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FINANCE

Menswear retailer to focus on marketing, digital in 2017

BY Marianne Wilson

Destination XL Group is slowing store growth to invest in e-commerce and enhanced marketing that includes a return to television advertising.

The retailer of big and tall men’s clothing on Monday reported better-than-expected net income of $1.8 million for the quarter, after reporting a loss of $1.4 million in the year-ago period.

Total sales for the quarter were reported as $122.6 million, down slightly from $124.0 million in the prior-year quarter. Same-store sales fell 2.4%.

For the full year, the company reported a loss of $2.3 million, down from a loss of $8.4 million in the prior year.

Total sales for the year were $450.3 million, up from $442.2 million in the prior year. Same-store sales inched up 0.6%.

“Despite the 2016 retail environment being one of the most challenging in recent memory, we were very pleased to deliver strong growth in EBITDA and free cash flow,” said president and CEO David Levin. “In 2016, we fully funded our DXL store expansion from free cash flow and grew EBITDA nearly 36%.”

Levin noted that six out of 10 “big and tall guys” still do not know who the company is and, therefore, “our top priority in 2017 is customer retention and acquisition.”

“We intend to fuel that objective with a marketing dollar increase of approximately 40% this year, including reinstituting television advertising beginning April 2,” he said. “Our marketing efforts, coupled with our accelerated digital strategies, are now unified and aligned at retaining existing customers, while simultaneously driving new customer acquisition.”

The retailer said it is taking a measured approach to fiscal 2017, and will slow new store growth while investing in marketing and digital. It expects to open 19 DXL retail stores and one DXL outlet store in fiscal 2017, while closing 16 Casual Male XL retail stores and three Casual Male XL outlet stores.

“We believe that investment in our marketing initiatives is necessary to drive brand awareness, store traffic and our digital presence,” Levin said. “As a result, we expect to increase our marketing spend for fiscal 2017 by approximately 40% or $6.8 million to $25.0 million. We plan also to invest in our digital distribution channel in order to transform the way that our consumers engage with us. While we expect this increase in spending to be in the best interest of the company on a long-term basis, this investment will impact our earnings in the short-term.”

Destination XL Group operates stores in the United States and London, England, under five brands: Destination XL, Casual Male XL, Rochester Clothing, ShoesXL and LivingXL.

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MOBILITY

eBay makes new speedy delivery play

BY Deena M. Amato-McCoy

Determined to fight back against online rival Amazon, eBay made a strategic move in the competitive online delivery game.

Beginning this summer, the e-commerce retailer will launch a new program, called “Guaranteed Delivery,” that will offer U.S. shoppers guaranteed delivery on 20 million eligible products in three days or less — with millions of the items offering free shipping.

In addition, shoppers will also be able to search for and filter items by one- and two day delivery.

Currently, 67% of eBay transactions already ship for free, and 63% of eBay packages are delivered within 3 days or less.

"While the majority of items on eBay already ship within three days or less, as well as for free, Guaranteed Delivery will give shoppers even faster delivery options and the confidence that their items will arrive on time," said Hal Lawton, senior VP of North America at eBay.

The program will be free to both buyer and sellers, however, sellers must meet a required set of shipping standards to participate, the company said.

The program directly competes with Amazon and the benefits — such as free shipping — connected to its annual Prime membership program. Recently, the online giant even lowered its free shipping threshold to orders of $35 for non-Prime members.

To ensure the program runs smooth, eBay is doing some early troubleshooting against unexpected snafus. For example, if a guaranteed item arrives late, the buyer will receive a coupon to be used towards their next eBay purchase. The buyer can also choose to return the item at no cost, eBay said.

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FINANCE

Hhgregg deal falls through

BY Marianne Wilson

Bankrupt Hhgregg Inc.’s proposed purchase by an anonymous buyer has collapsed.

The appliance and electronics retailer filed Chapter 11 on March 6, 2017, saying that it had reached an agreement to sell the business to an undisclosed party. But late last week Hhgregg said it “terminated its previously announced nonbinding term sheet with an anonymous party to purchase substantially all of the assets of the company through a reorganization under Chapter 11,” due to a failure “to reach a definitive agreement on terms”.

The retailer said it has received interest from other possible buyers.

"We have received strong interest from third parties interested in buying some or all of the company's assets," stated Robert J. Riesbeck, Hhgregg's president and CEO, Hhgregg. "We and our advisors continue to work with potential acquirers to help them understand our business model for future growth and our value proposition."

The company has obtained interim approval of its $80 million debtor-in-possession loan facility to fund operations of the business during the sale process. Hhgregg said it will continue to operate in the ordinary course of business throughout the restructuring process. It still anticipated exiting Chapter 11 in early May.

The retailer currently operates 220 stores in 19 states.

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