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Increased traffic propels Destination XL in Q2

Destination XL president and CEO David Levin credited increased traffic and higher conversion rates for helping drive sales in the second quarter.

Although charges related to the decision by Destination XL to exit the Sears Canada Direct business resulted in the retailer’s net loss growing to $4 million in the quarter, from $1.6 million a year earlier, total sales fared better, increasing 6% to $103.7 million, compared with $98 million in the second quarter of fiscal 2013. Same-store sales rose 7%.

"Our remaining Casual Male XL Retail stores also continued to perform well," said Levin. "During the first quarter of fiscal 2014, we returned to standardized operating hours for all Casual Male XL retail stores. The change has positively affected business at many of our Casual Male XL locations, resulting in a 7.1% comparable sales increase from our Casual Male XL and Rochester Clothing stores for the second quarter."

At the end of April, the company launched its latest DXL marketing campaign on cable, network TV, radio and digital mediums, and Levin said the results were very positive. While the investment in these promotional marketing activities adversely affected margins in the second quarter, they generated store traffic and increased conversion rates and transactions. Total transactions were up 13.1% and its conversion rate increased 6.2%.  

Direct business had very difficult year-over-year comparisons during the first two months of the quarter because the company still operated its catalog during the same period in 2013. “As a result,” Levin said, “total U.S. direct sales for the fiscal second quarter of 2014 were only up slightly year over year. We expect those comps to continue to improve in the second half of the year, when we are no longer comparing to 2013 catalog sales.”

Levin also discussed the retailer’s smaller footprint DXL store concept that the company is rolling out and that, according to Levin, increases the company’s opportunity for continued store growth beyond the original projected 220 to 250 stores.

“The economics of the smaller 5,000- to 6,000-sq.-ft. store is similar to our DXL larger format,” Levin said. “The smaller box allows us to penetrate markets where we previously thought we could not be profitable by leveraging improved sales per square foot, occupancy costs, build out costs and capex. We now anticipate opening 50 additional 5,000 to 6,000 square foot DXL stores in select smaller markets and in markets where geographical considerations warrant an additional presence.”