Sales for the second quarter exceeded the company’s plan, driven primarily by an increase in dollars per transaction. This increase is attributable to a combination of factors, including less markdowns from fewer promotions, deeper penetration in high ticket categories such as tailored clothing, and less clearance inventory available for sale. The growth in direct business of 12.7 per cent was driven by web and app with continued growth from online marketplaces. Through digital efforts and marketplace presence, the company continues to attract a new customer to DXL.
Total sales of Destination XL Group, the leading omni-channel specialty retailer of Big + Tall men’s clothing and shoes, for the second quarter of 2022 were $144.6 million, up 4.4 per cent from $138.6 million in the second quarter of 2021. Comparable sales for the second quarter were up 6.1 per cent with comparable sales from stores up by 3.6 per cent.
For the second quarter of fiscal 2022, the gross margin rate, inclusive of occupancy costs, was 52.1 per cent as compared to a gross margin rate of 51.7 per cent for the second quarter of fiscal 2021. The gross margin rate improved by 40 basis points, driven by a 50 basis point improvement in occupancy cost offset by a 10 basis point decrease in merchandise margins as compared to the second quarter of fiscal 2021. The 50 basis point improvement in occupancy costs was due to the increased leverage from sales as well as a decrease of approximately $0.1 million in occupancy costs from closed stores, the company said in a press release.
“We are pleased to report another strong quarter of sales growth and earnings which exceeded our internal expectations. During the second quarter, comparable sales increased 6.1 per cent driven by higher average order values, our digital transformation, and our brand repositioning. The brand repositioning is more than just selling clothing: we are helping our customer to find and define his style which allows him to express his personality, and live his best life. We do all this in more personalized ways, which we believe will fuel greater customer loyalty and propel our growth in the future,” Harvey Kanter, president, and chief executive officer.
“The brand repositioning strategy has reduced our promotional posture and also impacted clearance inventory levels which are the lowest they’ve been in years. We are in a healthy inventory position, having been able to replenish many of our categories that were depleted a year ago and our financial position remains very strong. We delivered another quarter of strong free cash flow, we continued to execute our share buyback programme, and we have no debt and full availability under our credit facility. We also released substantially all of our tax valuation allowance, which reflects our expectation to utilize our deferred tax assets in the future and provides a significant boost in shareholders’ equity onto our balance sheet,” explained Kanter.
“As we look towards the back half of fiscal 2022, I’m very encouraged by our business. We are off to another solid start in Q3 with an August month-to-date comp increase in the mid-single digits. In 2021, we had exceptional revenues coming out of the pandemic on an extremely low-cost base. In 2022, we are making deliberate and purposeful investments, specifically in marketing and attracting and retaining talent, to propel sustainable growth. We are also moving towards a more normalised EBITDA margin this year as compared to 2021’s extraordinarily high EBITDA margin. Today we are raising our guidance to a range of $520 to $540 million, which is an increase from our original guidance of $510 to $530 million. Our story continues to resonate with big + tall men and we have remained faithful to our mission that experience, assortment and fit is what sets us apart from others,” Kanter concluded.
Fibre2Fashion News Desk (RR)