Destination XL Group, Inc.

Good day, everyone, and welcome to the Destination XL Group Inc. Second Quarter Fiscal 2025 Financial Results Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Ms. Shelly Mokas, Vice President of Financial Reporting and SEC Compliance at DXL. Please go ahead, Shelly.

Thank you, Operator, and good morning, everyone. Thank you for joining us on Destination XL Group's Second Quarter Fiscal 2025 Earnings Call. On our call today are our President and Chief Executive Officer, Harvey Cantor, and our Chief Financial Officer, Peter Stratton. During today's call, we will discuss some 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.dxl.com for an explanation and reconciliation of such measures. Today's discussion also contains certain forward-looking statements concerning the company's strategic priorities, potential impact of current tariffs, and other expectations for fiscal 2025. 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. Information regarding risks and uncertainties is 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 Cantor. Harvey?

Thank you, Shelley, and good morning, everyone. I appreciate all of you joining us today to hear about our business and given the timing being just prior to the upcoming long weekend. There's been a lot going on at DXL for the past few months, and I'm hoping to provide a comprehensive update to you today. As most of you have likely already seen in our earnings release, which was published earlier this morning, our financial results continue to be under pressure. Sales demand for apparel has been tepid all year, and we believe our big and tall sector customers continue to hold very tight to their wallets as we observed a negative comparable sale trend across the business in the second quarter. We began to see this trend over a year ago, and our average customer continues to gravitate towards lower-priced goods and select promotions, signaling a consumer who is carefully choosing where, and how he spends his money. The objective for us is to try to understand these shifts and maneuver our plans and tactics in response to changing consumer behavior. I am pleased to let you know that our results in July were better than June. And in August, we've seen an uptick in business with results month to date better than July. Our store traffic has begun to improve and our comp sales results for August are coming in month to date with a modest improvement from July's negative 7% and from Q2 in total, which was negative 9.2%. The macro environment continues to be dynamic right now and full of uncertainty. As such, it is a challenge for us to provide clarity around his behavior and hence what we expect to deliver. Despite the difficult sales environment we posted in the second quarter, I must say we remain optimistic for our business with a strong conviction for upside when the current down cycle begins to turn. We still have half a year to go in 2025, and preparations for 2026 are well underway. To kick things off today, let me get through a few specifics on the quarterly results. We'll start with comparable sales, which I just mentioned declined 9.2% for the second quarter. Stores outperformed direct with comparable store sales down 7.1%, while direct was down 14.4%. Collectively, we saw sequential improvement in comp sales throughout the quarter. In May, we saw the total comp sales decline 10.4%. In June, comp sales improved to a negative 9.6%, and in July, comp sales improved again to negative 7%. In stores, the primary reason for the comp sales decline remained traffic, while dollars per transaction continued to see downward pressure with slight improvements in conversion. In the direct business, we've had some challenges with the new e-commerce platform for our website, and we continue to work through these issues and conduct a thorough audit of our website UI UX and operating elements. This examination has helped us to identify further opportunities for performance enhancements across our tech stack. The technology and product leaders have started work on eight different work streams designed to further improve overall site speed, user experience, and conversion. I'm happy to report that we are seeing greater stability with the website and conversion rates are improving. Traffic continues to be challenging along with continued pressure on average order value within the digital side of the business. Our digital customer continues to be price sensitive, and we believe he is cross-shopping largely on item and price. Given this orientation around item and price, we've been making changes in our promotional strategy and cadence to address this sensitivity. One example would be for Memorial Day weekend, where we promoted Polo, but did not repeat the large assortment of designer brands from 2024. This decision contributed to one of the softer periods of the quarter, but we felt this was appropriate as we are leaning in more to our private brands. Conversely, we also offered 20% off as a promotional test at the end of June, which allowed customers to capitalize on the entire assortment, which resulted in one of the strongest periods of the quarter for both the web and app and gave us momentum heading into July. We're not only executing promotions, but we're also testing and using an A-B type framework to assess incrementality. to ensure there is a payout for the margin hit embedded in the promotion uptick we've begun to execute. I just touched on a couple of examples around promotions, but this is certainly an area worth further elaborating on. We've started to reframe our promotional strategy around a more disciplined, strategic framework that prioritizes relevance, competitiveness, and a stronger perception of value. Our customer has been telling us that we need to create greater levels of value and go forward as we approach and treat promotions like managed categories with a clear and deliberate intent around timing, product focus, and purpose to drive sales, engagement, and brand equity. Historically, promotions were often reactive, used primarily to clear aging or excess inventory, resulting in margin erosion and training customers to wait for markdowns. As I noted, We're using a level of process, structure, and discipline to drive promotional offers using sales per markdown dollar, unit velocity, and customer engagement metrics, which we believe will end in promotions which drive incremental sales and margin dollars, albeit at a reduced margin rate. With improved instrumentation, we are better positioned to maximize the return on every markdown dollar, better aligned with strategic imperatives, and precisely target specific customer cohorts. The level of promotion has increased, but merchandise margins are still above pre-pandemic averages. We feel like we have struck the right balance, still not as aggressive as many other apparel retailers, but with greater acknowledgement and actions in our promotional strategy, giving the consumer and ourselves a better business outcome. That said, our promotions will continue to evolve based on the consumer and our results. We are also responding to changes in customer behavior by taking a hard look at our assortment and addressing barriers to entry. All of our customers are expecting better value. For some, that manifests through lower price points and more promotions. For others, it is better service and access to all the great brands that he loves. The initial area that we are attacking is shifting our core assortment to provide a greater breadth and depth to our private brand assortment. In our private brands, we own the product. We own the design, and we can control better the margins that we can with our national brands, designer brands. We have been observing a migration from designer brands to private brands for over a year now, and this brings us to perhaps the most significant strategic shift that we have undertaken in quite some time. Over the course of the next two years, we will be strategically shifting our assortment to prioritize private brands. To support this focus, we are reducing investment in underperforming national brands, which will create a realignment to drive higher profitability and enable us to leverage strategic promotions to fuel customer acquisition and sales growth. Our private brand portfolio is designed to combine a balance between trend right fashion and core essentials, while offering the agility to respond to quickly emerging trends, capitalize on overperforming categories, and address underperforming businesses. Our intent is to grow private brand sales penetration from today's 56.5% to greater than 60% in 2026 and greater than 65% in 2027, depending on customer response and brand resonance. We are confident with the strength of our assortment, enhanced storytelling, and strategic marketing efforts. we can drive greater customer loyalty and position our private brands as a primary reason customers choose DXL. To support this initiative, we are reducing the space and investment allocated to national brands that have experienced declining customer demand and underwhelming sales performance. We will continue to rigorously evaluate our national brand portfolio, eliminating those that no longer resonate with our customer. To be clear, National brands will remain a key lever for customer acquisition, but we are strategically evaluating their performance to determine future eliminations. One great example of a brand driving greater customer acquisition opportunity has been the launch of Travis Matthew. We will continue to add national brands on a select basis when it addresses a gap in the assortment. But we're going to see more leverage on the private brand side as we review opportunities that create the same draw and loyalty once delivered by national designer brands. One example here is Ask Leisure, where we believe there are opportunities to bolster our assortment with new product lines. By intentionally shifting towards private brands, we gain greater control over design, inventory flow, and profitability. allowing us to margin opportunities to invest greater in strategic promotions that drive customer acquisition, create differentiation, and accelerate sales growth. Let me also touch on the competitive landscape in the big and tall space, which we believe is becoming increasingly competitive as other men's apparel retailers appear to be expanding their big and tall exposure and encroaching on our end of rack sizes. As the macro environment is also difficult for apparel retailers who trade in traditional sizing, more competitors are dipping the toe into the big and tall space. Expanding into extended sizes is an easy modification for traditional size retailers, with customers having more choices across different price points and different styles. We are seeing increased competition from mass and general retailers competing on price, while direct-to-consumer brands attract customers with fresh marketing and storytelling. Off-price and warehouse retailers are also in the mix, competing on convenience and value. The increase in competition is further fragmenting customer loyalty and possibly contributing to some of the decline we are seeing in our business. The question is what DXL is doing about it, and I'm happy to start detailing some of those tactics now. One of the areas that we've talked about before and we are scaling up now is our FitMap initiative. We have been engaging on a much deeper level with our guests, and we are making a bigger commitment to fit that. First, we are making a bigger commitment with training. We have recently promoted someone internally into a newly created position of Vice President of Digital Fit Technology and Business Development. This initiative is going to transform the customer experience, drive operational excellence, and position the company at the forefront of personalized retail. Our DXL associates can now access customer fit profiles, style preferences, and purchase history, enabling more confident recommendations and deeper customer engagement. Since the inception of this program over a year ago, we have recorded over 23,000 fit profile scans. Our fit map technology is currently deployed in 62 stores, with an additional 24 locations set to launch by the end of August, bringing the protected total to 86 operational sites ahead of the seasonal peak. We are seeing a greater acceleration in the number of scans now that we are dedicating resources to this full-time. We are getting much better reporting on engagement across our customer file, existing, new to file, and reactivated. We are carefully analyzing customer value, average order value, customer spend, and net promoter score. FitMap allows us to align innovation with customer centricity. DXL is building a smarter and more agile and more personalized retail experience that sets a new standard in the big and tall apparel industry. Next, I want to touch on a subject that is on everyone's minds, and is providing some color on tariffs and how we see tariffs impacting our business. First of all, like everyone else on this call, we've been closely monitoring this tariff situation and are evaluating our options to mitigate the situation. At the current time, we have estimated that if currently enacted tariffs remain in effect through year end, they could increase our imaginary cost by just under $4 million in fiscal year 2025. This estimate is net of substantial cost concessions from our private brand vendors. We've also planned to take retail price increases over the remainder of fiscal 2025 and into 2026 to offset some of the tariff risk. We are also aggressively pursuing cost saving measures across the supply chain. One such opportunity involves leveraging tariff exemptions for garments that contain a minimum of 20% American made materials. DXL has explored this option for its Supima dress shirt program, which currently includes a 19.12% American-made fiber. Efforts are underway to modify the fabric composition to meet the exemption threshold, although the feasibility of this approach remains under evaluation. Conversations with our national brands are ongoing, but upcoming cost and retail increases remain unclear at this time. This evolving and unpredictable tariff landscape poses significant challenges to operational efficiency and financial performance for both retailers and manufacturers. With sourcing already diversified across multiple regions, DXL is actively evaluating strategic production shifts in response to ongoing trade negotiations. In the next few months, we are going to be implementing strategic pricing adjustments across certain product lines. To that end, the Excel is conducting a comprehensive review of the pricing architecture for all private brands. The objective is to identify opportunities to adjust retail prices without adversely affecting product performance or customer demand. The pricing adjustments will manifest through both promotional lines, such as our 2-4 pricing program, and through the increase in certain ticket prices. We're expediting the reticketing process across all retail locations, our distribution center, and our vendor networks. This exercise is projected to take approximately eight weeks to execute and is designed to minimize the negative financial impact for the current fiscal year and strengthen the company's position for the year ahead. We believe the global tariff situation will result in MSRP increases for our national brands, and accelerate migration and customer demand to our private brand assortment. I do also want to share a few comments on some of the elements that we believe we have controlled well. And despite the challenging environment around us, we believe we are running a clean business and doing a respectable job at controlling those elements around us that are within our control. Our operating expenses are down year over year. We continue to rationalize our corporate overhead to mitigate our sales challenges. Headcount, corporate headcount, is down 15% since the pandemic. And our inventory balance at the end of Q2 was $78.9 million as compared to $78.6 million last year, or a modest increase of $300,000. And in comparison, our inventory was down 28.5% as compared to 2019. The increase in inventory was due to our acceleration of receipts to help mitigate the impact of tariffs. It is worth reiterating that our focus on controllable elements of the business, such as inventory, is a testament to our operating regimen. Despite the weak sales demand, our clearance penetration at 10.2% remains in line with our long-term target of 10% and is down slightly from 10.4% in the second quarter of 2024. When conditions open up and demand accelerates, we believe there's an opportunity to leverage our operating costs. Next, I want to give you a quick update on store development. Through the end of the second quarter, we have opened six new stores in different white space markets across the country. We expect to open two more stores in the third quarter this year, which will bring our total to 18 new stores opened in the past two years. Although there are some bright spots, collectively, our new stores are performing below our initial expectations. We attribute the soft results to the same issues plaguing the stores across the entire portfolio. Weak customer demand for apparel and competing macroeconomic priorities. That being said, two weeks ago was the first week that new stores collectively for the first time exceeded sales plan. We still believe in these stores and the timing is everything, as the saying goes. We have opened these stores during a downturn in the sector and we cannot argue the results have been tough. We believe there are other white space markets across the U.S. that are deserving of a DXL store, but we have deliberately put future store openings on hold as we prioritize strategic initiatives with a lower capital investment. Right now, we are maintaining an orientation towards generating free cash flow. Once our business stabilizes and we can reverse the native comp sales trends, we will revisit our store development plans. The next topic that I want to update you on is our distribution alliance and collaboration with Nordstrom, which has been a great opportunity to expose more customers to the DXL assortment. Nordstrom will still represent a small percentage of total sales, but we are motivated by what we believe is a new and meaningful opportunity to grow. Our top performing brands have been Vineyard Vines, Travis Matthew, and some of our private brands, including Harbor Bay, Oak Hill, and True Nations. DXL participated in Nordstrom's anniversary sale, which saw very strong demand. We've been collaborating with the Nordstrom team on DXL marketing initiatives, and we are bringing more big and tall exposure to their site. We are excited about this initiative and are already having discussions with Nordstrom's team about next year. And now, I'm going to ask Peter to run you through the second quarter financials before I come back for some closing thoughts. Peter?

Thank you, Harvey, and good morning, everyone. I'll start with some additional color around our second quarter financial performance. Net sales for the second quarter were 115.5 million as compared to 124.8 million in the second quarter of last year. The decrease in net sales was primarily due to a decrease in comparable sales of 9.2%, partially offset by an increase in non-comparable sales from new stores. As Harvey noted, Sales trends improved month over month with comparable sales down 10.4% in May, down 9.6% in June, and down 7% in July. Overall, the second quarter decline was consistent with the first quarter as customers continued to pull back on discretionary spending and shifted towards our value-driven private brands, which sell at lower average unit retails but generate higher margins. However, the sequential improvement, which has continued into August, gives us hope that we can continue to close the gap in comp declines in the second half as we work towards getting back to positive comps and sales growth. Our gross margin rate, inclusive of occupancy costs, was 45.2% as compared to 48.2% in the second quarter of last year. The 300 basis point decrease was primarily due to a 240 basis point increase and occupancy costs from the deleveraging on lower sales and increased rents from new stores and lease extensions. Merchandise margins decreased by only 60 basis points as compared to the second quarter of last year, primarily due to a higher markdown rate from promotional offers and marketing initiatives and increased freight from accelerating inventory receipts ahead of planned tariff increases. These negative factors were partially offset by a benefit from the shift in product mix from national brands to private brands. Paris had a minimal impact on our second quarter margins, approximately 20 basis points, but are expected to become more impactful in the second half of the year as the new higher rates take effect. Despite bringing in some receipts early, our total inventory levels are flat to last year, and we feel very good about our inventory positions. clearance levels remain at approximately 10%, which is in line with our target and with last year. Inventory management continues to be a critical strength, enabling us to navigate the current down sales cycle. Moving on to selling general and administrative expenses, our SGMA expense as a percentage of sales decreased to 41.2% as compared to 43% in the second quarter of 2024. On a dollar basis, SG&A expenses decreased $6.1 million, primarily due to lower marketing spend and lower performance incentive accruals, partially offset by an increase in employee health care benefits. Last year's Q2 results included $3.6 million of brand advertising spend, which we did not anniversary in Q2 of 2025. As a result, our ad to sales ratio for Q2 decreased to 6.1%, from 8.8%. For the full year, we still expect to spend approximately 5.9% of our sales on marketing costs. Our EBITDA for the quarter came in at 4.6 million as compared to 6.5 million for the second quarter of last year. The decrease in earnings was primarily driven by our lower sales partially offset by reductions in operating expenses. Next, I'll turn to cash flow and liquidity. We continue to feel very good about the overall strength of our balance sheet. We finished the quarter with cash in short term investments of $33.5 million as compared to $63.2 million a year ago with no outstanding debt in either period and availability of $70.1 million under our revolving credit facility. The decrease in cash from a year ago includes a share repurchase equivalent to $13.6 million and 14.6 million of capital spent on new store development over the past 12 months. For the six-month year to date, our free cash flow, which we define as cash flow from operating activities, less capital expenditures, was a use of 14.2 million of cash as compared to cash generation of 3.2 million last year. Most of that decrease was driven by our lower earnings and the timing of of payables associated with the acceleration of inventory receipts in the first half of the year. We continue to keep our excess cash invested in short-term U.S. government treasury bills to earn interest while preserving liquidity. I'd like to conclude this quarter's financial update by highlighting two recent big wins for DXL that will help to provide financial stability for the next several years. First, in June, we signed a seven-year lease extension of our corporate headquarters and distribution center in Canton, Massachusetts. This is the sole location from which we fulfill all of our direct consumer and store replenishment orders. Our old lease was set to expire at the end of this fiscal year and extending at this location made good financial sense and provides certainty for our base of operations going forward. Earlier this month, we signed a five-year extension of our credit facility with Citizens Bank. The new credit facility includes terms and rates that are substantially the same as our old facility, which we were very pleased to secure in the current lending environment. As before, our availability under the credit facility is primarily supported by our inventory and our availability calculation before and after this amendment was unchanged. Based on the lower inventory levels with which we have been able to operate over the past few years and based on our future projections, we reduced the size of the credit facility from $125 million to $100 million, which will save us money on unused line fees. Although we currently have no need to borrow under the credit facility, securing this extension for five more years provides available capital and financial security for the future. This extension also represents a strong endorsement from our bankers who are choosing to be an important part of the DXL story as we move forward. Now I'd like to just turn the call back over to Harvey for some closing comments.

Thanks, Peter. Before we take questions, and although likely the single most repetitive comment I make, I must once again thank the DXL team that I work with every day. Their hard work and dedication in the stores, in the distribution center, in the corporate office, and in the guest engagement center provide a level of optimism for the opportunity ahead. Their passion and commitment as a team has served our underserved customer well and is our reason for being, our purpose, and why we do what we do. It is because of the great team and culture that we've created that I want to get up every morning and keep moving on this journey. Thank you for all your hard work and commitment in our pursuit observing big and tall men, and making DXL the place where they can choose their style and wear what they want. And with that, operator, we will now take questions.

Thank you. If you'd like to ask a question, please press star 1-1. If your question has been answered and you'd like to remove yourself from the queue, please press star 1-1 again. Our first question comes from Jeremy Hamlin with Craig Hallam Capital Group. Your line is open.

Good morning, and thanks for taking the questions. I want to come back to the strategy of shifting to more private brands. And if you could just walk us through again, you know, where your mix is on private brands today and what you're expecting that to migrate to over the next couple of years. And then just a reminder of what the – the product margin differences between the national brand average product margin versus the private brands.

Jeremy, great question. It's Harvey Cantor. Why we're doing what we're doing and then try to back into really what you've asked for. We believe that given the product quality that we can create in our private brand scenario, and I'll remind you that we are in factories that specialize in big and tall products, that have unique and distinctly different characteristics than a traditional factory in terms of the lay down and the quality. So based on the quality, based on the ability to create a proprietary fit and bring it to market in the way that we have and continue to do, and then ultimately, even with tariffs, the belief and knowledge that the value we can create in our private brands is demonstrably greater than national brands, and obviously a national brand has a reason to be abandoned in that, but there are distinct differences. We believe that the customers' migration, which we are actually seeing now live take place, is something we want to lean into. We've already started that process. I'll remind you that It's hard to believe I've been here now in my seventh year, but way back when, our private brands were under 50%, 48%, 49%, something like that, with 52% quickly becoming the penetration of national sales. Today, we're at 56.5%. So we've already seen a meaningful migration over the past couple of years. And as consumers hunt for value and being more discerning about what they buy, they are looking for absolutely lower price points. And in some respects, not only looking to not lose quality, but in our case, it's a better quality. We believe it's an opportunity to really lean in. And ultimately, your last question or the last part of your question about margin is really apropos here, because while we would tell you that we're in the low 50s, typically on a national brand, on an IMU basis, We're probably in the upper 60s to mid-70s on an IMU basis for private brands. So we start out with a distinctly different IMU. We don't necessarily end up at the same place because we have the wherewithal to use our private brands promotionally in a strategic way that allows us to do that and still margin out above national brands. but not with that level of gap at the end, just at the beginning. And then obviously still a meaningful gap on merch margin and gross margin when we're done, but not as great as we initially started with IMU. So hopefully I've helped you appreciate some of the, I wouldn't even call them nuances, big strategic levers and the reason for our actions and belief that over the next couple of years, the opportunity is yet ahead to really bring that to market, not just on margin, but on quality and the consumer's response.

That's helpful. There was a little bit of feedback. I wanted to just confirm. So a couple years from now, I think what you said is today you're at like 56.5% private brand, and that total is going towards like maybe 65% over the next couple years?

The way we've articulated it is we expect that by fall,

be over 60, coming from really today over 56. And by 2027, in the year of 2027, we're expecting to be north of 65.

Okay, great. And it sounds like there's well over 1,000 basis point differential or benefit to margin.

Yeah, I think when all is said and done on a merchant margin basis, there is something in the realm of what you just talked about. The IMU is greater initially, but then to the point I talked about strategic promotion, yeah, you end up in a merchant margin more similar to what you just defined.

Got it. That's great. Okay, and then I wanted to, you know, come back to tariffs here for a second. Still obviously an important point. You know, I know it's a volatile and fluid situation, but if the impact that you're anticipating is about $4 million for fiscal 25, at this point you have kind of a range of what you think it might look like for 26, all else being equal. I mean, obviously I'm sure there's mitigating factors that you're looking at,

additional vendor negotiations etc but do you have kind of a range of what you think the jeremy i think i i would love to lean in and give you an answer to your question but i don't know if you'll appreciate this but the reality is our range in 2025 has already been from literally a million in change to something north of 5 million and we're now obviously telling you we're just under 4 million The degree to which the unfortunate reality of the execution of tariffs changes daily is something that doesn't give us great confidence that I can articulate the question you asked for 26. So rather than try to give you a range that I think is just kind of sort of almost irrelevant, I gave you just a range just now that literally real time has been between one and six and we're hovering south of four million at this moment. But, you know, no different than literally India just executed the Russian tariff increase because of the gas going into India. You know, these various kind of movements left and right almost daily make it almost impossible to articulate with a great deal of confidence real time, yet alone 12 months from now.

Fair point. Let me shift gears then and talk about capital plans. Obviously, you've got a couple more stores that you're opening this year. I know you're not planning to do that in 26, but wanted to see if you could provide an outline of where you think your CapEx budget might be For 26 or you know at the least maybe a kind of what you expect maintenance capex to be Sure, so let me take that one Jeremy You're right.

We're We're putting a pause on store development. So we have two more stores to open and actually I think we just opened We just opened one store. So there's one more still to go in September and then we'll be to 18 stores really since we started building these stores after the pandemic and we're putting a pause on that really to wait for the business to stabilize and keep our focus on free cash flow. With your question regarding maintenance capex, yes, every year there is always some level of infrastructure capex where we're making investments in our technology infrastructure, our distribution infrastructure and so forth. Typically, That's running, you know, it could be anywhere from $5 to $10, $12 million a year. I'm not going to give you a number yet for 26. We're still kind of working on those plans, and a lot of that will be dependent on how the second half of the year comes together. But that gives you some general sense of You know, yes, there's always some level of maintenance capex that we typically have, and it's usually up towards, I would say, the $10 million mark.

Great. Thanks so much for taking my questions. Appreciate it.

Thank you. As a reminder, to ask a question, please press star 1-1. And our next question comes from Bryce Butler with Rockbot. Your line is open.

Hi. Thanks, everyone, for allowing the questions. My question is in regard to retail, in-store retail media. With the projected spend of retail media set to be about $1 billion by 2028, and with more apparel brands leaning into retail media, I was curious to hear, does the company have a current strategy or future strategy when it comes to in-store media and retail media promotions through their in-store media.

Bryce, I think I need you to be a little clearer on what you're referring to as in-store media, so maybe I can answer the question better.

Sure. I'm talking ads or messaging that pushes through the audio or appears on the screens through digital signage that's promoting brands and opportunities within the store. So for any private brand or any public brand, pushing that messaging out to your consumer base within the store, giving them an opportunity to see promotions that may lead to purchases.

Yeah, we do have both in-store audio. It's mostly music, but there is in-store audio where we populate it with messages that are appropriate for our brand's positioning. Typically, it talks about things like fit and not so typically about brands. There are selective mentions of some of our most important brands like Polo Ralph Lauren, but there are select brands that we talk about occasionally. In addition to that, probably more relevant, and you may or may not know this, we do have digital TVs in nearly every store, and we create distinct content for those TVs in stores that play. And that shows both our customer in our clothes and some level of advertising around our brands. But what we don't do is we don't specifically promote via audio or the in-store media things like promotion once they're in the store. It's really about the experience that is most important to us. Our net promoter score, which I don't know how familiar you are with the brand, but the 80s in the net promoter stores are a rather remarkable number. And it's all based on the experience and typically our guests know our store manager and store team and our team knows our guests and so it's really about less about selling them stuff and understanding why they came in and can we help them and for lack of a better way to say it and it may it may seem odd but in some many cases they are friends they literally know each other and shop with us for a very long period of time and and they're less about a client and more about just hey i was in the market wanted to see what you had in today and they pop in so Again, less promotional, less direct marketing once they're in the store, but certainly a level of positioning that we think reinforces the relevance of DXL in terms of fit and sizes that we carry and some of the really more important national brands that the consumer finds relevant in addition to our private brands.

Great. Thank you for that answer. I appreciate it.

You bet. Operator, it looks like that is the extent of our questions. We will regroup in about 90 days at the end of the third quarter and hopefully look forward to everyone joining us then for our updated quarterly results. And with that, I'll wish everyone a safe holiday this holiday weekend. Stay cool. And thank you for your attendance today. Have a great, great fall.