Destination Xl Group, Inc. · NASDAQ:DXLG
Destination Xl — ICR Conference 2019
40 slides from Destination Xl's conference presentation, Jan 15, 2019
Slide 1: Mens Apparel - ICR Conference
MENS APPAREL ICR Cor Jane
Slide 2: Forward-Looking Statements and Non-GAAP disclosures
Forward-Looking Statements and Non-GAAP disclosures Forward-Looking Statements: Certain information contained in this presentation constitute forward-looking statements under the federal securities laws and include statements regarding the Company’s expectations with respect to its growth opportunit
Slide 3: Key Objectives and Strategies
DXL Today Key Objectives and Strategies Grow market share and top-line sales Launch a new wholesale distribution channel Improve operating efficiency and productivity Agenda
Slide 4: DXL Today
DXL Today
Slide 5: DXL offers a premium, personalized shopping experience
DXL offers a premium, personalized shopping experience with a mix of designer and private label brands
Slide 6: Built to Fit Video
BUILT TO FIT VIDEO
Slide 7: Video
Video [Brief video featuring the Company’s broad merchandise offering]
Slide 8: Some facts & figures
231 DXL Retail locations; avg. age < 5 yrs. old 95 CMXL and 5 Rochester locations Annual sales > $470.0 million 21% e-commerce penetration Adjusted EBITDA margin % improving Some facts & figures…
Slide 9: 1. Grow market share and top-line sales
1. Grow market share and top-line sales Customer segmentation New marketing activities New merchandising initiatives Customer experience innovation Rebranding of Casual Male XL stores to DXL
Slide 10: Using consumer data to drive strategy
Using consumer data to drive strategy A six-month market segmentation and market analysis project completed in October 2018 4k Big & Tall men Combination of on-line, in-home and focus group interviews Goals Understand overall market structure and key competitors Understand their daily lives, shoppin
Slide 11: The Big & Tall market can be categorized into distinct segments
The Big & Tall market can be categorized into 6 distinct segments The “Fit & Style” segment is a strong target for DXL. Interested in style, trends, what’s new Engaged in the category, shopping process Looks for guidance and assistance Fit & Style Fit Only Disengaged Stand Out Convenience Budget Fit
Slide 12: Focus on our highest potential customers
We can now efficiently focus on our highest potential customers to drive profitable growth 28% of the Big & Tall Market 55% of Category Spending 28% 72% 55% 45% Source: DXL Segmentation Research, 2018 via Upstart Innovation
Slide 13: Marketing pivoting to targeted, data-driven model
Our marketing is pivoting to a more targeted, personalized, data-driven model. Future efforts will focus on leveraging data to acquire new Fit and Style customers in the digital space DXL will then create ongoing, personalized communication based on our understanding of his shopping habits and style
Slide 14: New Marketing Activities
We have introduced an updated creative look and feel to better connect with this target customer Younger, more contemporary, more aspirational Elevated style in model selection, photography More focus on fashion styles New Marketing Activities
Slide 15: Premium lookbook/catalog
…and a premium lookbook/catalog brought the brand to life Test program in 2018 Rollout in 2019
Slide 16: Collaborations with XL athletes
Collaborations with XL athletes – the biggest influence for the Big & Tall customer Vince Wilfork • November, 2018 Brian Urlacher • November, 2018 WWE (Sheamus and Cesaro) • December, 2018 Content leveraged across digital advertising, social media and dxl.com
Slide 17: New Merchandising Initiatives
New merchandising strategies are catering to this Fit and Style customer. Everyday basics now complemented with a growing percentage of “fashion” styles with strong results to date Merchandise assortment now consists of over 100 national brands and 9 private label brands Very positive results with n
Slide 18: Customer Experience Innovation
The DXL store experience is best-in-class - recent innovations provide an even greater guest experience DXL Universe program Allows store associates to easily access the company’s full merchandise assortment online and add items to the store sale -- completed in a single, seamless transaction. 34 DX
Slide 19: DXL e-commerce site relaunched
In September, the DXL e-commerce site was relaunched to provide customers an enhanced browsing and buying experience.
Slide 20: Rebranding of Casual Male XL to DXL
Rebranding of Casual Male XL to DXL Mesquite, TX • 2018
Slide 21: Strategy going forward: store rebranding
To date, we have rebranded 5 Casual Male XL stores to DXL Leverages brand awareness and marketing investment in DXL Of the 95 remaining, 60 potential conversions Expect to rebrand 10-15 stores annually Capital expenditures significantly less than a new store Expectations of 20% comp sales with a str
Slide 22: 2. Launch a new wholesale distribution channel
2. Launch a new wholesale distribution channel
Slide 23: DXL can provide unique value to other retailers
For other men’s apparel retailers, DXL can provide unique value DXL is the expert in Big & Tall apparel – it’s all we do We currently develop 9 of our own private label lines Merchandise construction includes DXL fit specifications DXL return rate is less than 10% DXL Private Label Oak Hill Collecti
Slide 24: Wholesale distribution as a third revenue stream
Wholesale distribution will provide a third revenue stream for DXL Allows us to access new customers who don’t currently shop at DXL Budget/convenience customers Women/gift givers buying for men Store buyers not located near a DXL Creates awareness of the DXL brand via high-traffic shopping environm
Slide 25: DXL selected as provider for Amazon Essentials
As part of this initiative, DXL has been selected as the provider of Men’s Big & Tall sizes for the Amazon Private Brand, Amazon Essentials. DXL will provide a range of styles 2XL and above Branding communicates “Amazon Essentials fit by DXL” The assortment is currently available on Amazon.com www.a
Slide 26: 3. Improve operating efficiency and productivity
3. Improve operating efficiency and productivity
Slide 27: Long-Term Objective: Improving Operating Efficiency
Long-Term Objective: Improving Operating Efficiency LONG-TERM GOAL FISCAL 2018 ESTIMATE* FISCAL 2017 ACTUAL Sales 100.0% 100.0% 100.0% Gross Margin % 46.5% 44.9% 45.0% SGA%- Customer Facing 21.5% 23.3% 24.7% SGA%- Corporate Support 15.0% 16.1% 16.6% Adjusted EBITDA % 10.0% 5.5% 3.7% * Fiscal 2018 as
Slide 28: Long-Term Objective: Improving Cash Flow
Long-Term Objective: Improving Cash Flow 52 LONG-TERM GOAL FISCAL 2018 ESTIMATE* FISCAL 2017 ACTUAL Adjusted EBITDA 10.0% 5.5% 3.7% Restructuring & CEO Transition Costs 0.8% EBITDA 10.0% 4.7% 3.7% Capital Expenditures -2.1% -2.2% -3.6% Interest & Taxes -0.1% -0.7% -0.7% Working Capital -0.8% 0.7% 2.
Slide 29: Long-Term Objective: Improving Leverage
Long-Term Objective: Improving Leverage Fiscal Year: 2017 2018E(3) Total Debt (1) $59.9 $50.0 Adjusted EBITDA (2) $17.1 $26.0 Debt/Adj. EBITDA 3.5 1.9 Gross, before unamortized debt issuance costs. Adjusted EBITDA is a non-GAAP measure. See appendix A for a reconciliation of this non-GAAP measure. A
Slide 30: Long-term Objective: Improving Inventory Productivity
Long-term Objective: Improving Inventory Productivity Our inventory turnover has improved from 1.9 at the beginning of fiscal 2016 to 2.5 in the third quarter of 2018. Inventory turnover has improved 32% over the past three years.
Slide 31: Key Objectives and Strategies
Key Objectives and Strategies 1. Grow market share and top-line sales 2. Launch a new wholesale distribution channel 3. Improve operating efficiency and productivity
Slide 32: Q3 2018 Financial Results
Q3 2018 Financial Results
Slide 33: Financial Highlights: Q3 2018
Financial Highlights: Q3 2018 Comparable sales increased in Q3 Total sales increase of 3.2% Q3’ 18 vs. Q3’ 17, increases in comparable sales and non comp sales partially offset by closed stores. Q3’18 sales also benefited from a shift in weeks due to the 53rd week in FY17 E-commerce sales as a perce
Slide 34: Financial Highlights: First Nine Months 2018
Financial Highlights: First Nine Months 2018 3.0% $(6.3)M Comparable sales for YTD Total sales increase of 3.1% YTD 2018 vs. YTD 2017 Adjusted EBITDA * Vs. $12.1m for YTD 2017 Net loss for YTD Versus a net loss of $(15.5) million YTD 2017 YTD 2018 includes corporate restructuring charge of $2.5m YTD
Slide 35: Financial Highlights: Nine Months 2018 YOY
Financial Highlights: Nine Months 2018 YOY * On a non-GAAP basis, Adjusted EPS, assuming a normalized 26% tax rate and before corporate restructuring and asset impairments, was $(0.06) per diluted share for the first nine months of 2018, compared with $(0.21) per diluted share for the first nine mon
Slide 36: Financial Highlights: Cash Flow & Balance Sheet
Financial Highlights: Cash Flow & Balance Sheet YTD Q3 2017 YTD Q3 2018 Capital Expenditures: DXL stores $12.6 $1.8 Other maintenance/infrastructure 5.8 8.0 Total $18.4 $9.8 Inventory $119.9 $116.4 Clearance inventory 9.7% 11.7% Total debt, net of unamortized debt issuance costs $81.4 $72.0 Borrowin
Slide 37: Financial Highlights: FY 2018 Guidance
Financial Highlights: FY 2018 Guidance Guidance Sales $470.0~$474.0 Total comparable sales increase 2.5-3.5% Gross margin 44.9% Adjusted EBITDA* $24.0~$27.0 Net loss per share, diluted $(0.20)~$(0.26) Adjusted net loss per diluted share * $(0.08)~$(0.13) Total Capital expenditures Approximately $10.
Slide 38: Non-GAAP Reconciliation Appendix A
Non-GAAP Reconciliation 63 Appendix A The Company uses non−GAAP financial measures, such as “Adjusted EBITDA,” ”Free Cash Flow,” “Free Cash Flow before DXL Capital Expenditures,” “Adjusted net income (loss)” and “Adjusted net income (loss) per diluted share” in assessing its operating performance. T
Slide 39: Non-GAAP Reconciliation Cont.
Non-GAAP Reconciliation Cont. GAAP TO NON-GAAP FREE CASH FLOW RECONCILIATION 2018 FORECAST GAAP TO NON-GAAP RECONCILIATIONS
Slide 40: Investor Contact
INVESTOR CONTACT Tom Filandro Managing Director, ICR 646-277-1235 (D) Tom.Filandro@ICRINC.com www.dxl.com