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Edited Transcript of DXLG earnings conference call or presentation 24-May-19 1:00pm GMT

Q1 2019 Destination XL Group Inc Earnings Call

CANTON Jun 4, 2019 (Thomson StreetEvents) -- Edited Transcript of Destination XL Group Inc earnings conference call or presentation Friday, May 24, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Harvey S. Kanter

Destination XL Group, Inc. - President, CEO & Director

* Peter H. Stratton

Destination XL Group, Inc. - Executive VP, CFO & Treasurer

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Conference Call Participants

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* Bernard Sosnick

Madison Global Partners, LLC, Research Division - Retail Analyst

* Christopher Walter Krueger

Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst

* Eric Martin Beder

Small Cap Consumer Research, LLC - CEO & Consumer Analyst

* Nitza McKee

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Destination XL Group, Inc. First Quarter 2019 Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Nitza McKee, with ICR. You may begin.

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Nitza McKee, [2]

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Thank you, Ashley, and good morning, everyone. Thank you for joining us on Destination XL Group's First Quarter Fiscal 2019 Earnings Call. On our call today is our President and Chief Executive Officer, Harvey Kanter; and our Executive Vice President and 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.destinationxl.com for an explanation and reconciliation of such measures.

Today's discussion also contains certain forward-looking statements concerning the company's comparable sales growth, the wholesale segment and free cash flow. 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.

Now I would like to turn the call over to our CEO, Harvey Kanter. Harvey?

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Harvey S. Kanter, Destination XL Group, Inc. - President, CEO & Director [3]

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Thank you, Nitza, and good morning, everyone. I'm thrilled to be speaking with you today for the first time as President and CEO of Destination XL. It has been less than 2 months, but I've already learned so much about this incredible company and the passion our teams have for engaging with big and tall consumers. I'm learning fast and quickly acquiring greater insight for the powerful opportunity yet ahead.

I've traveled to over 20 stores and heard firsthand from our guests what they love about DXL. In short, they told me that the DXL experience is very different from other, more traditional retailers. And although my words not theirs, what they said was that this different experience is memorable. It's what really sets us apart.

For many big and tall consumers, it is a challenge to find clothing that truly fits them, but the guests I spoke with told me that DXL gets it. DXL understands this challenge and helps them solve it.

At DXL, we strive to empower the XL man to look and feel his best by delivering a memorable experience in a wide assortment in men's clothing and shoes. We believe DXL's place in the market is as the quintessential specialty retailer of big and tall, driven by the most extensive, uniquely curated in size assortment of men's clothing and shoes that is designed and built for XL proportions.

The reality is our clothing is not just scaled-up product. We have a distinctive spec, fit spec to be specific. That is our secret sauce that we use to develop product for every size, which uniquely fits each customer in a way other retailers just do not.

Our mix of value-priced labels to higher-end brands and exclusive designers experienced in a one-stop shop across all consumer touch points provides consumers a differentiated and emotionally connected experience. I joined DXL because I believe we have a greater opportunity. And that by focusing on our core consumer and exceeding his expectations as well as those who purchase for him, we can and will drive improved business and financial performance, creating value for all stakeholders.

I now want to share with you 4 key topics that I'm going to talk about today. First, I want to give you a brief background on myself and what attracted me to DXL. Second, I will touch on our Q1 results. Third, I want to talk more broadly about what I've learned from the business in my first 2 months as the CEO. And finally, and perhaps most importantly, I want to provide you with a high level-overview of the mission, vision and strategy that we, the senior leadership team, have begun to author.

I will then turn the call over to Peter, who will walk you through the Q1 results in greater detail before opening up the call for questions.

First, a brief background on myself. I'm a 30-year retail veteran with experience across many categories and channels. I love retail. It's actually all I ever wanted to do. I'm a merchant and a marketer, who is energized by brands and people. I'm driven by developing and mentoring a team to focus on developing and executing a strategic plan to achieve operating success. I'm oriented around the discernible difference between specialty retail and brand versus just another distribution outlet for selling goods and services. Creating a lasting memory, a memorable experience in the eyes of the guest, is what drives me.

Why did I choose DXL? Quite simply, DXL feels a lot like Blue Nile and MooseJaw, my alma maters. As a company, DXL has a special place not just in retail, but in the hearts and minds of our guests. Our company provides a solution unlike anyone else. We present ourselves in a differentiated, unique and compelling way to be his solution for all his clothing and shoe needs. DXL provides a memorable experience.

Now let me give you a brief, high-level overview of our first quarter results. We've had a difficult start to the new fiscal year, with the quarter's performance below our expectations. Comp sales for the quarter were down 1.2% compared to a 2.2% positive comp in the prior year quarter.

We experienced declines in traffic in both our stores and digital platforms as we are not immune to the severe winter weather during the first half of the quarter, particularly in the Midwest and Northeast.

We were further impacted by unseasonably cool and wet weather during the second half of the quarter. Every year in spring, we see a clear sales build in our seasonal categories such as shorts, T-shirts and polos as our customer starts to put away his winter clothes and brings out his summer clothes. The unfortunate reality is not only have we not seen a ramp, but these categories have comped negative.

Interestingly enough, in just the last few days, we have seen positive changes as the sun and warmth have begun to show up. Despite the weather challenges, our assortments are in great shape and our sales associates continue to deliver a top-tier experience, both of which enabled us to register another quarter of improved shopper conversion and improved dollars per transaction.

In our attempt to drive traffic to the stores, we experienced a higher coupon redemption rate in the quarter among our customers taking advantage of our discount promotions. Unfortunately, the promotions, which were similar in scope and offer to last year, failed to drive incremental traffic. As a result, our mix of spending from discount customers versus our traditional full-price shoppers were higher than last year. This shift, which drove a higher markdown rate, resulted in a lower gross margin. Below the gross margin line, we continue to manage expenses well with our SG&A in line with expectations.

Now let me tell you a little about my observations and learnings from my first 45 days. The DXL brand has many significant strengths that I believe we can leverage to drive results.

First and foremost, our competitive position is strong. DXL is a market leader in both scale of merchandise and in store locations. Our core big and tall consumer has unique clothing, shoe and accessory needs, and we believe that DXL fulfills those needs well.

We have a great deal of historical knowledge on our customers' purchase behavior, and we capture data on over 90% of our transactions.

From our headquarters to our field associates, we have a strong culture and incredibly passionate teams all aligned to create an incredibly compelling experience for big and tall guy. We have a powerful merchandise assortment spanning both designer brands and our own private-label offerings. We are continually evolving our assortments to ensure that product vision matches his lifestyle needs. We operate 237 DXL stores today and I'm extremely impressed with our presentation, the in-store experience and our clear and compelling operational store discipline.

Despite these strengths, they are not enough to drive the performance of our business to the levels I believe we are capable of achieving. To that end, my first priority with the management team has been to more clearly articulate our mission and our vision, which we have done and I would like to share with you today. Our DXL mission is to offer the most extensive and uniquely curated specific-sized assortment of men's clothing and shoes designed and built for big and tall XL proportions, from value-price labels to higher-end brands and exclusive designers and to provide consumers a unique and memorable experience in a one-stop shop across all consumer touch points.

Our DXL vision, and really our brand promise, is to empower the XL man to look and feel his best by delivering an unequaled shopping experience and assortment in men's clothing and shoes.

We are now working to develop a strategy to align our company around these plans, the KPIs and the time line to achieve our goals, ultimately achieving a higher return for our shareholders.

As an aside, if you looked at my comp package, which I'm sure many of you have, it's clear I'm aligned side by side with our investor base.

Our second priority and the primary goal is to drive repeat visits and customer retention as well as acquire new customers. To accomplish our count goal -- our customer count goal, we are reducing blunt or broad-based marketing and becoming more surgical. The digital opportunities today to interact with addressable market versus the broader market generically can directly and uniquely help our marketing engage in a stickier and more meaningful way.

In so doing, we believe that we can drive greater productivity and return on ad spend. More broadly, far beyond just big and tall, we will think digital, think experience, think consumer and think personalization. We can learn from so many places, people and events. There is a far greater opportunity today to use data, analytics and resulting insights, which we have not yet leveraged at the level possible. Through this, I see meaningful opportunity for growth in the direct-to-consumer channel both through our company website and marketplaces.

Now let me talk a little bit about the development of the omni-channel marketing plan. Jim Davey, our CMO, has been leading this effort, and today we have a clear focus on achieving our #1 goal of driving the customer file to greater repeat visits, retention and new customer growth.

We need to keep the customers we have and increase the frequency of their visits, while at the same time we need to acquire the big and tall customers out there who are not shopping with us today. We have done a great job at defining the brand strategy, and we'll continue to delve deeper into engaging both current and new customers through these marketing initiatives.

We continue to believe we must leverage the marketing communication across all consumer touch points to tell the story we want to tell. Our path to achieving this vision will be grounded in a new approach to customer relationship management. We will elevate our personal relationship with both our existing guests and those consumers we know who should be DXL customers through the new CRM technology we are implementing. Clienteling, personalization and our "Save-the-Sale" initiative all offer a solid foundation for us to further develop a one-to-one connection with guests and consumers.

We have good data from our customers, but we are just not using it effectively. For example, if we have a customer with a clear affinity for shoes, we want to be sure we are highlighting shoes for him over suits. Alternatively, it doesn't make sense for us to send a customer with a clear preference for higher-end luxury brands an e-mail for a special on clearance sale product. This is work in progress, and we have launched a project that will be implemented in the second half of the year to upgrade our CRM system from a 15-year-old homegrown database to a best-in-class comprehensive solution.

And finally, our third priority is the development of the wholesale brand extension that we started talking about last quarter. We need to further develop the plan for wholesale that is anchored by our long-term mission vision for the business as well as strategies to support the plan.

Let me be very clear. We don't want to rush this. We are taking a test-and-learn approach to our wholesale rollout. We need to go slow and execute well, and we need to establish strong financial discipline, with an eye towards building a profitable business model.

We see wholesale as a significant opportunity to capture share across the big and tall spectrum. To date, we have limited our wholesale product offering to basics and core products at opening price points, but we see an opportunity to scale up to more fashion items in the future.

With many opportunities in front of us, it is important that we continue to develop process, structure and discipline, 3 of my favorite words, through our prioritized and focused manner. We will drive the process and disciplined structure to a detailed level and discussion through communication around our mission and vision and strategy.

To summarize, in my short time at DXL, we have strategized to further develop our mission, our vision and our brand's marketing strategy. Our #1 initiative is to grow our customer file, and we have begun to lay a framework to achieve that goal.

At DXL, big and tall is all we do. We are uniquely positioned in the marketplace as the fit leader, with every garment specifically structured across all size offerings. We are further differentiated by our associates who are keenly in tune with the needs of our big and tall customers, and we have consistently delivered an exceptionally high level of service.

Over the next few months, I intend to further articulate our plans on how we intend to grow our customer base and speak to the key metrics which we will be monitoring to measure our progress.

And with that, I will now turn the call over to Peter, our CFO, who will review our financial performance. Peter?

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Peter H. Stratton, Destination XL Group, Inc. - Executive VP, CFO & Treasurer [4]

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Thank you, Harvey, and good morning, everyone. I'd like to start this morning with a brief summary of our first quarter results.

For the quarter, total sales decreased approximately $300,000 or 0.3% to $113 million compared to last year's first quarter. The decrease was primarily due to a comparable sales decrease of 1.2% and a decrease of $1.6 million from closed stores. This decline, however, was partially offset by an increase in wholesale revenue of $2.4 million. Within our direct-to-consumer channel, our e-commerce sales increased 21.6% of our retail segment compared to 21.2% last year.

From an operational perspective, we struggled with sales momentum specifically across the Northeast and upper Midwest. Our traffic for the quarter was negative low single digits, while conversion and dollars per transaction were slightly positive.

We believe weather played a significant role in our performance as severe winter conditions persisted in the first half of the quarter while the delay in arrival of consistent spring weather impacted the second half of the quarter. This trend was further evidenced by poor performance in our warm weather seasonal categories such as shorts and knits.

Gross margin for the first quarter, inclusive of occupancy costs, was 43.7% compared to 44.7% in the first quarter of last year. The 100-basis-point decrease was due to a contraction of 150 basis points in merchandise margin, partially offset by 50 basis points of occupancy cost leverage. It is important to note that our merchandise margin is being impacted by our new wholesale segment.

Of the 150-basis-point decrease in merchandise margin, 110 basis points was due to the shift in mix between our wholesale segment and our retail segment. The remaining 40-basis-point difference was due to a higher redemption rate for promotional offers in our retail segment but partially offset by efficiency improvements in our shipping model.

As we noted on our fourth quarter call, the gross margin on wholesale is naturally lower than the margins in our store and direct channels. We view wholesale as an opportunity to scale and leverage our big and tall market expertise and reach, ultimately driving both top line and bottom line growth.

With regard to SG&A expenses, I would like to highlight several puts and takes from the quarter, which decreased by $800,000 compared to last year. The SG&A decrease was primarily attributable to approximately $2.3 million in savings that resulted from our corporate restructuring in May 2018. These savings were partially offset by an increase of approximately $400,000 of costs incurred in our developing wholesale business. Additionally, in the first quarter of 2018, we benefited from a $600,000 onetime insurance gain that negatively impacts our comparison to last year.

Finally, as a result of adopting a new lease accounting standard, we are no longer receiving a $400,000 quarterly benefit to SG&A expense from amortizing a deferred gain related to a sale leaseback transaction. Due to the new accounting standards, we were required to recognize the remaining deferred gain of $10.3 million as a direct adjustment to retained earnings.

As a percentage of sales, our fiscal 2019 first quarter SG&A expenses were 39.5% compared to 40.1% in last year's first quarter.

Customer Facing Costs, which include store payroll, marketing and other store operating costs, represented 22.6% of sales in the first quarter of fiscal 2019 compared to 22.9% last year.

Marketing costs for the quarter were 4.3% of sales compared to 4.2% in the first quarter 2018.

Corporate Support Costs, which include the distribution center and corporate overhead costs, represented 16.9% of sales in the first quarter of fiscal 2019 compared to 17.2% last year.

Our adjusted EBITDA for the first quarter was $4.8 million compared to $5.3 million in the first quarter of 2018.

GAAP net loss for the first quarter was flat to last year at $3.1 million or $0.06 per diluted share. On a non-GAAP basis, adjusted net loss for the first quarter of fiscal 2019 of $0.04 per diluted share was flat to last year.

Now let me turn to our balance sheet and cash flow. Cash flow from operations for the first 3 months of fiscal 2019 was a cash use of $16.5 million compared to a cash use of $5.8 million for the first 3 months of fiscal 2018. The decrease in cash flow from operations was primarily due to the timing of working capital.

At the end of the quarter, our accounts payable and accrued expenses were lower than the prior year as a result of the timing of payments due on certain inventory receipts as well as other direct expense payables.

Lastly, based on 2018 performance to plan, annual bonus payments increased $3 million in the first quarter.

Capital expenditures for the first quarter of fiscal 2019 were $3.7 million compared to $3.3 million last year. The increase in capital expenditures was related to higher IT infrastructure projects, including our order management system upgrade.

Within our store portfolio, we rebranded 5 Casual Male XL stores to the DXL format, and we closed 2 Casual Male XL stores and 2 Rochester Clothing stores.

Inventory at the end of the first quarter was up $6.1 million or approximately 5.8% compared to last year. The inventory increase was due to a combination of accelerated merchandise receipts and lower than expected first quarter sales. It's important to also point out that on a 2-year basis, our inventory is down 7.5%. We ended the quarter with a clearance inventory representing approximately 10.6% of our total inventory compared to 9.7% last year.

We remain comfortable with the composition and cleanliness of our inventory position and believe that less seasonal selling was the primary driver to the higher clearance level, which we expect will normalize by the end of the third quarter.

At the end of the quarter, total debt was $79 million, which includes borrowings under the revolving credit facility of $64.3 million with excess availability of $32.3 million. This compares to $70.3 million of total debt a year ago, with excess availability of $32.7 million. The increase in debt is directly related to changes in the timing of our working capital and more specifically, a decrease in accounts payable for the quarter.

As I mentioned, in the first quarter of fiscal 2019, we adopted the new lease accounting standard called ASC 842. As a result of the adoption, we established our leases as right-of-use assets of approximately $214 million and established corresponding lease liabilities of approximately $255 million on our consolidated balance sheet at February 3, 2019.

A $41 million difference between the right-of-use assets and lease liabilities was primarily attributable to the elimination of certain existing lease-related assets and liabilities as a net adjustment to the right-of-use assets.

We also recognized a net increase to opening and retained earnings of approximately $5.3 million, primarily related to the remaining deferred gain of $10.3 million from the sale leaseback transactions.

The adoption of this new standard is not expected to have any other material impact on earnings for fiscal 2019.

In closing, we still expect to deliver comparable sales growth in our omni-channel retail business, and we still expect to generate free cash flow in fiscal 2019. The company will continue to provide forward-looking commentary on business trends.

And with that, Ashley, we will open the call to questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from the line of Bernard Sosnick with Madison Global.

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Bernard Sosnick, Madison Global Partners, LLC, Research Division - Retail Analyst [2]

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Welcome, Harvey Kanter. It was a very refreshing overview that you provided. I'd like to follow up a bit. With regard to the marketing overview, it's clear that you're eliminating or moving away from broad-based advertising to direct-to-consumer. What implications does that have from your viewpoint right now regarding the level of advertising dollars to be spent, which in the past from my opinion was much too high?

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Harvey S. Kanter, Destination XL Group, Inc. - President, CEO & Director [3]

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It's a great question. And I would tell you that it's a little early to substantially say that there is a material change expected. I think what we're trying to evaluate is -- and understand better is the impact, for lack of a better word, is that in building the recipe. So we do expect there is a place for broad-based media communication, i.e., TV and radio and you may or may not have heard some of the increased TV we were doing in the past going away, but the radio replacing it with the belief that we can get closer to our core customer with all of the unique direct applications in media today.

Those are still both broad-based media opportunities. But more importantly, to your point, we believe there is inflection created by digital marketing and being able to get closer to the customer. That being said, quite honestly, it's too early to substantiate a material change yet, but we believe we will maintain all of the elements evolving that present a total and their relevance in the marketing package that Jim's steering us into.

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Bernard Sosnick, Madison Global Partners, LLC, Research Division - Retail Analyst [4]

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Could I follow up on that? The view with regard to fit and focus that DXL provides is key, of course, to the concept. With regard to the wholesale business, the $2.4 million revenue that you cited for the quarter was similar to the $2.4 million for the first 2 months from Amazon. Is that the pace that you anticipate or do you foresee Amazon coming in with higher purchases in the second half of the year?

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Harvey S. Kanter, Destination XL Group, Inc. - President, CEO & Director [5]

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Well, we clearly expect the business to accelerate. We're in the very infancy of the process for building a wholesale plan. So I think directionally, we could definitely say it'll continue to grow and be more meaningful in the future quarters. I would at the same time manage our expectations. We are trying to ensure that we're building a plan for a long-term vision as opposed to grab the shiny brass ring for the next quarter.

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Bernard Sosnick, Madison Global Partners, LLC, Research Division - Retail Analyst [6]

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One more question by the way, I'm sorry. CRM, we heard in the last conference call that there was an investment in a new CRM system, and you just said that the CRM system needs considerable improvement. Does this include significant capital investment?

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Harvey S. Kanter, Destination XL Group, Inc. - President, CEO & Director [7]

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So just to be really clear, I'm not sure what you're referring to exactly in the way you heard it last time, but we are in the process of putting in place a new CRM system. We had a 15-year-old homegrown proprietary CRM database system, and we are putting in a new one. So it's not an extension or improvement of what was. It is a new CRM system. That new CRM system should be live by early fall in the beginning elements that we can leverage for the second half of the year. 2020 will really be the point in time where it's fully implemented and the opportunity to create greater impact and specifically engage the consumer in a personalized, unique one-to-one way will come to life.

And so it's important that you hear 2 things. One, there is a new system. Yes, it does have a capital element to it. Peter can certainly talk to that, but it's not in place yet. It will be in place in fall in the very beginning part. But in terms of what will happen, it will really come to life in 2020 in a more meaningful way.

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Bernard Sosnick, Madison Global Partners, LLC, Research Division - Retail Analyst [8]

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Okay. And is that the system that you would have chosen had you made the decision?

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Harvey S. Kanter, Destination XL Group, Inc. - President, CEO & Director [9]

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It's a great system. The one we're doing is really one of the best-in-class out there, and they had done an extensive process before I arrived. To be quite honest, they waited for me to put my name next to it, but it's a great system.

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Operator [10]

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And our next question comes from the line of Eric Beder with SCC research.

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Eric Martin Beder, Small Cap Consumer Research, LLC - CEO & Consumer Analyst [11]

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Congratulations on your first quarter, Harvey. Can we talk a little bit about online? So the online business is already a 20-plus percent business. What do you think it should be and what are the opportunities in terms of margin to drive the online business even higher?

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Harvey S. Kanter, Destination XL Group, Inc. - President, CEO & Director [12]

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Well, I'm going to talk to you in kind of a broad-based way because I don't think it would make sense for me to give you an exact answer. I think what I would tell you is if you think we're almost at 22 points in change penetration and the best-in-class players, I might note Williams Sonoma as a reference point, is nearly 50% direct-to-consumer. And so I don't know what the right number is, but I clearly believe that we are able to do what we want to do with both our CRM -- and understand that we're not here to define how the customer shops, we're here to give the customer options to the app, through the browser-based experience and through our stores. The customer will choose how far they want to buy, but the requirement is really for us to be where the customer wants us to be when they want to buy. And we believe that, that includes a meaningful growth of online and direct-to-consumer experience digitally. So north of where we are, certainly, I never expect us to get to that 50% mark, but there's a lot of blue sky between 20% and 50%. So -- and I would tell you that's kind a reference point.

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Eric Martin Beder, Small Cap Consumer Research, LLC - CEO & Consumer Analyst [13]

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Great. When you look at the kind of legacy Casual Male stores which are being converted into Destination XL's, what is the -- should that be expanded even more in terms of being more aggressive in conversions? How should we think about kind of some of the legacy pieces here and what's going to happen to them?

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Harvey S. Kanter, Destination XL Group, Inc. - President, CEO & Director [14]

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It's a great question and one we continue to evaluate, especially with my joining the firm. We believe that those stores are producing at a level that we will convert all of them over time and it becomes a function of how much literally we can manage, number one, and what makes sense on the P&L. And we're moving through that as an ongoing conversation, but there's about 60 left and our belief based on performance is will continue to convert.

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Eric Martin Beder, Small Cap Consumer Research, LLC - CEO & Consumer Analyst [15]

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Great. And last question here. In terms of looking at the designer brands you have, I actually asked your predecessor this and he said it's pretty much done. Are there brands that you want to bring in that you don't have now?

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Harvey S. Kanter, Destination XL Group, Inc. - President, CEO & Director [16]

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Well, I think, to the point you made, I think we've done a great job at bringing in really relevant and important brands. That being said, we have to constantly, as I said, think about the consumer, think about how the consumer is moving and think about what's important to them. And the development of new brands is always going to happen. We have some brands, like Psycho Bunny is the perfect example, which is a relatively new brand relative to things about Ralph Lauren, and they are both really important, but Ralph Lauren is a core part of our mix that has been around for, obviously, a very long time as a brand. Psycho Bunny is a newer brand. And Allison, who's our head merchant is continuing to work with the team to make sure that we are on top of new trends. And I expect there will be some new brands that develop, but there's nothing out there that is a shiny, new object that I would say that we have to have today.

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Operator [17]

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(Operator Instructions) And our next question comes from the line of Chris Krueger with Lake Street Capital Markets.

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Christopher Walter Krueger, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [18]

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You indicated that your same-store sales were down 1.2% and that volatile weather patterns had an impact. Was there any part of the quarter where the comps were down harder or was it fairly consistent throughout the quarter?

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Peter H. Stratton, Destination XL Group, Inc. - Executive VP, CFO & Treasurer [19]

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Sure. So Chris, I'll take that one. I think the toughest part of the quarter was in February. We saw a little bit better in March and then in April we struggled a bit as well. So it was pretty even across the quarter, but the most difficult month was February.

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Christopher Walter Krueger, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [20]

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How about the month of May so far? We're almost through the end of it. Has that been similar to April or a little bit better?

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Harvey S. Kanter, Destination XL Group, Inc. - President, CEO & Director [21]

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Yes. It's Harvey. I think it started out pretty rough, to be quite honest, and very much weather driven. We saw very much highs and lows across categories that were uniquely different based on the seasonality of the product. So shorts, T-shirts, polo shirts, as I mentioned in the call, opening call notes, were pretty difficult. We've definitely seen May moving forward in a relatively meaningful way as the weather has popped and what we can also see is regionality in those pops. It's unfortunate, but where the storms have really taken the toll, on the consumer we've clearly seen they are not oriented to shop. The flip side is the Northeast where we've had pops of 75 and 80 degrees, we have seen meaningful change in the comps for a moment as the customers come out. And Memorial Day and leading up to this weekend has been a perfect example, where warm weather has clearly impacted some of those categories.

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Christopher Walter Krueger, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [22]

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Okay. And then on your advertising plan, I know the last several years is typically 2 times a year where that was boosted typically leading up to Father's Day and then the November-December time frame. What's the outlook for this year?

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Harvey S. Kanter, Destination XL Group, Inc. - President, CEO & Director [23]

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I think it would be anything but smart to not advertise when the fish are biting, for lack of a better way to say it. So you -- actually, if you monitored our advertising over the last 4 weeks, you will see or would have seen somewhat of a slower pace building into Father's Day and now you see, clearly, the radio that I already talked to reigniting the TV and some other digital increases, if you're monitoring our digital marketing, that are leading into Father's Day. And obviously, Father's Day and the holiday are the 2 most meaningful points in time. Interesting enough, the male shopper -- our big and tall male shopper, we believe, is less seasonal, if you will, overall and is really needs based. And certain catalysts provide a compelling reason for him to want to shop and we're trying to lead into those, like the weather, where it's getting warm and he says he needs shorts, but we don't have quite the level of spike maybe other retailers do from the first half to the second half.

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Christopher Walter Krueger, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [24]

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Okay. Last question. Can you give us your viewpoint on what you think of tariffs and where your sourcing comes from and how much comes from China? Just an overall outlook on what you think of that situation.

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Harvey S. Kanter, Destination XL Group, Inc. - President, CEO & Director [25]

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Yes. I think, without getting into any commentary on the politics of it, just plain and simply, it creates risk and we have put in place a lot of measures long before, to be quite honest, the tariffs to really leverage a number of different countries across Asia and even in North America, south of the States. And I think that we're well positioned to manage our way through the tariffs, given the change in sourcing the global team and our leader has done to really mitigate one country impacting us in a meaningful way.

Is there anybody else in the queue, operator?

I guess we're going to bring the call to an end at this point. It looks like there's no further calls or anybody waiting.

So operator, we're going to bring the call to a close. Thank you, everybody, for being on the call today. Enjoy Memorial Day weekend. If you're traveling, safe travels. Take care. Have a great day.

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Operator [26]

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Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Everyone, have a wonderful day.