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| Statement |
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| We are in the early innings of collaborations, but we believe product collaborations and broader distribution relationships have an incredibly exciting potential for the seasons ahead |
| We expect our marketing initiatives and our LRP that I will talk about next to start deliver small but incremental positive results in the second half of the year, which Peter is going to go through in our guidance for the year end at the end of our call |
| And as I articulated in my opening comments, we have continued to refine the vision and our positioning in a material way that we think is of great asset |
| There was also considerable work done to improve our tech stack to deliver better investment and stronger performance in our email program, which was driven by shopping behavior and unique customer segmentation |
| And then conversion, which for us has been a high watermark and something we're quite excited about the ability to continue to leverage based on the experience in the stores, the product we sell and the price points we sell product at |
| And what the team has achieved over the past four years is remarkable |
| We believe that the investments we are making today, will generate enough scale such that we can restore our double-digit EBITDA margin percentage on a significantly greater scale |
| And all of this will lead to important and meaningful gains in both company results and our future opportunities |
| The significant EBITDA we have generated over the past three years combined with improvements in working capital management have helped DXL build up a significant balance of cash and short-term investments totaling $60 million at fiscal year-end |
| And finally, we are refining the mechanics of our loyalty program, the program to improve the health of the program's success while continue to reward our best customers |
| This was a unique opportunity for us to capitalize on this year by taking advantage of higher interest rates, due to the high interest rate environment last year, the gap between our pension liability and our plan assets was relatively small |
| Our merchandise margin improvement was primarily the result of decreased freight costs, which offset smaller increases in markdown rates and raw material costs |
| We were pleased that our merchandise margins held up quite well and actually improved by 20 basis points over the prior year fourth quarter |
| DXL believes a curated product assortment and a highly engaging consumer experience is an attractive asset for collaboration and greater alliances |
| There is not much more I can say at this point, but we are truly excited and optimistic |
| They will begin to come online in late spring and will be a catalyst for sales growth for the balance of the year |
| We were also coming off a consecutive year-over-year double-digit growth rate and record sales in 2021 and 2022 |
| As we embark on the LRP that Harvey spoke about, I have great confidence in our ability to financially support our investments and fund these initiatives to see them through to fruition |
| We believe that we can invest in these gross initiatives while maintaining acceptable level of profitability and free cash flow and over the next five years, we expect to grow our top line significantly with scale and then return to double digit EBITDA margins finally unlocking the potential that exists in the big and tall men's market |
| The best-in-class provider to develop and launch a new e-commerce platform for our evolving digital online consumer experience |
| UNTUCKithas surpassed our expectations |
| We believe this upgrade will provide immediate performance improvements and customer experience benefits by eliminating friction, by eliminating friction points, optimizing search capability and enhancing speed and response times, which over time should grow conversion across multiple elements of the funnel flow |
| And over the next five years, we expect to grow our top line significantly with scale and return to double digit EBITDA margins |
| We believe we can materially grow our top line while maintaining what we can consider to be a minimum acceptable level of profitability and free cash flow |
| After two years of unprecedented growth, delivering the strongest financial performance in the company's history, we certainly felt our customer pullback with his spending and the frequency of visits this year |
| But before I do that, I want you to know that I am pleased with several areas in which we made significant progress this year |
| We experienced sales acceleration when we took in-season markdowns and clearance sales to expand on in season markdowns |
| Although this result is down from the prior two record breaking years, we are proud of the fact that this was the third most profitable result in the company's history and demonstrated a strong operating discipline by the team |
| We also improved cloud data warehouse capabilities for use in marketing and see our applications and work is progressing well with the migration to a new more agile website platform |
| As we have previously discussed, improving our data and analytics capabilities continues to be a priority to deliver better investment decisions, provide customer intelligence and enable more agile pivots in our marketing mix |
| Statement |
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| Despite all this progress I'm laying out for you, there is no escaping the fact that our fourth quarter results clearly missed our expectations and our business continues to be challenged by a macro environment that is difficult |
| For the fourth quarter, comparable sales were down 10.1%, driven primarily by decreases in traffic |
| This result was in the range of what we previously communicated in our holiday sales press release and reflects a further deceleration of the business in January |
| Right now, the business is not performing at an acceptable level and while we have expectations that our initiatives will take root and our business will improve in the second half of the year, we remain cautious over the first half |
| Given those results in specifically Q4, we were lapping at 10.8% prior year comp for the quarter and a 23.7% comp for January of 2023, the year-over-year comparison was challenging this past year and continues to be challenging |
| After adjusting for this extra week and for closed stores, our sales decreased by 10.1% on a comparable basis |
| Year-over-year comparisons are either your friend or your enemy, but regardless they are not, if that's the reason we're going to grow that would be disappointing |
| This decrease was primarily driven by the drop in sales, which caused our occupancy costs to deleverage by 90 basis points |
| For the full year, we expect 2024 gross margin rate to be down approximately 30 to 40 basis points |
| Nor is there any hiding from the fact that we expect our adjusted EBITDA margins to compress by more than 300 basis points this year |
| In the meantime, we continue to face the reality of consumer headwinds arising from the past two years of elevated inflation, a shift in consumer spending from goods to services and the uncertainty associated with an election year |
| Raphi Savitz You had mentioned that traffic has been a challenge, but if you look at the total of 2023, are your active customers growing? Harvey Kanter Raphi, our repeat rate is one of the greater challenges |
| First, we resisted the temptation to prop up holiday sales by becoming hyper promotional |
| It certainly not a bad thing, but it'd be disappointing |
| For the quarter both our store channel and the direct business experienced similar trends with stores down 9.4% and direct down 11.3% |
| I just wanted to ask on the profitability, like you said, it's going to go down to 7% this year |
| And our new two file is equally under some pressure |
| While we have stores in every major metro market across the United States, there are geographic voids in certain markets where big and tall consumers are not being served by a store |
| I'll remind you that we mentioned in November that cold weather seasonal categories such as sweaters, outerwear, boots, were off to a slow start and that trendunfortunately continued throughout Q4 |
| CJ Dipollino And then one more, so it looks like you guided adjusted EBITDA about $20 million below where you came in this year |
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