UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 27, 2013
DESTINATION XL GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 01-34219 | 04-2623104 | ||
| (State or Other Jurisdiction | (Commission | (I.R.S. Employer | ||
| of Incorporation) | File Number) | Identification No.) | ||
| 555 Turnpike Street, Canton, Massachusetts | 02021 | |||
| (Address of Principal Executive Offices) | (Zip Code) | |||
(781) 828-9300
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 Regulation FD Disclosure.
The Company is amending its previously filed Form 8-K, dated February 27, 2013, to correct two errors in its Investor Presentation dated February 28, 2013. The Investor Presentation, attached to this report as Exhibit 99.1 and incorporated by reference herein, has been revised to correct the operating margin percentage and capital expenditures for fiscal 2012 which are disclosed on slide 21.
The slide presentation contained in the exhibit includes statements intended as “forward-looking statements,” which are subject to the cautionary statement about forward-looking statements set forth in the exhibit. The slide presentation is being furnished, not filed, pursuant to Regulation FD. Accordingly, the slide presentation will not be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. The furnishing of the slide presentation is not intended to, and does not, constitute a determination or admission by the Company that the information in the slide presentation is material or complete, or that investors should consider this information before making an investment decision with respect to the Company.
Presentation of Non-GAAP Measures
The slide presentation includes the discussion of non-GAAP free cash flow on slide 24. Free cash flow is not a measure determined by generally accepted accounting principles (“GAAP”) and should not be considered superior to or as a substitute for net income (loss) or cash flows from operating activities or any other measure of performance derived in accordance with GAAP.
In addition, all companies do not calculate non-GAAP financial measures in the same manner and, accordingly, “free cash flows” as presented in this slide presentation may not be comparable to similar measures used by other companies. The Company calculates free cash flows as cash flow from operating activities less capital expenditures and discretionary store asset acquisitions, if any. We calculate projected free cash flows for fiscal 2016 of $60.0-$70.0 million as estimated cash flow from operating activities of $77.0-$87.0 million, less estimated capital expenditures of $17.0 million (no discretionary store asset acquisitions are anticipated in fiscal 2016). We believe that inclusion of this non-GAAP measure helps investors gain a better understanding of projected performance, especially when comparing such results to previous periods.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits |
| Exhibit No. |
Description | |
| 99.1 | Investor Slide Presentation dated February 28, 2013 | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DESTINATION XL GROUP, INC. | ||||||
| Date: February 28, 2013 | By: | /s/ Dennis R. Hernreich | ||||
| Name: Dennis R. Hernreich | ||||||
| Title: Executive Vice President and Chief Financial Officer | ||||||
 Keybanc
Consumer Conference February 28, 2013
1
Generating
Value
on
the
Road
to
Destination
XL
®
Exhibit 99.1 |
 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
January 28, 2012 filed on March 16, 2012 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
Customer
Satisfaction
80%
20%
1.5M
412
90%
85%
6 |
 Who
is Our Customer? 5
Males with a waist size 42”
and
greater (35M men in US).
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
Suggested
wardrobe
solutions
Wide aisles
One-stop
shopping
Bright
atmosphere
On-site
tailoring |
 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
2010
2012
2011
2013
Responding with Destination XL
® |
 9
|
 10
|
 11
|
 12
|
 13
|
 14
Large Selection of Name Brands |
 15
Average
Store size
3,400 sq. ft.
8,400 sq. ft.
Sales per sq. ft.
$166
$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
Casual Male XL vs. Destination XL
® |
 9451 Schaumburg, IL
9183 Niles, IL
11.4 miles
9512 Bloomingdale, IL
11.2 miles
Market Consolidation to DXL
Chicago Metro
Chicago Metro
DXL
Schaumburg, IL
0.9 miles
16
Customers are willing to drive up to 20 miles |
 17
DXL Comps Reflect Growth Opportunity
*Total DXLG Comparables consist of all stores,
including DXL stores and direct channel
14.5%
9
.0%
12.8
%
16.3%
17.1%
13.8%
15.0%
15.8%
0.7%
0.8%
2.1%
2.0%
2.0%
1.5%
0.5%
1.5%
0.0%
5.0%
10.0%
15.0%
20.0%
Q3 2011
Q4 2011
FY 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
FY 2012
DXL Comparables
Total DXLG Comparables* |
 18
Compelling DXL Returns
Expect greater store productivity
and profitability
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 |
 19
Accelerated DXL Openings
Accelerated rollout based on
success of DXL stores in 2011
0
50
100
150
200
250
300
350
400
450
500
2010
2011
2012
2013
2014
2015
2015 Store Count Target
Destination XL
®
Casual Male XL
Outlet
Rochester Clothing
215-230
~65
3
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.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
1%
4%
30%
49%
79%
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
Accelerated Rollout of DXL
* Net of subleases
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 |
 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
* Net of subleases |
 24
2016
Full benefit of DXL concept drives revenue >$600M
Open average of 10 DXL stores per year
Operating margins >10%
Generating
free
cash
flow
in
the
range
of
$60 -
$70M
Accelerated Rollout of DXL |
 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
8%
73%
89%
*Based on consumers’
stated responses per L.E.K’s survey within DXL markets
Source: L.E.K analysis
17% |
 26
Grow direct business with new website
Paradigm shift in marketing improves awareness
Target “end-of-rack”
customers
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
Attract a broader customer audience with one-stop-shop
|
 27
Destination
XL
®
Marketing
Campaign
Launched test campaign in 5 markets:
Memphis, Minneapolis, Denver, Atlanta and Oklahoma City
Increased awareness by 100%
in new markets & 38% in
established markets
“End-of-rack”
customer
base grew by 38%
Built Stronger Brand
to Attract and Serve
Customers
Results Demonstrate
Ability to Grow
Market Share |
 28
Established Effective Marketing Mix
6-Week Test Demonstrated TV, Radio and Digital is
Most Effective Marketing Combination
15% sales
24% traffic
64% new customer purchases
84% web traffic
7% web sales
38% market awareness
Established Market
Memphis DXL Opened in 2010 |
 29
DXL Test TV Commercial
Marketing to Customers in “No Man’s Land”
|
 •
Increase marketing spend as percent of sales from 4.5% to 6.5%
•
Launch strong national marketing campaign in spring 2013
Proposed 2013 Marketing Spend
$M
Total 50% Increase YOY
to Drive DXL Awareness
30
0
10
20
DXL Media
Direct
Digital
Visual
Loyalty
Other
2012
2013 |
 Q4
2012 Preliminary Results •
Comparable sales increased ~0.5% and total sales were ~$114.9M
•
Full year comparable sales increased ~1.5% and total sales
were ~$399.6M
•
Q4 comparable sales for DXL
were up ~15%, while comparable
sales for Casual Male XL stores decreased ~2.3%
•
DXL stores represented ~18% of retail sales
•
Direct e-commerce sales increased ~13.0%
•
Income from continuing operations expected to be
~$0.08 per diluted share
31 |
 32
Why Invest in DXLG?
Accelerated conversion to
DXL concept creates
compelling investment
opportunity
Leader in large and growing
B&T market
Three-year $150M investment
in DXL rollout to be
funded primarily by free cash
flow, including use of $47
million in tax benefits
Strong gross margins; Ability
to greatly improve operating
margins
Strong balance sheet
with borrowing capacity
Significant market share/sales
growth opportunity |
 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
33 |