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DXLG Destination XL

Participants
Harvey Kanter President, CEO & Director
Peter Stratton EVP, CFO & Treasurer
Nitza McKee ICR
Roger Feldman West Creek Capital
Christopher Krueger Lake Street Capital Markets
Bernard Sosnick Madison Global Partners
Eric Beder Small Cap Consumer Research
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Q3 2019 Destination XL Group Earnings Conference Call. [Operator Instructions].

I would now like to introduce your host for today's conference call, Nitza McKee, you may begin.

Nitza McKee

Thank you, Kevin, and good morning, everyone. Thank you for joining us on Destination XL Group's Third Quarter Fiscal 2019 Earnings Call. is our and Chief Executive Peter today Harvey Executive Financial call Stratton. and Kanter; Vice our our Chief President Officer, Officer, On President and

investors some call, Relations Please performance. website our an and our was for metrics will is today's which to information explanation discuss at release, of this During to our investor.dxl.com we refer such provide and Investors filed with earnings financial now useful about on measures. non-GAAP reconciliation morning available

the concerning cash statements comparable forward-looking affect that statements a certain actual contains also differ from wholesale and free company. discussion marketing the results growth, and are risks materially to the variety cause those flow. company's of efforts, that various Today's sales forward-looking could assumptions factors uncertainties to due subject mentioned segment to Such today

risks regarding and Securities Commission. Information the in uncertainties detailed with and company's the filings Exchange is

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

Harvey Kanter

morning Thank you, good and Nitza, all. to you

strong of today's call Let to our message with me stakeholders. begin a all

I earnings and company, as we CEO call you I am my opportunity of big since on today when is market and yet apparel and work as said After do. accessories arrived. over to little seven each tall is months for considerable, enthusiastic the believe DXL's men's I of have joining to a role as As The tremendous. addressable each in I DXL,

are management DXL actively As and our our we pivoting we transform and history, leverage strategy. team

centric are across channels. this and in laser-focused engaging engaging way We on consumers through team management means more digitally rebuilding a is that all them

scale specialty space market consumers big with else can. experience in this the memorable tall retail a create to one striving experience a on no are and that We and

behind, the bring reality. please this so than working view bear view potential the are said, into We me. looks with far ahead different being hard That to

business to plans I to greater Before have to for about third spend our marketing specific on take we I possible. believe want I our is results the quarter, the talking the level some touch time

objective channels. As drive to first and since digital to -- new business to remains my core traffic our we've repeat discussed customer stores earnings both our and earnings call, file

have people, a tools. and our and we rebuilding are of as combination collectively which said, we define process As marketing we redefining engine,

have put in and the into the the to been We the beyond. a working people, blocks to XXXX place, building tools and process successful drive

is in have each But of marketing team areas. the we skills made a in great in progress have evolved why in and greater but have evolving improvements associates, leadership. reality process meaningful need the than would made we these We organization tools first, core typically have the we marketing we

In identified QX, further have as plan experienced and learnings execution. we inform successes, look some we had to XXXX's and forward, opportunities and

more of the ahead around and and While we have progress made specifically past specifically our over few months, system, the people CRM is process. around there tools the new development around some work yet

our resources We marketing meaningful because are the been set than hand. and very restructure at to organization, have marketing To yet starts accomplish end, higher necessary our align to working we early leadership. in with any engine changes our that skill rebuilding work delivering

four past quarters leadership three the required in skills have we months, the Over ensure this to have of we our marketing right evolved journey.

ebbed interim, made have progress in is we While the it and flowed.

second You had than and and back, two for. even slower progress I quarters one been our might it step been say and forward hoped has steps has third the in

strategies a She's XX-year marketing Chief spanning previously hired wealth made management so a held more Erica pleased I Company marketing new of October leadership skills. digital feel that DXL said, Marketing XX, and we announce much of Thompson very and With to comes I around York is experience the Stride New a that to marketing native Erica Officer. is with loyalty the do on Network. & Home analytics consumer. digital Shopping leadership and progress. Rite, campaigns, and and and customer we've senior am roles a at development proven research PetSmart, programs, veteran, with

hiring our we as Ujjwal channels Officer. Digital the to our addition, initiatives In Dhoot think that across Ujjwal the digital we will overall of the attainable. and levels Chief are today, announced business across drive

digital As us searching they spent with comes time foot immersion in and XX% both pure-play with is of some store. retailers well over Ujjwal omni-channel set XX% retailers. consumers documented XX of to to a start today, typically before years online total and

the want a Now of before so spend I give circle real I time the to a do in weeds, to want sense you little to to back speak. tactical been I our strategy, holiday and and season have while we action developed for quick beyond. and plan work XXXX the actionable a place in plans more fixes doing for have comprehensive we better we the

if tackling I referred and that These be place which blocking you want really the to to so we great and elements intent strategic achieve to mentioned I with to are commitment. elements understand the in often I are required have to have before. such

if a with you And me, now bear so second, will.

gradual outreach increased This is loyalty an attributed The beginnings in media efficient to in seen was purchases. customer which issuance improving which October goes. certificate only and a improvement growth We emphasis, impact, of it CRM in increased approach, program the greater digital experience. the resulted when more greatest Here results. count. We achieved mix delivered earned positive continuous

developed through that platforms, and XXXX sales in -- the improved We strategic leading have data begun marketing advanced for in digital using created in in leverage new collect email. to performance. We performance to our indicators building enhanced time has capabilities optimization XXXX plan relationship AI send force's and a channel

marketing switched has improvement that meaningful carried digital QX agencies, November. DXL channel digital in delivered performance and momentum September, paid by In into

into channels, fluidly XXXX. beyond opportunities and during been We will accelerating, be change, across meaningfully to scaled in which performance with digital QX. on paid metrics monitor and all performance optimize channel and Since based shifting further needs QX the spending have

site on made through We SEO added the category and crawlability We've upgraded product a and improvements. schema We revised page titles. SEO-focused of have updated XXX number all top metadata. our pages

traffic, for organic revenue We with results landing gain to October upside. unique organic have preliminary begun views in and traction page the

SEO-friendly and improve user interface enhancements We driving improving mobile had bundling by and focus refined of We QX in website selection suiting enhanced in to of the goal launched taxonomy. a average the conversion. new in a site interface increases drive product and -- categorization to customer ticket. functionality. drill executed on We navigation capabilities, enhancements. menu clothing collection user specifically across QX the These We with

the drive site device. checkout by queue images in Now the experience. site only leveraging for big And programs, device speed focus and keeping simplified We tall to cart We removing faster the American to We customer a marketing a site conversion relationships load experience on rewards senior-friendly we types the purchase on finish. on a the opportunities We being path and with from decrease for experience. mobile the code, the to the reduced deliver to XX/XX. holiday are full Express checkout menu biggest flow we times. customer optimized to process is launched increased enhanced critical better process links program a

that's greater it's I've of sense the means And take and you done have normally, I not blocking and I it And because this detail. we what will strategic tackling for important. hope one sure, reason defined. know my of to level this direction through a you would, a informing is only for quite bit. give

Now me quarter through let briefly take third our results. you

financials. of that, on a our an I'll vision more provide strategic update there, discussion for and Following And Peter I in-depth pass will to our from initiatives. it

for Our third results were the bps. report third quarter were quarter to sales expectations, XX at I but positive am below pleased that comparable

but results hampered Our as as not by were but did improve the store did improve progressed. quarter the traffic, --

we combined August plus by with were X.X% closed in results, minus solid resulting our in sales October. and double-digit percentage stores plus and growth were pleased see increase September site to X.X%. out accelerated direct In fact, in October In in mid-single-digit X.X%, to in for direct September in sales our at growth direct traffic, and comp month improved channel,

-- testing advertising the learn to spend we can loyalty more As I aggressively mentioned with and on buying are about strategies we behavior. QX different influence call, how to promotion,

and again. are then learning, doing and it revising We optimizing testing, all over

much to resulted affiliate view strategies. but direct to There paid out offer. there memorable to our gains DXL is including ad growth traffic, marketing e-mail of strategies, and clear in there our work more are to we and the approach spend, experience we which unique a search that can tall some has channel and refine digital discover yet nice the attribute This in us indicator site who has as of ahead guys big have

our digital in to level an This forward will and QX Ujjwal be I particular in into this an evolve expect how she measure as test into will into And wheelhouse. we right we continue XXXX. is to area with offer move able -- we move we greater and Erica's of insight fiscal area even is practice. believe

Digging a performance. our little into deeper sales

Although due down, registered primarily every the slight markdowns. transaction more associates a per in which day the average favorable posture conversion experience growth the largely in store aggressive Improvements conversion resulted contraction to attributed traffic stores. deliver in to shopper average offset spend a was we was our The store promotions, outstanding in order towards in higher value.

spent deal in of discounts experimenting coupons deeper and third quarter with We the certificates. a good loyalty

this store-wide a be to tactic also whether meaningful a promotion, driver. to based experiment We coupon not traffic could assess

previously run discounting is gross of decline have the store mix very we drove self-inflicted not elevated margin customer-friendly. about a and omni-channel, events the level which of store we traffic omni-channel. were quarter, increased the promotional the or will quarter, events as in only, was third higher of past, not promotional had line we the generate minute, as web, The been a markdowns, I Throughout talk some some for were to to realize. bottom the that some did hoping selected were In were only only in being but web where which either targeted tested part

about we reasons, across will work promotional a digital not which and brick-and-mortar testing, For events not to specific learned we've the did details which best and channels. our lot competitive provide but both related

just our to moment. a for sales Back

Our sales for a $X.X reached to quarter, see continue for division runway the and nice in third growth. million wholesale more we

For orders for Amazon Essentials their the Amazon the of placed were third result business. majority by quarter, the sales of

on presence the plan We about our disciplines have to to and momentum the continue built other previously. initiatives financial build excellent business, maintaining we also wholesale strong making progress in retailers around with we great discussed while wholesale are our the feel

Moving down P&L. the further

was four lower Our third planned margin gross to due than quarter we primary reasons.

most I promotions an shops who already without we attempt store What of in to question, with there experimented that the to need them get promotional to we from get discovered a identifying a mentioned, drive customer better value traffic. value is, We as clearly he is speaking job can regularly. -- about most more highly different assortment. and us our number First, a do we how the customer this can

quarter saw the due of last first we of clearance of clearance quarters the Second, sales penetration penetration slower seller of higher sell-throughs weak quarter this the as third to the and compared selling is increased year. a in Much to year.

have that year we will managing planning and merchandise job sales Our than year a -- sales assortment we inventory the soft teams finish done the the at less a confident environment, despite with and we great had ago. allocation are

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more of important was and prudent change we this this will position but for in the decision. Peter as quarterly about results, future, the impact an the talk ourselves

has lower And finally, growing The retail wholesale business. than our business our naturally margins wholesale division.

a As gross continue deeper consolidated penetrate wholesale will revenue business the into we margin the shift see in we to stream, rate.

to we expense quarter, and the in information A order testing increase as launch unplanned quarter costs where supporting planned, costs also SG&A we was shift for as in to ongoing to due it SG&A. corporate the further system. we quarter a made from third the management sense. marketing evolve technology severance prepared than organization new higher Next, an fourth primarily the

took -- as expense adjust measures we further QX, organization, the we SG&A eliminated to the in of noted, and position Chief Officer. we In address Operating

margin adjusted of third last gross our deleverage, lower adjusted quarter came quarter below million. Factoring expense in at million, the third and EBITDA $X.X EBITDA year's in $X.X results

returns results working in results driven are me backward elements and know just be These are hard are create very not inflection we at of. is clear. have financial proud by to Let returns. about, the I and spoken future business and shareholder feel looking possible the They we drive sales we

infrastructure our to transformation takes certain our are the a accomplish of critical success. is degree, operational invest backwards we to our people, that and time level are foundation and We which we rebuilding in process our grounded performing and are vision. in foundation to believe are in resources It are progress parts required. believe path which forward be a vision is by continue business, know investing we I growing tools, step that need taking are required To a execute our making the our must is There and others several file. customer that to well, of elements and But be our to developed. clear, our others of in to

driving know need initiatives orientation and products. opportunity we always starts remains environment. they does to and remain they not want customer-first they how Our digitally through essence want, consumers channel in committed traffic, enabling they conversion where business. in services The and incremental whatever this, when fully obtain to growing ultimately our change. want it Knowing of purchase products today's generating our repeat to The

The customer-first quarter, customers beginning foundation started these more and last are initiatives, talking like initiatives repeating. they by from in anchored but of meaningful worth four is our major digital orientation about ways. consumers with I and to all engage personalized four standpoint, a

it it is CRM is leveraging second, customer First, our in planning our marketing management; working relationship detail. defining

wholesale platforms; building our business is digital the leveraging and is it fourth, Third unit.

direct Ultimately, to service-related enhance system that Let begin of is customers. behaviors. sales experience encompasses the with the and and view, organization really with on customer's customers, quick our development interactions analysis with implementation. just with practice. such CRM and organization's to not relationship refers our when the its of point customer entire follows update management relationship of customer this initiative, forecasting which a interacting as DXL. me insights is From It principles, guidelines overall processes, CRM practices a first serves and trends, an

the better allows customer we system to CRM and have segment past. our far new than now us in personalizing our Our file messaging

be Segment more our critical, a but on capitalizing remains to rich way and that opportunity. are in we early clear of a and opportunity, very customer personalized file speaking this the innings want important in strategizing I

right to Importantly, there. get we are building the us team

engine. group a of personnel right As marketing to effort specifically we I've get number and marketing earlier, noted in made changes, our team the in an place in to lead our rebuild

transformation. and time with the get. of march we will a the of Officer. ways and the changes most new Digital announced to hired today, a the the in engaging we The road possible. a test as noted, will bring Consumer, we are not search a process Marketing a right pursuing actively that respect will Chief Officer, Vice President, for us As consumer Chief the to we evolve CRM. CRM we as over who relevant knowing system, skills hiring a engage, dynamic organizational And the and the finally, learn, we These but oversee more to We more continue core use leadership smarter we better down

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on described our learn about test, way the are I and CRM, how Similar marketing a to we plans anchored think process. read

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the website, our evolve, plan we changes but While post must at we refining our approach have back holiday now the to locked made have to down for and experience to go holiday. is site selling, it our website

over and overhauling we third are learn, quarter, do which optimize our of it again. again, several all test, deployed Here end changes the We towards categorization. site an approach, iterative the include pursuing

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business select we've business, few initiative, additional fourth In wholesale this the the of busy development relations As development are which in our is plan, been we wholesale process, a largely Amazon. -- with in wholesale further pursuing retailers. today that

progress. great made have We

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made And to reduced technology we our have replenishment. with able systems capital speed for our in to market times streams our and revenue new existing build lastly, been new driving investment leverage We limit lead accounts. to and progress as we've

be updating we business And accounts in customer moving. a segment. moves momentum moves progress to top. remember the will It the we any not marketing, develop as drive channels is we as look a is It development of get transformation across expect, time are you for forward the new one that the of series any company to our much across important as to appropriate. of back across Wholesale is and driven on on to customer channel on our and and unique or looking when as series requires segments

big said, and being offer We Now remain with and designed incredible customer. tall with a uniquely all we that is an the retailer breadth product, incredibly that assortment unique position. compelling for

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the growth in We are believe will term the profitable our we stakeholders. to and drive returns support investments short making our for strategy

call who turn through will Peter, take us Peter? to now over And results. financial I will the our

Peter Stratton

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

our due comparable other X.X%, was offset the while noncomparable sales a Within year's $XXX,XXX XX-month an declined The The On growth. decrease sales. million. XX.X% $XXX.X our $X.X third were in e-commerce our sales closed quarter increased increased we in to of as quarter, compared compared third direct-to-consumer to For from trailing prior revenue third trailing a last of million mid-single-digit total stores, wholesale months. sales primarily in direct-to-consumer in and to sales channel registered quarter. decrease our channel, to revenue partially by the X.X% sales or as sales XX.X% increase by basis, retail improved segment reduced to XX sales the

In our experience continue quarter August, but to the did weaker particularly in we quarter, improvements store conversion traffic throughout channel, see all we in consistent long.

the factors. for which to transaction per we attribute quarter, been negative has Dollars slightly two

as First, different as we revitalize Harvey we tactics store discussed, promotional more tried were to traffic.

the Second, transaction. per also quarter a impacted dollars which higher goods, we with negatively level clearance entered of

Looking our quarter. a in Keep into on we in business are are unfavorable fourth ahead, we weather cold effect November, shifts snap in cold year, has only couple our particularly of the early calendar. seeing the holiday business. are there this weeks by the in had the And reads however, in the mind, a we positive encouraged are categories, recent as

decrease decrease inclusive cost third to by to margin last the in aged occupancy third XX% point higher retail XX.X% points XXX write-down points XXX offset basis the XXX the XXX certain XX and to basis occupancy basis compared merchandise costs, was margin, points of the the to for was partially growth business. carries promotional selling basis quarter, basis Of points due The clearance was in margins was our XX quarter merchandise in activity, due contraction, which due leverage. inventory point basis for of margin Gross of wholesale, points than lower and XXX basis year. of

workplace. elaborate would We've spoken continued charge of inventory and on quarter. our earnings the clearance calls inventory move the position the third casualization on, about Before on we to we I in took prior like the

third higher buying a clothing has this preferences coupled to had tailored business of clothing, more which with our and to our struggled our led This of last, sportswear. all us inventory stores year aging customers in close tailored decision to a shift more quarter to and Our the reexamine mix policies. decision as our shift, Rochester

third and is aging expected quarter pants, Not of to at our suits We shirts, our sell-throughs clearance performed look a dress diagnostic surprisingly, merchandise. our carefully much assortment inventory very blazers. in the clearance of and of dress the comprised

is from As a the of clearance that have business today result, attire. we more the formal shift stores market of indicative in away amount our

we address to of of fourth the For take a all This charge aged out quarter. aged noncash to XX,XXX be represents marked that stock our elected to third charge concerns. inventory margin quarter, $XXX,XXX of inventory gross in will the units

this sense at To we at our our selling of represents inventory units X end our write-off to of and our at We This just further costs. million decision some center distribution give inventory have on a is the of X.X cost the quarter. X.X position. inventory and million over you a maintain clean over feel in efforts scale, will of third healthy $XXX approximately that of and floors units prudent our

sales, to in last on which a wholesale million, information were XX.X% quarter in XX.X% in severance I'd to corporate basis, $X.X segment. third primarily compared of move as dollar due of like of a to year's rate SG&A $XXX,XXX an in Now our quarter. $XXX,XXX, expenses in expense, On to our to SG&A technology costs, $XXX,XXX related by and marketing $XXX,XXX increased increases increase third

amortizing a discussed related involving the transaction lease XXXX sale-leaseback two to on our corporate of calls, quarterly standard, accounting as are new we a from deferred headquarters. the prior result receiving SG&A to no longer gain benefit a a have expense adopting $XXX,XXX we As

recognize of remaining as new required quarter in XXXX of were $XX.X gain the the the deferred retained first we earnings. to to million Due standard, a direct lease to accounting adjustment

other cost marketing two store the We operating centers, which in few sales include view costs, a how spend comments our make through to SG&A store customer-facing XX% compared compared third marketing primary were X.X% and Marketing year. third to of X% expenses costs fiscal of want X.X% On of payroll, XXXX also XX.X% SG&A for the at dollars. in quarter sales about represented approximately I annual basis, be costs, to third the XXXX. quarter last quarter of targets to sales. management in of the quarter we an

Corporate support overhead which quarter include sales and represented costs, XX.X% center compared last the distribution costs, third fiscal year. of the in corporate to XXXX of XX.X%

Included $XXX,XXX in I'd approximately Rochester costs. of worth company an Now the the like to a adjustment. about related lease the translation remainder London of the a In foreign accumulated London the expense closure noncash this was to incurred charge primarily wind-down operation. charge talking and store. minutes our $XXX,XXX of spend related to The charge termination liquidation few $X.X related the to recognition the inventory million third quarter, approximately of currency was the of

the occupancy a was approximately a economics to just the XXXX, our fiscal of brand. a At London store cash local Rochester flow XXXX, As escalations, the customer we Rochester market a did time, at four for that We've the rent the London decision In turn U.S. us. focus $XXX,XXX. Unfortunately, costs XXXX close not Unlike we expected loss and In store to not DXL operating the declining several particularly XXXX, our the shop. our our sustainable. were wall the years. expected London presented we alternative costs. previously store over had disclosed, due a the Rochester reached portfolio, to approaching portfolio line continue expected store our in to unique store operate store's year volume challenge ago would same to loss. past to fiscal four over our our DXL have top has store escalate, In wall operate breakeven. fiscal at

$XXX,XXX avoidance to years. less of believe company's it this in we on while the manner. decision this has payback best a our proceed quarter Our a than incur cash charge drag this results, QX in two charge sizable to the interest is was Again, cost

Hills Rochester and fourth close Beverly our the in to York expect Rochester We New quarter. stores

cost Rochester specifics engaging Hills. we circumstances exit customer a and to to DXL markets, We customers closing involved over in due The lease, high New in are stores These do have law City in or migration the to entity. more London not seen and an had even time the apply DXL. unusually actively other York foreign to of these migrate strategies in Beverly closing to Rochester our U.K. store stores issues the

million the was to Our $X.X was primarily million adjusted in adjusted million expenses to EBITDA the EBITDA lower for XXXX. decrease of for higher compared in margin third SG&A the quarter the the per loss share quarter for or million period. or to of $X.X quarter third GAAP share The quarter. $X.XX net net third loss a The and prior $X.XX was $X.X $X gross diluted third compared as due a diluted year's per in

compared $X.XX loss loss third of net net for for was of of fiscal quarter adjusted quarter a XXXX diluted $X.XX basis, third to fiscal adjusted share an non-GAAP per On the the XXXX.

first fiscal operations XXXX. in accrued compared the EBITDA payments first cash is XXXX incentive the Now from nine to primarily from lower The and fiscal XXXX. operations three due but months was nine million of the balance expenses compared our fiscal months earned negative million timing accounts let and the turn quarters decrease flow working in to payable cash sheet fiscal primarily first flow XXXX XXXX flow. for to in to fiscal me paid in for Cash $XX.X of capital, as negative of last out $X.X and of adjusted year and

better inventory as the million in levels by as last a and year. X.X% or our increased quarter to to balance due presentation well an increase as compared The increase in of inventory Our in $X.X third primarily wholesale inventory best style collections XX% we to the growing with branded for year's at demand quarter We total of our the -- the clearance down clean to XX.X% assortments quarter. inventory on XX% in position last a of to compared inventory position end inventory collections. capitalize was ended third

was Capital related first The last million as infrastructure to order in million quarters management $X.X capital CRM as the our expenditures our increase XXXX new of to year-to-date system. projects, were $XX expenditures fiscal basis well year. on for system upgrade three compared IT including higher a

side, stores On XX we retail XL estate the outlet real outlet male to and rebranded two male casual DXL XX and stores. casual have stores remodeled and XL three DXL retail

four to addition male of stores, connection one year-to-date, stores. Clothing of store Rochester have our in and outlet which we with closed opening two closed stores, and efforts, store closed DXL DXL XL the In casual three we rebranding

which unamortized million to Moving of debt the We of of credit excess third sheet. to facility million million, excess availability total FILO ago, balance end costs. $XX.X quarter, credit and the total $XX.X with debt the million our $XX ended $XX.X includes quarter under $XX.X At million debt year outstanding back under was borrowings net of $XX million. our of compares the with revolving facility, of our This facility. availability a issuance under

to we which to business in would believe In closing, for fourth we the free expect sales be the breakeven. increase is omni-channel retail comparable full comp quarter, in single-digit approximately achievable. flow be flat year cash our and a This low imply

for I'd turn back now thoughts. final the to like call some to Harvey over

Harvey Kanter

DXL. This year challenging has Peter. Thanks, and been for a unique

year named rules also the last at the longer executive mid-management of have our our in level. at we have and organizational company, executive not with senior only from are undergone turnover level, five no We tremendous three but where responsibilities change, changes experienced and officers

comp to we sales. and stimulate growth, counts through manifest increased We've greater customer laid which out will believe plan a

have team. and to comment completing to management are as and DXL night the be thanks team. take their immense, on good is From business for DXL wholesale True consumer. by crew me progress at out behalf on the an and a comments and of opportunity are stores, losing plan, on the point. big keeps believe are for what necessary team the not We often changes Namely, and made me me is encouraged easy XXXX. to last up our in at prospects forward appreciated up easy. Change team close believe DXL Investors to questions. and we fulfillment that great made hard-working transformations we look never me. We What is foundational is behalf commitment are we the inflection wholesale big all night. ask One to the we desire headquarters and keeps dedicated, begin business a the must our -- drive tall greatly passionate, and the to

the that. Together, forward together, heartfelt to all to asset. would a else thanks. everyone now associates greatest we We in business you and as to we our will, are fact, of do our moving take these a look calls on people like team, big as calls. and listen of Our Many

Operator

[Operator Instructions].

comes Our with first SCC from Beder Eric Research. question

Eric Beder

there. between seamlessness things to little want I and online brand different is One and some offline. the about talk to between you a

Or synchronizing to some that go? are there promotions. talked of you to the that at enough large You -- specific segments? promotions of different about going justify way different the it is forward, having is bases kind Is between that when look in in customer

Harvey Kanter

have as Yes. Eric, available the an The has that being customer don't said, limited one -- ever or we not to any any any to to think they Harvey. all expectation are they nothing. what it's reality I in channel there's That that them. going be is believe

to the we into that same So vice And walk at understand you challenge time, in can the that doing how price the same board. try we to expectation across get navigate the the versa. a have store and found online continue to and

test we unfortunately, how and unique greatest And one consumer understand of optimizes navigate and to may specific -- so that segments answer, you uniquely. it's part TBD, give to the the I'll not understand but example,

we program, example to the offer a membership offer full a is loyalty to to and not been distribution. online able limited have unique where our So greatest probably that's program loyalty our

when stubbed event. but that walk store that is we then and they where in can a we online-only, our don't get they the So expectation potentially have and same something to did everybody, toe

So again, how, us. where the the They it's in define would experience, challenge and we to they but when navigate, customer that shop. the customer define for to wouldn't best

Eric Beder

a And guess I related then kind Okay. of question.

and Core What the much the terms changing stores is that customer purchases? demographics? maintaining response male the look. has more location been been You've they're And come and casual over And switching with the Destination purchasing but What customer the male they're that? the XL of casual in like? goods basically Destination what to to changing XLs

Peter Stratton

Sure.

remodel. a from male We've the carpet, results inventory, a They're casual and them getting getting into of really which before. seen in male refresh one. from getting different over take I'll stores a the some Peter. actually that paint to they're They're but and casual this Eric, have times importantly, giving assortment. We're most better these So lot has of nice that customer never stores going had stores. converted we DXL It's existing

these stores. absolutely seeing comps better in we're So

I responding in And to think been well a continue we're to program going pursuing XXXX. very it. that it's he's

Eric Beder

is a into should Okay. of be I signpost more becoming think I and know want kind know what going of be? XXXX about are you things and but somewhat this that seeing in And should and XXXX pieces, don't as finally, changing And I that financial journey. as at thinking how looking -- we they

Harvey Kanter

formats the of be the The our believe comps, is say business. in performance that first it's that online and obviously I Harvey. right? the is file comp marketing ultimate And But the transcends the doing obviously we share marketing actually, which firmly in and driven, be and And digital growth revenue lion's today. challenge -- one bifurcate would today, will and digital that, would comps. The stores, foremost, then -- believe store can't that, no, you digital can't you we're we enhancing

are happen changes file. oriented be, customer our pursuits driving can so will markers And comp organizational will obviously, if there marketing. appreciate that. And traffic clearly we've the via in digital But you towards and made, stores the

Operator

from Our comes next with Chris question Lake Krueger Capital.

Christopher Krueger

the How much by, the call you as I growing? sales. know should majority how Looking of think is at that that you but Is said I And can Amazon was give, in wholesale have look go don't SKUs many your quarters with how that? curious, you Amazon? detail the at efforts, I we

Harvey Kanter

should you exists look pursuits our are the SKU business. today. that it you Amazon you think as grow can on I The look to it actually can at look and count, at at that

Amazon overall. going I'm about -- expectation to not talk Our specifically talk as much as I'll

looking, able talked about expectations are success but would great just not we've And with Amazon, and have We expand to, we be alluded with expect our to the wholesale. evolves obviously, grow it specifically, biz the that We should for which to business, account then further. dev structure. we is that

look we expand account we're big to Amazon you product and for if in at take the are their the other retailers. taking looking not And sizes you we're producing to And for product, them structure, that so -- to extended best-selling tall. when format them is what

Christopher Krueger

-- well? far products at are out stand as that that selling Any as Amazon particular

Harvey Kanter

really the the basics. be house core day's fashion-forward what basics It's were Amazon the core done, When we're and might not most the really driving.

Christopher Krueger

everyone's before, Got asked this clear. just I but it. All so I've right. know

this On the apples-to-apples fourth the weeks operating is year? on year last number of quarter, it versus

Peter Stratton

of is it the Yes, everyone in total it holiday have experiencing. in shift number the apples-to-apples last But a we for that number to year of is although this is same that in weeks, year. the weeks, retail

Christopher Krueger

seen year-over-year? all And quarter, In your of far you Is fourth third then one to impacted in that. sequentially numbers what improve a that Okay. margin we've while. quarter, in gross would the expect the went over you or as the details as lower

Peter Stratton

different quarter of from we're in year. most the margin out why the would -- which were basis we've that last third watching detailed there's XXX promotions one three is the at I gross guess and due clearance, talked make is So I there down about I to the is points length. kind that about the components point carefully The that to

points. a shift business. than write-off other, inventory more And charge don't that have from lower our retail -- has wholesale, sales XX took, we a expect that as was due natural that basis was was The to the retail we then we the That that margin that we in onetime to wholesale, there be to grow recurring. natural

next will to continue that So year.

see write-off again. erosion, see will won't the So continue but to inventory we we that

Operator

Instructions]. [Operator

Our next West Roger Creek question comes with Feldman from Capital.

Roger Feldman

if But could about urgency we And your you decisions, And talk money little to And the more pedestrian. start talk how that rank? you profitability. business. know I is the guys from business make wonder make where when about you making that? from that? wholesale it money a toward -- could if that's I bit when does possible

Harvey Kanter

Peter growth. profitability. -- this. one -- And just is growth share leverage is Without number number That growth one? the our orientation Which about thing we're comp in growth I'll the expectation is drive we're XXXX EBITDA thing growth. talk and and to ultimately, -- against a business. one P&L I'll store drive and will The and growth, file our managing driving that and

Peter Stratton

us We've that much is to have the but of unique as this are quarter. can. been that we Yes. a that structure to focused are We in role with has I would elimination starting, for changes say orientation all we're that going of cost the be significant third year on. continuing personnel something positions an as got we're the address Again, the on. did a new pretty continuing cost very

Roger Feldman

flexibility on So just -- growth way much how there money -- much money? how positive investment to of, do make the able to much terms how it, in I tolerance have call do order need or outcome? And is money -- be so I to in losing much how we for you understand, mean you feel the

Peter Stratton

Yes.

in been need about was we the of to And think talked need it's that that pretty that's So our the to comments -- I grow. majority clear remarks has Harvey that we we what grow. prepared

going I can bit we're the think have to in we expect term, progress. do before a backwards fact tolerance forward. for would So But some start certainly the to we go we're some that see going I that near

Harvey Kanter

one And Roger, very and this. different, thing -- it is about. transparent transparent One we've thing good, about really Harvey. better we've been been

the we base the The talked that and it is to with directly, market we're would I a be. will behind is, matter need plan. I we bring and fact very grow, investor belief of plan a about to thought and we Our share where

and articulate to to behind articulate, be And will your talked September, will trying marketing learning quite with be in directly, ultimately -- be lack questions show, facing change nonroad to definitively answer going our of made have sales a we we -- have ways, that some is coming that The some November. is to to so in the there -- fiscal that we've to we've and go-to-market not of for bit pretty acknowledged, is that of the August momentum initiatives and of honest, Its is to I be along we opaque. in in think and the about our out amount expected October, further to QX and compression in learning September out in there's were the where of will the be come We roll QX adjustments informed dice what of the expectations. We're retail show. calendar expectations to acknowledged from fair impact we QX, road QX the able it inform to of of a and XXXX, as we're in XXXX everyone the little we -- have. and better plan a

would done strategy. to some will Barring rebuilding we're with improvement opposed in and said, some traction that get able on the then taking as allow very of the line we've And a strongly in organization plan curve our the the conversation, tactics us expectation normalized about that feel that up the so behind to market sales time work come to because as we're around in to and to doing, direction be of is able QX we QX. to really and we the would just been we've and of that add I discuss directly,

Roger Feldman

then I are. expectations easily -- respond an I guess around things on would in something in this be the do And some Board's I you become would is may experience from financial that I the own think alone where understand this understand. -- my profitable? all this, that I to at What there I be the more guess understand -- investor's that. But mean me So are. least it is just to When is -- you the is for are turnarounds, goals have call. just what there happy. would -- profitability? guess you to And nice discipline explained So don't with what love make I perspective,

a We're wildly pretty question. small not second profitable. a and as company So

that resource in are today? fighting what what And we of start balls we given the is to -- does wholesale? when allocation that all the air, for worthwhile are make a So in money? And

Harvey Kanter

Yes.

again. So Harvey it's

the think at not larger at market we you Polos, look less we're moderately core So for this don't doing we're is market. T-shirts, wholesale quite with with And expand selling is it's it's and go market a knits, of the core market. that different if DSO Amazon, out define want bringing there, into to It's vis-à-vis out broader more us are business to well. we've I what as demonstrates that more get after that addressable customer. customer And doing, what an the with retrade core to of product the the as it's to customer ability is affluent do addressable it's addressable every core believe we base a that much would product. point, one what Amazon, there I tap talked khakis, a broadly customers we've in mix and what articulated, them. the so a it's and We want business The about, to many

actually you it's a Amazon, at about If ratings X.X. the look on

in remarkable a I months. think is result it's seven that short and X.XX

I and a mix define and curated more similar specialty a other a belief consumer retailers DXL. can imagine -- our feel probably number we're are mix so the same is good And about have of more that to and less offer And the that response curation of really that is the we terms almost and more as to is big in product that to scale in you aspirationally what refer product a both selling Nordstrom-esque not in a like would tall store. that as I would at a there is quality our of upscale, service to and and general merchant similar Amazon

see greater opportunity meaningful get as And so we're far we'll you page bringing talk about then publicly, we line on to we we than when business today, the to that we we hope and to dev material see and work the the market, done. between wholesale biz talked given but see and the and what what haven't a which bright to bring

the to struggling giving amount to as business but where, it's through it the it we the Today, said, enough different expense cart that front getting monitoring make, And that to appropriately distinctly than we we're cautiously resources. of allocation moving, not DXL investment you in very the of so SG&A speak. get see of point to horse,

questions we good. point again, We're to can't I trying transparency The that not to they're as work are it, done. at quite valid. that comments, articulate. just be talk think I'm biz has a -- address So It's as we to be can dev your very

Roger Feldman

amazing. I to start if -- mean just I'm I make you you until a incredibly it narrowing there observer got to, I -- an a you supportive. be guess you that I potential -- seems are The have the there, just I just go stores, guys I we great the comment that I focus websites should The leave terrific. to and thing I wonder wonderful. will I think The pictures then. but make I Well, is have I'll the there the engagement mean -- you say better core like near-term just things you job. like imagine do -- have sounds the impact. And are you a successful you've turnarounds doing that the great -- been tend in wouldn't that think is business if I've this focus the think wouldn't I on mean narrow wonder off profitable? whole I I

Harvey Kanter

one one share. I is crack to Roger, at happy take might perspective, this because absolutely that other Yes, I'm there more

might are call is that they're about make and we supply is powerful. spec engage, that are to in way what many very chain, are IP way engaged big big believe and product. talking supply tall to is factories of would think we exclusively to we're and tall not factories, We where and struggling But that we chain we factories in around the big not actually and that actually believe retailers specific, And our have tall a and ownership realize meaningful, supply a the You're IP our chain. in appropriate. ability talking that incredibly and reality, from you wholesale

has by And by is as Amazon the value. tremendous brand Essentials Amazon, DXL DXL, which demonstrated of

our For DXL, works chain expert. to are in supply we as and using actually, it chain because that supply product with we a specifically, as retailers, knowledge bigger but become leverage favor other bigger

of scale leverage against our goods addition will growing revenues We sold others. with cost that to in

And side the to making our come on down factors better so well the will the of back DXL as way powerful both actually is doing that and doubling as leadership we're a is important investment demonstrating us for chain revenue reductions to cost really with. and business much that supply more lack as make we're potentially

Roger Feldman

So gross up. our going I should margins see

Harvey Kanter

will. You

in a a A our very that not leadership. and will that -- will that's chain commitment you by quarter, strong see belief. next supply belief You is but leverage

Roger Feldman

around greater luck. I Okay. encourage generating I luck. urgency guys guys wish I cash, you some you some wish would but

Operator

Madison question next Our Global. Sosnick comes Bernard from with

Bernard Sosnick

data the necessarily question it. of way. much related to a later market to installing but effective lot CRM effort, My because the just with regard in it straightened But takes the support relates levels cost into of program expected, you things has I develop getting more hiring to thought You meanwhile, process system spent the your a been and system the can place to levels, to time system system, a to, to to when become The -- assume. time the the bit than personalize. ability little falling in to technology CRM effective is not my employed there optimal

but done the fully? much new be of there in not place, All you'll you're with effectively might yet when be more these things there put can system you and

Harvey Kanter

almost a Yes. is practice that system think reality fully evolving than process, probably Well, and say system I question much never. but is right? it's comprehensive CRM is an would The a CRM I the global a -- would system. The more is

we of point platform next the is, would to earnings we sales half incorporated more as have different believe by think, a those we quarter, a the of the QX, be the at richer, It development And the with I fourth learnings. in consumers. second system opportunity profitability. that of the or advocacy, analytics. But into in will insights will I platform. But profitability great The communicated beginning us second previously whether executed see on different is first last program, e-mail end on consumer the demonstrate where you engagement quarter be has and CRM much what file we're the actually interaction ultimately year, use the what we've line. gives now consumers and learnings go that by on And so right. reality And platform be we'll a terms elements. to is The level bottom really revenue line primarily a continue we'll the repeat or loyalty quarter, a profound number experiencing across knowledge, interaction, call, are of of the is to relationship into drive of and through of with top the it's our or leverage

Operator

I'm showing And any this not further time. at questions

Harvey Kanter

a call, time holidays, a wish to in will the on everyone XX we your short talk Thanksgiving, energy and and we and safe you happy I appreciate days.

Operator

conclude and Ladies does gentlemen, this today's presentation.

wonderful and now have may disconnect day. a You