CANTON, Mass. - Destination XL Group, Inc. (NASDAQ: DXLG), a leading specialty retailer of Big + Tall men’s apparel, reported fourth-quarter earnings that surpassed analyst expectations but saw a significant decline in shares due to a revenue shortfall.
The company announced a fourth-quarter adjusted EPS of $0.10, which was $0.03 higher than the analyst consensus of $0.07. However, revenue for the quarter was reported at $137.1 million, falling short of the consensus estimate of $138.45 million.
The stock plummeted 13.09% following the earnings release, indicating a strong negative market reaction attributed to the revenue miss. This decline underscores investor concerns about the company's performance amidst a challenging retail environment.
During the fourth quarter, total sales decreased by 4.7% to $137.1 million from $143.9 million in the same quarter last year. The company also experienced a 10.1% decrease in comparable sales compared to the previous year. The decline in sales was partially offset by an additional week of sales in the fiscal year 2023, which contributed $7.1 million.
Harvey Kanter, President and Chief Executive Officer, commented on the results, noting that despite the challenging apparel retail market in 2023, the company delivered sales and adjusted EBITDA results that were the second and third highest, respectively, in the company's history. He attributed this to an adjusted EBITDA margin that has more than doubled and a net sales increase of 10% since 2019. Kanter acknowledged that a challenging apparel retail market in 2023 negatively impacted customer traffic both in stores and online, contributing to the full-year comp sales decrease of 4.6%.
Looking ahead, Kanter expressed optimism about the company's strategic growth initiatives, which include marketing, store expansion, enhancing the DXL digital experience, and collaborations. These initiatives are expected to drive sales growth for the remainder of the year. However, the company is cautious, predicting a mid-to-high single-digit decrease in comparable sales through the first half of fiscal 2024, with an improvement to a low to mid-single-digit increase in the second half.
For fiscal 2024, the company provided guidance for sales between $500.0 million and $530.0 million, with net income expected to be approximately $17.0 million, assuming a sales midpoint. Adjusted EBITDA is projected to be around $36.0 million, based on the midpoint of sales guidance.
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