The gross margin, including occupancy costs, was 46.5 per cent, down from 48.4 per cent in FY23, largely impacted by deleveraging effects from lower sales volume and rising occupancy costs. However, merchandise margins improved by 40 basis points (bps) YoY, driven by favourable outbound shipping costs, shifts in product mix, and decreased loyalty programme expenses.
Destination XL Group has reported sales of $467 million in FY24, down 10.6 per cent YoY, with net income of $3.1 million.
Despite a challenging retail landscape, the company invested in digital upgrades, brand awareness, and store conversions.
In Q4, sales declined by 13.1 per cent YoY.
FY25 began with a 12.5 per cent drop in comparable sales, but recovery is expected in the second half of the year.
SG&A expenses increased to 42.5 per cent of sales, up from 37.7 per cent last fiscal, reflecting elevated marketing, healthcare, technology expenses, and accruals for non-recurring legal settlement costs. The store-based sales were down by 9.6 per cent in FY24 and direct business sales declined 12.8 per cent. Adjusted EBITDA stood at $19.9 million.
The group launched an upgraded e-commerce platform aimed at enhancing the online shopping experience and implementing a revitalised rewards programme to foster deeper customer engagement, DXL said in a press statement.
During FY24, the group opened 7 new DXL stores, relocated two DXL stores, converted 8 Casual Male XL stores to the DXL format, completed five DXL remodels, and closed 2 Casual Male XL stores. Looking ahead, there is potential to open approximately 50 nets new DXL stores nationwide, with an average size of 5,000 square feet—representing a 13 per cent increase in total store footprint.
“Our sales results reflect a difficult year for the men’s apparel sector where DXL has been challenged by lower traffic levels to our stores and lower conversion online. Men’s retail remains volatile, and we believe the Big + Tall consumer cut back on spending for himself in fiscal 2024,” said Harvey Kanter, president and chief executive officer (CEO) at DXL. “In 2024, we conducted vital consumer research across the brand, exploring brand awareness, consumer trends and the potential impact of GLP-1 drugs. We believe these insights can be greater potential catalysts for inflection for the brand and to drive long-term sales growth. We successfully tested a DXL brand awareness campaign in a three-city matched market test.”
Continuing the trend seen in its full fiscal results, DXL recorded sales of $119.2 million in in the fourth quarter (Q4) of FY24, a 13.1 per cent YoY decrease. Comparable sales declined 8.7 per cent, and the company posted a net loss of $1.3 million or $0.02 per diluted share.
The adjusted EBITDA for the quarter was $4.2 million. Merchandise margins rose 50 bps in Q4, supported by improved product mix, reduced shipping and loyalty costs, partly offset by markdown activity. SG&A expenses were 41.7 per cent of sales compared with 38.5 per cent in Q4 FY23.
DXL reported a 12.5 per cent decline in comparable sales during the first six weeks of fiscal 2025 (FY25). However, the company anticipates sequential improvement, with a return to positive comparable sales growth expected in the second half of the year.
The company anticipates capital expenditures to range between $19.0 million and $21.0 million, net of tenant incentives.
DXL Group remains vigilant regarding macroeconomic challenges, including tariffs. However, the impact is expected to be minimal, affecting gross margins by less than 10 bps due to limited exposure in China, Mexico, and Canada.
The group also continued store development plans which include the opening of 8 new DXL stores and the conversion of 2 Casual Male XL locations to the DXL format. While store expansion remains a vital part of the long-term growth strategy, the company intends to pause new store openings in fiscal 2026 due to current challenges in the men’s retail apparel sector and subdued consumer demand, the release added.
“In 2025, we are focused on executing our strategic plan, while delivering an acceptable EBITDA margin and free cash flow. We are monitoring the emerging situation with tariffs, and we have minimal exposure in China, Mexico, and Canada. Collectively, these three countries represent less than 5 per cent of our own sourced product, and we expect they will impact gross margin by less than 10 bps in 2025. We are committed to profitable and responsible growth,” added Kanter.
Fibre2Fashion News Desk (SG)
