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Destination XL Prioritizes E-Commerce Growth Over Store Openings for 2017

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Destination XL is turning to digital commerce to combat a tough retail environment.

Following the release of its fourth quarter and fiscal 2016 results on Monday, Destination XL indicated it will scale back on store openings and focus more on e-commerce growth for 2017. To accommodate shifting retail patterns and changing consumer behavior, the retailer will only open 19 DXL retail stores and 1 DXL outlet, while closing 19 Casual Male XL locations this year. By comparison, the retailer opened 26 DXL stores and 4 DXL outlets in 2016.  

“Under the leadership of Sahal Laher, our new chief digital and information officer, we are accelerating our efforts to leverage our already robust omni-channel capabilities with a focus on building an unparalleled online experience,” Destination XL CEO and president David Levin said. “This will enhance our engagement with existing shoppers, while inviting new customers to the DXL experience.”

To build its online presence and drive brand awareness, the retailer is also allotting more funds to its marketing initiatives. Destination XL expects to increase its fiscal 2017 marketing spend by roughly 40 percent to $25 million.

The retailer predicts that these investments will benefit short-term and long-term earnings, in addition to driving consumer engagement in coming years.

For the fourth quarter, Destination XL’s total sales declined 1.1% to $122.6 million, compared to $124 million in fourth quarter 2015. The total sales decrease was driven primarily by a comparable sales decrease of $2.7 million (2.4%), which included a comparable stores decrease of 1.9% from its DXL stores. Gross margin was slightly lower at 44.9% compared to 45.8% for last year, meanwhile fourth quarter net income was $1.8 million or $0.04 per diluted share.

Fiscal 2016 total sales increased 1.8% to $450.3 million, compared to $442.2 million in fiscal 2015. For the full year, the retailer achieved comparable DXL store sales growth of $5.4 million (2.4%). New DXL store growth was also slightly offset by sales from Causal Male XL store closures and comparable store decreases from other store formats. Fiscal 2016 gross margin was 45.5% percent and net loss was $2.3 million or $0.05 per diluted share).

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