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Destination XL swings to Q4 loss; plans 40 new stores

BY Dan Berthiaume

Canton, Mass. – Destination XL Group Inc. reported a net loss of $55.1 million for its fourth quarter, compared to net income of $4.2 million in the year-ago period. The chain cited a sluggish retail environment, a shorter holiday selling season and adverse weather conditions as contributing to the disappointing results.

Fourth quarter net sales declined almost 6% to $108.5 million, from $114.9 million. However, same-store sales rose 13.6%. In fiscal 2014, DXL plans to open approximately 40 DXL stores and to close approximately the same number of Casual Male XL stores. Some of the new DXL stores will be smaller-sized locations in smaller markets.

“Since accelerating the opening of DXL stores and closing our Casual Male stores nearly a year and a half ago, we have made significant progress in our transformation,” said David Levin, president and CEO of Destination XL. “During the past year, we opened half of the 102 DXL stores that are currently in operation. From that activity, we’ve been able to analyze a significant amount of empirical data with respect to the effectiveness of our store openings and closings. We have better insights into the optimal location and size of DXL stores and the importance of opening new stores prior to the Q4 holiday season.”

During the full fiscal year 2013, net loss was $59.8 million, compared with net income of $6.1 million for fiscal 2012. For fiscal 2013, total sales were $388 million, down 4% from $399.6 million for fiscal 2012. Same-store sales declined 3%

Looking ahead, Destination XL forecasts a comparable sales increase of approximately 5.6% and total sales in the range of $405 million to $410 million.

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Report: Target prices dropped 20% during breach

BY Dan Berthiaume

Ottawa, Canada – Target dropped prices on its monitored assortment by more than 20% during the days leading up to its confirmation of the data breach that compromised the security of 70 million customers’ personal information during the pre-holiday shopping season. According to data from 360pi analyzing approximately 830 products across eight categories, including TVs, tablets, digital cameras and more, Target dropped its prices by 18% between Dec. 14 and Dec. 17.

Prices continued to drop another 5% leading up to Christmas. In comparison, Walmart dropped prices by only 5%-6% during the same time period.

“Our data suggests that faced with a loss of customer trust, mounting inventory and a shrinking pre-Christmas shopping window, Target may have taken a dramatic price decrease approach to attract price-sensitive shoppers and minimize the impact of lower sales,” said Jenn Markey, VP marketing for 360pi. “It appears to us that this pricing strategy did not completely mitigate the financial impact of the breach, as Target’s fourth quarter profit decreased by 46% while Walmart’s fell only 21%.”

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Zumiez net income, sales zoom in Q4; plans 55 new global stores

BY Dan Berthiaume

Lynnwood, Wash. – Net income in the fourth quarter of fiscal 2013 at Zumiez Inc. increased 17.3% to $26.9 million, from $22.9 million last year.

Net sales increased 1.1% to $226.8 million from $224.4 million, although same-store sales dropped 2.2%.

Results for the quarter include a $5.8 million benefit related to Zumiez’ acquisition of Blue Tomato. Zumiez plans to open up to 55 new stores during fiscal 2014, including as many as seven in Canada and five in Europe.

“The fourth quarter proved to be more challenging than we expected both domestically and abroad,” said Rick Brooks, CEO of Zumiez, referring to same-store sales. Weak mall traffic in December and January created a highly promotional retail environment that pressured our sales and deleveraged our cost structure.”

During the full fiscal year 2013, Zumiez reported net income increased 9% to $45.9 million, compared to net income in the prior fiscal year of $42.2 million.

Net sales grew 8.2% to $724.3 million from $669.4 million, and same-store sales dropped 0.3%.

Looking ahead, Zumiez expects net sales of $156 to $160 million and a net loss during the first quarter of fiscal 2014. This guidance is based on an anticipated comparable sales decrease in the low single digit range for the first quarter of fiscal 2014, and also takes into account increased spending on digital capabilities and European expansion, as well as the amortization of intangible assets associated with Blue Tomato.

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