US: Charges push Destination XL to Q4 net loss
- Q4 net loss of US$55.1m
- Gross margin narrows to 45.3%
- Sales drop 5.6%
Destination XL Group has moved to a net loss in its fourth quarter as a result of one-off charges and a sluggish retail environment.
In the three months ended 1 February, net losses amounted to US$55.1m. This compared to earnings of $4.2m in the prior year period. The figure included a non-cash charge of $51.3m to establish a full valuation allowance against its deferred tax assets, $2.3m in executive severance costs, $1.5m in asset impairments and $2.9m for DXL transition costs.
Gross margin narrowed to 45.3% from 47.5% for the fourth quarter of fiscal 2012. This was the result of an increase in occupancy costs of 180 basis points and a decrease in merchandise margin of 40 basis points.
Total sales dropped 5.6% to $108.5m, but same store sales were up 13.6%. US e-commerce sales increased 6.1% on last year's comparable quarter.
"As previously announced, DXL's fourth-quarter fiscal 2013 results were in line with much of the retail industry, which faced challenges due to a sluggish retail environment, a shorter holiday selling season and adverse weather conditions in some geographies," said CEO David Levin. "However, the fall national marketing campaign was a success, nearly doubling DXL brand awareness to 25% and contributing to the 13.6% increase in same store sales for the DXL stores open for more than one year."
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