Destination Xl Group, Inc. · NASDAQ:DXLG
Destination Xl — Investor Presentation (December 2013)
36 slides from Destination Xl's investor presentation, Dec 3, 2013
Slide 1: Destination XL Group, Inc. Investor Presentation December 2013
Destination XL Group, Inc. Investor Presentation December 2013 Exhibit 99.1
Slide 2: Safe Harbor
SAFE HARBOR Certain information contained in this presentation, including, but not limited to, sales, cash flows, operating margins and store counts for fiscal 2013 and estimates through fiscal 2016, constitute forward-looking statements under the federal securities laws. The discussion of forward-l
Slide 3: Who Is Destination XL Group?
WHO IS DESTINATION XL GROUP? Largest multi-channel specialty retailer in niche men’s big and tall (B&T) market Offers unique blend of wardrobe solutions – Private label & leading apparel name brands
Slide 4: Welcome to a Better World of Menswear
WELCOME toa BETTER WORLD OF MENSWEAR. WELCOME to BRANDS: LOVE. WELCOME to TODAY’S STYLES & LOOIs g |
Slide 5: DXLG by the Numbers
SALES Customer Satisfaction DXLG BY THE NUMBERS 6 BRANDS 375 RETAIL STORES 1.4M ACTIVE CUSTOMERS 90% 90% ENROLLED IN LOYALTY PROGRAM ENROLLED IN LOYALTY PROGRAM 80% RETAIL 20% DIRECT 85% HIGHEST RATED RETAILER IN 2011 CSI SURVEY
Slide 6: Who Is Our Customer?
Males with a waist size 40” and greater (40M men) Determined by physical characteristic, not demographic Seeking greater selection in size Not dependent on age, income, race or nationality Values convenience, selection and fit over price WHO IS OUR CUSTOMER?
Slide 7: Current Casual Male XL Stores
CURRENT CASUAL MALE XL STORES
Slide 8: What Our Customers Want
More brands Bright Atmosphere Wide aisles One-stop shopping Onsite tailoring Large changing rooms WHAT OUR CUSTOMERS WANT
Slide 9: Responding with Destination XL
RESPONDING WITH DESTINATION XL Opened 4 DXL concept stores Opened 32 DXL stores Opened 12 DXL stores Opportunity for accelerated growth and profitability Expect to open 53 stores
Slide 10: Paes |
Paes | AP BX ME cell
Slide 11: Traditional Section, Polo
Traditional Section, POLO
Slide 12: Studio Section, Runway
Studio Section, Runway
Slide 13: Club Department
Club Department
Slide 14: Studio Department
Studio Department
Slide 15: Large Selection of Name Brands
LARGE SELECTION OF NAME BRANDS
Slide 16: Casual Male XL vs. Destination XL
CASUAL MALE XL vs. DESTINATION XL Store size 3,600 sq. ft. 8,400 sq. ft. Sales per sq. ft. $172 $147 (maturing to $230) Build out costs $50 $70 Occupancy costs $30 $30 Dollars per transaction $102 $150 Style choices 2,000 Private label brands Name brands *Average store
Slide 17: Market Consolidation to DXL
9451 Schaumburg, IL 9183 Niles, IL 11.4 Miles 9512 Bloomingdale, IL 11.2 miles Customers are willing to drive up to 20 miles Chicago Metro *Customers are willing to drive up to 20 miles Schaumburg, IL 0.9 miles MARKET CONSOLIDATION TO DXL
Slide 18: DXL Comps Reflect Growth Opportunity
DXL COMPS REFLECT GROWTH OPPORTUNITY *Total DXLG Comparables consist of all stores, including DXL stores and direct channel 14.5% 9.0% 12.8% .3% 17.1% .8% .0% 15.6% 17.7% 28.8% 17.7% 0.7% 0.8% 2.1% 2.0% 2.0% 1.5% 0.5% 1.5% -0.5% 3.8% 4.4% Q3 2011 Q4 2011 FY 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 FY 20
Slide 19: Comparable Sales for DXL Open > Year
COMPARABLE SALES FOR DXL OPEN > 1 YEAR (11 stores) (16 stores) (23 stores) (29 stores) (36 stores) Spring market campaign ran from 5/5/13 to 6/14/13 Fall marketing campaign ran from 9/28/13 to 11/23/13 Reported 25.3% increase at DXLs open >1 year in October 2013 (2.7)% 5.9% 4.7% 16.5% 11.3% -5% 0% 5
Slide 20: Compelling DXL Returns
COMPELLING DXL RETURNS Expect greater store productivity and profitability 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 Potenti
Slide 21: Accelerated DXL Openings
ACCELERATED DXL OPENINGS 2015 Store Count Target Destination XL 215-230 Casual Male XL Outlet 55-60 Rochester Clothing Accelerated rollout based on success of DXL stores in 2011 Total Stores: (460) (275-295) (315-330) (~363) (412) (450)
Slide 22: DXL Sales Increase as % of Total Revenue
DXL SALES INCREASE AS % OF TOTAL REVENUE * DXL sales include direct sales via the DestinationXL.com website. 1% 5% 28% 44% 65% 80% 88% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Slide 23: Increased Awareness = Opportunity
Repeat Addressable Population Aware of DXL Visiting DXL Purchasing from DXL INCREASED AWARENESS = OPPORTUNITY DXL Customer Purchase Funnel* Source: L.E.K analysis prior to launch of marketing campaign (November 2012) *Based on consumers’ stated responses per L.E.K’s survey within DXL markets 73% of
Slide 24: Opportunity to Grow Market Share
OPPORTUNITY TO GROW MARKET SHARE Capture greater wallet share with DXL concept Attract broader customer audience with one-stop-shop Target “end-of-rack” customers Paradigm shift in marketing improves awareness Grow direct business with new website Addressable Market = 40M Customers 1.4M Currently Ac
Slide 25: DXL Advertising Campaign
DXL ADVERTISING CAMPAIGN • Combination of TV, radio & digital support • Built stronger brand to attract and serve customers • Results demonstrate ability to grow market share Fall Flight (Sept 28 – Nov 23) • Spring Flight (May 5 to June 14) • • Transaction size increased 23% • New customers grew by
Slide 26: DXL Advertising Campaign: Marketing to Customers in No Man's Land
DXL ADVERTISING CAMPAIGN Marketing to Customers in “No Man’s Land”
Slide 27: 2013 Marketing Spend
2013 MARKETING SPEND • Strategically increase marketing spend as percent of sales from 4.5% to 7.0% • Rebalance spend to focus on prospecting and reduce direct marketing • Increase budget by $10M to support DXL media and digital acquisition $27.1M (7.0%) $18.5M (4.6%) +$10M Direct Marketing Digital
Slide 28: Financial Performance
Destination XL Group, Inc. FINANCIAL PERFORMANCE
Slide 29: YTD 2013 Results Through Q3
YTD 2013 RESULTS THROUGH Q3 • DXL stores comparable sales increased 21.4% and represented 26.5% of total comparable retail sales • 36 DXL stores opened 1 year comparable sales increased 11.5% • Dollars per transaction have increased 17.5% over the prior year • Comp sales for Casual Male XL and Roche
Slide 30: Sales & Gross Margin
42.7% 44.2% 45.9% 46.3% 46.5% SALES & GROSS MARGIN Strong gross margins provide opportunity for significant sales leverage $443.9 $393.9 $392.0 $395.9 $399.6 $279.4 46.3% 38% 40% 42% 44% 46% 48% 50% $0 $100 $200 $300 $400 $500 YTD 2013 Revenue ($MM) Revenue Gross Margin
Slide 31: Operating Margin & Comparable Sales
* Before impairment charge of $23.1M OPERATING MARGIN & COMPARABLE SALES Focus on improving operating margins through greater DXL sales (continuing operations) (1.1)% 2.4% 4.6% 4.7% 3.5% (2.5)% (10%) (5%) 0% 5% 10% 2011* YTD 2013 DXLG Operating Margin (4.3)% (10.8)% 1.5% 2.1% 1.5% 2.5% (15%) (10%) (
Slide 32: Strict Expense Management
39.9% 37.9% 37.9% 38.4% 39.1% STRICT EXPENSE MANAGEMENT $34.1 $19.1 $19.0 $19.6 $18.5 $21.0 $177.3 $149.2 $148.4 $152.0 $156.4 $122.8 43.9% 30% 33% 36% 39% 42% 45% $0 $50 $100 $150 $200 YTD 2013 ($ mm) Marketing Expense Total SG&A SG&A as a Percentage of Sales
Slide 33: Strong Balance Sheet
2008 2009 2010 2011 2012 FY 2013 Forecast STRONG BALANCE SHEET Inventory $98.6M $90.0M $92.9M $104.2M $104.2M $102M Net borrowings under revolver $38.7M $3.5M $0 $0 $0 $0 Cash on hand $5.0 $4.3 $4.1M $10.4M $8.2M $0 Fixed term loan $12.5M $7.6M $0 $0 $0 $18M FY 2013 Net borrowings estimate includes
Slide 34: Cash Flow & Capital Expenditures
$12.6 $4.6 $9.0 $18.0 CASH FLOW & CAPITAL EXPENDITURES $23.2 $30.8 $18.7 $23.4 $29.9 $(5.5) $32.4 $38.2 -$10 $0 $10 $20 $30 $40 -$10 $0 $10 $20 $30 $40 YTD 2013 ($ mm) Cash Flow CAPEX
Slide 35: Why Invest in DXLG?
Accelerated conversion to DXL concept creates compelling investment opportunity Leader in large and growing B&T market Strong gross margins; Ability to greatly improve operating margins Three-year $150M investment in DXL rollout to be funded primarily by free cash flow and deferred tax benefits Sign
Slide 36: For Additional Information
FOR ADDITIONAL INFORMATION: Jeffrey Unger V. P. Investor Relations jeffunger@usa.net 561-482-9715 (o) 561-543-9806 (c) www.DestinationXL.com
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