Q3 2024 Destination XL Group Inc Earnings Call

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Speaker 1: Good day and thank you for standing by. Welcome to Destination XL Group Incorporated's third quarter of the 2023 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded.

Good day, and thank you for standing by walks to the destination XL Group incorporated third quarter 2023 financial results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press.

Star one on your telephone you will then hear an automated message advising their hands race to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Shelly makers.

Our financial reporting and SEC. Please go ahead.

Speaker 2: Thank you, Norma, and good morning, everyone. Thank you for joining us on Destination XL Group's third quarter fiscal 2023 earnings.

Thank you norm and good morning, everyone. Thank you for joining us on destination XL group's third quarter fiscal 2023 earnings call on our call today are our president and Chief Executive Officer, Harvey Kanter, and our Chief Financial Officer, Peter Stratton.

Speaker 2: On our call today are our President and Chief Executive Officer, Harvey Cantor, and our Chief Financial Officer, Peter Strutt.

Speaker 2: During today's call, we will discuss some non-GAAP metrics to provide investors with useful information about our financial performance.

During today's call, we will discuss our non-GAAP metrics to provide investors with useful information about our financial performance. Please refer to our earnings release, which was filed this morning and is available on our Investor Relations website at Investor <unk> Com for an explanation and reconciliation of such measures.

Speaker 2: Please refer to our earnings release which was filed this morning and is available on our Investor Relations website at investor.dxl.com for an explanation and reconciliation of such

Speaker 2: Today's discussion also contains certain forward-looking statements concerning the company's sales and earnings guidance, long-range strategic plan, and other expectations for fiscal 2023. Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those assumptions mentioned today due to a variety of factors that affect the company's sales and earnings guidance.

Today's discussion also contains certain forward looking statements concerning the company's sales and earnings guidance long range strategic plan and other expectations for fiscal 2023, such forward looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those assumptions mentioned today due to a variety of factors that affect the <unk>.

Speaker 2: Information regarding risks and uncertainties is detailed in the company's filings with the Securities and Exchange

Yes.

Information regarding risks and uncertainties as detailed in the company's filings with the Securities and Exchange Commission I would now like to turn the call over to our CEO Harvey Kanter Harvey.

Speaker 2: I would now like to turn the call over to our CEO , Harvey Cantor. Harvey?

Yeah.

Thank you Shelly and good morning, everyone.

Speaker 3: I appreciate the opportunity to speak with you all for the agenda today. I'm going to give you a quick review of our 3rd quarter results. And then give you an update on some of our key initiatives.

I appreciate the opportunity to speak with you all for the agenda today I'm going to give you a quick review of our third quarter results and then give you an update on some of our key initiatives.

Speaker 3: I'll talk a bit about our expectations for the fourth quarter and then touch on our evolving brand building and growth strategies that we see coming to life in 2024.

Talk a bit about our expectations for the fourth quarter, and then touch on our evolving brand building and growth strategies that we see coming to life in 2024.

Speaker 3: At that point, I will turn it over to Peter for some more specific comments on our third quarter financial performance and an update on our outlook for the rest of the year.

At that point I will turn it over to Peter for some more specific comments on our third quarter financial performance and an update on our outlook for the rest of the year.

Speaker 3: What I hope to accomplish on this call today with you is to simply share perspective, a perspective on where we are today.

What I hope to accomplish on this call today with you is just ship simply share perspective.

Picking up on where we are today.

Our strategy our.

Our views on greater investments.

Speaker 3: and what all of that means to 2024, and in turn our expectations for achieving greater levels of growth for DXL over a period of time, which we loosely define as 25 through 27.

What all that means for 2024 and in turn our expectations for achieving greater levels of growth for EXL over a period of time, which we loosely defined as 25 through 27.

Speaker 3: Our third quarter results missed our expectations, and like most other retailers, our business continues to be challenged by difficult macro environments.

Our third quarter results missed our expectations and like most other retailers our business continues to be challenged by difficult macro environment.

Speaker 3: We believe our customer has shifted away from the level of discretionary spending that we experienced in 2021 and 2022 into more essential spending.

We believe our customer has shifted away from the level of discretionary spending we experienced in 2021 and 2022 into more essential spend it.

Speaker 3: We are competing for an ever tightening wallet as economic headwinds persist.

We are competing for an ever tightening wallet economic headwinds persist.

So what exactly are we doing.

Speaker 3: To be very blunt, we are relentlessly focusing on controlling what we can control.

To be very broad we are relentlessly focusing on controlling what we can control.

Speaker 3: where we can run a clean business and have confidence in our ability to operate and deliver against elements like merchandise margins, inventory levels, payroll, and SG&S.

So we can run a clean business and have confidence in our ability to operate and deliver against elements like merchandise margins inventory levels.

Payroll and SG&A.

Speaker 3: Our challenge in Q3 was traffic, and that is job number one, driving traffic. But beyond this challenge, we believe we can execute our fundamentals at a very high level.

Our challenge in Q3 was traffic and that is job number one.

<unk> traffic, but beyond this challenge we believe we can execute our fundamentals at a very high level.

Speaker 3: we can proactively manage our inventory to avoid overbought.

We can proactively manage our inventory to avoid over block positions.

Speaker 3: we can monitor and adjust our coverage and restore labor.

We can monitor and adjust our coverage restore labor.

Speaker 3: we can resist the temptation to be hyper promotional and effectively buy unprofitable sales at lower margin rates.

He can resist the temptation to be hyper promotional.

Secondly by unprofitable sales at lower margin rates.

Speaker 3: We have the ability to execute our store development plan. We have the ability to replatform our e-commerce site. We have the ability to launch a new brand campaign that will drive share of voice, build greater awareness, generate trial. And we know if consumers experience DXL, given our conversion, our repeat rates, lifetime value and our net promoter score, we will win and grow market share over the next two to three years.

We have the ability to execute our store development plan, we have the ability to re platform. Our ecommerce site. We have the ability to launch a new brand campaign that will drive share of voice build greater awareness generate trial.

We know if consumers experienced EXL, given our conversion our repeat rates lifetime value and our net promoter score we will win and grow market share over the next two to three years.

Speaker 3: And lastly, we can leverage our position as the authority on big and tall through collaborations with other iconic menswear brands, as well as potential distribution alliances to expose DXL even greater.

Lastly, we can leverage our position.

The authority on big and tall through collaborations with other iconic menswear brands as well as potential distribution alliances to expose <unk> even greater.

Speaker 3: Store development, the website replatform, brand awareness, collaborations, and distribution alliances are our major objectives over the next 12 months.

Store development.

Web site re platform brand awareness collaborations and distribution alliances our major objectives over the next 12 months.

Speaker 3: I've said this before and I will say it again, with an addressable market of $23 billion, we believe DXL has the potential to scale far greater than where we are today.

I've said this before and I'll say it again with an addressable market of 23 billion. We believe <unk> has the potential to scale far greater than where we are today.

Speaker 3: We are maintaining our focus on delivering an incredible assortment of both private brands and national brands that are designed with a superior fit and quality, all wrapped up in a modern day retail experience.

We are maintaining our focus on delivering an incredible assortment of both private brands and national brands that are designed with a superior fit and quality all wrapped up in a modern day retail experience.

Speaker 3: An experience that the big and tall consumer doesn't get anywhere else.

An experienced at the big and tall consumer doesn't get anywhere else.

Speaker 3: Supporting this is the DxL campaign to him and for him. Our trademark, wear what you want.

Supporting this is the DSL campaign to him.

For him or trademark where what you want.

Speaker 3: invitation to big and tall men across the United States to shop like everyone else by providing him the freedom to choose his own style.

Invitation to big and tall men across the United States to shop like everyone else by providing him the freedom to choose his own style.

Speaker 3: The EXCEL campaign and brand positioning is part of this only further support my enthusiasm for our customers, our team, and our mission, which is as strong today as it was when I first joined the company.

With EXL campaign and brand positioning as part of its only further support.

Our customers our team and our ambition, which is as strong today as it was when I first joined the company.

Speaker 3: If you can't tell, I remain incredibly excited about our opportunities and I look forward to sharing my perspective with you here today. One more quick note before I get into third quarter results.

Jill I remain incredibly excited about our opportunities and I look forward to sharing my perspective with you here today.

One more quick note before I get into the third quarter results.

I wanted to share our perspective about how we view our performance.

Speaker 3: If you look at our performance on a straight year-over-year basis, our results have certainly been more challenging than in 2021 and 2022.

If you look at our performance in a straight year over year basis, our results have certainly been more challenging than in 2021 and 2022.

Speaker 3: There is no doubt we are facing a more difficult macro environment in 2023 than what we saw in the last couple of years. However, if you look at our performance against where we were in 2019, since we began the Excel's repositioning, it's a very different point of view.

There is no doubt we are facing a more difficult macro environment in 2023 than what we saw in the last couple of years. However.

If you look at our performance against where we were in 2019.

We began dx sales repositioning, it's a very different point of view.

Speaker 3: Since 2019, we have driven comparable sales growth by more than 25%.

Since 2019, we had driven comparable sales growth by more than 25%.

Speaker 3: Our adjusted EBITDA margin rate more than tripled in 2021 and remains more than double what it was in 2019 with our updated guidance.

Our adjusted EBITDA margin rate more than tripled in 2021 and remains more than double what it was in 2019 with our updated guidance.

Speaker 3: Fiscal 2023 is still forecast to be the third most successful year in the history of the company.

Fiscal 2023 is still forecast to me the third most successful year in the history of the company.

Speaker 3: Furthermore, very importantly, we have essentially recapitalized the balance sheet. And today, we're actually in the fourth quarter with no debt.

Furthermore.

Very importantly, we have essentially recapitalize the balance sheet and today, we are exiting the fourth quarter with no debt.

Speaker 3: $60 million of cash, and over $150 million of stockholder equity, which provides the greater opportunity to invest and drive our strategic initiatives.

$60 million of cash and over $150 million of stockholder equity, which provide a greater opportunity to invest and drive our strategic initiatives.

Speaker 3: delivering another year over year of sequential growth, I think it's important to recognize the results we've achieved and how far we've come since 2019. But having said that, we still have much work to do.

Fight the challenge and.

Delivering another year over year or sequential growth I think it's important to recognize the results we've achieved and how far we've come since 2019.

But having said that we still have much work to do.

Speaker 3: The slowdown in traffic that began earlier in the year intensified in the third quarter, especially in stores.

The slowdown in traffic that began earlier in the year intensified in the third quarter, especially in stores.

Speaker 3: We're seeing weaker sales in categories and brands that had heightened levels of performance.

We're thinking seeing weaker sales in categories and brands that had a heightened level of performance last year for.

Speaker 3: For example, sports shirts and casual pants perform below our expectations.

For example, sports shirts, and casual pants performed below our expectations, but both of these categories were exceptionally strong last year, primarily due to the continued resurgence of back to school and back to work and social events. Additionally.

Speaker 3: But both of these categories were exceptionally strong last year, primarily due to the continued resurgence of back-to-school, and back-to-work, and social events.

Speaker 3: Additionally, the easily strong cold weather categories like outerwear and sweaters are off to a slow start.

Additionally, seasonally strong cold weather categories, like outerwear, and sweaters are off to a slow start.

Speaker 3: Despite coming in a bit short of our sales expectations in Q3, we continue to take steps to manage our inventory and mitigate inventory risks as part of our process, structure, and discipline while leveraging our supplier relationships and reducing our inventory receipt flow.

Despite coming in a bit short of our sales expectations. In Q3, we continued to take steps to manage our inventory and mitigate inventory risk as part of our process.

Sure and discipline, while leveraging our supply relationships and reducing our inventory receipt flow.

Speaker 3: We also took advantage of clearance opportunities by using them to strategically create greater lower price point merchandise offers to address the challenged consumer.

We also took advantage of clearance opportunities by using them to strategically create greater lower price point merchandize offering to address the challenged consumer.

Speaker 3: while also ensuring we avoid any buildup and nonproductive image.

While also ensuring we avoided any buildup.

And unproductive inventory.

Speaker 3: As we progress through the year, our inventory position continues to improve.

As we progress through the year, our inventory position continues to improve.

Speaker 3: For the third quarter, our inventory is down 6.5% on last year and down nearly 17% to 2019.

For the third quarter, our inventory is down six 5% last year and down nearly 17% to 2019.

Speaker 3: Our inventory turnover rate has improved from 1.3 pre-pandemic to two times today on an annual basis.

Our inventory turnover rate has improved from one three pre pandemic two two times to two times a day on an annual basis.

Speaker 3: Clearance events have helped arrest overall softness in the web business, delivering healthy growth in new customer acquisition and increased engagement with our existing customer file.

Clearance events have helped arrest overall softness in the web business, delivering healthy growth and new customer acquisition and increased engagement with our existing customer file.

Speaker 3: We see these events as an appropriate lever to lower the barrier to entry during economically challenging times. And we see no erosion in customer value during these events.

We see these events as an appropriate lever to lower the barrier to entry during economically challenging times and we see no erosion in customer value during these events.

Speaker 3: One area that we are incredibly excited about is our newest collaboration with Untucked.

One area that we are incredibly excited about is our newest collaborations I can touch it.

Speaker 3: While we are just over a month in, the initial results have far surpassed our...

While we are just over a month and the initial results have far surpassed our expectations. The launch on October 12th what's the.

Speaker 3: The launch on October 12th was supported by a comprehensive marketing campaign on both DxL and Untuckit channel.

Ported by a comprehensive marketing campaign on both DSL and untucked channels.

Speaker 3: We're selling shirts exclusively online, but we have also launched try-on capsules in 10 physical stores.

We're selling shirt exclusively online, but we have also launched try on capsules and 10 physical stores.

Speaker 3: We're monitoring the effects of traffic engagement and you to file and we expect these results will justify a more extensive roll out in 2024.

We are monitoring the effects of traffic engagement and new to file and we expect these results will justify a more extensive rollout in 2024.

Speaker 3: This has been a big win for DXL, and we will continue to explore other strategic collaborations with other brands that are widely recognized due to their industry-leading marketing efforts, which will complement our curated assortment and will not cannibalize our established brands. With each collaboration and truly meaningful brands already established, we believe this just builds on our already established leadership in the big and tall addressable market.

This has been a big win for EXL, and we will continue to explore other strategic collaborations with other brands.

That are widely recognized due to their industry, leading marketing efforts, which will complement our curated assortment and will not cannibalize our established brands with.

With each collaboration and truly meaningful brands already established we believe this just builds on our already established leadership in the big and tall addressable market.

Speaker 3: Fit by DxL is not just a label. It's not just a tagline. It is the very reason why brands not in the space are partnering with us.

<unk> is not just the label it's not just a tagline is there reason why brands not in the space are partnering with us.

Speaker 3: Our core competence in fit, in merchandise planning, inventory management, and the like is a core skill in an extensive SKU core business that cannot be overstated.

Our core competence in fit.

Merchandize planning.

Inventory management and the like is a core skill and an extensive SKU core Calvin business that cannot be overstated.

Speaker 3: I also want to acknowledge the launches of Ferity and Hugo Boss. Ferity is exclusive to DxL in big and tall sizes and has been on the floor in 20 stores for the past seven weeks.

And also I also want to acknowledge the launches of <unk> and Hugo Boss 30 is exclusive to the EXL and big and tall sizes and has been on the floor and 20 stores for the past seven weeks.

Speaker 3: Hugo Boss is delivering exclusive big Intel product capsules, meaning in both examples you cannot find this product anywhere else.

Hugo boss is delivering exclusive big and tall product capsules. Many in both examples you cannot find this product anywhere else.

Speaker 3: Boss, as it's referred to, is available in 36 stores, and sales results for both of these iconic brands have surpassed our initial expectations.

Boss as it's referred to as available in 36 stores and sales results for both of these iconic brands have surpassed our initial expectations.

Speaker 3: The Verity and Voss are fantastic additions to our assortment, will further drive the conceptual framework for our core consumer to wear what he wants and, given initial performance, we will be looking to expand the number of stores carrying this product in 2024.

Yes.

Excuse me, but <unk> and boss are Fantastic addition to our assortment will further drive the conceptual framework for our core consumer to wear what he wants and given initial performance we will be looking to expand the number of stores carrying this product in 2024.

Speaker 3: We've also seen great progress this past quarter with a number of a market.

We've also seen great progress this past quarter with a number of our marketing initiatives one of the topics that I talked about last quarter and want to update you on today is our E mail platform, which continues to build momentum.

Speaker 3: One of the topics that I talked about last quarter and want to update you on today is our email platform, which continues to build momentum. Personalized behavior driven emails have driven improvement in our click through and open rates and further utilization of our new deployment platform remains a huge focus for the fourth quarter.

Arsenal is behavior, driven E mails have driven improvement in our click through and open rates and further utilization of our new deployment platform remains a huge focus for the fourth quarter did.

Speaker 3: Digital conversion online has also increased for the first time in more than a year, driven by our robust email program and continued healthy growth from our app.

Digital conversion online has also increased for the first time in more than a year driven by a robust E Mail program and continued healthy growth from our App.

Speaker 3: We are now just starting to anniversary the relaunch of our loyalty program, which was introduced last November . One of our biggest opportunities was to promote loyalty program benefits and educate our consumers and our members about the importance of participating.

We are now just starting to anniversary the relaunch of our loyalty program, which was introduced last November one of our biggest opportunities was to promote loyalty program benefits.

Indicate our consumers and our members about the importance of participating.

Speaker 3: For example, unlike using a coupon, which often excludes designer brands, loyalty certificates are like currency and have no brand exclusions or purchase minimum.

For example.

<unk> using a coupon, which often excludes designer brands loyalty certificates are like currency and have no brand occlusions or purchase minimums.

Speaker 3: We've continued to evolve the positioning of the communication to lean into value as a material proposition of the program and better communicate the benefits in this regard, given the economic macro elements.

We've continued to evolve the positioning of the communication to lean into value.

Purion proposition of the program and better communicate the benefits in this regard given the economic macro elements.

Speaker 3: We also wanted to closely align our Wear What You Want brand messaging with the loyalty tagline, Reward Your Style.

We also wanted to closely aligner, where what you want brand messaging with the loyalty tagline reward your style.

Speaker 3: Leaning into a designer brand to drive repositioning combines wear what you want with loyalty or reward to create greater value for the program, and we believe this should drive greater engagement of gold and silver tier members and acquisition of bronze tier members as well.

Leaning into our designer brands to driver positioning combines where would you want loyalty reward to create greater value for the program and we believe this should drive greater engagement of gold and silver tier members and acquisition broadens tier members as well.

Speaker 3: This is because the Loyalty Program is about how we treat our customers, our very best customers, in unique and engaging ways. We want the Loyalty Program to mean something special and provide something really different to our customers than just shop and save.

This because of the loyalty program, but how we treat our customers our very best customers and unique and engaging ways. We want the loyalty program to mean, something special Android something really different to our customers than just shop 'n save.

Speaker 3: I also want to touch on our big and tall essentials, or BTE. This is a business that is designed to be sold through Amazon's marketplace and has struggled to reach our expectations.

I also want to touch on our big and tall essentials or <unk>. This is a business that is designed to be sold through Amazon's marketplace and has struggled to reach our expectations.

Speaker 3: Back when we transitioned from Amazon's private brand white label wholesale into DXL's own big and tall essentials, we believed there would be great potential for this product.

Back when we transitioned from Amazon's private branded and white label wholesale into Dsos vehicles, all big and tall Essentials, we believe there would be great potential for this product line.

Speaker 3: While we've been successful with our mainline private brand assortment on Amazon's marketplace, our BTE line has been unprofitable due to ongoing shifts in Amazon's model with increased advertising and fulfillment costs.

While we've been successful with our mainline private brand assortment on Amazon's marketplace <unk> line.

<unk> has been unprofitable due to ongoing shifts in Amazon's model with increased advertising and fulfillment costs.

Speaker 3: We are significantly scaling back our BTE line in 2024 to focus on a handful of products that we can sell more profitably. We will still sell our mainline private brand assortment through Amazon Marketplace, but with the exception of a few items, BTE is going to be phased out over the next year.

We have significant significantly scaling back our <unk> line in 2024 to focus on a handful of products that we can sell more profitably, we will still sell our mainline private brand assortment through Amazon marketplace, but with the exception of a few items being T. He is going to be phased out over the next year.

Speaker 3: I mentioned the DNA call. I wanted to share with you our longer view and perspective.

I mentioned, the D&A call I wanted to share with you our longer view and perspective, we.

Speaker 3: We believe that we can change the growth trajectory of the company. And to do that, we need to expose our brand to new customers.

We believe that we can change the growth correct, Jack directory of the company and to do that we need to expose our brand to new customers.

Speaker 3: We know that our awareness levels are far below what we deem a reasonable and acceptable benchmark.

We know that our awareness levels are far below what we deem a reasonable and acceptable benchmark.

Speaker 3: We also believe that we can create greater awareness, then that leads to traffic and trial, and trial leads to repeat. And we believe this catalyst and that sequence can only be driven by effectively increasing our brand market.

We also believe that we can create greater awareness then that leads to traffic and trial and trial leads to repeat we believe this catalyst in that sequence can only be driven by effectively increasing our brand marketing.

Speaker 3: With regards to our brand building and awareness campaign, the process of identifying an agency partner to develop, build, next campaign is well underway. We have an opportunity to create an irrational emotional connection with consumers within our where would you want ethos and drive brand awareness.

With regards to our brand building and awareness campaign the process of identifying the agency partner developed build next campaign is well underway.

We have an opportunity to create an irrational emotional connection with consumers within our what you want.

And drive brand awareness.

Speaker 3: This is a shift from features and benefit positioning of the last seven years.

This is a shift from features and benefit positioning over the last several years.

Speaker 3: We are taking a strategic approach to identify a creative agency that has deep retail experience and a track record of building emotionally relevant and compelling creative storytelling and will be a good cultural fit as an extension of DXL.

We're taking a strategic approach to identify creative agency that his deep retail experience and a track record of building emotionally relevant.

Compelling creative storytelling and will it be a good cultural fit as an extension of DSL.

Speaker 3: We hope to select an agency by the end of the year, and our plan is to test the campaign as developed, produced, and in market in time for Father's Day 2024.

We hope to select an agency by the end of the year and our plan is to test. The campaign has developed produced and in market in time for father's day 2024.

Speaker 3: Concurrent with our creative agency search, we've also kicked off the early stages of media agency review to identify short-term needs related to upper brand funnel activity, media, and mediums to accomplish greater brand awareness across marketing channels.

Concurrent with our creative agencies search. We're also kicked off the early stages of immediate media Agency review to identify short term needs related to of our brand funnel activity media and mediums to accomplish greater brand awareness across marketing channels.

Speaker 3: Despite the current business landscape and the possibility of a prolonged economic challenge. We still believe this is the path to grow our business.

Despite the current business landscape and the possibility of a prolonged economic challenge. We still believe this is the path to grow our business.

Speaker 3: Fiscal 2024 is the correct timing to begin. We need to be bold and we need to go after this now and not wait until everyone is chasing the consumer with cash flush in their pockets and competitive advertising rates ever more expensive.

Fiscal 2024 at the correct timing to be get we need to be bold and we need to go. After this now and not wait until everyone is chasing the consumer with cash flush in our pocket and competitive advertising rates ever more expensive debt.

Speaker 3: That being said, we are evaluating the investment and magnitude of the plan in 2024 to ensure we are both pragmatic and thoughtful.

That being said, we are evaluating the investment and magnitude of the plan in 2020 toward to ensure we are both pragmatic and thoughtful.

Speaker 3: We are targeting a campaign launch for late spring 2024, pre-father's day, and we are prepared to conservatively spend in either one to two percent of sales to initially fund this initiative. And with positive results, we will fund this at greater levels over time, where we will read and we will react and determine further investment levels as the results and the landscape become clearer. Now let me

We are targeting a campaign launch for late spring 2024, pre father's day, and we are prepared to conservatively spend in either 1% to 2% of sales to initially fund this initiative and with positive results, we will fund a greater levels overtime.

We will read and we will react and determined further investment levels as a result, and the landscape become clearer.

Now, let me shift gears and talk a bit about stores I am very pleased to report on that September 30, we opened our first new DSL store since 2018 at Regal Park in Queens, New York.

Speaker 3: I am very pleased to report on that September 30th, we opened our first new DXL store since 2018 at Regal Park in Queens, New York.

Speaker 4: Queens was one of the last of the five New York City boroughs without a DXL.

Queens was one of the last of the five New York City boroughs without an <unk> store.

Speaker 4: We expect it will take a few years for this store to reach its full potential, but are very excited to be back opening new stores and Regal Park is pretty darn amazing.

We expect it will take a few years to for this store to reach its full potential.

Very excited to be back opening new stores and Regal Park is pretty amazing.

Speaker 4: I'm also happy to report that our second DXL store will be opening in Cincinnati, Ohio in early December , and our 3rd store will be opening in Pasadena in Los Angeles market in June .

I'm also happy to report that our second the XL store will be opening in Cincinnati, Ohio in early December and our third store will be opening in Pasadena, Los Angeles market in January.

Speaker 3: We are aggressively working on a pipeline of real estate deals to continue opening DXL stores in 2024, and right now we're negotiating nine different deals for 2024 openings, hoping we can still yet find one more to bring the expectation up to 10 new DXL stores in 2024.

We are aggressively working on a pipeline of real estate deals to continue opening the XL stores in 2024 and right now we're negotiating nine different deals for 2024 openings and hoping we can still yet find one more to bring the expectation up to 10, new <unk> stores in 2024.

Speaker 3: I'm also pleased to report that we have converted seven existing casual male health stores to the DSL concept and three more are nearing completion.

I'm also pleased to report that we are converting seven existing casual male stores.

CSL concept and three more are nearing completion now.

Speaker 4: That will give us 10 more stores converted to the Excel by the end of the year, and one more existing Excel store has been remodeled.

That will give us 10 more stores converted to <unk> by the end of the year and one more existing EXL store has been remodeled.

Speaker 4: over the next three or five years, we believe we could potentially open 50 net new DXL stores across the country, which averaging 6,000 square feet means 300,000 square feet in total new stores, square footage.

Over the next three to five years, we believe we can potentially opened 50 net new <unk> stores across the country, which averaging 6000 square feet 300000 square feet in total new stores square footage.

Speaker 4: I'd like to take a few minutes to address another topic that is one of the more frequently asked that we get these days. And that question is, to what extent do you believe the availability of new obesity, anti obesity, weight loss drugs could affect the company?

I'd like to take a few minutes to address another topic that is one of the more frequently asked that we get these days and that question is to what extent do you believe the availability of new obesity anti obesity weight loss drugs could affect the company.

Speaker 3: Let me just start by saying that is not at all uncommon for customers to have their waistlines fluctuate.

Let me just start by saying that is not at all uncommon for our customers to have their waistlines fluctuate.

Speaker 3: What we've seen for many customers over many years is that when his weight fluctuates, it often necessitates augmenting or even fully replacing his wardrobe. It's far too early to know what long-term impact these medications will have on the population, but we believe fluctuations in weight, for whatever reason, are a catalyst for buying new clothes.

What we've seen from many customers over many years is that one is weighted fluctuate it all doesn't necessitate augmenting or even fully replacing his wardrobe. It's far too early to know what long term <unk> impact. These medications will have on the population, but we believe so.

Actuation and wait for whatever reason or a catalyst for buying new clothes.

Speaker 3: It has been widely reported that anti-obesity medications do not replace physical activity or healthy eating habits. And the research that we've read suggests that weight management programs work best when they're accompanied by a healthy lifestyle change program. And I think that is one question yet to be answered.

It has been widely reported that anti obesity medications do not replace physical activity and healthy eating habits and the research that we've read suggests that weight management programs work best when they are accompanied by healthy lifestyle change program.

That is one question yet to be answered.

Speaker 3: How many people will lose weight? How many people will keep their weight off if they go off the medication? And for now, we look at it as a catalyst for a business. For now, this is an issue that we will continue to monitor. And with that, I'm going to turn it over to Peter for a few comments on the financials. Peter?

Many people will lose weight, how many we will keep people will keep the weight off if they go off the medication and for now we look at it as a catalyst for our business for now. This is an issue that we will continue to monitor and with that I'm going to turn it over Peter for a few comments on the financials Peter.

Speaker 5: Thank you, Harvey and good morning. Everyone. On our last earnings call in August , we talked about how through 6 months we were at a year to date sales comp of negative 0.5.

Thank you Harvey and good morning, everyone.

On our last earnings call in August we talked about how through six months, we were at a year to date sales comp of negative.

5%.

Speaker 5: We further stated that we believe the third quarter will be a mid-single-digit negative comp and the fourth quarter could claw back close to flat. Unfortunately that is not materialized.

We further stated that we believe the third quarter will be a mid single digit negative comp in the fourth quarter could claw back close to flat.

Unfortunately that is not materializing as we expected.

Total sales for the third quarter of 2023 decreased to $119 2 million from $129 7 million in the third quarter of 2022.

Speaker 5: Our actual sales count for the third quarter was a bit lower than we expected at negative 6.7%.

Our actual sales comp for the third quarter was a bit lower than we expected at negative six 7%.

Speaker 5: In August , we saw a sales comp decline of 6.5%.

In August we saw a sales decline of six 5%.

Speaker 5: In September , we improved a bit to negative 5.4%, but in October , we fell back further to a negative comp of minus 8.3%.

September we improved a bit too negative five 4%, but in October we fell back further to a negative comp of minus eight 3%.

Speaker 5: A direct business performs slightly better than stores at negative 3.2% for the quarter, while stores delivered a negative sales comp of negative 8.1%.

Our direct business performed slightly better than stores at negative three 2% for the quarter, while stores delivered a negative sales comp of negative eight 1% for the quarter.

Speaker 5: There is no question that the greatest challenge we've seen this past quarter is declining traffic.

There is no question that the greatest challenge, we've seen this past quarter as declining traffic.

Speaker 5: Visits to our stores were down minus 5.9 percent, while dollars per transaction in conversion combined were down approximately 2 percent, with DPT being down

Visits to our stores were down minus five 9% while dollars per transaction and conversion combined were down approximately 2%.

With DPT being down greater than conversion.

Speaker 5: For the first three weeks of November , the business continued to perform at a mid to high single digit negative comp.

For the first three weeks of November the business continued to perform at a mid to high single digit negative comp and given Q3's volatility month to month, we're thinking the fourth quarter is likely a mid to high single digit negative comp and that is where our sales outlook remains for the balance of the year.

Speaker 5: given Q3's volatility month to month we are thinking the fourth quarter is likely a mid to high single-digit negative comp and that is where our sales outlook remains for the balance of the year.

<unk>.

Yeah.

Next a few comments about gross margin or.

Speaker 5: Our gross margin rate inclusive of occupancy costs was 47.5% as compared to 50% in the third quarter of last year.

Our gross margin rate inclusive of occupancy costs was 47, 5% as compared to 50% in the third quarter of last year.

Speaker 5: 250 basis point decrease was due to 110 basis point reduction in merchandise margin and 140 basis point decrease.

The 250 basis point decrease was due to 110 basis point reduction in merchandise margin and 140 basis points in occupancy costs.

Speaker 5: The decline in rate from occupancy costs was due to the deleveraging of sales and increased rents from lease extension.

The decline in rate from occupancy costs was due to the deleveraging of sales and increased rents from lease extensions the.

Speaker 5: The merchandise margin rate has been in line with expectations and has held up relatively well in light of the economic challenges.

The merchandise margin rate has been in line with expectations and has held up relatively well in light of the economic challenges.

Speaker 5: We've remained low promotional with only a slight uptick in markdowns from the clearance events that Harvey mentioned, and we have been able to offset increases in some of our private label merchandise costs with lower inbound freight.

You've remained low promotional with only a slight uptick in markdowns from the clearance events that Harvey mentioned and we have been able to offset increases in some of our private label merchandise costs with lower inbound freight.

Speaker 5: Consistent with last quarter, we continue to see increased costs for fulfillment of direct-to-consumer orders and increased costs from our loyalty program. Both of these items

Consistent with last quarter, we continue to see increased cost for fulfillment of direct to consumer orders and increased costs from our loyalty program.

Both of these items were in line with our expectations.

Speaker 5: We are expecting gross margin rates for the year to be approximately 180 basis points lower than last year down from our previous estimate of 100 basis points, primarily due to the leverage of occupancy costs on lower sales.

We are expecting gross margin rates for the year to be approximately 180 basis points lower than last year down from our previous estimate of 100 basis points, primarily due to the deleverage of occupancy costs on lower sales expectations.

Speaker 5: Despite the deterioration we've seen in margin rate this year, we're still pleased with the gross margin improvement since 2019. We expect gross margin for the full year will be approximately 500 basis points favorable to 2019.

Despite the deterioration we've seen in margin rate. This year, we're still pleased with the gross margin improvement since 2019, we expect gross margin for the full year will be approximately 500 basis points favorable to 2019.

Speaker 5: Turning to selling general and administrative expenses, SG&A expense was 40.2% of sales for the 3rd quarter as compared to 37.3% of sales in 3rd quarter 2022.

Turning to selling general and administrative expenses SG&A expense was 42% of sales for the third quarter as compared to 37, 3% of sales in third quarter 2022.

Speaker 5: On a dollar basis, compared to last year, expenses decreased by $400,000 for the quarter and are down $800,000 year-to-date.

On a dollar basis compared to last year expenses decreased by $400000 for the quarter and are down 800000 year to date.

Speaker 5: As Harvey noted, we have worked hard to control the elements of our P&L that we can control, and variable labor costs and discretionary spending like travel are areas that we continue to keep a tight leash on.

As Harvey noted we have worked hard to control the elements of our P&L that we can control and variable labor costs and discretionary spending like travel are areas that we continue to keep a tight leash on.

Speaker 5: same time, we continue to invest in the people and technology needed to drive DXL's growth strategy forward, and investments in areas like store development and technology remain substantial.

At the same time, we continue to invest in the people and technology needed to drive sales growth strategy forward and investments in areas like store development and technology remains substantial.

Speaker 5: Advertising for the quarter increased to 6.3% of sales, up from 5.9% last year.

Advertising for the quarter increased to six 3% of sales up from five 9% last year and focused primarily on paid search direct mail and E Mail management that seeks to balance return on AD spend with new customer acquisition.

Speaker 5: and focus primarily on paid search, direct mail, and email management that seeks to balance return on ad spend with new customer acquisition.

Speaker 5: Our full year ad spend goal remains at 5.7% of sales and cost for the brand campaign won't be incurred until next time.

Our full year goal remains at five 7% of sales and cost of a brand campaign won't be incurred until next year.

Speaker 5: What this all means for the third quarter bottom line is an adjusted EBITDA of $8.6 million or 7.3% of sales and net income of $4 million or $0.06 per diluted share.

What this all means for the third quarter bottom line as an adjusted EBITDA of $8 6 million or seven 3% of sales and net income of $1 million or six cents per diluted share.

Speaker 5: The third quarter is historically challenging from a profit standpoint due to the seasonality of our business, and we saw a return to more normal levels this year after two years of record-breaking third quarter results.

Third quarter is historically challenging from a profit standpoint due to the seasonality of our business and we saw a return to more normal levels. This year. After two years of record breaking third quarter results.

Speaker 5: Despite some challenges with the P&L, I am very pleased with the strength of our balance sheet and cash flows through the first nine months of the year.

Despite some challenges with the P&L I'm very pleased with the strength of our balance sheet and cash flows through the first nine months of the year.

Speaker 5: We ended Q3 with a cash and investment balance of over $60 million, have been debt-free for two years and have full availability under our credit.

We ended Q3 with a cash and investment balance of over $60 million have been debt free for two years and have full availability under our credit facility.

Speaker 5: Inventory levels are down. We are turning faster than ever and clearance remains under our goal of 10%.

Inventory levels are down you are turning faster than ever and clearance remains under our goal of 10%.

Speaker 5: Thanks to our inventory management, we were able to increase year-to-date free cash flow.

Thanks to our inventory management, we were able to increase year to date free cash flow to.

Speaker 5: $22.7 million, up from $22.3 million a year ago.

To $22 7 million up from $22 3 million a year ago.

Speaker 5: also funding increased capital projects and eliminating our legacy pension liability.

While also funding increased capital projects and eliminating our legacy pension liability.

Speaker 5: Capital expenditures year-to-date has been $10.4 million, of which $4.2 million relates to store development and the balance to technology and infrastructure.

Capital expenditures year to date has been $10 4 million of which $4 2 million relates to store development and the balance to technology and infrastructure projects for.

Speaker 5: For the year, we expect our capex to be around 15.5 million to 17.5.

For the year, we expect our capex to be around $15 5 million to $17 5 million.

Speaker 5: Let me also provide a few comments on our share repurchase.

Let me ask you also provide a few comments on our share repurchase program.

Speaker 5: During the first 9 months of 2023, we repurchased 3.1 million shares at an aggregate cost of $14.9 million. As a reminder, the original share repurchase program approved by the Board of Directors last March authorized a share repurchase of up to $15 million.

During the first nine months of 2023, we repurchased three 1 million shares at an aggregate cost of $14 9 billion. As a reminder, the original share repurchase program approved by the board of Directors last March authorized a share repurchase of up to $15 million.

Speaker 5: I'm pleased to report that earlier this week, the existing program was amended to increase the maximum repurchase amount up to $25 million.

We used to report that earlier this week the existing program was amended to increase the maximum repurchase amount up to $25 million. The program expires on March 16th 2024.

Speaker 5: The program expires on March 16th, 2024.

Speaker 5: This new authorization provides the company with added flexibility to deploy capital for share repurchase when we believe the share price is compelling and will generate shareholder value.

This new authorization provides the company with added flexibility to deploy capital for share repurchase when we believe the share price is compelling and will generate shareholder value.

Speaker 5: Despite the difficult macro environment, we are confident that our Fortress Balance Sheet gives us this flexibility as well as provides the resources to weather an ongoing economic downturn while also funding our long-term growth initiatives. I'll end with our full

Despite the difficult macro environment, we are confident that our fortress balance sheet gives us this flexibility as well as provides the resources to weather and ongoing economic downturn, while also funding our long term growth initiatives.

I'll end with our full year revised guidance.

Speaker 5: The economic pressures that have impacted consumer spending caused our third quarter sales to come in below our expectations. We have similarly revised our fourth quarter for

The economic pressures that have impacted consumer spending caused by caused our third quarter sales to come in below our expectations and we have similarly revised our fourth quarter forecast for fiscal 2023, we now expect sales to be approximately 520 million to $530 million and our adjusted EBITDA margin.

Speaker 5: For fiscal 2023, we now expect sales to be approximately $520 million to $530 million and our adjusted EBITDA margin to be between 10% and 11% on a 53-week basis.

To be between 10% and 11% on a 53 week basis.

Speaker 5: I'm now gonna turn it back over to Harvey for some closing thoughts. Harvey.

I'm now going to turn it back over to Harvey for some closing thoughts Harvey.

Speaker 4: Thanks, Peter. I'd like to just close with a quick summary. But 1st, I want to say sincere. Thank you to our team here. Dxl. I feel as though our corporate culture is 1.

Thanks Peter.

I'd like to just close with a quick summary, but first I wanted to say a sincere. Thank you to our team here at <unk>.

Feel as though our corporate culture is one of our superpowers.

Speaker 3: And none of this would be possible at the hard work and dedication of our people in the stores and the distribution center in the corporate office and in the guest engagement center. Thank you for all your hard work and commitment and pursuit of serving big Intel med everywhere. And finally, all for you.

And none of this would be possible at the hard work and dedication of our people in the stores and.

In the distribution center in the corporate office and in the guest engagement Center.

Q for all your hard work and commitment in pursuit of serving big and tall men everywhere and.

And finally, all for you this clothing perspective.

Speaker 3: We have authored a strategic plan, but in the current environment, the volatility of the consumer, the market, world events and the like are quite challenging to achieving the magnitude of our goals in the timeline.

We have offered a strategic plan, but in the current environment the volatility of the consumer the market world events and alike are quite challenging to achieving the magnitude of our goals and the timeline.

Speaker 3: But march on, we must, and we will. We remain relentlessly focused on executing our fundamentals and are committed to the strategy to grow and the initiatives we have spoken of today and often of in times past. We will open productive new stores. We will get the new platform deployed. We will launch a brand campaign. And we will keep pursuing merchandise collaboration and distribution alignment.

But march on we must and we will we remain relentlessly focused on executing our fundamentals and are committed to the strategy to grow and the initiatives, we've spoken up today and often.

Time's passed.

He will open productive new stores, we will get the new platform deployed we will launch a brand campaign and we will keep pursuing merchandise collaborations and distribution alliances.

Speaker 4: Taking more drastic action, such as offering deeper discounts and more broadly promoting and funding unproductive ROAS tactics would not make sense in the long run.

Taking more drastic action, such as Ocwen deeper discounts and more broadly promoting and funding unproductive rollout taxes would not make sense in the long run.

Speaker 3: We are not going to jeopardize the brand position that we've put so much emphasis in and on over the last several years. Our trademark, wear what you want, is grounded in fit, in assortment and experience, and not in price and promotion.

We're not going to jeopardize the brand positioning that we put so much emphasis in and on over the last several years.

Our trademark where what you want is grounded in fit and assortment and experience and not in price and promotion.

Speaker 3: We can't control customer traffic, but we can control where we focus our effort.

We can't control customer traffic, but we can control, where we focus our effort and attention. We believe in the <unk> brand and everything it can mean and we remain focused on the opportunity ahead as opposed to traffic struggles at single moment in time.

Speaker 4: We believe in the DXL brand and everything it can mean, and we remain focused on the opportunity ahead, as opposed to traffic struggles at this single moment in time. And with that, operator, we'll now take questions.

With that operator, we'll now take questions.

Speaker 1: Thank you. As a reminder, to ask a question, you'll need to press star 1-1 on your telephone. To withdraw your question, please press star 1-1 again. Please wait for your name to be announced. Please stand by while we compile the Q&A roster. One moment for our first question.

Thank you.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question. Please press star one again, please wait for your name to be announced please standby, while we compile the Q&A roster.

For our first question please.

Speaker 1: Our first question comes from the line of Michael Baker with DA Davidson. Your line is now open.

Our first question comes from the line of Michael Baker with D. A Davidson your line is now open.

Speaker 6: Okay, great. Thanks, guys. You sort of addressed this in the prepared remarks, but figured I'd follow up on it. Last quarter, spent a lot of time talking about a long-term investment strategy, which I think makes sense.

Okay, great. Thanks, guys.

You sort of addressed this.

In the prepared remarks, but figured I'd follow up on it.

Last quarter.

<unk> spent a lot of time talking about our long term investment strategy, which I think makes sense. Since then it does seem like things have slowed how does that impact your long term plans. If at all I think correct me, if I'm wrong, but the advertising budget for next year is maybe a little bit more conservative than what you had talked about on our second quarter call, but just in general.

Speaker 6: Since then, it does seem like things have slowed. How does that impact your long-term plans, if at all? I think, correct me if I'm wrong, but the advertising budget for next year is gonna be a little bit more conservative than what you had talked about on the second quarter call. But just in general, what does this do to your long-term outlook, if any?

What does this do to your long term outlook if anything.

Speaker 3: Yeah, Mike, hey, it's Harvey. I'll address that at a very high level.

Yes, Mike It's Harvey I'll test address that at a very high level for competitive reasons, we don't want to obviously share every element, but yes. The reality is it's hard to understand where the customer is going and what the economic realities are over the next 12 months. So we have moderated our inverse.

Speaker 3: reasons. We don't want to obviously share every element. But yes, the reality is it's hard to understand where the customer is going and what the economic realities are over the next 12 months.

Speaker 4: So we have moderated our investment view, marching forward with what we have planned, because we think it is not just critical, it's a critical imperative to do so if we're going to gain share of voice and share of market. And we know that once we do that and get trial, we...

View marching forward with what we had planned because we think it is not just critical it's a critical imperative to do so if we're going to gain share of voice and share of market and we know that once we do that and get trial, we will win but we are moderating that in the first half of the year to try to understand the return.

Speaker 3: But we are moderating that in the first half of the year to try to understand the return and the level investment that makes sense and will lean in even harder, hopefully, as the economic realities become a little bit better in the second half of the year, but equally. So we have learnings in place to make sure that we understand what the return will be.

And the level of investment that makes sense and we'll lean in even harder hopefully as the economic reality has become a little bit better in the second half of the year, but equally so we have learnings in place to make sure that we understand what the return will be.

Speaker 6: Okay, that makes sense. A couple others. One, interesting about the BTE pullback in Amazon. I get that it's harder to be profitable there, but what about demand and what does that tell you about your ability to go after, as I understood it, that was more of an entry-level type of product. What does that tell you about your ability to go after that?

Okay.

That makes sense.

While there is one.

Interesting about the BT EE pullback in Amazon.

Again, I get that it's hard to be profitable, there, but what about demand.

What does that tell you about your ability to go after as I understood. It that was more of an entry level type of product.

What does that tell you about your ability to go after that customer.

Speaker 3: Yeah, there really still is a meaningful opportunity to address the larger addressable market that is really outside the box, for lack of a better way to say it, of DXL. The challenge with Amazon is actually not a lot dissimilar than Google these days, where paid elements of search rise to the top, and organic is much more difficult, and you have to buy that traffic.

Yes, there is still there really still is a meaningful opportunity to address the larger addressable market that is really outside the box for lack of a better way to say it a DSL the challenge with Amazon.

Not a lot dissimilar than Google These days, where some paid elements of search rise to the top and organic is much more difficult and you have to buy that traffic and if you don't do that you can't get to the top so when the program was white label. The reality is that they owned it and they can drive it anywhere they want when you think about the fact that we're buying our way too.

Speaker 4: And if you don't do that, you can't get to the top. So when the program was white label.

Speaker 4: The reality is that they owned it and they could drive it anywhere they want. When you think about the fact that we're buying our way to search results. And in addition to that, having FBA as part of our mix, the costs are just going up. And so we're trying to obviously navigate a fine line.

Search results and in addition to that having FBA as part of our mix. The costs are just going up and so we're trying to obviously navigate a fine line between the addressable market of the lower income consumer and the profitability of that product because buying product than <unk>.

Speaker 4: the addressable market of the lower income consumer and the profitability of that product because buying product.

Speaker 3: that then ultimately sells at a loss doesn't make any sense. So it's something that I would say is yet to be concluded. We believe there is greater opportunities. We continue to believe that over the long term, once we are at a point where we're comfortable with the DXL brand and it's well on its way, there are greater opportunities for a lower income consumer, whether whether that's a new brand.

Ultimately sells at a loss doesn't make any sense. So.

It's something that I would say is yet to be concluded. We believe there is greater opportunity as we continue to believe that over the long term. Once we are at a point, where we're comfortable with the <unk> brand and its well on its way there are greater opportunities for lower income consumer whether it whether that's a new brand new distribution channels or greater opportunities we have had.

Speaker 3: or new distribution channels or greater opportunities, we have had great learning by the BETE program and the top line versus the bottom line, which is distinctly different.

<unk> learning.

<unk> program and the top line versus the bottom line, which is distinctly different.

Speaker 6: Yeah, okay. So, yeah, it sounds like it's something that maybe come back to in a different way 1 more.

Yeah, Okay. So.

Yes, it sounds like it's something that maybe you come back to in a different way.

One more in.

Speaker 6: And I don't know if you can possibly answer this, but you're right, there is a lot of focus on the GLP-1 drugs and it makes sense to me that as waistlines fluctuate, that could actually be good for you.

And I don't know if you can possibly answer this but you are right. There is a lot of focus on the <unk> one drugs and it makes sense to me that was wait lines fluctuate waste volumes fluctuate that could actually be good for you.

Speaker 6: I guess, and again, maybe you can't. Is there any evidence of that? Like, would you even have any way to know which of your customers might be on that? And and have you seen anything understanding? It's very early in this whole situation.

Again and again.

Maybe you can is there any evidence of that.

Even have any way to know which of your customers might beyond that and have you seen anything.

Understanding it's very early in this whole situation and all on.

Speaker 4: Yeah, in all honesty, we have been monitoring assertively, very assertively, size penetration, and we haven't seen any material shifts. But part of the reality is, you know, we look at our business in kind of three distinct ways. There's the entry level, which is the rack of 38 to 40, so to speak. There's the

Honestly, we have been monitoring assertively, various certainly size penetration and we haven't seen any material shifts, but part of the reality is we look at our business in kind of three distinct ways, they're the entry level, which is the rack.

38% to 40% so to speak.

Speaker 4: core sweet spot of our business, which is 43 to 46, and I'm talking about waist sizes.

Core sweet spot of our business, which is 43% to 46% I'm talking about waist sizes and then.

Speaker 4: there's the upper end of the rack, which let's just say that 60 to 70. And in the range of our core sweet spot, we've seen small movements lower in scale, but in the core suite overall, it's about the same. And so it's hard to really know where that's coming from. But what you might've expected is actually a greater level of move out of our middle core sweet spot into sizes that are more competitive with other retailers and quite honestly, not our core sweet spot. And we just haven't seen that.

There is the upper end of the rack, which let's just say that 60% to 70 and.

The range of our core sweet spot, we've seen small movement lower in scale, but in the core suite overall, it's about the thing and so it's hard to really know whether where that's coming from but what you might have expected is actually a greater level of move out of our middle core sweet spot is.

Two sizes that are more competitive with other retailers and quite honestly not our core sweet spot and we just haven't seen that and so that's a long way of saying I think the jury is still out I think that the unfortunate reality as much as I think the weight loss drug in such a positive outcome for some some part of the population is $10 $12 $15000.

Speaker 4: And so that's a long way of saying, I think if the jury's still out, I think that, you know, the unfortunate reality is as much as I think the weight loss drug is such a positive outcome for some part of the population, it's $10,000, $12,000, $15,000 a year, and it's not accessible to everybody. And as a result of that, the question is, what's the penetration? And then if you stay on that, it's great, but if you go off it, and as we mentioned, you don't have lifestyle changes, you gain weighing back. And so those are all things that are creating cloudiness.

A year and it is not accessible to everybody and as a result of that the question is what's the penetration and then if you stay on that.

Great, but if you go off of it and as we mentioned you don't have lifestyle changes gain weighing back and so those are all things that are creating cloudiness in and ultimately I think we're going to just need years not months or weeks to better understand this.

Speaker 4: And ultimately, I think we're going to just need years, not months or weeks, to better understand this.

Speaker 7: Yeah, makes perfect sense. I appreciate the time. Thank you. Thank you.

Yes, it makes perfect sense.

Appreciate the time thank you.

Thank you.

One moment for our next question please.

Speaker 1: This one comes from the line of Jeremy Hamblin with Craig Hallam, Capital Mark Group.

Comes from the line of Jeremy Hamblin with Craig Hallum Capital Group. Your line is now open.

Speaker 8: Thanks. I wanted to start with just talking about some of the customer behavior. Obviously, retail traffic trends have been tough. You noted that you've seen an uptick in the use of the loyalty program certificates.

Thanks.

I wanted to start with.

Just talking about some of the customer behavior obviously.

Retail traffic trends have been tough.

Noted that.

<unk> seen an uptick in the use of the loyalty program certificates.

Speaker 8: And just in terms of thinking about, you know, what you've seen so far here in November , you know, do you expect or what type of insight are you gaining from that increase in

And just in terms of thinking about.

What you've seen so far here in November.

Do you expect.

What.

What type of insight are you gaining from that increase in use of the loyalty certificates and on a go forward basis.

Speaker 8: use of the loyalty certificates and on a go forward basis you know how do you think about as you try and have that balance of getting traffic in the stores and staying engaged with this customer so they're you know they don't lapse or anything how are you thinking about utilizing that program uh... to help kind of balance that drive of

How do you think about as you try and have that balance of getting traffic in the stores and staying engaged with this customer so they.

They don't lapse or anything.

How are you thinking about utilizing that program to help kind of balance that drive us.

Speaker 8: of foot traffic into the stores, but also not kind of marking down product.

<unk>.

Foot traffic into the stores, but also not kind of marking down.

Product.

Speaker 4: Yeah, it's a great question, and there's three or four different elements there that I'll try to unpack for you. First and foremost, you know, the reality is the loyalty program is something that's really important to us. We believe that if we can successfully communicate the value of the program, that he will, or she, will shop more regularly with us because they'll appreciate that. And the value of the program, specifically, is performing best with our best customer.

Yes, it's a great question.

Three or four different elements, there that I'll try to unpack for you first and foremost.

The reality is the loyalty program is something Thats really important to us we believe that if we can successfully communicate the value of the program that he will or she will shop more regularly with us because they will appreciate that and the value of the programs specifically is performing best with our best customer.

Speaker 3: probably not a surprise, but they understand that value. They shop more frequently. They are more engaged with their purchases.

Probably not a surprise, but they understand that value. They shop more frequently they are more engaged with their purchases and they recognize one of the critical elements is literally our loyalty certificates or like currency greenbacks for lack of a better ways that they can come in and use it like dollars Theres no exclusions, they can buy anything.

Speaker 4: And they recognize one of the critical elements is literally our loyalty certificates are like currency. It's like greenbacks for lack of a better way to say it. They can come in and use them like dollars. There's no exclusion. They can buy anything.

Speaker 4: you know, in any brand that we offer, unlike a coupon, where we are using coupons selectively to manage inventory and the file, which we've spoken about before. But anytime we do that, it's to our actual internal file, and there are limitations and exclusions.

Any brand that we offer unlike coupon, where we are using coupons selectively to manage inventory in the file which we've spoken about before but anytime we do that is to our actual internal file and there are limitations and exclusions such that they can't use it on most of the national brands, because we're just not.

Speaker 4: such that they can't use it on most of the national brands because we're just not discounting those brands.

Discounting those brands and as a result of that our best customers utilizing the most where they understand the program and the efficacy of the program for them and in opening kind of price points. If you will and opening customers bronze silver versus gold and platinum they don't yet understand that so the third element I would say is that.

Speaker 4: And as a result of that, our best customers utilizing them the most where they understand the program and the efficacy of the program for them.

Speaker 4: And in opening kind of price points, if you will, and opening customers bronze and silver versus gold and platinum, they don't yet understand that. So the third element, I would say, is that we spoke about in my prepared remarks that.

We spoke about in my prepared remarks that.

Speaker 4: Our challenge is to evolve the consumer's understanding of the program and the inherent value in being not just a member, but utilizing the certificate. And unlike a discount for us,

Our challenge is to evolve the consumers understanding of the program and the inherent value in being not just a member, but utilizing the certificate and unlike a discount for us.

Speaker 4: If they come in with a certificate, whether it's 15 or 30 or even 45, our average ticket is well above that.

They come in with a significant whether its 15 or 30 or even 45, our average ticket is well above that and we know that if they use the certificate. They will end up spending close to our average ticket and we will win at a lower level of if you will discount which is when the day is done that the actual $15 certificate is a discount.

Speaker 4: When the day is done, the actual $15 certificate is a discount on the product price.

The product price, but it's not discounted as appear discounted discounted with the ability to use it as currency. So we still look at it as a really meaningful opportunity for US one we continue to work really hard its only a year old and really hard to creating the communication and understanding of the benefits of the program overtime we.

Speaker 4: but it's not discounted as a pure discount, it's discounted with the ability to use it as currency. So we still look at it as a really meaningful opportunity for us. One, we continue to work really hard, it's only a year old, and really hard to creating the communication and understanding of the benefits of the program. Over time, we think it'll ultimately be a big win for us, but like anything else, it's new to the consumer, it's uniquely different than it was a year ago.

It will ultimately be a big win for us, but like anything else, it's new to the consumer is uniquely different than it was a year ago.

Speaker 8: That's helpful color. I wanted to transition to talk about the store opening plan. So 10 locations for 24 along with, you know, a bunch of free models in terms of thinking about.

That's helpful color.

Wanted to transition to talk about the store opening plan.

10 locations for 24, along with.

A bunch of Remodels.

In terms of thinking about.

Speaker 8: you know, two aspects to this. One is the capex investment.

Two aspects to this one is the Capex investment.

Speaker 8: Presumably, we'll step up decently from the $16.5 million midpoint that you guided to for this year.

Presumably will will step up decently from the $16 5 million midpoint that you guided to for this year.

Speaker 8: But I also want to understand for those 10 locations.

I also wanted to understand for those 10 locations.

Speaker 8: you know, roughly the cadence you're expecting, whether that's, you know, 25% of those are, you know, two, three in the first half.

Roughly the cadence you're expecting whether that's 25% of those are two to three in the first half of the year and the balance in the back half of the year just to get a sense on that.

Speaker 8: of the year and the balance in the back half of the year, just to get a sense on that. And then also, as it relates to that, there's obviously some increased infrastructure costs that goes along with that, whether that's members of maybe your real estate team that you've needed to add.

And then also as it relates to that.

There is obviously some increased infrastructure cost that goes along with that whether thats members, maybe your real estate team that you've needed to add but just wanted to get a sense for embarking on that program.

Speaker 8: But just wanted to get a sense for, you know, embarking on that program.

Speaker 8: You know, what the rough, you know, annualized cost is, you know, from an SG&A standpoint to support the new openings and the remodel.

Whats the rough annualized cost is from an SG&A standpoint to support the <unk>.

New openings and the Remodels.

Speaker 5: Sure, so I'll take that 1, Jeremy, you're absolutely right. This is something that we've been talking about for a, you know, well, over a year now, and the investment that we need to make in order to have site selectors have store planners and construction folks project managers.

Sure So I'll take that one Jeremy.

You're absolutely right. This is something that we've been talking about for.

Well over a year now and the investment that we need to make in order to.

Site selectors have.

Store planners.

Construction folks project managers.

Speaker 5: Um, all of that adds up and it's all got a deferred return because we're incurring those expenses earlier for stores that typically it takes us a year to get a store open.

All of that adds up and it's all got a deferred return because we're incurring those expenses earlier.

For stores that typically it takes us a year to get a store open.

Speaker 5: The cost of our stores is typically around a million dollars.

The cost of our stores is typically around $1 million.

Speaker 5: And that's usually a net of some TI allowance that we would try to get.

And Thats usually.

Net of some some ti allowance that we would try to get.

Speaker 5: So, you know, we're, we're definitely pushing forward with those as Harvey mentioned. We've got 9 leases that are being negotiated right now. I'm hopeful that we'll get, you know, I would say 30% of those done in the 1st half and 70 in the 2nd half will definitely be more weighted towards the 2nd half of the year.

So.

We are definitely.

Pushing forward with those as Harvey mentioned, we got nine leases that are being negotiated right now I'm hopeful that we'll get.

I would say 30% of those done in the first half and 70 in the second half.

We will definitely be more weighted towards the second half of the year.

But.

Speaker 5: I'm glad we've got the nine and hopefully we'll get one more so we'll get 10 in place for the year. But this is a big part of our strategy. We know that the customer is attracted to the experience in stores and our store associates are one of our secret weapons that not everybody knows about and how well they're able to engage with and deliver an experience that big and tall customers are not going to get anywhere else. It's something that we're going to continue to leverage.

I'm glad we've got the nine and hopefully we'll get one more so we'll get we'll get 10 in place for the year.

But this is a big big part of our strategy.

We know that the customer is attracted to the experience in stores and.

Our store associates are one of our secret weapons that not everybody knows about and how well they are able to engage with and deliver an experience that big and tall customers youre not going to get anywhere else.

It's something that we're going to continue to leverage.

Speaker 8: Got it. Thanks. And just to remind us in terms of, you know, the conversions and the remodels, you know, the approximate cost of those when you're going from casual mail to DXL and other conversions that you're you're doing is the range.

Got it thanks, and just remind us in terms of.

The conversions in the Remodels.

The approximate cost.

Of those undergoing from casual male to DSL and.

Other conversions that you're you're doing just.

This is the range.

Yeah.

Speaker 5: Yeah, of the two types of conversions, we have the casual mail being converted to DXL, of which we're going to get 10 of those done this year. And then there's probably another, I would say, 5 to 10 next year that will get done. Those typically cost $200,000 to $300,000.

Yes.

Two types of conversions.

We have the casual male being converted to Dx sell of which we're going to get 10 of those done this year and then there's probably another.

I would say five to 10 next year that we will get that will get done those typically cost 200 to $300000 apiece.

Speaker 5: And then there's the DXL remodels, which is it's already an existing DXL store, but we have

And then there's the Dx cell remodels, which is already an existing <unk> store, but we have.

Speaker 5: We have 2 stores actually 3 stores that we have. We've done this in already in Warwick, Rhode Island and in Troy, Michigan, where in some cases we think that by.

We have two stores actually three stores that we have we've done this in already in Warwick, Rhode Island in Troy, Michigan, where in some cases.

We think that by remodeling the inside of the store.

Speaker 5: remodeling the inside of the store, and there's a number of changes, which I won't get into on the call here, but remodeling the interior of the store, that's about a $300,000

Theres, a number of changes, which I won't get into on the call here, but remodeling interior of the store that's about a $300000.

Speaker 5: price tag as well. There's five of those that are in progress right now. Next year, we're going to do a few of those as well. We don't have the exact number of what we're going to do yet next year, but we're continuing to monitor what kind of return those DXLV models will get.

Price tag as well.

There's five of those that are in progress right now and.

Next year, we're going to do a few of those as well we don't have the exact number of what we're gonna do yet next year, but we're continuing to monitor what kind of return those Dx Lv models, we'll get for us.

Speaker 4: One thing I might add just to that, Jamie, Jeremy, that Peter said he wouldn't get into it, but I can't help myself just acknowledge that if you haven't been to regal park, you should definitely make a point to go when you're in the city. It's really rather remarkable the evolution of what I would call the social community element of the storefront.

One thing I might add just to that Jamie and Jeremy.

Peter said, you wouldn't get into it but I can't help myself just acknowledge that if you haven't been a Regal Park and you should definitely make it a point to go when you're in the city.

It's really rather remarkable the evolution of what I would call the social community element of the storefront.

Speaker 4: There, I know I referenced this last time. I think I did, you know, the, the concept of in home where you have the center island in a kitchen and everyone hanging out and the community and the ability to access our entire online assortment.

I know I referenced this last time I think I did.

In the home, where you have the center island in the kitchen and everyone hanging out in the community and the ability to access our entire online assortment.

Speaker 8: buy it in the store, pick it up in the store, have it sent to your home.

<unk> in the store pick it up in the store habits into your home the community of lay down the integrated digital experience, it's really a very different storefront and we're quite excited about it we're very early in the process, but as Peter said, we will have a second of this year and multiple more next year and as we build new stores the new stores are doing.

Speaker 4: community of laydowns, the integrated digital experience, it's really a very different storefront and we're quite excited about it. We're very early in the process, but as Peter said, we'll have a second this year and multiple more next year. And as we build new stores, the new stores are being built out in this format of the remodeled boxes, but it's just a compelling storefront. And I think it's very different than most other retail storefronts you would go into, especially for this core customer who has nearly no other options that a pure play box would

Being built out in this format of the remodel boxes, but it's just a.

Telling storefront and I think it's very different than most other retail storefront you would go into especially for this core customer who has nearly no other options that pure play box would provide like we do.

Speaker 8: Got it. Thanks. And then last one for me is, you know, I think at the end of Q2, you had a little over 9% of your inventory was, was of the clearance variety. And you might have mentioned this, and I missed it, but where does that, that percentage stand today? That's.

Got it thanks.

And then last one for me is.

I think.

At the end of Q2, you had a little over 9% of your inventory was was the clearance variety.

And you might have mentioned this and I missed it but where does that that percentage stand today.

Today, we're at nine 7%.

Speaker 8: Got it. And so that's up about 300 basis points from a year ago.

Got it and so thats up about 300 basis points from a year ago.

Speaker 5: Uh, yeah, I don't have my fingertips what it was a year ago, but, um, but I remember the 9.7% was where we are. We're at the end of Q.

Yeah, I don't have at my fingertips, what it was a year ago, but I remember the nine 7% was where we were at the end of Q3.

Speaker 4: Jeremy, what's a really interesting conversation to explore, maybe not on the call, but later if you'd like, is that our inventories have come down, you know, we talked about we're six and a half percent under last year's inventory levels, and our view is that clearance, and primarily, I would say units, but also dollars based on what we carry, it's really important to maintain an offer, and so we're actually strategically and tactically trying to manage to a certain level of clearance, because we believe in the box as it sits,

Well, Jeremy what's a really interesting conversation to explore maybe not on the call. But later if you'd like is that our inventories have come down we talked about was six 5% under last year's inventory levels and our view is that clearance and primarily I would say units, but also dollars based on what we carry it's really important to me.

Maintaining an offer and so we're actually strategically and tactically trying to manage to a certain level of clearance because we believed in the box as it fits that the reality is the customer gets greater value from the clearance and that's our opportunity to create greater value for lower income consumers as opposed to discounting product, but when.

Speaker 4: that the reality is the customer gets greater value from the clearance and that's our opportunity to create greater value for lower income consumers as opposed to discounting products.

Speaker 8: But when our inventory in total comes down, and we're trying to make a certain level of unit in the store, by default, the percentage and dollar value penetrates greater. So, as we've always said, 10% is the marker. We're trying to actually achieve closer to 10% than farther away. So, the migration from 6 to 10 has some thoughtfulness behind it. It didn't just happen. Got it. Thanks so much for the call and best wishes.

Our inventory in total comes down and we're trying to maintenance certain level of unit.

Store by default the percentage or dollar value penetrates greater so as we've always said, 10% is the marker we're trying to actually achieve closer to 10% and farther away. So the migration versus fixed and <unk> had some thoughtfulness behind it didn't just happen.

Got it thanks, so much for the color and best wishes.

Thank you. Thank you thanks happy Thanksgiving to you.

One moment for our next question please.

Speaker 1: Our next question comes from Rafi Savitz with Reeves Advisors. Your line is open. Hey, Robbie. Hey.

Our next question comes from Murphy service with lease Advisors. Your line is open.

Hey, Robyn Hey, good morning, guys.

Speaker 9: Maybe one tactical question and then kind of a bigger picture question on the tactical side.

Maybe one tactical question, and then kind of a bigger picture question on the tactical side.

Speaker 9: Now, as you're, as you're reinvesting in the store base here, um, have you revisited at all, you know, how you're thinking about, you know, incentivizing your, your workers and your store managers to ensure success?

Now as you're as you're reinvesting in the store base here.

Have you revisited at all how youre thinking about incentivizing your workers in your store managers to ensure success.

Speaker 3: Yeah, so we have three different programs in place. We have a base compensation program. It varies by locale where the minimum wages are different, but every single store is above minimum wage in its locale and the combination of the store quarterly bonus.

Yes, so we have three different programs in place we have a base compensation program. It varies by locale, where minimum wages are different but every single stores above minimum wage and it's locale and the combination of the store quarterly bonus and the actual sales Associates Commission.

Speaker 4: and the actual Sales Associates Commission ultimately creates their hourly pay, and we're, I'd say, at a high level comfortable with where they are. They're maturely greater than any historical perspective in terms of their hourly wage rates.

Ultimately creates there their hourly pay and we're I'd say at a high level of comfortable with where they are they're materially greater than any historical perspective in terms of their hourly wage rates.

Speaker 4: I think if you're going to a store and actually experience interaction, you would find it remarkable. You would never know they're on commission where often enough in commission stores, you have a heavier push of the sales as they're trying to sell you what's on the rack.

I think if you go into a store and actually experienced interaction you would find it remarkable you would never know they are on commission, where often enough and commission stores you have a heavier push over the sales as they are trying to associate with on the rack and in our case. The first question is how can I help me today may I take your measurements certified fifth specialists.

Speaker 4: And in our case, the first question is, how can I help you today? May I take your measurements by our certified fit specialist? And it's really understanding what they came in for, what they're shopping for and helping them put together looks. And the outcome of successfully doing that.

And it's really understanding what they came in for what Theyre shopping for in helping them put together looks and the outcome of successfully doing that achieved an average DPT or average transaction value that is above what most most other retailers have as average transaction value and ultimately as a result of that is a higher commission and a better store bonus simply.

Speaker 3: an average DPT or average transaction value that is above what most other retailers have as average transaction value. And ultimately, the result of that is a higher commission and a better store bonus if we achieve our results. So, kind of a backdoor way to look at that.

Our results so kind of a back backdoor way to look at that.

Speaker 4: I think the outcome of their commentation is the effectiveness of creating the experience that we talk about so often and frequently.

The outcome of their compensation is the effectiveness of creating the experience that we talk about so often and frequently.

Speaker 9: Okay. And then, you know, as you think about the next few years.

Got it Okay and then.

As you think about the next few years.

Speaker 9: at DXL. You know, you've talked about, again, kind of inflecting growth and really driving growth in the out...

At EXL.

You've talked about again kind of inflect and growth and really driving growth in the out years.

Speaker 9: How do you, how do you think about, you know, kind of rank ordering? What will drive that growth? Is it, is it, you know, kind of the increased customer lifetime value of, of existing folks, is it, is it the branding efforts to bring in new folks? Is it, is it the new stores? Yeah, that's a great question.

How do you how do you think about kind of rank ordering what will drive that growth does it is it kind of increased customer lifetime value of existing folks is it the branding efforts to bring a new folks as it is at the new stores, Yes, that's a great question.

It's a great question I can say there is no silver bullet I want to caution you there is not a silver bullet so what you're referring to there is a little bit embedded in each one of those elements, but obviously the way we have thought about it and prioritize that and we're trying to balance. It is we believe that our share of awareness in the marketplace is just some water.

Speaker 4: is we believe that our share of awareness in the marketplace is just sub water. We have done research, we have consumer insight, we did a brand study. We are in single digit awareness levels on an unaided basis and low double digit awareness levels on an aided basis.

We have done research we have consumer insight we did a brand study we are in a single digit awareness levels on an unaided basis, and low double digit where awareness levels on an 80 basis and in both cases, just by the name of other retailers that are not really specialist in this business that any shape manner or form and more general merchant.

Speaker 3: And in both cases, just by the name of other retailers that are not really specialists in this business at any shape, matter or form and more general merchants, their awareness levels perceived are higher, even though the reality is they may not be the same in terms of the assortment, breadth and depth we carry. So our job, number one, is share a voice.

Their awareness levels perceived are higher even though the reality is they may not be the same in terms of the assortment breadth and depth. We carry so our job number one is share of voice or job number two is awareness actual awareness and job number three is trial and when you successfully do all of those things you create new customer add.

Speaker 3: or job number two is awareness, actual awareness, and job number three is trial. And when you successfully do all of those things, you create new customer acquisition.

Speaker 3: I cannot tell you that it's prioritized literally as number one, but it is a very strong priority for us. The flip side is it's not necessarily number one exclusively, because, as you might imagine, if we did that, the cost of acquisition is always the highest versus the cost of reengaging your current customer. So, the reason we talk about trial.

<unk> I cannot tell you that is prioritized literally is number one but it is a very strong priority for us. The flipside is it's not necessarily number one exclusively because as you might imagine if we did that the cost of acquisition is always the highest versus the cost of Rio gauging. Your current customer. So the reason we talk about trial.

Speaker 4: and repeat and lifetime value is because we both appreciate that the core customer with us today.

And repeat and lifetime value is because we both appreciate that the core customer with us today generates more efficacy and our marketing returns by just reminding them of who we are and a reason to come in and the combination of both new and repeat hopefully creates the long term growth opportunity we have.

Speaker 4: generates more efficacy in our marketing returns by just reminding them of who we are and the reason to come in. And the combination of both new and repeat hopefully creates the long-term growth opportunity we have. When the day is done, you obviously have to appreciate and recognize that we have to exponentially grow our new customer file, but we have to do that in a, what I would say is a pragmatic and thoughtful way because the cost to do that is a challenge to the P&L, which is why we've talked about the fact that the P&L as a percentage of EBITDA margins will go down.

When the day is done obviously you have to appreciate and recognize that we have to exponentially grow our new customer file, but we have to do that in a what I would say is a pragmatic and thoughtful way because the cost to do that is a challenge to the P&L, which is why we've talked about the fact that the P&L as a percentage of EBITDA margins will go down for a period of time before that.

Speaker 4: for a period of time before they go back up.

Speaker 3: As we try to engage more customers, but we've even moderated that view, given the environment and the efficacy of our marketing return or traffic and the customer is just more challenged today than ever. And the expectation might be in 2024 that we're going to have a rougher year than we, I think any of us really hope for. Got it and.

Go back up.

As we try to engage more customers, but we've even moderated that view given the environment and the efficacy of our marketing return where traffic and the customer is just more challenged today than ever and the expectation might be in 2024 that were going to have a rougher year than I think any of us really hoped for.

Got it and on the awareness question.

Speaker 4: Is there a significantly better awareness where you have stores in market than where you don't have stores? Oh, for sure. There are absolutely awareness levels that are better by geography and even more so by the population centers of the world and within where we have really strong performance. So like we talked often about the Northeast and the Southeast, very strong market for us, higher awareness levels, Midwest is more challenging. And so yeah, the answer to your question is yes. Got it.

Is there a significant significantly better awareness, where you have stores in markets, where you don't have stores for sure.

There are absolutely awareness levels that are better by geography, and even more so by the population centers of the world and within where we had really strong performance. So like we've talked often about the northeast and the southeast.

Strong markets for us higher awareness levels Midwest is more challenging.

And so yes the answer to your question is yes.

Got it okay. Thanks Harvey.

Speaker 4: Thank you. Happy Thanksgiving to you as well. Operator, it looks like that's the end of the questions. If we can take 1 more pass. Is there any other questions? If not, we will wish everyone a happy and healthy Thanksgiving quality time with your family and look forward to coming back to you in early January with a holiday release.

Thank you happy Thanksgiving to you.

Well operator, it looks like Thats the end of the questions that we can take one more passed is there any other questions. If not we will wish everyone, a happy and healthy Thanksgiving quality time with your family and look forward to coming back to you in early January with.

Holiday release.

Speaker 1: This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.

This.

Today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.

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