificate redemptions and sales. Speaker 200:16:51In Q2, we have plans to further engage customers and drive acquisition with a focus on the value the program delivers every time you shop. Further, we plan to improve awareness, improve engagement and customer experience with a more pronounced loyalty emphasis on our site to ensure our customers are taking advantage of this program. But building brand loyalty does not come without a cost And our program features new ways to engage with the brand and leads to more loyalty certificates being issued. This is an extension of our marketing efforts that allows us to stay more connected to our best customers. In Q1, we continued our efforts to build a more robust Modern Marketing Organization. Speaker 200:17:38As we have previously discussed, we've continued to work to better position DXL for the future regarding more personalized personalization at scale, building our analytic capabilities and deepening customer engagement. In April, we launched our customer data platform or CDP as planned and on schedule. Over time, this new capability will further improve our customer targeting with ability with a more sophisticated approach to segmentation through audience creation, deeper customer insights and a path to even greater relevant personalization at scale. Throughout the coming quarter, we will be utilizing this tool across our marketing channels to better engage our customers based on shopping behavior, insights and predictive modeling. In addition to launching the CDP, we also brought in a new email partner to help manage our remarketing program based on individual shopping behavior. Speaker 200:18:41These trigger emails have historically been a significant revenue driver and we believe they become even greater part of our mix in the near term. The combination of better segmentation, audience identification with the CDP and a more robust remarketing program should benefit us later in the year. We've also begun foundational improvements on our analytic capabilities, Moving to the near term to an improved holistic cloud based architecture will enable a more robust data infrastructure that delivers complex analytics at significantly greater speed. This will enable a democratization of data across the organization, leading to a greater unlock of customer understanding, new ways to think about our business and make better investment decisions behind marketing drivers. As I already mentioned, we saw store traffic begin to soften throughout the quarter. Speaker 200:19:44To combat this, we have leveraged data to better utilize our digital investment to drive both online and offline traffic and revenue. Additionally, we will be bolstering traffic by highlighting local store inventory to meet customer demand in any given trade area. We believe we have made significant progress in Q1 And while our work is not done, we have laid out where we are going in the coming months and the balance of the year to deliver sustained marketing improvement. I also want to touch on our real estate and store development objectives. Earlier this year, we talked about the opportunity to grow our store base And I'm pleased to report we are starting to see movement on this front. Speaker 200:20:30We have come to terms and executed our first lease agreement for a new store in Los Angeles. We are very close to our 2nd new store, which will be in New York market, and we expect to sign at least one more lease for a third store that we expect to open by the end of 2020 3, we've also begun construction work on 4 of our casual mail stores that are converting to DXL And there are 6 additional casual mail stores that we expect to begin and complete conversion to our DXL store format by the end of the year. This would bring us to 13 new doors operating under the DXL brand nameplate by the end of 2023. And finally, we have begun work on remodeling 1 of our DXL stores in the Chicago market and we are looking to begin work On remodeling at least 4 additional existing DXL stores before the end of 2023. Over the next 3 to 5 years And to provide you with an estimate of scale, we believe we could potentially open up to 50 net new DXL stores. Speaker 200:21:36We intend to continue to convert casual mail locations and we continue to evaluate the DHL remodels For incrementality and productivity, the bottom line is we see store development leading to more customers And we are pursuing these three avenues and we'll adjust our tactics as we learn. It's an incredibly exciting time for us at DXL And I'm honored and humbled to speak with you about these opportunities yet ahead of us. In summary, I am very proud of our team and what we have achieved this quarter. None of this would be possible without the hard work and dedication of all our people in the stores, in the distribution center, In the corporate office and in the guest engagement center, I want to take a moment to just say thank you. I truly believe that all we have accomplished is because of who we are as a team. Speaker 200:22:31Thank you for all your hard work and your commitment in our pursuit of serving the big and tall consumer and making DXL the place where they can best satisfy the desire to wear what they want. And now, I'm going to turn it over to Peter for an update on the Q1 financials and how we are thinking about guidance for the remainder of the year. Peter? Speaker 300:22:57Thank you, Harvey, and good morning, everyone. Net sales for the Q1 were 100 and $400,000 as compared to $127,700,000 in the Q1 of last year. On a comparable basis, adjusting for closed stores, Sales grew by 0.6 percent. Our stores, which make up about 70% of our total business, We're up by 1.5% and our direct business, which makes up the other 30% was down 1.6%. As Harvey noted, our sales growth slowed in March April due to a slowdown in traffic, which We believe is consistent with the overall macro environment. Speaker 300:23:38Although our direct channel was down slightly overall, We continue to see sales growth in our mobile app and online marketplaces. The mobile app customer tends to be a more loyal customer We shops more frequently, so we are excited to see growth in this channel. Moving over to gross margin, Our gross margin rate inclusive of occupancy costs was 48.6% as compared to 50% in the Q1 of last year. This 140 basis point decrease was a combination of 110 basis points in merchandise margin and 30 basis points in occupancy costs, primarily due to the deleveraging of sales. The decline from last year's record high margin rate was generally in line with our expectations. Speaker 300:24:30We have maintained a non promotional posture that emphasizes our superior quality, fit and experience rather than discount prices and our margin rate in the high 40s remained significantly higher than our historical rate. However, on a year over year basis, merchandise margins decreased due to a combination of higher costs in 3 areas. First, we decided to absorb the cost increases on certain private label merchandise, especially those at an opening price point level rather than passing these on to our customers through price increases. 2nd, we have seen an increase in costs related to the fulfillment of our direct to consumer orders. And third, the success of our new loyalty program means that there are more customers redeeming loyalty certificates for a discount on their purchase. Speaker 300:25:24These three factors were partially offset by lower inbound freight costs on receipts from overseas. Although these elements will all persist at varying levels through the rest of the year, we expect them to moderate to the point where gross margin rates for the year should be approximately 100 basis points lower than last year as compared to the 140 basis points we saw in Q1. Most importantly, we feel very good about our inventory position, both in terms of total inventory balance at the end of the quarter and in relation to our turnover rates as well as our clearance levels. Inventory management is especially critical in our business with a variety of styles and sizes that we offer. I won't repeat the numbers, which Harvey already covered, but we feel like our inventory position at the end of Q1 That sets us up for future success and we have adjusted our receipt plan to reflect our sales expectations. Speaker 300:26:23Moving on to selling, general and administrative expenses, Our SG and A as a percentage of sales increased to 38.5% as compared to 36.5% in the prior year's Q1. On a dollar basis, SG and A expense increased by $1,700,000 approximately split between customer facing costs and corporate supporting costs. The increase was primarily due to payroll related costs from new positions added in the past year to support our long term growth initiatives, including new store development. Last year's annual merit adjustments in the healthcare costs also contributed to the increase. Our add to sales ratio also increased slightly to 5.5% from 5.3% in Q1 of last year. Speaker 300:27:15For the year, we expect to spend about 5.7 percent of sales on advertising. As you might expect, we are beginning we are being very judicious with expense management, but we remain committed to investing in the people and technology necessary for future growth and success. With gross margin at 48.6 percent and SG and A expense at 38.5 percent, this brings our EBITDA in at 10.1 or $12,600,000 for the Q1. Although lower than last year's 13.5 percent or 17,300,000 We are pleased to be able to deliver another quarter of double digit EBITDA performance in the current macroeconomic environment. I want to spend a moment on income taxes, since this is an area where our year over year results require adjustment to be comparable. Speaker 300:28:10Last year, we had virtually no tax expense in the Q1 because our taxable income was offset by our fully reserved net operating loss carry forwards. With the release of our valuation allowance in the Q2 of last year, We have now returned to a more normal tax rate of approximately 26%. However, we are still able to utilize Our remaining net operating loss carry forwards to reduce our cash taxes and as a result, we will pay very little in federal or state income Cash tax in fiscal 2023. Moving on to liquidity, we feel very good about our cash position and the overall strength of our balance sheet. At the end of Q1, we had cash and short term investments of $46,000,000 as compared to $7,500,000 a year ago, with no outstanding debt in either period and availability of $93,800,000 under our revolving credit facility. Speaker 300:29:11With the seasonality of inventory builds and payments of prior year incentive accruals, View 1 is typically a quarter with a net cash outflow. This quarter, our free cash flow, which we define as cash flow from operating activities less capital expenditures, was a use of 5.9 We are keeping most of our excess cash or $29,200,000 in short term U. S. Government treasury bills, which are earning interest at approximately 5%. In March, our Board of Directors authorized a $15,000,000 stock repurchase program And we expect to begin to execute purchases of our common stock on the open market in the Q2 of this year. Speaker 300:29:58We believe this is a prudent use of our cash and at our current stock price and allows us to put our free cash flow to work for our shareholders by reducing the number of shares outstanding. I'll close with an update on our financial outlook for fiscal 2023. Based on our results for the Q1 and considering the macroeconomic challenges and uncertainties regarding consumer spending seen throughout the retail industry, We are currently trending towards the lower end of our previously reported guidance for fiscal 2023. How we get there is through a low single digit negative comp for Q2. We are optimistic that we can be flat in Q3 and back to a low single digit positive comp in Q4. Speaker 300:30:45Accordingly, for the 53 week period, We are guiding to sales of approximately $550,000,000 and an adjusted EBITDA margin of approximately 12.5%. Our outlook assumes that the sales trends we have seen in March, April May will continue to persist through the Q2, but we are expecting to see small sequential improvement from consumer driven marketing initiatives, which come online over the months ahead. We believe these efforts will drive a return to positive comps in the second half of the year. We remain focused executing the strategies we have spoken about today, and we are optimistic that this will allow us to outperform the broader apparel market. I would now like to turn it back over to Harvey for some closing thoughts. Speaker 300:31:33Harvey? Speaker 200:31:34Thanks, Peter. Before I move on to Q and A, I'd like to just briefly summarize what we believe are the most critically important elements for us and hopefully you as investors as you think about investment in DXL as We posted a comp sales increase for the Q1 of plus 0.6% and remain encouraged by our ability to drive another quarter of comp growth and that growth is now over 9 consecutive quarters. While DXL is unique on many levels, we are still impacted by volatility, consumer psyche and sentiment But we believe that our Q1 results have outperformed the broader retail market on a relative basis And because we can serve by consumer, we're bringing to market a clearly differentiated brand driven by more personalized, more relevant communication, structurally built on a positioning that leverages fit, assortment and experience. And for that, we remain optimistic for our long term ability to take market share. We believe that the strategic transformational changes we have made are increasing our share of wallet and attracting and retaining new customers We've not yet experienced the DXL factor from a sales and profit from a marketing and strategic planning perspective, We continue to employ an eye on the road and eye on the horizon in our approach to driving outcomes this year, but also investing for the future. Speaker 200:32:54At an operating level, we continue to have a very strong operating process, structure and discipline and proven out as an example by our lean inventory, which at quarter end was 11% below pre pandemic levels and turnover which was up 25% over pre pandemic levels in 2019. We are maintaining our shift away from discounting, driving gross margins in the upper 40s and EBITDA in the low to mid double digits. And we believe we are setting ourselves up to continue to navigate meaningful growth over the next 2 to 3 years and are prepared to weather this most recent round of volatility. We remain incredibly excited and enthusiastic about DXL's prospects in the year ahead And as a market leader, as an incredibly important brand serving an incredibly underserved consumer. And with that, operator, we will now take questions. Operator00:33:49Thank you. One moment for our first question. And our first question comes from the line of Jeremy Hamlin with Craig Hallum Capital Group. Your line is now open. Speaker 400:34:20Thanks and congrats on the strong results in a tough environment. So I wanted to just start by asking about your gross margin and making sure that I understood in terms of the Roughly 140 basis points or so year over year decline. You noted a couple of reasons for that, including the loyalty program costs, Higher shipping costs and some occupancy deleverage as well. Wanted to see if you could It'll be a little bit or provide us more color in terms of splits Of how those components factored into the year over year decline? And what you expect to have on that guidance for down 100 basis points of the year. Speaker 300:35:13Sure. So I'll take that one, Jeremy. I think the biggest Part of the decline in the merchandise margin, it really came in the IMU deterioration. Across the board, we saw that it was most impactful in wovens and knits. I think the other three pieces, The loyalty costs and the shipping costs, which are Really what we saw on the direct to consumer side, those were more or less offset by the savings that we saw On the ocean freights and the container freight costs that we saw. Speaker 300:35:54So the piece that I would point to the most is, Again, it's the product cost. And keep in mind, the product, we recognize that cost when we sell through the product. So this is product that We would have taken receipts on upwards of it could have been a year ago, even as much as a year and a half ago when cotton prices were higher and some of the other prices were a bit higher. But hopefully that gives you just a little more clarity on where some of the splits are coming from. Speaker 400:36:23Yes, that's definitely helpful. And then in terms of your same store sales color And expectation for the year, I think you said Q2 down low single digits, flattish for Q3 And then returning to positive low single digit in Q4. In terms of getting there, Again, tough environment out there. You guys are clearly doing a lot better than most of the competition. What does it assume in terms of performance on a relative basis to where we are today? Speaker 400:37:03Is this kind of factor in? We know that traffic has been the big driver here. Your conversion remains strong. And as Harvey noted, average order value is still strong as well. What are you building into that? Speaker 400:37:19And then How does how are you factoring in, let's say, the new stores and some of these conversions, which I would assume would also have a positive benefit here in the second half of the year. Speaker 200:37:33Jeremy, it's Harvey. I'll address that from a customer facing perspective and then Peter might add a little value In terms of some of the underlying KPIs, but we, as you know, have been very oriented around transformationally restructuring how we engage consumers and whether it's The things we've already done like the beginning of the loyalty program, which I'll remind you is literally not going to anniversary itself until really the 1st November. It It was mid October when we did that. We believe there's upside in elements such as that. We also believe that the new trigger email program is another example As well as the CDP and I use the words more personalized, more relevant marketing communication and ultimately We have some small expectation we might be able to impact traffic by things like localized inventory advertising, Where we can literally advertise based on searches and local inventory in stores and then serve that up to consumers On one level, pretty tactical, but important, but on another level at a higher, more strategic perspective, The concept of more personalized marketing and more relevant communication to consumers to ultimately accomplish What we want to engage consumers about why we are so different is what's really driving the change. Speaker 200:38:50And as more of those things come online, We're hopeful what we'll see is greater level of conversion, greater level of potential AOV and not material change in traffic, although We're hopeful that there's some level of moving on that regard. And unfortunately, that's the kind of the Element that is unknown, right? Where we are overall in a business climate, are things going to get worse, are things going to get better? We believe at some level we'll be able to push water uphill By some of our own initiatives and if they're just neutral to where we are today, we'll win. If they deteriorate, there's obviously the potential fall short And if they improve, there's actually the opportunity to be upside. Speaker 200:39:31So it's a challenge. As one of our board members says often, if we could predict future we probably wouldn't be doing what we're doing. And I think if anyone could truly predict the future at this moment in time, it would be remarkable. So Hopefully, I've given you a little bit of perspective around the consumer facing elements, which we think are meaningful. Speaker 300:39:51The one piece that I'll add to that is, we did deliberately try to give you a little more direction on what we're expecting to see quarter by quarter. And we typically don't do that. We typically just stick with an assumption for the year, but we felt it was important to just show how we're thinking of the year. Relative to other performance, as we said, it's we're talking low single digits either negative or positive, which is where we've been trending for the last few months. And it's not we're not looking for a Herculean change in the business, but we definitely are expecting that the second half of the year for all of the reasons that Harvey just laid out that we're trying Control from a micro level, plus we're hoping we get a little bit of tailwind from hopefully an improving macro environment. Speaker 300:40:46But There are elements that we are focusing on deploying here within the company that we think are going to help lead to a better second half. Speaker 400:40:56Yes, that's great context, especially on top of last year's plus 11 comps. I wanted to also just get into your customer support costs, so inclusive of your DC, your corporate overhead. That's up, I think it was up 110 basis points year over year in Q1. In terms of thinking about the environment We've had enough retailers report now that there's been a softening across the board. In terms of thinking about the ability, if you felt it was necessary that there was some additional slippage in the economy, that You know, employment rates fell a little bit. Speaker 400:41:42Do you feel like is there a little bit of wiggle room in terms of being able Pull a little bit out of that if you felt like you needed to, but I wanted to just understand, I know that you're In a different phase for this company that you're now entering in a phase with some unit growth when You're generating these conversions that are going to be helpful overall, but what's your ability to potentially nip That if you felt like you had to pull back a little on the structural cost side. Speaker 300:42:18So again, I'll take this one and it's a really good question and we talk about this a lot. I think that we've been pretty with what we're trying to achieve with the company in terms of growing our analytics capabilities, growing our store base. We've been upgrading our roster and bringing on great people that are going to help really propel the business. On the other side of the coin, you could say, all right, well, if we really do we really want to stop doing those things And maybe save another $500,000 or $1,000,000 of expense. I really don't think that we get The credit for making those kinds of difficult decisions and then we come out of this a year from now And we just have to restart everything all over again. Speaker 300:43:12So I think that it's important to just be Clear that we do believe this is a moment in time with where the economy is and we think that what we've done with the brand and the transformation and Creating this haven for big and tall guys, that's going to get us past this moment. And so I don't think we're looking at we're not looking at making drastic cuts, because it's Just going to leave us empty and not have those initiatives when we do come out of this. Speaker 200:43:44Yes, Jeremy, I want to underline what Peter said And make sure you heard the most important thing. We are trying to position ourselves for growth and it's in the public markets, it's a little challenging to say the least Navigating quarter to quarter, but our Board and management team is very oriented towards growth. And we believe that I've said this before, we believe why aren't we a $1,000,000,000 company, let alone something greater than that and that's not guidance In any shape, manner or form, but I definitely want to express the fact that our actions and strategy is oriented towards growth over the next 2 to 3 years and the challenges managing quarter to quarter. Speaker 400:44:28Got it. No message I heard loud and clear. All right. Best wishes. Thanks for taking the questions guys. Speaker 200:44:35Thanks so much. Have a great day. Operator00:44:38Thank you. One moment for our next question please. Question comes from the line of Michael Baker with D. A. Davidson. Operator00:44:48Your line is now open. Speaker 500:44:51Good morning, Mike. Thanks, Scott. Hi, how are you? I wanted to ask you a couple of questions, but one, let's start. I'm curious what you're seeing in some of the remodel efforts that you've done. Speaker 500:45:00I think You talked about doing 1 in Chicago. I think you already you're doing a remodel or did a remodel in Warwick, Rhode Island, I believe. What did you change here and what are you seeing in terms of the sales lift versus cost? Speaker 300:45:16So in terms of the remodels, we've opened up we've remodeled 2 stores. 1 is in Warwick, Rhode Island. The other is in Troy, Michigan. The 3rd store that we're doing, which is currently underway is in the Chicago market. We do believe that We're going to get 4 more underway in this year. Speaker 300:45:36I'm hoping we can get 4 finished this year, but I'm not sure we'll have them all By the end of January, but we're definitely going to get 4 more started and see where they are. The thing I'll say about performance Is that in both Warwick and in Troy, they have outperformed both their regional store peers and the chain in total. So I think it's still early for us to make any real definitive Because again, it's only 2 stores and that's why we want to get 5 more open. So we'll have a little bit broader of a sample to make some judgment on. But in both cases, traffic's improved, our net promoter score has improved in those stores And our new to files improved in those stores. Speaker 300:46:25So we're encouraged, but we still need to learn more. Speaker 200:46:29The only other thing I'll add, Mike, is the Strategic intent of our remodel is to create a stronger relationship with consumers. And the best example of that It's literally if you've been in our stores, which obviously I know you have in most stores, the cash wrap for lack of a better way to say it where you check out where Speaker 400:46:47the cash registers are, if you will, the POS Speaker 200:46:47terminals are at the front of the store. And we If you will, the POS terminals are at the front of the store. And we've actually dismantled that entire front of the store. It is now all window. It is open to the world. Speaker 200:46:59We have great lighting and great visibility into the store. And what we've done is Embed in the store, for lack of other ways, they had 2 small kitchens. And when I say kitchens, as most people recognize that when they have a party at their house, everyone seems to All hang out in the kitchen around the island and we have 2 islands embedded deeper in the stores and those islands given the opportunity with a POS terminal, A digital consumer interface to show our universe offering, which is all of the things offered online where color extensions and size extensions and Style extensions exist and the ability to be right near the fitting room so that we can interact with consumer in a more one on And actually create that relationship by sitting down. So that center island has bar stools, it has a computer terminal and we literally look to Kind of share a cup of coffee and talk about the product, we present the product on that island. It's a much more engaging relationship and We're obviously looking to drive AOV, we're looking to drive UPTs and ultimately become stickier And so that they remember not just they purchased something and made a transaction, but they worked with Bob and had incredible experience and Might even refer to Bob as their friend at DXL. Speaker 200:48:17It's a different way to think about it, but in the business that we do with Such an underserved consumer and such a inferior relationship in most retail stores where they don't serve this consumer the way we do, We think the strategic intent of the remodel is really an important variable. Speaker 500:48:35Yes, it makes sense. I think they look great. Couple of other questions. One, let me ask a short term question and then a long term question. In the short term, with all the factors you highlighted that have impacted comps, I think are pretty well known. Speaker 500:48:48But what about tax refunds? Do you have any data to suggest that that impacts your customer? I know your customer is Typically a little bit higher end, but any impact there, is that sort of now phased into the background, that whole tax refund issue? Speaker 300:49:06So I'll take that one, Mike. I think, to some degree, yes, that's impacting us, but not nearly as much as What I've heard other retailers talking about relative to that, I think one of the things that Harvey talked about in his prepared remarks was that All retailers are fighting for that ever tightening share of the consumer's wallet and that gets impacted by what's the cash Coming in so that he can make his discretionary purchases. I don't think it's as pronounced for us as it is at other retailers, but I would say there's certainly some elements of that, that we saw in the Q1 results. Speaker 500:49:47Fair enough. And then a longer term question, you talked first of all, you said gross margins high 40s. I think in the past, you had said About $50,000,000 subtle change, but what's did something change in your long term, even this year and then long term gross margin perspective, But then you talked about growing sales over the next couple of years. Can you frame what you think a proper top line sales number should be over the next couple of years? And then the third part of that is, you said EBITDA lowtomidsing sorry, lowtomidteens. Speaker 500:50:21I think that mid is higher than you're guiding certainly this year. What can drive you back to that mid teen number? Thanks. Speaker 300:50:32Sure. So on the EBITDA The low to mid teens, we've said from day 1 many years ago, we want to have sustained EBITDA margin in excess of 10%. We've clearly been well beyond that. I think As we've talked about with the investments that we're making in marketing and real estate and store development, that comes at the short term expense Of margin. So I would expect that in these years where we're continuing to try to build out 50 stores and build out our analytics practice, It will be in the I don't want to get into specific numbers, but if we're saying low to mid double digits, that's 10% to 15%. Speaker 300:51:18So we're going to continue to be floating in that space as we continue to build out. But the whole purpose of that is to make the right investments now so that we emerge a few years from now with a bigger, stronger store portfolio, Digital practice, direct to consumer business that makes us a more powerful company. Speaker 500:51:44Yes. Fair enough. What about gross margins a little bit lower? Speaker 300:51:49Sorry. So for gross margins, yes, I mean, we said for this year, we're expecting them to be down about 100 basis points from last year. So I think last year we were right at 50%. So this year we're thinking we're going to be around 49%. Right. Speaker 300:52:06Again, it's all three factors that I mentioned before. It's the lower IMU, It's the cost of loyalty. Those are the bigger pieces of it, That's what we're assuming this year. Speaker 500:52:25Well, yes, I guess just to push on that though, I think on your last call, correct if I'm wrong, but the target was closer to 50. So it's down a little bit. And so of all those things that you outlined, I guess, a lot of those you could have What has changed? What is making it worse? Is it just less leverage on the occupancy if you're at the lower end of sales or Just trying to figure out what changed versus a few months ago on the Speaker 200:52:51gross margin? Speaker 300:52:53Yes. So there's no I wouldn't point to any one thing. I would say all three of them have come in a little bit lower than what our initial expectations were. That and combined with lower leverage on lower of a sales base, initially, we were at $550,000,000 to $570,000,000 range and now we're coming in at the low end of that. So there's no one Silver bullet that suddenly blew up in our face. Speaker 300:53:25It was all a lot of little things that altogether have just led us to we think we're going to be down about 100 basis points. Speaker 200:53:32And Mike, I would stress that that 100 basis points from the 50 basis points is in direct comparison to, Let's just say $43,000,000 and change. So it's not like we're in any shape, manner, or form suggesting we're going back to where we've historically. But To Peter's point, there's a lot of variables that were challenged to address and there were high watermarks at 50. Speaker 500:53:57Yes, makes sense. Understood. Thank you. Operator00:54:01Thank you. Our next question comes from Raffi Savitz with he's a private investor. Your line is now open. Speaker 600:54:16Hey, Harvey. I guess you've been at the helm for 4 years or so. And can you maybe take a moment to reflect What's gone according to plan and what hasn't met your expectations in your time there? Speaker 200:54:31Yes, I think there's 3 things that I'm incredibly excited about. 1, a recognition of our place in the market and building a strategy To execute against that, we have a customer that historically has not been honored and respected in a way that most Individuals that are, let's say, more of average bills can shop anywhere they want with the clothes that fit them and styles they want. And we have, I think, Not evolved the assortment as much because I think the assortment was pretty powerful, but we've really evolved the way we engage And communicate and marketed the business and whether it's the lack of promotion with the recognition that the DXL factor is Driven by the experience and a unique fit that Close really fit them in ways that they didn't recognize before, We have really done a good job. We're not where we end up ultimately want to be, but we're continuing to work against that marketing element. And that It's a really important strategic element and shift from the way we've communicated and marketed the business before. Speaker 200:55:33If you have tracked literally the business prior to my arrival, we were very promotional, maybe almost 100% promotional on most of the things we did for the 2 or 3 years prior to my arrival. The second thing is really, I think, really engage And empower the team. We have an incredible group of people today that are doing really a yeoman's work. And the fact of the matter is that In the accountability and ownership, we've spread that throughout the organization. So our stores group is Incredibly passionate, they know what they're responsible for, they are bonus and insensitive against those elements. Speaker 200:56:10We provide them a different level of tools and marketing messaging and Execution that we haven't done before. And then last but not least is obviously I think the investments we're making. I think we've made Really important investments. One might say that we had technical debt. We've addressed so many of those elements with changes in the CRM system and the loyalty program The technical debt and the other investments with stores and marketing, you look at the shift in marketing, we've historically been a 4% and change marketing company today, we're closer to 6%. Speaker 200:56:45We've done what we needed to do, I think, to really engage and communicate in the ways I just So I think when you kind of sort of the way Peter talked about margin, there's no one silver bullet. I believe that it's The combination of multiple elements and a lot of heavy lifting and I might even go so far as to say a greater level of blocking and tackling To recognize execution is everything. So we have a plan. We know what it is. We have objectives for every person in the company to execute against those. Speaker 200:57:15We empower them the folks and then we hold them accountable and inclusive of myself. So hopefully that was some sense of what it is we've done. Speaker 600:57:24Yes, that's helpful, Harvey. And maybe on that point, you think about kind of the go forward strategy here. What would you say the major risks are in that strategy and how are you doing your best to mitigate those? Speaker 200:57:39I think that I would say that the most major risk is really the economy. I think we believe we're in the first The 4th year of a non normal year. The unfortunate reality is in my 1st 7 months, we had a strategy. We executed against the way I just referred to it. We made small but meaningful growth. Speaker 200:58:01So we went from a negative comp to a positive comping went from single digit growth online to double digit growth online and then the pandemic hit. And literally since basically February, March of 2020, No year, 1 year to the next has looked the same. And so we're trying to navigate this an incredible level of ambiguity. And mind you, we've gone from a $23,000,000 EBITDA to a $75,000,000 EBITDA. We've gone from $473,000,000 of revenue to $500,000,000 and let's say $550,000,000 And we have measurably moved EBITDA from 10% to double digits excuse me, single digits 10% and north of that. Speaker 200:58:37So, it's just an incredibly challenging period of time for every retailer and Quite honestly, probably every business in humanity to navigate the issues that we're all facing, no matter whether you're in business or not in business, just navigating the world today. Speaker 600:58:54And maybe my last question here. I guess in terms of kind of market share growth either kind of where you're getting that growth today or where you think you'll get that growth in the future. I mean, is it primarily taking it from, let's say, department stores That aren't servicing these men as well as you are or is it or is the expectation that You think you're creating a much better experience and ultimately these folks that aren't really shopping and aren't really buying that much will be buying Those will be spending more of their disposable income on clothing because of DXL. Speaker 200:59:28Yes. Our belief is that there are a lot of players in this space That dabble in this, we've often referred to they have a fixture or some version of number of web pages that represent product to Serve the underserved consumer, but in reality, we're the only ones literally that have the full service across stores and web, And we believe we'll take share from a lot of different places. But we asked the question and I didn't flippantly say why aren't we $1,000,000,000 We asked the question why aren't We have a meaningful market share, but I often say we're an 800 pound gorilla, but the reality is we're probably a 100 pound gorilla With a lot of £20 chimpanzees around us, we're just not as big as we should be and there's incredible opportunity to grow and I think we started that process. So I really appreciate the question. Speaker 601:00:19Thanks Harvey. Speaker 201:00:21You bet. You bet. Operator, I think we have time for one last question and then we'll have to roll. Operator01:00:26Thank you. Our next question comes from the line of Pete Johnson with Johnson Inc. Your line is now open. Speaker 701:00:35Yes, good morning. You have a fair amount of cash in the balance sheet and I think you've said that you didn't buy back any shares recently. Is part of the concern perhaps that the overhang from 2 of your biggest investors, AWM and Wolf Health have been Selling shares recently and you want to wait for that overhang to pass? Speaker 301:01:00So I'll take that one. And I guess the only comment I'll make on The buyback is, as I said, we plan to start executing that in Q2. When we started the quarter, I think our stock was up over $7 at the beginning of the year. And so as it's been slowly coming down, it's certainly a much more attractive Price for us to acquire at. So it's really been the last 4 or 5 weeks, 6, 7 weeks that it's come down much more meaningfully. Speaker 301:01:32So we do fully intend to start executing on that very soon. Speaker 701:01:37Okay. And has either AWM or Wolf Given you any sense of their sort of medium to long term plans? Speaker 201:01:49Yes, that's just something unfortunately we wouldn't comment on. And I thank you for the question, but we just won't make a comment on that. Speaker 701:01:57Okay, fair enough. But you certainly have enough cash on your balance sheet to be able to put some aside for the buyback at this point, I would say. Speaker 201:02:05Indeed. And that's why the Board has supported that initiative and we expect we'll be more than likely in market. Speaker 701:02:11Excellent. Thank you. Speaker 201:02:14Operator, with that, we are a little over. We really appreciate everyone's support. I wish you all a wonderful Memorial Day safe And we look forward to talking to you within our next quarterly earnings call. Operator01:02:25This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.Read morePowered by