Destination Xl Group, Inc. · NASDAQ:DXLG
Destination Xl — Investor Presentation (March 2013)
39 slides from Destination Xl's investor presentation, Mar 21, 2013
Slide 1: Destination XL Group, Inc.
Exhibit 99.1 Destination XL Group, Inc.
Slide 2: Safe Harbor
Certain information contained in this presentation, including, but not limited to, cash flows, operating margins, store counts, earnings expectations for fiscal 2012 and estimates through fiscal 2016, constitute forward-looking statements under the federal securities laws. The discussion of forward-
Slide 3: Who is Destination XL Group, Inc.?
Who is Destination XL Group, Inc.? Largest multi-channel specialty retailer in niche men’s big and tall (B&T) market Offering unique blend of wardrobe solutions Private label & leading apparel name brands
Slide 4: DXLG by the Numbers
DXLG by the Numbers Active customers Enrolled in loyalty program Highest rated retailer in 2011 CSI Customer Survey Retail Direct Retail Stores Brands Customer Satisfaction
Slide 5: Who is Our Customer?
Who is Our Customer? Males with a waist size 40” and greater (40M men). Determined by physical characteristic, not demographic. Not dependent on age, income, race or nationality Seeking greater selection in size. Values convenience, selection and fit over price.
Slide 6: Our Current Casual Male XL Stores
Our Current Casual Male XL Stores
Slide 7: What Our Customer Wants
What Our Customer Wants Large changing rooms More brand selections On-site tailoring Bright atmosphere Suggested wardrobe solutions Wide aisles One-stop shopping
Slide 8: Opportunity for accelerated growth and profitability
Opened 4 DXL concept stores Opened 32 DXL stores Opened 12 DXL stores Opportunity for accelerated growth and profitability Expect to Open ~60 DXL stores
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Slide 12: MAN Ny it i iN
MAN Ny it i iN ne
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Slide 14: Large Selection of Name Brands
Large Selection of Name Brands
Slide 15: Average store comparison: Casual Male XL vs DXL
Average Store size 3,600 sq. ft. 8,400 sq. ft. Sales per sq. ft. $172 $147 ($230 by 2016) Build out costs $50 $70 Occupancy costs $30 $30 Dollars per transaction $97 $137 Style choices 2,000 Private label brands Name brands
Slide 16: Market Consolidation to DXL: Chicago Metro
9451 Schaumburg, IL 9183 Niles, IL 11.4 miles 9512 Bloomingdale, IL 11.2 miles Market Consolidation to DXL Chicago Metro Customers are willing to drive up to 20 miles D XL Schaumburg, IL 0.9 miles
Slide 17: DXL Comps Reflect Growth Opportunity
DXL Comps Reflect Growth Opportunity ** Total DXLG Comparables consist of all stores, including DXL stores and direct channel * The 16 DXL stores opened for more than 1 year produced a 7.6% comp in Q4 20.0% 15.0% 10.0% 5.0% 0.0% 14.5% 0.7% 9.0% 0.8% 2.1% 2.0% 2.0% 1.5% 0.5% 1.5% 12.8% 16.3% 17.1% 13
Slide 18: Compelling DXL Returns
Compelling DXL Returns Expect greater store productivity Better leveraging of expenses -- occupancy, labor productivity and local/district management Projecting higher 4-wall profits than combined profits of individual stores Targeting between 25%-30% store operating margin Potential to capture addi
Slide 19: Accelerated DXL Openings
Accelerated DXL Openings 2015 Store Count Target Destination XL ® 215-230 Casual Male XL Outlet ~60 Rochester Clothing 3-4 Accelerated rollout based on success of DXL stores in 2011 Total Stores: (460) (450) (412) (348-358) (308-318) (283-298)
Slide 20: DXL Sales Increase as % of Total Revenue
DXL Sales Increase as % of Total Revenue * DXL sales include direct sales via the DestinationXL.com website. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1% 5% 28% 48% 70% 84% 89%
Slide 21: Accelerated Rollout of DXL
Opened DXL stores / Closed stores Operating margins were approximately 3.5% CapEx was $32.4M Accelerated Rollout of DXL
Slide 22: Accelerated Rollout of DXL
Open 57- DXL stores / Close 110-119 stores Sales of $415 - $420M Expected borrowing level of $10 - $15M at year end Commence new marketing strategy with incremental $10M spend Lease exit and asset impairment charges in the range of $3-$4M Operating margins of ~ breakeven to 0.5% CapEx expected to pe
Slide 23: Accelerated Rollout of DXL
Complete rollout with - opened DXL stores and Closure of remaining Casual Male XL anchor stores Annual sales growth of ~10% – 15% Operating margins gain traction and increase to ~8% (from 4.2% in ‘11) Expected ending cash balance of $5 - $10M CapEx expected to be approximately $38M Lease exit and as
Slide 24: Accelerated Rollout of DXL
Full benefit of DXL concept drives revenue > $ 600M Open average of DXL stores per year Operating margins >10% Accelerated Rollout of DXL Generating free cash flow in the range of $ 60 - $ 70M
Slide 25: Increased Awareness = Opportunity
Increased Awareness = Opportunity DXL Customer Purchase Funnel* Addressable Population Aware of DXL Visiting DXL Purchasing from DXL Repeat DXL’s addressable market is primarily men with over 40” waist Awareness of DXL is low across its markets, directly impacting ability to attract new customers Of
Slide 26: Opportunity to Grow Market Share
Grow direct business with new website Paradigm shift in marketing improves awareness Target “end-of-rack” customers Attract a broader customer audience with one-stop-shop Capture greater wallet share with DXL concept Opportunity to Grow Market Share Addressable Market = 40M Customers 1.5M Currently
Slide 27: Increased awareness by 100% in new markets
Increased awareness by 100% in new markets & 38% in established markets “End-of-rack” customer base grew by 38% Launched test campaign in 5 markets: Memphis, Minneapolis, Denver, Atlanta and Oklahoma City Built Stronger Brand to Attract and Serve Customers Results Demonstrate Ability to Grow Market
Slide 28: Established Effective Marketing Mix
Established Effective Marketing Mix 15% sales 24% traffic 64% new customer purchases 84% web traffic 7% web sales 38% market awareness Established Market Memphis DXL Opened in 2010 6-Week Test Demonstrated TV, Radio and Digital is Most Effective Marketing Combination
Slide 29: DXL Test TV Commercial
DXL Test TV Commercial Marketing to Customers in “No Man’s Land”
Slide 30: Increase marketing spend as percent of sales
• Increase marketing spend as percent of sales from 4.6% to 6.7% • Launch national DXL Media marketing campaign in spring 2013 2013 Marketing Spend $M Total 50% Increase YOY to Drive DXL Awareness DXL Media Direct Digital Visual Loyalty Other
Slide 31: Financial Performance
Financial Performance
Slide 32: Q4 2012 Results
Q4 2012 Results • Comparable sales increased 0.5% and total sales were $114.9M • DXL stores represented 18% of comparable retail sales • Comp sales for Casual Male XL stores decreased 2.3% • U.S. direct e-commerce sales increased 13% • Income from continuing operations was $4.2 million, or $0.09 per
Slide 33: Sales and Gross Margin
42.7% 44.2% 45.9% 46.3% 46.5% Sales and Gross Margin Strong gross margins provide opportunity for significant sales leverage Revenue ($ mm) $500 $400 $300 $200 $100 $0 $443.9 $393.9 $392.0 $395.9 $399.6 50% 48% 46% 44% 42% 40% 38% Revenue Gross Margin
Slide 34: Operating Margin & Comparable Sales
* Before impairment charge of $23.1m Operating Margin & Comparable Sales (continuing operations) Focus on improving operating margins through greater DXL sales CMRG Annual Historic Operating Margin 10% (10%) (5%) 5% 0% 2011 * 5% (15%) (10%) 0% (5%) CMRG Historical Annual Comp Sales 2.4% 4.6% 4.7% 3.
Slide 35: Strict Expense Management
39.9% 37.9% 37.9% 38.4% 39.1% $34.1 $19.1 $19.0 $19.6 $18.5 Strict Expense Management ($ mm) Marketing Expense Total SG&A SG&A as a Percentage of Sales $0 $50 $100 $150 $200 $177.3 $149.2 $148.4 $152.0 $156.4 30% 33% 36% 39% 42% 45%
Slide 36: Strong Debt-Free Balance Sheet
$98.6M $90.0M $92.9M $104.2M $ 104.2M $38.7M $3.5M $0 $0 $ 0 $5.0 $4.3 $4.1M $10.4M $ 8.2M $12.5M $7.6M $0 $0 $ 0 Strong Debt-Free Balance Sheet
Slide 37: Cash Flow and Capital Expenditures
$12.6 $4.6 $9.0 $18.0 Cash Flow and Capital Expenditures $40 $30 $20 $10 $0 $23.2 $30.8 $7.6 $23.4 $29.9 $32.4 $40 $30 $20 $10 $0 ($ mm) CAPEX Cash Flow
Slide 38: Why Invest in DXLG?
Why Invest in DXLG? Accelerated conversion to DXL concept creates compelling investment opportunity Strong gross margins; Ability to greatly improve operating margins Significant market share/sales growth opportunity Leader in large and growing B&T market Three-year $150M investment in DXL rollout t
Slide 39: For additional information:
For additional information: Jeffrey Unger Destination XL Group, Inc. V. P. Investor Relations 561-482-9715 Office 561-543-9806 Cell jeffunger@usa.net www.destinationxl.com
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