DXLG - Destination XL Is Resilient Has A Growth Plan And Is Cheap At These Prices (Rating Upgrade)
2024-03-29 11:10:53 ET
Summary
- DXLG is an apparel retailer serving the big and tall men's market. The company is turning around after dismal operations in the 2010s.
- New management is implementing promising changes in operations, increasing efficiencies, advertising, digital investments, and remodeling without growing SG&A.
- DXLG has also stopped doing promotions and increased margins, maintaining them in the current challenging context. Even with 10% lower comparable sales, current margins are profitable.
- DXLG plans to grow more in 2024, via brand-building advertising and expanding stores by 3% in 2024 and 5% per year between 2025 and 2027. This will decrease margins in the short term.
- Still, the company's cash balances and break-even analysis show resilience to lower sales and higher fixed costs. At current stock prices, the stock is a Buy in the author's opinion.
Destination XL (DXLG) is an apparel retailer serving the big and tall men's market.
I commended the company's characteristics, strategy, and management in a recent article . I issued a Hold rating on macroeconomic uncertainty and a fair but not opportunistic price back then....
Destination XL Is Resilient, Has A Growth Plan, And Is Cheap At These Prices (Rating Upgrade)