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ANNUAL REPORT 2019

ANNUAL REPORT 2019 · 2021. 5. 25. · The DXL brand has many significant strengths that we believe we can leverage to drive results. Our competitive position is strong, as the market

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Page 1: ANNUAL REPORT 2019 · 2021. 5. 25. · The DXL brand has many significant strengths that we believe we can leverage to drive results. Our competitive position is strong, as the market

A N N U A L R E P O R T

2019

Page 2: ANNUAL REPORT 2019 · 2021. 5. 25. · The DXL brand has many significant strengths that we believe we can leverage to drive results. Our competitive position is strong, as the market

Dear Shareholders,

On April 1, 2019, Harvey Kanter joined us as our new President and CEO. Even prior to his first day, Harvey was learning the business, visiting stores, getting to know our customers and laying the groundwork for gaining further insights for the powerful opportunity yet ahead for our Company. It quickly became abundantly clear to Harvey how passionate our associates are about engaging with our big and tall customers. We know firsthand from our customers that the DXL experience is uniquely differentiated, and what sets us apart in the retailing landscape. We also know that for many big and tall consumers it is a challenge to find clothing that truly fits, but at DXL we understand this challenge and offer a compelling solution. At DXL, we EMPOWER the XL man to look and feel his BEST by delivering a memorable experience and the most extensive, curated and uniquely sized assortment in men’s clothing, shoes and accessories in the marketplace. DXL is the quintessential specialty retailer of Big + Tall clothing, shoes and accessories for men.

We were pleased with our performance in fiscal year 2018 as total sales increased 1.2% to $473.8 million and we delivered a positive comparable sales increase of 3.0% with all four quarters of the year registering positive comparable sales growth. For the full year, we saw an increase in both shopper conversion and dollars per transaction, as our sales consultants delivered outstanding in-store experiences throughout the year. These increases helped to mitigate a slight decline in store traffic. First quarter comparable sales declined 1.2%, as the late arrival of spring weather impacted sales of our seasonal merchandise. Despite the weather challenges, our assortments are in great shape and our sales consultants continued to deliver memorable experiences, both of which enabled us to register another quarter of improved shopper conversion and dollars per transaction.

The DXL brand has many significant strengths that we believe we can leverage to drive results. Our competitive position is strong, as the market leader with scale in both merchandise assortment and store locations. We have a great deal of historical knowledge on our customer’s purchase behavior, as we capture customer data on over 90% of our transactions. From our headquarters to our field associates, we have a strong culture and passionate teams all aligned to create a compelling experience for our Big + Tall guy. We operate 237 DXL stores today with an impressive presentation and in-store experience, as well as clear and compelling operational store discipline.

Under Harvey’s leadership, we have a singular focus to increase the number of customers who shop with us during a rolling twelve month period. Our strategies are aimed squarely at driving repeat visits and customer retention, as well as acquiring new customers. In order to grow our customer count, our strategies are driven towards comprehensive omni-channel marketing plans while improving our return on advertising spend. The known fact, that the very best customers are the customers who shop across all channels, is not lost on us. We will reduce blunt, or broad-based marketing and become more personalized in our communication and the relationships we are building with our Big + Tall customer. We have defined the brand, but that only goes so far. We will continue to delve deeper into engaging both current and new consumers through these marketing initiatives. We continue to believe we must leverage the marketing communication across all consumer touch points to tell our story and gain more customers.

We see an opportunity to achieve greater leverage through data, analytics and resulting insights. We see meaningful opportunity for growth in the direct-to-consumer channel, both through our website at DXL.com and marketplaces. Our path to achieving this vision will be grounded in a new approach to customer relationship management. To that end, we are installing a new CRM system to be a comprehensive solution that will allow us to reach out to our customers on a more personal level in the second half of the year. We will elevate our personal relationship with both our existing guests and look to engage with those consumers who become DXL customers through the CRM technology we are implementing. Segmentation and personalization offer a solid foundation for us to develop a deeper and more significant one-to-one connection with guests and consumers.

Finally, we are pursuing a wholesale brand extension that we announced last quarter. Developing a plan for wholesale that is grounded in the long-term vision for the business, as well as strategies to support the plan, are critical and that is what drives our primary pursuits today. We will go slowly and execute well, while establishing strong financial discipline with an eye towards building a profitable business model. We see wholesale as a significant long-term opportunity to capture market share and extend the big and tall spectrum for DXL.

To summarize, we have strategized to make clearer our mission, our vision, and our brand’s marketing strategy. Our number one initiative is to grow our customer file and we’ve begun to lay a framework to achieve that goal. At DXL, Big + Tall is all we do. We are uniquely positioned in the marketplace as the fit leader with every garment specifically structured across all of our size offerings. We are further differentiated by our associates who are keenly in tune with the needs of our Big + Tall customers and have consistently delivered exceptional high level service. Over the next few months, we will further articulate our plans on how we intend to grow our customer base, and speak to the key metrics we will be monitoring to measure our progress. We believe that by focusing on the core consumer and exceeding his expectations, as well as those who purchase for him, we can and will drive improved business and financial performance creating value for all of our stakeholders.

Thanks to all associates for their dedication, hard work, and commitment to DXL and to you, our shareholders, for your continued support.

Harvey S. Kanter President and CEO Destination XL Group, Inc.

John E. Kyees Chairman of the Board Destination XL Group, Inc.

Page 3: ANNUAL REPORT 2019 · 2021. 5. 25. · The DXL brand has many significant strengths that we believe we can leverage to drive results. Our competitive position is strong, as the market

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Page 10: ANNUAL REPORT 2019 · 2021. 5. 25. · The DXL brand has many significant strengths that we believe we can leverage to drive results. Our competitive position is strong, as the market

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Page 30: ANNUAL REPORT 2019 · 2021. 5. 25. · The DXL brand has many significant strengths that we believe we can leverage to drive results. Our competitive position is strong, as the market

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Page 31: ANNUAL REPORT 2019 · 2021. 5. 25. · The DXL brand has many significant strengths that we believe we can leverage to drive results. Our competitive position is strong, as the market

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Page 32: ANNUAL REPORT 2019 · 2021. 5. 25. · The DXL brand has many significant strengths that we believe we can leverage to drive results. Our competitive position is strong, as the market

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Page 78: ANNUAL REPORT 2019 · 2021. 5. 25. · The DXL brand has many significant strengths that we believe we can leverage to drive results. Our competitive position is strong, as the market
Page 79: ANNUAL REPORT 2019 · 2021. 5. 25. · The DXL brand has many significant strengths that we believe we can leverage to drive results. Our competitive position is strong, as the market

2019A N N U A LREPORT

OTHER SHAREHOLDER INFORMATIONBOARD OF DIRECTORS

John E. Kyees Chairman of the Board of Directors

Jack Boyle Co-President of Direct to Consumer/Omni-Channel for Fanatics, Inc.

Lionel F. Conacher Managing Partner, Next Ventures, GP

Seymour Holtzman Chief Executive Officer of Jewelcor Management, Inc.

Harvey S. Kanter President and Chief Executive Officer

Willem Mesdag Managing Partner of Red Mountain Capital Partners LLC

Ward K. Mooney Director

Mitchell S. Presser Partner at Freshfields Bruckhaus Deringer LLP, Head of US Global Transactions

Ivy Ross VP Google

EXECUTIVE OFFICER

Harvey S. Kanter President and Chief Executive Officer

SENIOR MANAGEMENT

Francis C. Chane Senior Vice President, Supply Chain and Customer Fulfillment

Jim Davey Executive Vice President, Chief Marketing Officer

Anthony Gaeta Senior Vice President, Store Sales and Operations

Robert S. Molloy Senior Vice President, Chief Administrative Officer, General Counsel and Secretary

Brian S. Reaves Executive Vice President, Chief Operating Officer

Peter H. Stratton, Jr. Executive Vice President, Chief Financial Officer and Treasurer

Allison Surette Senior Vice President, General Merchandise Manager

CORPORATE OFFICES

555 Turnpike Street Canton, Massachusetts 02021 781.828.9300

FINANCIAL INFORMATION

Requests for financial information should be directed to our Investor Relations Department at our headquarters: Destination XL Group, Inc., 555 Turnpike Street, Canton, Massachusetts, 02021, by calling 781.828.9300 or emailing us at [email protected]. You may also visit our website at https://investor.dxl.com. A copy of our Annual Report on Form 10-K for the fiscal year ended February 2, 2019, filed with the Securities and Exchange Commission, may be obtained without charge upon request to the Investor Relations Department.

ANNUAL MEETING

Our 2019 Annual Meeting of Stockholders will be held on August 8, 2019.

TRANSFER AGENT AND REGISTRAR

Inquiries regarding stock transfer requirements, address changes and lost stock certificates should be directed to: American Stock Transfer & Trust Company LLC 6201 15th Avenue Brooklyn, New York 11219 800-937-5449/718-921-8200, ext. 4801 • www.astfinancial.com

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

KPMG LLP Two Financial Center 60 South Street Boston, Massachusetts 02111

This Annual Report contains forward-looking statements within the meaning of the federal securities laws. You can identify these forward-looking statements by our use of the words “believes,” “anticipates,” “plans,” “expects,” “may,” “will,” “intends,” “estimates,” and similar expressions, whether in the negative or in the affirmative. Although we believe that these forward-looking statements reasonably reflect our plans, intentions and expectations, our actual results could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements under the heading “Risk Factors” under Item 1A of our Form 10-K for the year ended February 2, 2019, that we believe could cause our actual results to differ materially from the forward-looking statements that we make. Forward-looking statements contained in this Annual Report speak only as of the date of this report. Subsequent events or circumstances occurring after such date may render these incomplete or out of date. We undertake no obligation and expressly disclaim any duty to update such statements.

Page 80: ANNUAL REPORT 2019 · 2021. 5. 25. · The DXL brand has many significant strengths that we believe we can leverage to drive results. Our competitive position is strong, as the market

Destination XL Group, Inc.

555 Turnpike St. Canton, MA 02021

781.828.9300

DXL.COM