Solid start for Destination XL in Q1

Destination XL Group reported disappointing earnings and sales in its first quarter of 2017, citing challenges in February and March. But the retailer began to pick up momentum in sales in April, following the launch of its spring advertising campaign.

After deciding to increase its 2017 marketing budget by 40%, the retailer decided to increase air time for its spring campaign this year to 10 weeks as opposed to last year’s six. Since the campaign’s launch, the retailer has reported positive comps of 6.4%, higher than they expected, and the positive trend has continued this month.

The retailer saw rack penetration inch up to 44.8% in first quarter 2017, compared with 43.8% in first quarter 2016, citing the upward trend as a clear indication its marketing efforts are paying off. “We’re now halfway through the spring campaign, which will continue through Father’s Day. We’re building our brand awareness and we remain on track with our positive comp sales guidance for the full year,” said David Levin, president and CEO.

Wanting to capitalize on the spring campaign’s momentum, the retailer has decided to run a fall campaign for the first time. It anticipates an October launch with ads running through the holiday season. It’s via this aggressive marketing strategy that the retailer hopes to create brand awareness to acquire new customers. Plans for retention are also in the works. The retailer wants to drive customer loyalty through targeted engagement and expand the men's apparel brand reach by leveraging strategic business relationships with Amazon.

The company is also on track to launch its first mobile app during the second quarter. It will serve as another platform via which shoppers can easily and conveniently shop the retailer’s entire selection of brands and private label merchandise. “In addition, our loyalty program will be integrated into this mobile platform to simplify the monitoring and redemption of rewards. Our e-commerce sales penetration in fiscal 2016 was approximately 15% of total sales. We expect to experience solid growth in our digital channel in 2017, benefitting from strategic action plan, while leveraging our already robust omnichannel capabilities and the new mobile app,” added Levin.

Regarding the retailer’s entrance in the Toronto market, Levin anticipates the possibility of having seven or eight stores there in time. Canadian customers, he added, are really taking to its private label product as they do in the United States — great news for the retailer since it gets a higher margin dollar on its private label.

 

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