Destination XL Group, Inc. (NASDAQ:DXLG) Q4 2023 Earnings Call Transcript

And so, we’ve talked about a three to five year long range plan. Our expectation is over the next two to three years, we must consistently move forward in the brand campaign to build awareness. And in so doing we’ll create greater trial and ultimately grow the file and grow the size of our business. So it’s not a one and done. It couldn’t be a one and done. To be honest, we would’ve no backbone if it didn’t work initially and we bailed because that then doesn’t address the issue. That is a fact, which is not enough people know who DXL is.

Operator: Our next question comes from CJ Dipollino with Craig-Hallum Capital Group.

CJ Dipollino: It’s CJ on for Jeremy Hamblin. Wanted to touch on same store sales a little bit. I know some of it’s the math of passing easier comps in the second half of the year, but are there any additional drivers beyond the math and the LRP that can point to that?

Harvey Kanter : For sure. It is not just comps. Year-over-year comparisons are either your friend or your enemy, but regardless they are not, if that’s the reason we’re going to grow that would be disappointing. It certainly not a bad thing, but it’d be disappointing. The fact of the matter is we’re going to grow on really four key initiatives. One is overall marketing, and whether it’s the brand campaign pre-Father’s Day, moving into hopefully fourth quarter with a greater level of effort based on the success of that, it’s the evolution of our brand positioning. So it should be clear that the brand campaign is not just — it’s going to be linear TV, it’s going to be cable TV, it’s going to be cable color TV. It’s going to be video assets like YouTube and others, but it’s driven by video but it’s not exclusively driven by video and once it starts, it will continue to evolve our entire marketing program.

So whether it’s shopping behavior based emails, whether it’s trigger based emails, whether it’s batch and blast emails, whether it’s how we actually load social media, it’s a multifaceted campaign that leverages really our core reason for being as a company and that is relevant today, tomorrow, a year from now, because no one actually has the proprietary fit that we bring to market, which is literally our calling card. In addition to obviously the exclusivity of offer and obviously the experience we create. When you put all that together, the successful marketing of where, what you want and the evolution of our communication to our customer is a reason that we will continue to turn around the comps. And as I articulated in my opening comments, we have continued to refine the vision and our positioning in a material way that we think is of great asset.

Examples of that, whether it’s UNTUCKit or other collaborations and the people are knocking at our door and saying, we want to partner with you. The concept of fit by DXL as I think I’ve shared before is no different than the concept of the intel inside and semiconductors and computers. We believe that we are the only game in town that creates this fit perspective, that it’s critically important and when more people understand it and we have the opportunity to create greater share of voice, ultimately we’ll have a greater share of revenue. The second variable, which again to your point is comp driven. It’s not new store driven, but just plain and simply the hopefully evolving consumer landscape. It’s not a secret that our first quarter was pretty successful prior year.

So on a year-over-year basis, that’s one element, but just improving on all the variables that we talked about. The launch of UNTUCKit now going to 30 stores versus it literally was only available as a sample a year ago. The launch of Faherty and Hugo Boss and other exclusive lines, the evolution of our marketing. So that will drive more traffic and ultimately with our conversion and our DPT, our average ticket that should drive comps. And then last but not least, is our website. And again, the website is not a big to tall, it’s actually basis points of improvement. So whether it’s 10 or 20 or 30 basis points of improvement, if you think about 10 bips on a $500 million business that is going to be something that will help us and it will come online in approximately May to August time period.

And that we’re hoping to see expectations on a comp basis comp to our website or comp to digital shopping relative to the second half of the year.

CJ Dipollino: And then one more, so it looks like you guided adjusted EBITDA about $20 million below where you came in this year. I get some of it’s going to come from marketing investments and maybe a little deleverage in gross margin. Is there anything else that you could point to kind of fill in that gap?