Destination XL (US:DXLG)2022-05-26 15:57Financial Data and Key Metrics Changes - Comparable sales for Q1 2022 increased by 19.5% compared to Q1 2021, driven by a 20.8% increase in stores and a 16.7% increase in the direct channel [38] - Gross margin rate improved to 50% from 45.6% in Q1 2021, with a 440-basis-point improvement attributed to merchandise margin and occupancy costs [43][44] - SG&A as a percentage of sales increased to 36.5% from 33.3% in the prior year, primarily due to increased advertising costs [49] Business Line Data and Key Metrics Changes - The tailored clothing business grew from 12% of Q1 revenue last year to 18% this year, driven by strong sales in suits and dress shirts [31] - The sportswear business showed strong results, with inventory challenges being addressed as the company returns to a fully assorted inventory position [32] Market Data and Key Metrics Changes - All regions showed positive comp sales compared to both 2021 and 2019, with the Southeast, especially Florida, performing exceptionally well [42] - Active customer counts reached the highest levels since tracking began, indicating strong new customer acquisition [18] Company Strategy and Development Direction - The company is focused on a growth mindset, increasing marketing investment to 6.2% of sales to drive new customer acquisition and retention [15] - DXL is transitioning away from discounting and promotions, with a significant reduction in promotional marketing tactics, leading to improved margins [23][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges such as supply chain disruptions and labor shortages but expressed confidence in the company's ability to navigate these issues [36][61] - The company reaffirmed its sales guidance for fiscal 2022, expecting to trend toward the high end of the $510 million to $530 million range [59] Other Important Information - The company has seen improvements in inventory turnover rates, now greater than 2 times, and clearance levels have decreased to 6.9% of total inventory [54] - DXL has a cash balance of $7.5 million and remains debt-free, with no need to access its revolving credit facility [56] Q&A Session Summary Question: Strong new-to-file customer growth and Q2 trends - Management noted that new-to-file growth rates are strong but did not disclose specific percentages, indicating continued positive trends into Q2 [64][66] Question: Marketing strategies for upcoming events - The company will continue to focus on brand positioning and unique customer engagement strategies, with excitement around the upcoming loyalty program launch [70][71] Question: Expectations for DXL essentials revenue - Management indicated that the DXL essentials line could contribute around $10 million in retail sales annually, with potential for growth [76] Question: CapEx needs and future store openings - CapEx is expected to be in the $10 million to $12 million range this year, with plans to open upwards of 50 stores over the next few years [85]