Specialized in manufacturing T-shirts for 21 years

edited transcript of dxlg earnings conference call or presentation 24-may-19 1:00pm gmt

by:Teesso     2019-11-06
First quarter June 4, 2019 earnings of 2019 Destination XL group (
Thomson StreetEvents)--
Friday, May 24, 2019, at 1:00:00, edit record of Destination XL Group Inc. Earnings Call or presentation
KanterDestination XL Group Co. , Ltd. -
President, CEO and director
StrattonDestination XL Group Co. , Ltd. -
Conference call participant Bernard * Bernard SosnickMadison global partner, LLC, research-
Retail analyst Christopher Walter KruegerLake Street Capital Markets Research
Senior Research Analyst * Eric Martin BederSmall Cap consumer research Co. , Ltd-
Nitza McKee presentation-CEO & Consumer Analyst-------------------------------------------------------------------------------Operator [1]--------------------------------------------------------------------------------
Hello ladies and gentlemen, welcome to Destination XL Group Co. , Ltd.
2019 conference call in the first quarter. (
Operator instructions)
As a reminder, this conference call is being recorded.
I would now like to introduce the moderator of today\'s meeting, Nitza McKee, who is with the CRS. You may begin. --------------------------------------------------------------------------------Nitza McKee, [2]--------------------------------------------------------------------------------
Thank you, Ashley. good morning, everyone.
Thank you for attending the Destination XL Group earnings call for fiscal 2019 for the first quarter.
Harvey Kanter, our president and chief executive, said on the phone today:
And our executive vice president and chief financial officer, Peter Stratton.
In today\'s conference call, we will discuss some non-
GAAP indicators that provide investors with useful information about our financial performance.
Please refer to the earnings release we submitted this morning, which can be found on the investor networking site. destinationxl.
Com explained and coordinated these measures.
Today\'s discussion also includes some foresight.
Statements on comparable sales growth, wholesale sector and free cash flow of the company. Such forward-
The outlook statements are affected by various risks and uncertainties that, due to various factors affecting the company, may lead to significant differences in actual results from the assumptions mentioned today.
The documents submitted by the company to the Securities and Exchange Commission provide detailed information on risks and uncertainties.
Now I want to transfer the call to our CEO Harvey Kanter. Harvey? --------------------------------------------------------------------------------Harvey S.
Destination XL Group Ltd. -
President, CEO and director3]--------------------------------------------------------------------------------
Thank you Nitza. good morning, everyone.
I am happy to talk to you for the first time today as President and CEO of Destination XL.
It\'s been less than two months, but I \'ve learned a lot about this incredible company and the enthusiasm of our team to engage with high-end consumers.
I am learning quickly and quickly gaining greater insight into powerful opportunities for the future.
I have been to more than 20 stores and heard their love for DXL directly from our guests.
In short, they told me that the DXL experience is very different from other more traditional retailers.
Although my words are not theirs, what they say is that this different experience is memorable.
What really sets us apart is it.
It\'s a challenge for many high-end consumers to find clothing that really suits them, but the guests I spoke with told me that DXL got it.
The DXL understands the challenge and helps them solve it.
At DXL, we strive to make XL men look and feel the best by providing an unforgettable experience in a variety of men\'s wear and shoes.
We believe that DXL\'s position in the market is classified by the most extensive, uniquely curated sizes of men\'s and shoes, designed and manufactured for XL proportions.
The reality is that our clothes are not just shrinking. up product.
We have a unique specification for specific specifications.
This is the secret sauce we use to develop products of all sizes, uniquely suited to each customer in a way that other retailers do not fit.
Our value portfolio
Label with higher price
End brands and exclusive designers experienced in one-
Stop shopping at all consumer touch points provides consumers with a differentiated and emotional connection experience.
I joined the DXL because I believe we have a bigger chance.
By focusing on our core consumer, exceeding his expectations, and the people who buy products for him, we can and will drive improvements in business and financial performance to create value for all stakeholders.
I would like to share with you now the four key topics I am going to talk about today.
First of all, I would like to give you a brief background on myself and the reasons for attracting me to DXL.
Second, I will talk about our first quarter results.
Third, I want to talk more broadly about what I learned from the business during my first two months as CEO.
Finally, perhaps most importantly, I want to provide you with a high level
Outline the mission, vision and strategy that our senior leadership team has begun to write.
I will then transfer the call to Peter, who will give a more detailed account of Q1 results before starting the question.
First of all, briefly introduce your own background. I\'m a 30-
Retail experience in multiple categories and channels. I love retail.
That\'s what I always wanted to do.
I am a merchant and a marketer, and I am motivated by brands and people.
My motivation is to develop and guide a team focused on developing and executing strategic plans to achieve operational success.
I focus on the obvious differences between professional retail and brands and another distribution channel for selling goods and services.
In the eyes of the guests, creating lasting memories, unforgettable experience is my motivation.
Why do I choose DXL?
To put it simply, it feels a lot like Blue Nile state and MooseJaw DXL, what I am doing.
As a company, DXL has a special position not only in retail but also in the hearts of our guests.
Our company offers solutions that are different from other companies.
We present ourselves in a distinctive, unique and eye-catching manner, becoming his solution for all of his clothing and shoes needs.
The DXL offers an unforgettable experience.
Now, let me give you a short, high
Our first quarter performance level overview.
We had a tough start to the new fiscal year, and we did less than we expected this quarter.
Comp sales fell by 1 in the quarter.
2% is 2 than.
Positive Pay for the previous quarter was 2%.
Traffic on both our stores and digital platforms has declined as we are not immune to the severe winter weather in the first half of this year, especially in the Midwest and Northeast.
In the second half of the quarter, we were further affected by unusually cool and humid weather.
Every spring we see significant sales growth in seasonal categories such as shorts, T-shirts
When our customers start to put away his winter clothes and take out his summer clothes, shirts and Poros.
Unfortunately the reality is that not only do we not see slopes, but there are also negative effects in these categories.
Interestingly, over the past few days, we have seen positive changes as the sun and warmth begin to manifest.
Despite the weather challenges, our product range is very good, and our sales staff continue to provide first-class service.
Both experiences enable us to register in each transaction another quarter improved shopper conversion and improved USD.
As we try to drive store traffic, we experience a higher coupon redemption rate among our customers who take advantage of discount promotions.
Unfortunately, promotions similar to last year failed to drive incremental traffic.
Therefore, our combination from discount customers to traditional full consumption
The price of shoppers is higher than last year.
This shift in high price cuts has led to a decline in gross profit margins.
Below the gross margin line, we continue to manage the expenses with SG & A as expected.
Now, let me tell you a little bit about my observations and studies from the first 45 days.
The DXL brand has many important advantages that I believe we can use to drive results.
First of all, our competitive position is strong.
DXL is a market leader in commodity size and store location.
Our core big high consumers have unique clothing, shoes and accessories needs, and we believe that DXL meets them well.
We have a lot of historical knowledge about the customer\'s purchase behavior, and we have collected more than 90% transaction data.
From our headquarters to our on-site staff, we have a strong culture and an incredibly passionate team that creates an incredibly compelling experience for tall people.
We have a strong portfolio of products covering both designer brands and our own private brands. Label products.
To ensure that the product vision matches his lifestyle needs, we are constantly improving the range of our products.
We run 237 DXL stores today and I was impressed with our presentation
Rich store experience and clear and eye-catching operational discipline.
Despite these advantages, they are not enough to take our business performance to the level I think we can achieve.
To this end, my top priority with the management team is to articulate our mission and vision more clearly, we have done so and I would like to share with you today.
Our DXL mission is to provide the broadest and most unique planning
Size classification of men\'s and shoes, designed and built large and high XL ratio based on value
Higher price tag-
End brands and exclusive designers provide a unique and memorable experience for consumers
Stop shopping at all consumer touch points.
Our DXL vision, and our true brand commitment, is to enhance the look and feel of XL men by providing an unbeatable shopping experience and assortment of men\'s and shoes.
We are now working on a strategy to align our company around these plans, key performance indicators and timelines to achieve our goals, and ultimately achieve higher returns for shareholders.
Also, if you look at my comp package, I\'m sure many of you have it, and obviously I\'m in line with our investor base.
Our second priority and primary goal is to drive repeat access and customer retention and to get new customers.
Complete our counting target-
Our target number of customers is to reduce or expand
Based on marketing,
Today, digital opportunities to interact with the wider market can directly and uniquely help our marketing in a more tricky and meaningful way than addressable markets.
In doing so, we believe we can improve productivity and get a return on advertising spending.
More broadly, we will think about numbers, thinking about experiences, thinking about consumers, and thinking about personalizing, not just being tall.
We can learn from many places, people and events.
Today, the opportunities for using data, analytics and the resulting insights are much greater, and we have not yet taken advantage of this information at a possible level.
Through this I see meaningful opportunities for direct growthto-
Consumers go through our company\'s websites and market channels.
Now, let me talk about the development of omni --
Channel marketing program.
Our CMO Jim Davey has been leading this work, and today we have a clear focus on achieving one of our goals of driving increased repeat access, retention and new customer growth in customer profiles.
We need to keep the customers we have and increase the frequency of their access, while we need to get high-end customers who are not shopping with us today.
We have done a great job in defining brand strategies and we will continue to gain insight into attracting current and new customers through these marketing initiatives.
We still believe that we must use the marketing communications of all consumer touch points to tell the stories we want to tell.
Our path to achieving this vision will be based on a new approach to customer relationship management.
We will enhance our personal relationships with existing customers and consumers we know should be DXL customers through the new CRM technology we are implementing.
Customer, personalized and our \"save\"the-
The \"sales\" initiative provides a solid foundation for our further development. to-
Contact with guests and consumers.
We got good data from our customers, but we didn\'t use it effectively.
For example, if we have a customer who has a clear affinity for shoes, we want to make sure that we are highlighting shoes for him instead of suits.
Or, it doesn\'t make sense for us to send a customer with a significantly higher preference
High-end luxury brand e-
Special mail for clearance sale products.
This is the work in progress, we have started a project that will be implemented in the second half of the year, bringing our CRM system from 15-year-
A best old local databasein-
Class integrated solution.
Finally, our third priority is to develop the wholesale brand extension that we started discussing last quarter.
We need to further develop our wholesale program based on our long term
The long-term mission vision of the business and the strategy to support the plan.
Let me make it clear.
We don\'t want to rush this.
We\'re doing a test. and-
Learn about our methods of wholesale promotion.
We need to go slowly and execute well. we need to build strong financial discipline and focus on building a profitable business model.
We believe that wholesale is an important opportunity to gain a share in a wide range and a high range.
So far, our wholesale products are limited to basic products and core products, but we believe there will be opportunities to expand to more fashion products in the future.
There are a lot of opportunities ahead of us, and it is important that we continue to develop processes, structures and discipline in a way that we prioritize and focus on, which is my three favorite words.
We will drive the process and discipline structure to a detailed level and discussion through communication around our mission, vision and strategy.
In conclusion, during my short time in DXL, we have developed strategies to further develop our mission, vision and brand marketing strategy.
Our first plan is to increase our client profile and we have begun to lay the framework for achieving this goal.
At DXL, everything we do is tall.
As a fitness leader, we are in a unique position in the market, and each garment is designed specifically for products of all sizes.
Our colleagues are very consistent with the needs of our big customers and big customers, we are further different, we have been providing a very high level of service.
Over the next few months, I intend to further clarify our plans for how we intend to expand our customer base and talk to key metrics that we will monitor to measure our progress.
With this, I will now transfer the call to Peter, our chief financial officer who will review our financial performance. Peter? --------------------------------------------------------------------------------Peter H.
Stratton, Destination XL Group-
[Chief financial officer and executive vice president of finance4]--------------------------------------------------------------------------------
Thank you, Harvey. good morning, everyone.
I would like to start this morning with a brief summary of our first quarter results.
Total sales fell by about $300,000 or 0 this quarter.
Compared with the first quarter of last year, it grew 3% to $0. 113 billion.
The main reason for the decrease is a 1 decrease in comparable sales.
$ 2% and $1 reduction.
6 million from the closed shop.
Wholesale revenues, however, increased by $2, partially offsetting the decline. 4 million.
In our directto-
Our e-commerce channel
Business sales increased by 21.
Compared to 21, 6% of our retail sector. 2% last year.
From an operational point of view, our sales momentum in the northeast and central and western regions is very strong.
Our traffic for the quarter was negative low single digits, while the dollar for conversion and each transaction increased slightly.
We believe that the weather has played an important role in our performance, as the harsh winter conditions continued in the first half of this year, while the delay in the continued spring weather affected the performance in the second half of this year.
Poor performance in our warm weather season categories, such as shorts and knitting, further demonstrates this trend.
The gross profit margin for the first quarter, including check-in fees, was 43.
7% compared to 44.
7% in the first quarter of last year. The 100-basis-
The decrease in points was due to a 150 basis point reduction in commodity margin, partially offset by 50 basis points of occupancy cost leverage.
It is worth noting that the profit margin of our goods is affected by our new wholesale department. Of the 150-basis-
Commodity profit margins fell by 110 basis points, due to a change in the mix between our wholesale and retail sectors.
The remaining 40-basis-
The difference is due to the high redemption rate of promotional activities in our retail sector, but partially offset by the efficiency improvement of our shipping model.
As we pointed out in the fourth quarter conference call, the wholesale gross margin is naturally lower than the gross margin of our stores and direct channels.
We see wholesale as an opportunity to expand and leverage our vast market expertise and reach, ultimately driving growth at the top and bottom.
Regarding SG & A fees, I would like to highlight several inputs and expenditures for the quarter, down $800,000 from last year.
The main reason for the reduction in SG & A is about $2.
Thanks to the restructuring of our company in May 2018, we saved 3 million.
These savings are partially offset by an increase in the cost of about $400,000 generated by our growing wholesale business.
In addition, in 2018, we benefited from a one-time insurance benefit of $600,000, which had a negative impact on us compared to last year.
Finally, due to the adoption of the new lease accounting standards, we no longer receive quarterly earnings of $400,000 from SG & a charges for amortization of deferred gains related to after-sales leaseback transactions.
Due to the new accounting standards, we were asked to confirm the remaining $10 deferred earnings.
3 million as a direct adjustment to retained earnings.
As a percentage of sales, our SG & a expenditure for fiscal 2019 in the first quarter was 39.
Compared to 40 5%.
The first quarter of last year was 1%.
Customer-facing costs, including store salaries, marketing and other store operating costs, account for 22.
In the first quarter of fiscal 6%, sales were 2019, compared with 22. 9% last year.
The marketing cost for this quarter is 4.
Sales of 3% compared to 4.
2% was 2018 in the first quarter.
Company support costs including distribution centers and company overhead costs are 16.
Sales in the first quarter of fiscal 9% were 2019, compared to 17. 2% last year.
Our Adjusted EBITDA for the first quarter was $4.
8 million, $5.
The first quarter of 2018 was 3 million.
GAAP\'s net loss in the first quarter was flat with last year, at $3. $1 million or $0.
06 per share after dilution. On a non-
Based on GAAP, the adjusted net loss was $0 in the first quarter of fiscal 2019.
The diluted 04 per share was the same as last year.
Let me now talk about our balance sheet and cash flow.
The operating cash flow for the three months before the 2019 fiscal year was $16 in cash use.
Compared to $5 in cash use, it was 5 million.
Three months before the 8 million fiscal year was 2018.
The decrease in business cash flow is mainly due to the timing of working capital.
At the end of the quarter, due to the time of payment for certain inventory receipts and other direct expense payables, our accounts payable and accrued charges are lower than the previous year.
Finally, according to the performance plan for 2018, annual bonus payments for the first quarter increased by $3 million.
Capital expenditure for the first quarter of fiscal 2019 was $3.
7 million is $3.
3 million last year.
The increase in capital expenditure is related to higher IT infrastructure projects, including the upgrade of our order management system.
In our store portfolio, we renamed 5 Casual Male XL stores to DXL format and we closed 2 Casual Male XL stores and 2 Rochester Clothing stores.
Inventory at the end of the first quarter increased by $6.
1 million or about 5.
Up 8% from last year.
The increase in inventory is due to the acceleration of commodity revenue and lower than expected sales in the first quarter.
It is important to also point out that in 2-
Our inventory dropped 7 this year. 5%.
At the end of this quarter, our customs clearance inventory was about 10 copies.
Compared to 9, we have 6% of our total inventory. 7% last year.
We are satisfied with the composition and cleanliness of our inventory positions and believe that the reduction in seasonal sales is the main driving force to improve the level of customs clearance, and we expect to normalize by the end of the third quarter.
As of the end of the quarter, the total debt was $79 million, including loans under the $64 revolving credit mechanism.
3 million, more than $32. 3 million.
By contrast, $70.
A year ago, 3 million of total debt exceeded $32. 7 million.
The increase in debt is directly related to the time change in our current capital, and more specifically, to the decrease in accounts payable during the current quarter.
As I mentioned, in the first quarter of fiscal 2019, we adopted the new accounting standards for leases ASC 842.
As a result of the passage, we establish our lease as a right-of-
As at February 3, 2019, approximately $0. 214 billion of assets were used on our consolidated balance sheet and corresponding lease liabilities of approximately $0. 255 billion were identified.
The difference on the right is $41 million. of-
The use of assets and lease liabilities is mainly due to the cancellation of certain existing leases --
Related assets and liabilities as net adjustment of rights-of-use assets.
We also confirm a net increase of approximately $5 in opening and retention earnings.
3 million, mainly related to the remaining deferred benefits of $10.
After-sales rental transactions 3 million.
Adopting this new standard is not expected to have any other significant impact on revenue for fiscal 2019.
Finally, we still expect our omni-
We still expect free cash flow in fiscal 2019.
The company will continue to provide forwarding-
Comments on business trends.
With this, Ashley, we will start asking questions.
Questions and Answers--------------------------------------------------------------------------------Operator [1]--------------------------------------------------------------------------------(
Operator instructions)
Our first question came from Bernard Sosnick at Madison Global. --------------------------------------------------------------------------------
Bernard Sosnick, Research Department, Madison Global Partners Co. , Ltd-
Retail analyst2]--------------------------------------------------------------------------------
Welcome to Harvey Kanter.
This is a very refreshing overview you provide.
I want to follow up.
With regard to the marketing overview, it is clear that you are eliminating or away from the extensive
Direct advertising basedto-consumer.
From your point of view, what does this have to do with the level of advertising expenses that will be spent, and from my point of view, past advertising expenses are too high? --------------------------------------------------------------------------------Harvey S.
Destination XL Group Ltd. -
President, CEO and director3]--------------------------------------------------------------------------------
This is a great question.
I will tell you that it is too early to say that substantial changes are expected.
I think what we\'re going to evaluate is-
Because of the lack of better words, a better understanding is the impact on building recipes.
So we want to have a big place.
Based on media communication, I. e.
TV and radio, you may or may not have heard about the increase in some of the TV shows we were doing in the past, but the radio replaced it, because it believes we can get closer to our core customers today through all the unique direct applications on the media.
These are still extensive.
Media-based opportunities.
But more importantly, as far as your point of view is concerned, we believe that digital marketing and getting closer to customers create an inflection point.
To be honest, it\'s too early to confirm a substantial change, but we are confident that we will keep all the evolving elements and their relevance of the marketing package that Jim leads us. --------------------------------------------------------------------------------
Bernard Sosnick, Research Department, Madison Global Partners Co. , Ltd-
Retail analyst4]--------------------------------------------------------------------------------
Can I follow up?
Views on the fit and focus provided by DXL are certainly key to this concept.
About the wholesale business, $2.
4 million of the revenue you quoted this quarter is similar to $2.
4 million from Amazon in the first two months.
Is this the speed you expect or do you expect Amazon to buy higher items in the second half of the year? --------------------------------------------------------------------------------Harvey S.
Destination XL Group Ltd. -
President, CEO and director5]--------------------------------------------------------------------------------
We obviously expect the business to accelerate.
We are in the early stages of making wholesale plans.
So I think from a side up, we can say with certainty that it will continue to grow and make more sense in the coming quarters.
At the same time, I will manage our expectations.
We\'re trying to make sure we\'re working on a long-term plan.
Compared to catching the shiny brass ring in the next quarter, this is a long-term vision. --------------------------------------------------------------------------------
Bernard Sosnick, Research Department, Madison Global Partners Co. , Ltd-
Retail analyst6]--------------------------------------------------------------------------------
I\'m sorry, by the way.
CRM, we heard at the last conference call that there is an investment in a new CRM system, and you just said that the CRM system needs considerable improvement.
Does this include a lot of capital investment? --------------------------------------------------------------------------------Harvey S.
Destination XL Group Ltd. -
President, CEO and director7]--------------------------------------------------------------------------------
So it\'s clear, I\'m not sure exactly what the way you heard last time refers to, but we\'re building a new CRM system. We had a 15-year-
We have launched a new CRM database system developed independently.
So this is not an extension or improvement of the past.
This is a new CRM system.
The new CRM system should be running at the beginning of the year and we can take advantage of these elements in the second half of the year.
2020 will truly be a point in time for full implementation and will have the opportunity to have a greater impact, particularly by engaging consumers in personalized, unique activities --to-
There will be a way in life.
So it\'s important to hear two things.
First, there is a new system.
Yes, it does have capital elements.
Of course Peter can say that, but it is not yet in place.
It will be in place at the beginning of the fall.
But in terms of what will happen, it will really come in a more meaningful way in 2020. --------------------------------------------------------------------------------
Bernard Sosnick, Research Department, Madison Global Partners Co. , Ltd-
Retail analyst8]--------------------------------------------------------------------------------Okay.
Is this the system you will choose if you make a decision? --------------------------------------------------------------------------------Harvey S.
Destination XL Group Ltd. -
President, CEO and director9]--------------------------------------------------------------------------------
This is a great system.
What we are doing is the best one. in-
There was class and they had done a wide process before I arrived.
To be honest, they wait for me to put my name next to it, but it\'s a great system. --------------------------------------------------------------------------------Operator [10]--------------------------------------------------------------------------------
Our next question comes from Eric Beder from SCC research. --------------------------------------------------------------------------------
Eric Martin Beder, small market value consumer research Co. , Ltd-
CEO and consumer analyst11]--------------------------------------------------------------------------------
Harvey, congratulate you on the first quarter.
Can we talk about the Internet?
So the online business is already 20-
Plus percentage business.
What do you think it should be? In terms of profit margins, what are the opportunities to drive higher online business? --------------------------------------------------------------------------------Harvey S.
Destination XL Group Ltd. -
President, CEO and director12]--------------------------------------------------------------------------------
Well, I\'m going to talk to you in a broad way.
Because I don\'t think it makes sense to give you an exact answer.
I think what I will tell you is that if you think we are close to 22 points in terms of the penetration of change and are the best --in-
I might notice that the professional players of Williams Sonoma as a reference point are directly close to 50%to-consumer.
So I don\'t know what the correct number is, but I am clearly confident that we can do what we want with our CRM-
Understand that we are not here to define how customers shop, we are here to provide customer options for applications through browsers --
Experience through our store.
Customers will choose how far they want to buy, but ask us to go where they want us to when customers want to buy.
We believe this includes meaningful growth both online and directly --to-
Digital consumption experience.
So, in the north where we are, of course, I never expected us to reach 50%, but there is a lot of blue sky between 20% and 50%. So --
I will tell you that this is a good reference point. --------------------------------------------------------------------------------
Eric Martin Beder, small market value consumer research Co. , Ltd-
CEO and consumer analyst13]--------------------------------------------------------------------------------Great.
When you see the traditional casual male shop that is converting to Destination XL, what is--
Should this be expanded more aggressively in terms of conversion?
How should we look at some of the legacy here and what will happen to them? --------------------------------------------------------------------------------Harvey S.
Destination XL Group Ltd. -
President, CEO and director14]--------------------------------------------------------------------------------
This is a good question and we will continue to evaluate it, especially when I join the company.
We believe in the production levels of these stores and over time we will convert them all into functions of quantities that we can manage, first, what is the point on P & L
We are going through this process as an ongoing conversation, but there are about 60 more and our belief based on performance will continue to shift. --------------------------------------------------------------------------------
Eric Martin Beder, small market value consumer research Co. , Ltd-
CEO and consumer analyst15]--------------------------------------------------------------------------------Great.
Here\'s the last question.
From the point of view of your designer brand, I actually asked your ex this question and he said that a lot has been done.
Do you want to introduce a brand you don\'t have now? --------------------------------------------------------------------------------Harvey S.
Destination XL Group Ltd. -
President, CEO and director16]--------------------------------------------------------------------------------
Well, I think, as you said, I think we did a good job of bringing in really relevant and important brands.
Having said that, as I said, we must constantly think about consumers, how consumers move, and what is important to them.
The development of new brands will always happen.
We have brands like Psycho Bunny which is a perfect example, it\'s a relatively new brand relative to Ralph Lauren and they are all very important, but Ralph Lauren is the core part of our portfolio, and obviously it\'s been a long time since we were a brand.
Psycho Bunny is a new brand.
Allison, our main merchant, continues to work with the team to ensure we are at the forefront of new trends.
I expect to have some new brand development, but there is nothing more shiny, new than what I have to have today. --------------------------------------------------------------------------------Operator [17]--------------------------------------------------------------------------------(
Operator instructions)
The next question comes from Chris Krueger\'s collaboration with Lake Street Capital markets. --------------------------------------------------------------------------------
Research Department Christopher Walter Krueger, Lake Street Capital market Co. , Ltd-
Senior Research Analyst]18]--------------------------------------------------------------------------------
You said your one.
Sales of stores have declined.
2% and fluctuating weather patterns have had an impact.
Is there any part of the comps falling more sharply this quarter or is it fairly consistent throughout the quarter? --------------------------------------------------------------------------------Peter H.
Stratton, Destination XL Group-
[Chief financial officer and executive vice president of finance19]--------------------------------------------------------------------------------Sure.
Chris, let me get that.
I think the hardest part of the quarter was in February.
In April, we saw a better side and then we struggled a bit.
So the whole quarter is almost the same, but the most difficult month is February. --------------------------------------------------------------------------------
Research Department Christopher Walter Krueger, Lake Street Capital market Co. , Ltd-
Senior Research Analyst]20]--------------------------------------------------------------------------------
How about the month so far?
We\'re almost over.
Is this similar or better than April? --------------------------------------------------------------------------------Harvey S.
Destination XL Group Ltd. -
President, CEO and director21]--------------------------------------------------------------------------------Yes. It\'s Harvey.
To be honest, I think it was tough at first and it was affected by the weather.
Depending on the seasonal nature of the product, we see a lot of highs and lows in different categories. So shorts, T-
As I mentioned on the phone, shirts, polo shirts, opening phone records are very difficult.
We certainly see that with the sudden appearance of the weather, it may move forward in a relatively meaningful way, and we can also see the region of these persistent organic pollutants.
This is unfortunate, but where the storm is really causing losses, we clearly see that consumers are not suitable for shopping.
The other side is the Northeast, where we have persistent organic pollutants of 75 degrees and 80 degrees, and when the customer comes out, we have seen a meaningful change for a while.
Memorial Day is a perfect example of some of these categories that were clearly affected by the warm weather before this weekend. --------------------------------------------------------------------------------
Research Department Christopher Walter Krueger, Lake Street Capital market Co. , Ltd-
Senior Research Analyst]22]--------------------------------------------------------------------------------Okay.
Then in your advertising plan, I know that the past few years are usually twice a year, usually before Father\'s Day, and then before November, this will increase.
Time frame December
What is the prospect of this year? --------------------------------------------------------------------------------Harvey S.
Destination XL Group Ltd. -
President, CEO and director23]--------------------------------------------------------------------------------
I think it is smart not to advertise when the fish bites because there is no better way to express it. So you --
In fact, if you monitor our ads in the last 4 weeks, you will see or will see a slowdown in Father\'s Day, and now you see clearly, if you\'re monitoring our digital marketing, I \'ve talked about restarting the TV and some other digital growth radios, and that\'s the arrival of Father\'s Day.
Obviously, Father\'s Day and holidays are the two most meaningful points in time.
Interestingly, male shoppers-
We believe that the seasonality of our tall male shoppers will decrease if you like and is really demand-based.
Certain catalysts provide a compelling reason for him to want to shop and we are trying to guide him to places where the weather is getting warmer and he says he needs shorts but, from the first half to the second half, we have not reached the peak level that other retailers may have reached. --------------------------------------------------------------------------------
Research Department Christopher Walter Krueger, Lake Street Capital market Co. , Ltd-
Senior Research Analyst]24]--------------------------------------------------------------------------------Okay. Last question.
Can you tell us what you think of the tariff, where is your purchase coming from and how much is coming from China?
Just an overall view of what you think about the situation. --------------------------------------------------------------------------------Harvey S.
Destination XL Group Ltd. -
President, CEO and director25]--------------------------------------------------------------------------------Yes.
I think, without any comment on its politics, to put it simply and clearly, it creates a risk, and to be honest, we have taken a lot of steps a long time ago, tariffs are really used in Asia, and even in North America, in many different countries, in the south of the United States.
I think we are fully capable of managing our way through tariffs, given the changes in procurement by the global team and our leaders, we have really reduced the impact of a country on us in a meaningful way.
Operator, is there anyone else in the queue?
I think we will end this call at this point.
It looks like there is no further phone call and no one is waiting.
So, operator, we\'re going to finish the call.
Thank you for your call today.
Enjoy Memorial Day weekend.
Travel safely if you are traveling. Take care.
Have a good day. --------------------------------------------------------------------------------Operator [26]--------------------------------------------------------------------------------
Ladies and gentlemen, thank you all for attending today\'s meeting.
It did end today\'s show and you may all be disconnected.
I wish you all a good day.
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