![]() September 2014 Investor Presentation Exhibit 99.1 Destination XL Group, Inc. |
![]() Destination XL Group, Inc. FORWARD LOOKING STATEMENTS AND NON-GAAP MEASURES Forward Looking Statements: Certain information contained in this presentation, including, but not limited to, future store projections of sales per square foot, gross margin, occupancy and selling, general administrative expenses as well four-wall cash flow, 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 1, 2014 filed on March 17, 2014 and other Company filings with the Securities and Exchange Commission. The Company 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. Non-GAAP Measures: Adjusted Net Loss, Adjusted Net Loss Per Diluted Share, EBITDA, Adjusted EBITDA, EBITDA Margin and Adjusted EBITDA Margin are non-GAAP measures. The Company believes that these non-GAAP measures are useful as additional means for investors to evaluate the Company's operating results, when reviewed in conjunction with the Company's GAAP financial statements. Please see Appendix A for additional information concerning these non-GAAP measures and a reconciliation to their respective GAAP measures. 2 |
![]() 3 LARGEST MEN’S B&T SPECIALTY RETAILER 354 Total stores 80% - 85% Retail sales 15% - 20% Direct sales 15 Private label brands 40 Name brands 20 Exclusive brands 40 million Addressable market 1.4 million Active customers 90% Enrolled in loyalty program Destination XL Group, Inc. |
![]() UNIQUE CUSTOMER Not determined by demographic Males of all ages with a waist size 40” and greater Values convenience, comfort, selection and fit over price Desires a good, better, best array of product assortments in all primary lifestyles 4 Destination XL Group, Inc. |
![]() TRANSFORMING OUR BRAND 5 Began transformation to DXL brand in 2010 to provide customers with a one-stop shopping destination and grow the business Capture greater wallet share Attract broader customer audience Opportunity for Growth Target end-of-rack 1 customers Leverage website to drive sales 1 Waist sizes 40 to 46 inches Destination XL Group, Inc. |
![]() ONE-STOP SHOPPING AT ITS BEST 6 More brands Bright Atmosphere Wide aisles Highly Trained Staff Onsite tailoring Large changing rooms Destination XL Group, Inc. |
![]() |
![]() |
![]() |
![]() LARGE SELECTION OF NAME BRANDS 10 Destination XL Group, Inc. |
![]() COMPLETE DXL STORE ROLL-OUT IN 2017 11 Majority of store openings are timed prior to the holiday shopping season to maximize profitability August 2, 2014 2017 Estimate DXL Stores Casual Male XL Retail CM Outlet Stores Rochester Clothing Additional Stores Open ~40/year Close ~40/year Destination XL Group, Inc. 181 113 51 9 220 250 50 50 3 |
![]() SQUARE FOOTAGE COMPOSITION 12 DXL Stores Casual Male XL Retail CM Outlet Stores Rochester Clothing Additional Stores DXL stores will account for the majority of square footage by end of fiscal 2017 Total square footage to increase 10% to 25% by end of fiscal 2017 August 2, 2014 2017 Estimate DXL Stores Casual Male XL Retail CM Outlet Stores Rochester Clothing Sq. Ft. (000’s) 1,893 sq. ft. ~2,095 – 2,395 sq. ft. Destination XL Group, Inc. 1,700 – 2,000 ~200 ~155 ~40 1,003 643 164 83 |
![]() Destination XL Group, Inc. DXL Year 1 DXL Year 2 DXL Year 3 DXL Year 4 DXL Year 5 Sales per square foot $150 $170 $190 $205 $220 Gross margin, net of occupancy costs 42.0% 44.0% 45.0% 46.0% 47.0% SG&A as a % of sales 26.0% 22.0% 21.0% 21.0% 20.0% Four-wall cash flow 16.0% 22.0% 24.0% 25.0% 27.0% Build out costs $75 IMPROVED PROFITABILITY AT MATURITY 13 1 Average store results 2 Average store pro forma 1 2 1 1 2 |
![]() Destination XL Group, Inc. DXL 5K STORES DRIVE PROFITABILITY 14 Introduced 5,000 square foot store concept in Q2 2014, which increased opportunity for continued store growth by ~50 more stores Lowers cap ex and occupancy costs by 25% as compared to a 7,000 sq. ft. store Penetrate smaller markets, where the economics of a full-size DXL would not work, and certain larger markets that warrant an additional presence due to geographical considerations Economics of a 5,000 square foot DXL in year one in a sample market with expected annual sales of ~$800K: Sales per square foot $160 Gross margin, net of occupancy costs 45.5% SG&A as a % of sales 30.5% Four-wall cash flow 15.0% Build out costs $80 |
![]() Destination XL Group, Inc. Per Square Foot Average Sq. Ft. Year One Sales Year One 4-Wall Cash Flow ROI 2010 – 2012 (48 stores) 9,590 $151 $22 30.0% 2013 (51 stores) 8,441 $145 $25 38.0% 2014 (40 stores) 7,428 $153 $26 42.0% INCREASING RETURN ON INVESTMENT 15 1 Average store results 2 ROI is defined as the internal rate of return calculated on a store four-wall basis over 5 years 1 1 1 1,2 Achieving stronger return on investment in first year with smaller store sizes |
![]() Destination XL Group, Inc. SUCCESSFUL DXL MARKETING CAMPAIGNS 16 You’re Looking Good Since first flight launched (Q2 2014 vs. Q2 2013): +6.5% Traffic +13.1% Transactions +6.2% Retail Conversion +5.6% Web Conversion +7.6% End-of-Rack +11.0% Customer Count |
![]() Destination XL Group, Inc. Experience Book & $50 Gift Card 35% Response Rate Free Polo Offer 22% Response Rate DRIVING TRAFFIC TO DXL STORES 17 +65% +26% More customers in an average DXL store’s active database than at the average Casual Male XL store Higher retention rate at an average DXL store compared with an average Casual Male XL store |
![]() Destination XL Group, Inc. CONVERTING THE CASUAL MALE CUSTOMER Begin promoting new DXL store at ambassador Casual Male XL stores 6 months prior to closing 18 Extending leases at certain Casual Male XL locations Greater conversion rate of Casual Male XL customers in Spring 2014 than Spring 2013 +24% |
![]() Destination XL Group, Inc. FALL 2014 MARKETING CAMPAIGN 19 Commence campaign two weeks later than prior year Will run from mid-October through mid-December Aligned with peak holiday selling season and targeting gift givers Greater quality of program for ad placement (NFL, ESPN, Prime Time) Increased media presence for Thanksgiving week to mid-December Implement a “lead into the weekend” strategy |
![]() Destination XL Group, Inc. GREATER PRESENCE IN METRO MARKETS 20 Customers typically willing to drive up to 20 miles to shop at DXL Chicago metro market large enough for multiple full-sized and 5K DXL stores Prior to conversion, there were 19 Casual Male XL stores that serviced this market Full size DXL 5K DXL Future DXL |
![]() Destination XL Group, Inc. IMPRESSIVE DOUBLE-DIGIT COMP SALES 21 (11 stores) (16 stores) (23 stores) (29 stores) (36 stores) (48 stores) (52 stores) (61 stores) 1 Spring marketing campaign ran from 5/5/13 to 6/14/13 2 Fall marketing campaign ran from 9/28/13 to 11/23/13 3 Spring marketing campaign ran from 4/27/14 to 6/14/14 1 2 5 quarters of double-digit comp sales increases 3 1 (2.7)% 5.9% 4.7% 16.5% 11.3% 13.6% 12.8% 11.3% Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 |
![]() IMPROVING DIRECT BUSINESS 22 Eliminated catalog circulation in May 2013 Improved website functionality Omnichannel retailer •Ship to store •Preferred delivery •Store inventory available online •Free shipping on orders above $100 •Mobile coming soon Increased digital display marketing Stronger promotional cadence Destination XL Group, Inc. |
![]() Destination XL Group, Inc. FINANCIAL PERFORMANCE Destination XL Group, Inc. |
![]() Q2 2014 SALES HIGHLIGHTS Total sales (Retail and Direct) Comparable sales (all stores) DXL comparable store sales Casual Male XL and Rochester Clothing stores 24 +5.8% +7.0% +11.3% +7.1% Destination XL Group, Inc. |
![]() Destination XL Group, Inc. 25 SALES AND GROSS MARGINS Strong gross margins provide opportunity for significant sales leverage $192.2 $195.8 $196.0 $192.0 $200.5 $392.0 $395.9 $399.7 $388.0 45.9% 46.3% 46.5% 46.0% 45.6% 2010 2011 2012 2013 2014 YTD ($MM) Sales Q1 & Q2 Total Annual Sales Gross Margin |
![]() Destination XL Group, Inc. 26 EBITDA & EBITDA MARGIN 1 EBITDA, Adjusted EBITDA, EBITDA Margin and Adjusted EBITDA Margin are non-GAAP measures. The above Adjusted EBITDA for fiscal 2011 excludes a trademark impairment charge of $23.1 million. For additional information about these non-GAAP measures, including a reconciliation to their respective GAAP measures, see Appendix A attached to this presentation. 1 1 $31.4 $31.2 $29.4 $7.7 $4.5 8.0% 7.9% 7.4% 2.2% 2010 2011 2012 2013 2014 YTD ($MM) EBITDA EBITDA as a Percentage of Sales 2.0% |
![]() Destination XL Group, Inc. OPERATING MARGIN & COMPARABLE SALES Focus on improving operating margins through greater DXL sales (continuing operations) Total DXLG Comp Sales 27 Total DXLG Operating Margin 1 Before impairment charge of $23.1 million 4.6% 4.7% 3.5% (3.4)% (3.3)% 2010 2011 2012 2013 2014 YTD 1.5% 2.1% 1.5% 3.0% 5.2% 2010 2011 2012 2013 2014 YTD Destination XL Group, Inc. |
![]() Destination XL Group, Inc. 28 INCREASING SG&A WITH DXL ROLL-OUT $19.0 $19.6 $18.5 $27.8 $14.3 $148.4 $152.0 $156.4 $170.7 $86.8 37.9% 38.4% 39.1% 44.0% 43.3% 2010 2011 2012 2013 2014 YTD Marketing Expense Total SG&A SG&A as a Percentage of Sales ($MM) |
![]() Destination XL Group, Inc. 29 SOLID BALANCE SHEET 2010 2011 2012 2013 Q2 2014 Inventory $92.9 $104.2 $104.2 $105.6 $116.0 Net borrowings under revolver $0 $0 $0 $9.0 $25.7 Cash on hand $4.1 $10.4 $8.2 $4.5 $5.6 Fixed term loan $0 $0 $0 $16.7 $22.6 ($MM) Unused excess availability under credit facility at August 2, 2014 was $71.0 million |
![]() Destination XL Group, Inc. 30 CASH FLOW & CAPITAL EXPENDITURES 1 1 Before tenant allowances $18.7 $23.4 $29.9 $24.9 $(2.7) $9.0 $18.0 $32.4 $54.1 $18.9 2010 2011 2012 2013 2014 YTD ($MM) Cash Flow from Operating Activities CAPEX |
![]() Destination XL Group, Inc. 31 DXLG INVESTMENT HIGHLIGHTS Transformation to DXL concept creates compelling investment opportunity Significant market share/sales growth opportunity Strong gross margins Ability to significantly improve operating margins Solid balance sheet with borrowing capacity |
![]() Destination XL Group, Inc. NON-GAAP RECONCILIATION • In addition to Operating Income (Loss) determined in accordance with United States Generally Accepted Accounting Principles (GAAP), the Company uses certain non-GAAP financial measures, such as “EBITDA,” “Adjusted EBITDA,”EBITDA Margin” and “Adjusted EBITDA Margin” in assessing its operating performance. The Company believes that these non-GAAP measures serve as appropriate measures to be used in evaluating the performance of its business. • The Company defines EBITDA as Operating Income (Loss) before Depreciation and Amortization. In addition, Adjusted EBITDA for fiscal 2011 excludes the impact of a non-recurring trademark impairment charge. The Company defines EBITDA Margin and Adjusted EBITDA Margin as EBITDA or Adjusted EBITDA divided by Sales. • EBITDA and Adjusted EBITDA as defined by the Company may not be comparable to similarly titled measures reported by other companies. The Company does not intend for non-GAAP financial measures to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP. • The following table provides a reconciliation of Operating Income (Loss), on a GAAP basis, to EBITDA and Adjusted EBITDA, on a non-GAAP basis (in millions, except percentages) Fiscal year: 2010 2011 2012 2013 2014 YTD Sales $ 392.0 $ 395.9 $ 399.6 $ 388.0 $ 200.5 Operating Income (Loss), GAAP Basis $ 18.2 $ (4.4) $ 13.9 $ (13.1) $ (6.6) Add back: Depreciation and Amortization $ 13.2 $ 12.5 $ 15.5 $ 20.8 $ 11.1 EBITDA $ 31.4 $ 8.1 $ 29.4 $ 7.7 $ 4.5 Adjustment for Trademark Impairment - $ 23.1 - - - ADJUSTED EBITDA - $ 31.2 - - - EBITDA MARGIN 8.0% 2.0% 7.4% 2.0% 2.2% ADJUSTED EBITDA MARGIN 7.9% Appendix A |
![]() Destination XL Group, Inc. INVESTOR CONTACT Jeffrey Unger V. P. Investor Relations Destination XL Group, Inc. jeffunger@usa.net 561-482-9715 (o) 561-543-9806 (c) www.DestinationXL.com 33 |