![]() 1 Exhibit 99.1 Destination XL Group, Inc. |
![]() Certain information contained in this presentation, including, but not limited to, cash flows, operating margins, store counts, earnings expectations for fiscal 2012 and estimates through fiscal 2016, constitute forward-looking statements under the federal securities laws. The discussion of forward-looking information requires management of the Company to make certain estimates and assumptions regarding the Company's strategic direction and the effect of such plans on the Company's financial results. Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those indicated. Such risks and uncertainties may include, but are not limited to: the failure to implement the Company's business plan for increased profitability and growth in the Company's retail stores sales and direct-to-consumer business, the failure to achieve improvement in the Company's competitive position, changes in or miscalculation of fashion trends, extreme or unseasonable weather conditions, economic downturns, a weakness in overall consumer demand, trade and security restrictions and political or financial instability in countries where goods are manufactured, increases in raw material costs from inflation and other factors, the interruption of merchandise flow from the Company's distribution facility, competitive pressures, and the adverse effects of natural disasters, war, acts of terrorism or threats of either, or other armed conflict, on the United States and international economies. These, and other risks and uncertainties, are detailed in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended February 2, 2013 filed on March 15, 2013 and other Company filings with the Securities and Exchange Commission. Destination XL Group, Inc. assumes no duty to update or revise its forward- looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. 2 Safe Harbor |
![]() Who is Destination XL Group, Inc.? 3 Largest multi-channel specialty retailer in niche men’s big and tall (B&T) market Offering unique blend of wardrobe solutions Private label & leading apparel name brands |
![]() DXLG by the Numbers 4 Active customers Enrolled in loyalty program Highest rated retailer in 2011 CSI Customer Survey Retail Direct Retail Stores Brands Customer Satisfaction |
![]() Who is Our Customer? 5 Males with a waist size 40” and greater (40M men). Determined by physical characteristic, not demographic. Not dependent on age, income, race or nationality Seeking greater selection in size. Values convenience, selection and fit over price. |
![]() 6 Our Current Casual Male XL Stores |
![]() 7 What Our Customer Wants Large changing rooms More brand selections On-site tailoring Bright atmosphere Suggested wardrobe solutions Wide aisles One-stop shopping |
![]() 8 Opened 4 DXL concept stores Opened 32 DXL stores Opened 12 DXL stores Opportunity for accelerated growth and profitability Expect to Open ~60 DXL stores |
![]() 9 * * * * |
![]() 10 |
![]() 11 * * * * **** |
![]() 12 * * * * |
![]() 13 * |
![]() 14 Large Selection of Name Brands |
![]() 15 Average Store size 3,600 sq. ft. 8,400 sq. ft. Sales per sq. ft. $172 $147 ($230 by 2016) Build out costs $50 $70 Occupancy costs $30 $30 Dollars per transaction $97 $137 Style choices 600 2,000 Private label brands 10 15 Name brands 8 30 |
![]() 9451 Schaumburg, IL 9183 Niles, IL 11.4 miles 9512 Bloomingdale, IL 11.2 miles Market Consolidation to DXL Chicago Metro Customers are willing to drive up to 20 miles DXL Schaumburg, IL 0.9 miles 16 |
![]() 17 DXL Comps Reflect Growth Opportunity ** Total DXLG Comparables consist of all stores, including DXL stores and direct channel * The 16 DXL stores opened for more than 1 year produced a 7.6% comp in Q4 2012 20.0% 15.0% 10.0% 5.0% 0.0% 14.5% 0.7% 9.0% 0.8% 2.1% 2.0% 2.0% 1.5% 0.5% 1.5% 12.8% 16.3% 17.1% 13.8% 15.0% * 15.6% Q3 2011 Q4 2011 FY 2011 FY 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2012 DXL Comparables Total DXLG Comparables** |
![]() 18 Compelling DXL Returns Expect greater store productivity Better leveraging of expenses -- occupancy, labor productivity and local/district management Projecting higher 4-wall profits than combined profits of individual stores Targeting between 25%-30% store operating margin Potential to capture additional market share Attract new customers Better cross-selling environment to capture greater share of apparel wallet from existing customers Opportunity to improve operating margins Expect to increase margins significantly after the transition to DXL is complete and profitability |
![]() 19 Accelerated DXL Openings 2015 Store Count Target Destination XL ® 215-230 Casual Male XL Outlet ~60 Rochester Clothing 3-4 Accelerated rollout based on success of DXL stores in 2011 500 450 400 350 300 250 200 150 100 50 0 2010 2011 2012 2013 2014 2015 Total Stores: (460) (450) (412) (348-358) (308-318) (283-298) |
![]() 20 DXL Sales Increase as % of Total Revenue * DXL sales include direct sales via the DestinationXL.com website. 2010 2011 2012 2013 2014 2015 2016 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1% 5% 28% 48% 70% 84% 89% |
![]() 21 2012 Opened 32 DXL stores / Closed 70 stores Operating margins were approximately 3.5% CapEx was $32.4M Accelerated Rollout of DXL |
![]() 22 2013 Open 57- 64 DXL stores / Close 110-119 stores Sales of $415 - $420M Expected borrowing level of $10 - $15M at year end Commence new marketing strategy with incremental $10M spend Lease exit and asset impairment charges in the range of $3-$4M Operating margins of ~ breakeven to 0.5% CapEx expected to peak at $45M 2014 Open 60 DXL stores / Close 99 stores Annual sales growth of ~ 10% - 15% Expected borrowing level of $10 - $15M at year end Lease exit and asset impairment charges in the range of $3-$4M Operating margins of ~4% CapEx expected to be $40M Accelerated Rollout of DXL 1 Net of subleases 2 Net of expected tenant allowances 1 2 1 |
![]() 23 2015 Complete rollout with 215 - 230 opened DXL stores and Closure of remaining 63 Casual Male XL anchor stores Annual sales growth of ~10% – 15% Operating margins gain traction and increase to ~8% (from 4.2% in ‘11) Expected ending cash balance of $5 - $10M CapEx expected to be approximately $38M Lease exit and asset impairment charges in the range of $2-$3M Accelerated Rollout of DXL 1 Net of subleases 2 Net of expected tenant allowances 1 2 |
![]() 24 2016 Full benefit of DXL concept drives revenue >$600M Open average of 10 DXL stores per year Operating margins >10% Accelerated Rollout of DXL Generating free cash flow in the range of $60 - $70M |
![]() 25 Increased Awareness = Opportunity DXL Customer Purchase Funnel* Addressable Population Aware of DXL Visiting DXL Purchasing from DXL Repeat DXL’s addressable market is primarily men with over 40” waist Awareness of DXL is low across its markets, directly impacting ability to attract new customers Of those aware of DXL, only 8% are visiting the store 73% of those that visit the store make a purchase 89% of those that make a purchase intend to return *Based on consumers’ stated responses per L.E.K’s survey within DXL markets Source: L.E.K analysis |
![]() 26 Grow direct business with new website Paradigm shift in marketing improves awareness Target “end-of-rack” customers Attract a broader customer audience with one-stop-shop Capture greater wallet share with DXL concept Opportunity to Grow Market Share Addressable Market = 40M Customers 1.5M Currently Active Customers Goal = Grow Customers by 40% Over 3 Years |
![]() 27 Increased awareness by 100% in new markets & 38% in established markets “End-of-rack” customer base grew by 38% Launched test campaign in 5 markets: Memphis, Minneapolis, Denver, Atlanta and Oklahoma City Built Stronger Brand to Attract and Serve Customers Results Demonstrate Ability to Grow Market Share |
![]() 28 Established Effective Marketing Mix 15% sales 24% traffic 64% new customer purchases 84% web traffic 7% web sales 38% market awareness Established Market Memphis DXL Opened in 2010 6-Week Test Demonstrated TV, Radio and Digital is Most Effective Marketing Combination |
![]() 29 DXL Test TV Commercial Marketing to Customers in “No Man’s Land” |
![]() • Increase marketing spend as percent of sales from 4.6% to 6.7% • Launch national DXL Media marketing campaign in spring 2013 2013 Marketing Spend $M Total 50% Increase YOY to Drive DXL Awareness 30 DXL Media Direct Digital Visual Loyalty Other 2012 2013 0 10 20 |
![]() Financial Performance 31 |
![]() Q4 2012 Results • Comparable sales increased 0.5% and total sales were $114.9M • DXL stores represented 18% of comparable retail sales • Comp sales for Casual Male XL stores decreased 2.3% • U.S. direct e-commerce sales increased 13% • Income from continuing operations was $4.2 million, or $0.09 per diluted share 32 |
![]() 33 Sales and Gross Margin Strong gross margins provide opportunity for significant sales leverage Revenue ($ mm) $500 $400 $300 $200 $100 $0 2008 2009 2010 2011 2012 $443.9 $393.9 $392.0 $395.9 $399.6 42.7% 44.2% 45.9% 46.3% 46.5% 50% 48% 46% 44% 42% 40% 38% Revenue Gross Margin |
![]() 34 * Before impairment charge of $23.1m Operating Margin & Comparable Sales (continuing operations) Focus on improving operating margins through greater DXL sales CMRG Annual Historic Operating Margin 10% (10%) (5%) 5% 0% 2008 2009 2010 2011* 2012 5% (15%) (10%) 0% (5%) 2008 2009 2010 2011 2012 CMRG Historical Annual Comp Sales 2.4% 4.6% 4.7% 3.5% (1.1)% (10.8)% 1.5% 2.1% 1.5% (4.3)% |
![]() 35 Strict Expense Management 39.9% 37.9% 37.9% 38.4% 39.1% ($ mm) Marketing Expense Total SG&A SG&A as a Percentage of Sales $0 $50 $100 $150 $200 $177.3 $149.2 $148.4 $152.0 $156.4 30% 33% 36% 39% 42% 45% 2008 2009 2010 2011 2012 $34.1 $19.1 $19.0 $19.6 $18.5 |
![]() 2008 2009 2010 2011 2012 $98.6M $90.0M $92.9M $104.2M $104.2M $38.7M $3.5M $0 $0 $0 $5.0 $4.3 $4.1M $10.4M $8.2M $12.5M $7.6M $0 $0 $0 36 Strong Debt-Free Balance Sheet |
![]() 37 Cash Flow and Capital Expenditures $40 $30 $20 $10 $0 $23.2 $30.8 $7.6 $23.4 $29.9 $32.4 $40 $30 $20 $10 $0 2008 2009 2010 2011 2012 ($ mm) CAPEX Cash Flow $12.6 $4.6 $9.0 $18.0 |
![]() 38 Why Invest in DXLG? Accelerated conversion to DXL concept creates compelling investment opportunity Strong gross margins; Ability to greatly improve operating margins Significant market share/sales growth opportunity Leader in large and growing B&T market Three-year $150M investment in DXL rollout to be funded primarily by free cash flow and deferred tax benefits Strong balance sheet with borrowing capacity |
![]() For additional information: Jeffrey Unger Destination XL Group, Inc. V. P. Investor Relations 561-482-9715 Office 561-543-9806 Cell jeffunger@usa.net www.destinationxl.com 39 |