Destination XL Group Stock

Destination XL Group, Inc., together with its subsidiaries, operates as an integrated commerce retailer of big and tall men’s clothing and shoes. Through its multiple brands, which include both national brands and own brands, the company provides a premium, personalized shopping experience, whether in-store or digitally, with a broad range of merchandise at varying price points, catering from the value-oriented customer to the luxury customer.

The company’s best-selling pant has 58 size combinations and a unique specification as compared to an average retailer who may only have 15 different size combinations. The company’s DXL retail stores, e-commerce site, dxl.com, and mobile app cater to all income demographics and offers its customers merchandise to fit a variety of lifestyles from casual to business, young to mature, in all price ranges and in all large sizes from XL and up. In addition, the company offers a selection of shoes in sizes 10W to 18W on its website at dxl.com. The company’s Casual Male XL retail stores primarily carry moderate-priced national brands and its own brands of casual sportswear and dresswear. The company also operates Casual Male XL outlets and DXL outlets for its value-oriented customers. Through digital marketplaces, the company is able to extend its reach, by providing a select offering of its merchandise to new customers who may not be current DXL customers.

Business Strategy

The company’s marketing strategy in fiscal 2023 will focus on brand awareness and storytelling, what sets it apart from its competitors, or as it calls it the DXL Factor. The company’s digital growth has highlighted for it areas of white space opportunity in markets that are not being served by a DXL store. The company’s ability to offer its customers a selection of national brands and own brands that cannot be found elsewhere distinguishes it from its competitors and in fiscal 2023 it will continue to focus on the development of its assortments and the exclusivity across its brands. The company is also planning to launch a new customer data platform in fiscal 2023 that will allow it to better understand its customers’ behaviors and drive more personalized relevant marketing messages.

Merchandise

The company offers its customers an extensive assortment of apparel consisting of both its own brands and over 100 well-known national brands, within its good, better and best price points. Regardless of its customers’ age, socioeconomic status, or lifestyle preference, the company is able to assemble a wardrobe to fit their apparel needs. With over 5,000 styles available, the comopany carries an extensive selection of tops in sizes up to 7XL and 7XLT with additional assortments up to 8XL, bottoms with waist sizes 38 inches to 70 inches and shoes in sizes 10W to 18W.

The company’s stores are merchandised to showcase entire outfits by lifestyle, including traditional, active, modern, tailored and denim. This format allows the company to merchandise key items and seasonal goods in prominent displays and makes coordinating outfits easier for the customer while encouraging multi-item purchases. This lifestyle layout also allows the company to manage store space and product assortment effectively in each market to target local demographics. The key item strategy is also fully integrated by lifestyle, allowing the company to focus on merchandise presentation and offers its customers a compelling value proposition.

Merchandise assortments in the company’s DXL stores are organized not only by lifestyle but, within each lifestyle, the assortments are shown in a good, better and best visual presentation.

In January 2023, the company announced that it was adding Life is Good and Original Penguin Golf to its list of exclusive brands for Spring 2023. In addition to its exclusive brands, the company works with several other national brands to offer a unique, curated merchandise assortment, in sizes 2XL and above, that are exclusively sold in its stores and on its website and are not available from the brand’s own website. These offerings are a subset of the larger merchandise offering that the company carries for these respective brands.

Value-Priced Apparel -Good Merchandise

For its value-oriented customers, the company carries Champion, Lee, Wrangler and Reebok. Within its product assortment for Champion, the company offers exclusive styles specially curated for its customers. In addition, the company carries several value-priced private label lines:

Harbor Bay was the company’s first proprietary brand and it is a traditional line that continues to represent a significant portion of its business, specifically in terms of its core basic merchandise.

Oak Hill is a premier line catering to those customers looking for slightly more style and quality than the company’s Harbor Bay line but still in a traditional lifestyle.

Synrgy targets the customer looking for a contemporary/modern look.

True Nation is a denim-inspired line consisting of vintage-screen t-shirts and wovens and is geared towards the company’s younger customers.

Society of One is an activewear brand that offers versatile styling options and is grounded by performance technology.

Moderate-Priced Apparel -Better Merchandise

The company offers its customer an extensive selection of quality sportswear and dress clothing at moderate prices carrying well-known brands, such as: Cutter & Buck, Levi's, Columbia, Carhartt, and Jockey. The company’s exclusive brands in this price range include O’Neill and Nautica, Adidas Golf and vineyard vines. Within its product assortment for Callaway, Lacoste, Majestic and Tommy Bahama the company also offers exclusive styles specially curated for its customers.

Higher-End Fashion Apparel -Best Merchandise

Within this higher-end price range, the company carries a broad selection of quality apparel from well-known branded manufacturers, such as The North Face, Polo Ralph Lauren, Jack Victor, Michael Kors, and Tallia. The company’s exclusive brands in this price range include Brooks Brothers, JOE’S Jeans, 7 for all Mankind, and Robert Barakett. Within its product assortment for Psycho Bunny, Lucky and Robert Graham the company also offers exclusive styles specially curated for its customers. Polo Ralph Lauren builds one collection a quarter for its customers that is exclusive to DXL.

Shoes

The company’s DXL website offers an assortment of footwear, with a broad selection from casual to formal, in varying price points. The company has a selection of more than 200 styles of shoes, ranging in sizes from 10W to 18W, including designer brands, such as Cole Haan, Timberland, Sketchers, New Balance, Reebok and Deerstags.

Store Channel

DXL Men’s Apparel Stores

The company’s DXL store concept brings all of its brands together in one format. Within this format, the company caters to its diverse customer base, with merchandise representing all price points, from its higher-end brands to value-oriented brands, and all lifestyles, from business to denim. The company’s DXL stores are located on real estate that is highly visible, often adjacent to high-performing regional malls or other high-traffic shopping areas.

The company’s DXL stores offer up to three times the product offering of a Casual Male XL store. Depending on the customers in each respective market, the company can adjust the appropriate mix of merchandise, with varying selections from each of its price points, to cater to each demographic market.

In many markets, rebranding a Casual Male XL store to a DXL store provides a viable alternative to the more costly endeavor of relocating a Casual Male XL store to new DXL real estate. In addition, the converted stores benefit from DXL advertising. The company is actively reviewing opportunities to relocate or convert Casual Male XL stores to DXL and it is reviewing white space opportunities in markets where its store footprint is underpenetrated.

Casual Male XL Retail Stores

The majority of the merchandise carried in the company’s Casual Male XL stores is moderate-priced basic or fashion-neutral items, such as jeans, casual slacks, t-shirts, polo shirts, dress shirts and suit separates. These stores also carry a full complement of the company’s better own brand collections. The average Casual Male XL retail store is approximately 3,300 square feet.

DXL Outlet /Casual Male XL Outlet Stores

The company offers a wide range of casual clothing for the big and tall customer at prices that are generally 20-25% lower than its moderate-priced merchandise. Much of the merchandise in the company’s outlet stores is offered at discounted prices to cater to the value-oriented customer. In addition to own brands and national brands at its good price tier, its outlets also carry clearance product obtained from DXL and Casual Male XL stores, offering the outlet customer the ability to purchase brand and fashion product for a reduced price.

Direct Channel

The company’s direct business is a critical channel for growing sales and market share through new customer acquisition and digital engagement of the active file. Through its digital efforts and marketplace presence, the company is creating brand awareness and attracting a new customer to DXL. Growing its new-to-file and retaining that customer remains one of its key priorities for fiscal 2023.

The company defines its direct business as sales that originate online, whether through its website, its app, those initiated online at the store level, its Guest Engagement Center, or through a third-party marketplace. The company wants to serve its customers wherever and how they want to shop, whether in-person at a store, over the telephone, or online via a computer, smartphone or tablet.

A key to being a successful integrated commerce retailer is having the ability to showcase all of the company’s store inventories online, resulting in additional transactions that are initiated online, but are ultimately completed in store. In addition, the company’s stores are able to fulfill an order for an item that is out-of-stock in its warehouse.

DXL Website and App

Digital Sales at Store Level

In support of its integrated commerce approach, the company’s store associates use its website to help fulfill its in-store customers’ clothing needs.

Digital Marketplaces

The company continues to broaden its reach through digital, third-party marketplaces. A large portion of the company’s assortment is available on Amazon.com, Target.com and Walmart.com. Digital marketplaces provide the company an opportunity to drive awareness, grow its customer base and introduce new customers to its brand.

Merchandise Planning and Allocation

The company’s merchandise planning and allocation function is critical to the effective management of its inventory, store assortments, product sizes and overall gross margin profitability. The company’s evergreen merchandise made up approximately 43% of its merchandise assortment in fiscal 2022.

The company’s merchandising data warehouse provides the merchandising team with standardized reporting for monitoring assortment performance by product category and by store, identifying in-stock positions by size and generally monitoring overall inventory levels relative to selling. At season end, the company analyzes the overall performance of product categories, overall assortments and specific styles by store to focus on the opportunities and challenges for the next season’s planning cycle.

Marketing And Advertising

The company’s marketing initiatives are critical to driving its sales growth by increasing traffic to its stores, website and app. The company has been working to transform its brand positioning by focusing on a key customer insight and leveraging its distinct advantages of superior fit, depth of assortment, great styles and largely exclusive brands and an experience like no other. The company’s focus is to acquire new customers and achieve a greater lifetime value across its entire customer file.

The company’s marketing programs include email, direct mail, its loyalty program, direct marketing, digital marketing, social media, and streaming media, among others.

In late fiscal 2022, the company relaunched its loyalty program, The DXL Rewards Club, reengineered to drive better engagement with the company’s customers by offering enrolled customers exclusive offers, more opportunities to earn points by engaging with it in multiple ways, beyond the store or online purchase.

In March 2023, the company launched its new brand initiative Wear What You Want inviting its customer to not only experience the depth of its assortment but also the breadth of exclusivity across its brands, offering brands and styles not available elsewhere. The company is providing him the freedom to choose his own style and wear what he wants.

Global Sourcing

The company has strong relationships with many of the leading factories and mills across the globe. The company’s sourcing network consists of over 34 factories in eight countries which are experts in big and tall sizing and production. In fiscal 2022, approximately 52% of all the company’s product needs were sourced directly. The company manufactures a significant percentage of its own brand merchandise in Southeast Asian countries consisting of Vietnam, Bangladesh, Cambodia and India. In 2020, the company retained Elevate Ltd., a global leader in supply chain assessment, and instituted 4-Pillar audits of its manufacturing facilities.

Distribution

The company’s supply chain technology provides visibility for imports and domestic deliveries giving its buyers accurate shipping information and allowing the distribution center to plan staffing for arriving freight, resulting in reduced costs and improved receipt efficiency.

For store shipments and domestic customer deliveries, the company primarily uses United Parcel Services and FedEx. The company is able to track all deliveries from the warehouse to its individual stores, including the status of in-transit shipments. In addition, the company is able to provide its direct customers with Authorized Return Service and Web labels, making returns more convenient for them.

In order to service its International customers, the company has contracted with a global e-commerce company for payment and shipment services. Through this service, international customers view and pay for products in their local currency.

Competition

Discount retailers with significant buying power, such as Walmart, Kohl's and J.C. Penney, represent a source of competition for the company. The direct business has many competitors, including the King Size catalog and website, as well as online marketplaces, such as Amazon.

Seasonality

Historically, and consistent with the retail industry, the company has experienced seasonal fluctuations as it relates to its operating income, net income, and free cash flow. Traditionally, a significant portion of its operating income, net income, and free cash flow is generated in the second and fourth quarters. The company’s inventory is typically at peak levels by the end of the third quarter (year ended January 28, 2023), which represents a significant use of cash, which is then relieved in the fourth quarter as it sells down its inventory through the holiday shopping season.

Trademarks/Trademark License Agreements

The company owns several service marks and trademarks relating to its businesses, including among others, Destination XL, DXL, DXL Mens Apparel, Big on Being Better, Casual Male, Casual Male XL, Harbor Bay, Oak Hill, Continuous Comfort, Synrgy, Society of One, True Nation, and Wear What You Want. The company also holds a U.S. patent for an extendable collar system, which is marketed as Neck-Relaxer and a U.S. copyright for a no-iron hang tag.

History

The company was founded in 1976. It was incorporated in the state of Delaware in 1976 under the name Designs, Inc. In 2002, the company changed its name to Casual Male Retail Group, Inc. and then to Destination XL Group, Inc. in 2013.