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Destination XL (DXLG) - 2024 Q1 - Quarterly Report

Financial Performance - Total sales for the first quarter of fiscal 2023 were $125.4 million, a decrease from $127.7 million in the first quarter of fiscal 2022[97]. - Net income for the first quarter of fiscal 2023 was $7.0 million, or $0.11 per diluted share, compared to $13.4 million, or $0.20 per diluted share, in the prior year[98]. - For Q1 fiscal 2023, the company reported net income of $7.0 million, or $0.11 per diluted share, down from $13.4 million, or $0.20 per diluted share in Q1 fiscal 2022[112]. - Adjusted net income for Q1 fiscal 2023 was $7.0 million, or $0.11 per diluted share, compared to $9.7 million, or $0.14 per diluted share in Q1 fiscal 2022[113]. - Adjusted EBITDA for Q1 fiscal 2023 was $12.6 million, with an adjusted EBITDA margin of 10.1% compared to 13.5% in Q1 fiscal 2022[132]. Sales and Revenue - Comparable sales increased by 0.6%, with store sales up 1.5% and direct sales down 1.6%[101]. - Gross margin rate for the first quarter of fiscal 2023 was 48.6%, down from 50.0% in the first quarter of fiscal 2022[103]. - SG&A expenses as a percentage of sales increased to 38.5% from 36.5% year-over-year, with a dollar increase of $1.7 million[105][106]. Cash Flow and Investments - Cash and investments at April 29, 2023, were $46.0 million, up from $7.5 million at April 30, 2022, with no debt outstanding[99]. - Cash flow from operations decreased to $(4.2) million in Q1 fiscal 2023, compared to $(1.5) million in Q1 fiscal 2022, primarily due to lower earnings[118]. - Free cash flow for Q1 fiscal 2023 was $(5.9) million, down from $(2.7) million in Q1 fiscal 2022[119]. Inventory Management - Inventory was down 11% compared to pre-pandemic levels, with turnover up over 25%[99]. - Inventory increased by approximately $3.4 million to $100.3 million as of April 29, 2023, compared to $96.9 million a year earlier, with inventory turnover up over 25% from pre-pandemic levels[114]. Future Plans and Capital Expenditures - The company plans to open 3 new DXL stores and convert 10 Casual Male stores to DXL format by the end of fiscal 2023, with potential for 50 new DXL stores over the next five years[125][126]. - Capital expenditures for fiscal 2023 are expected to range from $19.0 million to $21.0 million[126]. Stock and Credit Facilities - The Company approved a $15.0 million stock repurchase program in March 2023, expected to begin in the second quarter of fiscal 2023[100]. - The company has a $125.0 million revolving credit agreement with no outstanding borrowings as of April 29, 2023, and an average unused excess availability of approximately $82.5 million during Q1 fiscal 2023[123][124]. Marketing Expenses - Marketing costs for the first quarter were 5.5% of sales, with expectations of approximately 5.7% for fiscal 2023[107]. Taxation - The effective tax rate for the first quarter of fiscal 2023 was 26.6%, compared to 0.8% in the prior year due to the release of a valuation allowance against deferred tax assets[111].