Destination XL posts small loss, but says its new retail format delivered strong results

Photo taken from company website.
Photo taken from company website.

Destination XL Group Inc., a Canton-based retailer that sells clothes for big and tall men, said that its new store format posted strong results for the second quarter even as the company reported a loss.

For the second quarter, the company had a loss of $1.6 million versus a profit of just over $1.2 million for the same quarter a year ago. Second-quarter 2013 sales were $97.6 million compared with $100.5 million in the second quarter of fiscal 2012.

The company is in the process of transitioning from one retail format to another. Its new format, called Destination XL, features about 8,500 square feet of space and lots of brand name merchandise. The company also operates a chain called Casual Male XL. Casual Male stores are much smaller than Destination XL stores and are stocked with less branded goods.

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The company’s plan is to eventually exit its Casual Male business as it steadily opens more Destination XL stores, which is also refers to as DXL stores.

At the 29 DXL stores open at least a year, second-quarter sales were up 16.5 percent, said the company, which added that it now expects to open between 55 and 58 DXL stores during fiscal 2013. The second-quarter jump in same-store sales at DXL stores is partly a result of a six-week marketing campaign, which included TV advertising as well as a mix of radio and digital marketing, the company said.

Meanwhile, the company is also closing Casual Male stores and Rochester Clothing stores --- Rochester is another chain that the company operates.

At the end of fiscal 2011, the company operated 420 Casual Male stores. At the end of the second quarter of 2013, there were 312 Casual Male stores.

In Friday’s press release, Destination XL Group said that over the next three years, it expects to incur transition costs of about $10 million per year, partly as a result of lease terminations resulting from store closures.

In a statement, company president and chief executive David Levin offered his take on Destination XL Group’s second-quarter results.

“Our financial results for the second quarter of 2013 exceeded our expectations on the retail side of the business as a result of the positive and significant effect of our marketing campaign,” Levin said.

Levin added: “With an effective marketing campaign to build brand awareness, our DXL stores are beginning to demonstrate their true growth potential. Having seen the very positive results of our first marketing flight, we are increasingly confident that our decision to accelerate our DXL strategy will yield the long-term results that we expected.  We are now looking forward to the launch of our expanded fall marketing campaign.”

In mid-afternoon trading, company shares were up 36 cents, or nearly 6 percent, to $6.17.