Good day, and thank you for standing by. Welcome to the Destination XL Group, Inc.'s first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To remove yourself from the queue, please press star one 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 Mokas, Vice President of Financial Reporting, SEC. Please go ahead. Thank you, Norma, good morning, everyone. Thank you for joining us on Destination XL Group's first quarter fiscal 2023 earnings call. On our call today are our President and Chief Executive Officer, Harvey Kanter, 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 sales and earnings guidance 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. 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 Kanter. Harvey? Thank you, Shelley, Good morning, everyone. I'm grateful for the opportunity to speak with you today about our first quarter results and our thoughts on how our business is developing this year. We posted a comp sales increase for the first quarter of +0.6%. While our overall growth has slowed from our record-breaking double-digit comparable sales increases of the past two years, we remain encouraged by our ability to deliver our ninth consecutive quarter of comp sales growth. On our last earnings call in March, we talked about how our comp sales expectations for the full year was to be somewhere between flat to +5%. For the first half of the year, we expected to be closer to the lower end of that range. As most of you have already seen, first quarter sales results for most apparel retailers have been affected by broader macro challenges. The question we have been trying to answer is: What should we expect for the remainder of the year? I'll come back to that shortly, I do want to acknowledge how very proud I am of how Team DXL has managed the business during a period of harsh economic realities. The first quarter news cycle has been dominated by bank failures, rising interest rates, tighter credit standards, inflation, and fears of a recession, all of which are impacting consumer spending. Retailers are fighting for a share of an ever-tightening consumer wallet. While DXL is an exception on many levels, we are still impacted by the volatility, consumer psyche, and sentiments of the economic reality. We do believe that our first quarter results have outperformed the broader retail market on a relative basis. Because we serve a consumer with limited options and given our clear differentiated positioning, we believe we have continued to take market share, and therefore, we remain as optimistic as ever about our growth trajectory over time. For many retailers, the first quarter has been punctuated by double-digit comparable sales decreases. We've been fortunate to avoid that outcome and post another quarter with a comp sales increase, albeit a small increase. While the consumer climate in May is certainly more challenging than it was in February, we believe the reason we have been able to outperform many of our peers is that our differentiated positioning is structurally unique. Our brand is built on a positioning that leverages fit, assortment, and experience, and for a consumer that, at best, has limited options, and dare I say, perhaps only one truly immersive option, and that is DXL. While many of you have heard this before, the three elements I've referred to are what set DXL apart from our competition. At DXL, big and tall isn't just a rack in our store. It isn't just a page on our website. It's all we do. We believe that the total addressable men's big and tall market is more than $23 billion, while we currently hold a meaningful slice of the better and best market share, we have far greater opportunity. Going forward, we believe that over the next two to three years, we can grow top line and take market share profitably by driving unique, more personalized, and more relevant communication while maintaining our shift away from discounting. The result is driving gross margins in the upper forties and EBITDA in the low to mid double digits, in direct comparison to our historic margin in the lower forties and EBITDA in the low single digits. Our results over the last 2+ years have been solid, these results have been driven by DXL's strategic and transformational structural changes. This stands in direct contrast to results in apparel retail more broadly, which were driven in many ways because of government stimulus, low interest rates, and the like. We believe the strategic transformational changes we have made are increasing our share of wallet and attracting and retaining new customers who have not yet experienced the DXL difference. We consistently hear from big and tall consumers that fit and style are the most important factors in their purchase journey. We believe our proprietary fit and expertise is a strategic asset, along with a curated and mostly exclusive offer. We have dedicated teams focused solely on developing precise specifications to deliver a unique, ownable, and authentic fit, and an assortment that looks, feels, and moves great for the big and tall consumer. Assortment refers to our thoughtfully curated offering of designer collections and our own brands, including many exclusive brands and styles that can only be found at DXL. In fact, between our own brands and exclusive arrangements with national brands, over 80% of our assortment is exclusive to DXL. This delivers a product array and quality that stands in stark contrast to our competitors' offerings and is one of the biggest elements of the DXL difference. Lastly, is the signature experience. We call it The DXL Factor. Whether in store or online, DXL is a brand built solely with the big and tall man in mind, and we're engaging him in ways no one else can deliver. With DXL, he can satisfy all his wardrobe needs, feel valued, respected, and throughout his shopping experience, and emerge looking great and feeling even better, and all in one place. We exist to provide the big and tall man the freedom to choose his own style. We relentlessly strive to serve his fit and style needs. When we do this, we are a haven for him, with the largest assortment of brands and sizes, accompanied by unrivaled expertise that creates an experience like no other. A testament to this, and an objective metric that underlies the success we have in creating this experience, is our Net Promoter Score metric, which in stores is solidly in the mid-seventies. For those of you familiar with NPS scores, this is a retail industry-leading metric and one which we are appropriately proud. Our vision of becoming a haven for the big and tall man is crystal clear, and it is what we believe is why so many men have tried DXL for the first time over the last few years. Let me get right to the specifics and details for our first quarter performance. As I just mentioned, comp sales in the first quarter were up 0.6%. I am pleased that this is our 9th consecutive quarter of positive comp sales growth. Clearly, this is not where we want to be. The quarter started out very strong, with a comp sales growth rate of 9.1% in February. We fell back to -2.8% in March, and then finished out the quarter with a -1.9% in April. As I'm sure many of you are wondering, where is May's performance? Month to date, we are currently tracking to a low to mid single-digit comp sales decrease. In terms of the overall high-level KPIs, the comp sales slowdown in March and April was primarily traffic related, with conversion and average order values were roughly flat to last year. To provide a little more color around traffic, what I can share is we literally can see differing levels of performance tied to events and context happening in the world around the consumer. I referenced earlier the consumer psyche, and specifically how performance is tied to moments. For example, the SVB banking crisis was just such a moment, where in the days following, we saw business immediately change. Likewise, the looming debt ceiling discussion of late, where again, we can see and feel the consumer sentiment falling off. Correlation or causation, we really cannot say, but a clear indication that consumers are affected, and this just adds to the overall malaise of consumer sentiment and reduced spending, inclusive of apparel. Conversely, in our core company-owned channels, it is worth noting that we continue to see a nice lift in AOV from increased penetration in tailored clothing. We expect that lift will continue through the second quarter, but starting in fall, we will begin to anniversary that impact. Within our marketplace, we've seen sales growth from our Big & Tall Essentials program, but this comes at the cost of a lower price point and consequently, lower margins. The bottom line is we've experienced a discernible difference in the velocity of traffic to both the stores and the website for the first quarter. Regarding pricing and promotions, we continue to be very selective in how we utilize promotion, and we have not taken any meaningful price increases. While it can be very tempting to lean on promotions to attempt to drive sales in a weaker economy, we have resisted that temptation. The work we have done around the structural positioning in the brand with the consumer is a critically important structural element supporting our transformational strategy. We continue to prioritize the greater development and building of more personalized relationships with consumers over the next 2 to 3 years. Over the past 2 years, we have worked very hard to reposition our brand around the pillars of fit, assortment, and exclusivity, inclusive of the experience in stores. Price is important to our customers. Price is not how we differentiate. We've seen some small level of erosion in the gross margin relative to last year, which was driven by loyalty, shipping, and product costs. I'll talk more about our loyalty program in a minute, but there is a cost associated with the program that is impacting the margin. Let me now share some thoughts on Q1 performance in the context of our merchandise assortment. As a reminder, our current merchandise assortment is approximately 55% our own brands and 45% national brands. Our sales penetration for the first quarter was relatively consistent with that inventory position. Tailored clothing accounted for 21% of the Q1 business, compared to 18% in the first quarter of last year. This is an area where we have been improving our in-stock position as demand for event-driven shopping and continued return to office gains momentum. In sportswear, the top-selling brands in our assortment continue to see slightly higher selling velocity, including Polo Ralph Lauren, Nautica, and Reebok. In the spring 2023 season, Life is Good and Original Penguin Golf officially joined DXL's growing exclusive brand portfolio, further reinforcing us as the number one destination for desirable national designer brands in big and tall sizes. As I've already communicated in our prior quarterly call, we have two more iconic brands joining our portfolio of exclusive offerings in the fall. We aren't yet ready to reveal who those brands are, but they are household names that our customers are going to love. Next up, inventory. Inventory continues to be a key priority for us, and we are in a better stock position today as compared to the first quarter of 2022. We have a very strong orientation to try to turn faster, and we are making great progress here. Compared to 2022, our inventory levels are up 3%, but compared to 2019, our inventory levels are down 11%. We have been working to improve our inventory turnover for years, and I'm happy to report that our inventory turnover is up 25% to pre-pandemic levels. Our clearance inventory at the end of Q1 2023 is 7.8%, as compared to 6.9% at the end of Q1 in 2022, and we are very comfortable with clearance inventory levels in total, which are still less than our historic target of 10%. From a marketing perspective, throughout the quarter, we continued to employ an eye on the road and an eye on the horizon approach to ensure we deliver solid results while continuing to build momentum and a modern marketing organization for the future. As such, we have continued to make good progress after we rolled out our campaign of Wear What You Want, the brand positioning launched in early March. As a reminder, this new approach invites our customers to finally shop like everyone else by choosing the style of apparel that they want, that reflects who they are, and fits each of them uniquely, versus simply accepting whatever they can find that covers their body. We continue to believe we are uniquely positioned to deliver this through our brand pillars of industry-leading fit expertise, the broadest assortment of national and owned brands, the highest standards of construction and quality, the most style options, and an experience you cannot find anywhere else. I am happy to report that the work has been well received by our customers and our DXL associates alike. We have seen increased engagement in our social channels, increased revenue in our email program, and as a result, a more unified message to customers to wear what they want, our Wear What You Want campaign. We will continue to build on the success of the launch in the coming quarter with an integrated push around the key Father's Day period that includes all our owned and paid channels, as well as introducing new videos, which will be shown via streaming media, video that will target new customers. Additionally, we have to continue to engage customers with our DXL Rewards Club loyalty program since launching it in late October of last year. We are seeing particularly strong results among our gold and platinum tiers in both certificate redemptions and sales. In Q2, we have plans to further engage customers and drive acquisition with a focus on the value the program delivers every time you shop. Further, we plan to improve awareness, improve engagement, and customer experience with a more pronounced loyalty emphasis on our site to ensure our customers are taking advantage of this program. Building brand loyalty does not come without a cost, and our program features new ways to engage with the brand and leads to more loyalty certificates being issued. This is an extension of our marketing efforts that allows us to stay more connected to our best customers. In Q1, we continued our efforts to build a more robust, modern marketing organization. As we have previously discussed, we've continued to work to better position DXL for the future regarding more personalization at scale, building our analytic capabilities, and deepening customer engagement. In April, we launched our customer data platform, or CDP, as planned and on schedule. Over time, this new capability will further improve our customer targeting with a more sophisticated approach to segmentation through audience creation. Deeper customer insights and a path to even greater relevant personalization at scale. Throughout the coming quarter, we will be utilizing this tool across our marketing channels to better engage our customers based on shopping behavior, insights, and predictive modeling. In addition to launching the CDP, we also brought in a new email partner to help manage our remarketing program based on individual shopping behavior. These trigger emails have historically been a significant revenue driver, and we believe they become even greater part of our mix in the near term. The combination of better segmentation, audience identification with the CDP, and a more robust remarketing program should benefit us later in the year. We've also begun foundational improvements on our analytic capabilities. Moving to the near term to an improved, holistic, cloud-based architecture will enable a more robust data infrastructure that delivers complex analytics at significantly greater speed. This will enable a democratization of data across the organization, leading to a greater unlock of customer understanding, new ways to think about our business, and make better investment decisions behind marketing drivers. As I already mentioned, we saw store traffic begin to soften throughout the quarter. To combat this, we have leveraged data to better utilize our digital investment to drive both online and offline traffic and revenue. Additionally, we will be bolstering traffic by highlighting local store inventory to meet customer demand in any given trade area. We believe we have made significant progress in Q1, and while our work is not done, we have laid out where we are going in the coming months and the balance of the year to deliver sustained marketing improvement. I also want to touch on our real estate and store development objectives. Earlier this year, we talked about the opportunity to grow our store base. I'm pleased to report we are starting to see movement on this front. We have come to terms and executed our first lease agreement for a new store in Los Angeles. We are very close to our second new store, which will be in the New York market. We expect to sign at least one more lease for a third store that we expect to open by the end of 2023. We've also begun construction work on four of our Casual Male stores that are converting to DXL. There are six additional Casual Male stores that we expect to begin and complete conversion to our DXL store format by the end of the year. This would bring us to 13 new doors operating under the DXL brand nameplate by the end of 2023. Finally, we have begun work on remodeling one of our DXL stores in the Chicago market, and we are looking to begin work on remodeling at least four additional existing DXL stores before the end of 2023. Over the next 3-5 years, to provide you with an estimate of scale, we believe we could potentially open up to 50 net new DXL stores. We intend to continue to convert Casual Male XL locations, and we continue to evaluate the DXL remodels for incrementality and productivity. The bottom line is we see store development leading to more customers, and we are pursuing these three avenues and will adjust our tactics as we learn. It's an incredibly exciting time for us at DXL, and I'm honored and humbled to speak with you about these opportunities yet ahead of us. In summary, I am very proud of our team and what we have achieved this quarter. None of this would be possible without the hard work and dedication of all our people in the stores, in the distribution center, in the corporate office, and in the guest engagement center. I want to take a moment to just say thank you. I truly believe that all we have accomplished is because of who we are as a team. Thank you for all your hard work and your commitment in our pursuit of serving the big and tall consumer and making DXL the place where they can best satisfy the desire to Wear What You Want. Now, I'm going to turn it over to Peter for an update on the first quarter financials and how we are thinking about guidance for the remainder of the year. Peter? Thank you, Harvey. Good morning, everyone. Net sales for the first quarter were $125.4 million, as compared to $127.7 million in the first quarter of last year. On a comparable basis, adjusting for closed stores, sales grew by 0.6%. Our stores, which make up about 70% of our total business, were up by 1.5%, and our direct business, which makes up the other 30%, was down 1.6%. As Harvey noted, our sales growth slowed in March and April due to a slowdown in traffic, which we believe is consistent with the overall macro environment. Although our direct channel was down slightly overall, we continue to see sales growth in our mobile app and online marketplaces. The mobile app customer tends to be a more loyal customer who shops more frequently, so we are excited to see growth in this channel. Moving over to gross margin. Our gross margin rate, inclusive of occupancy costs, was 48.6%, as compared to 50% in the first quarter of last year. This 140 basis point decrease was a combination of 110 basis points in merchandise margin and 30 basis points in occupancy costs. Primarily due to the deleveraging of sales. The decline from last year's record high margin rate was generally in line with our expectations. We have maintained a non-promotional posture that emphasizes our superior quality, fit, and experience rather than discount prices, and our margin rate in the high forties remains significantly higher than our historical rate. However, on a year-over-year basis, merchandise margins decreased due to a combination of higher costs in three areas. First, we decided to absorb the cost increases on certain private label merchandise, especially those at an opening price point level, rather than passing these on to our customers through price increases. Second, we have seen an increase in costs related to the fulfillment of our direct-to-consumer orders. Third, the success of our new loyalty program means that there are more customers redeeming loyalty certificates for a discount on their purchase. These three factors were partially offset by lower inbound freight costs on receipts from overseas. Although these elements will all persist at varying levels through the rest of the year, we expect them to moderate to the point where gross margin rates for the year should be approximately 100 basis points lower than last year, as compared to the 140 basis points we saw in Q1. Most importantly, we feel very good about our inventory position, both in terms of total inventory balance at the end of the quarter and in relation to our turnover rates, as well as our clearance levels. Inventory management is especially critical in our business with the variety of styles and sizes that we offer. I won't repeat the numbers, which Harvey already covered, but we feel like our inventory position at the end of Q1 sets us up for future success, and we have adjusted our receipt plan to reflect our sales expectations. Moving on to selling, general, and administrative expenses, our SG&A as a percentage of sales increased to 38.5%, as compared to 36.5% in the prior year's first quarter. On a dollar basis, SG&A expense increased by $1.7 million, approximately split between customer-facing costs and corporate supporting costs. The increase was primarily due to payroll-related costs from new positions added in the past year to support our long-term growth initiatives, including new store development. Last year's annual merit adjustments and the healthcare costs also contributed to the increase. Our ad-to-sales ratio also increased slightly to 5.5% from 5.3% in Q1 of last year. For the year, we expect to spend about 5.7% of sales on advertising. As you might expect, we are being very judicious with expense management. We remain committed to investing in the people and technology necessary for future growth and success. With gross margin at 48.6% and SG&A expense at 38.5%, this brings our EBITDA in at 10.1% or $12.6 million for the first quarter. Although lower than last year's 13.5% or $17.3 million, we are pleased to be able to deliver another quarter of double-digit EBITDA performance in the current macroeconomic environment. I want to spend a moment on income taxes, since this is an area where our year-over-year results require adjustment to be comparable. Last year, we had virtually no tax expense in the first quarter because our taxable income was offset by our fully reserved net operating loss carryforwards. With the release of our valuation allowance in the second quarter of last year, we have now returned to a more normal tax rate of approximately 26%. We are still able to utilize our remaining net operating loss carryforwards to reduce our cash taxes, and as a result, we will pay very little in federal or state income cash tax in fiscal 2023. Moving on to liquidity, we feel very good about our cash position and the overall strength of our balance sheet. At the end of Q1, we had cash and short-term investments of $46 million, as compared to $7.5 million a year ago, with no outstanding debt in either period and availability of $93.8 million under our revolving credit facility. With the seasonality of inventory builds and payment of prior year incentive accruals, Q1 is typically a quarter with a net cash outflow. This quarter, our free cash flow, which we define as cash flow from operating activities, less capital expenditures, was a use of $5.9 million of cash. We are keeping most of our excess cash, or $29.2 million, in short-term U.S. government Treasury bills, which are earning interest at approximately 5%. In March, our board of directors authorized a $15 million stock repurchase program, and we expect to begin to execute purchases of our common stock on the open market in the second quarter of this year. We believe this is a prudent use of our cash and at our current stock price and allows us to put our free cash flow to work for our shareholders by reducing the number of shares outstanding. I'll close with an update on our financial outlook for fiscal 2023. Based on our results for the first quarter and considering the macroeconomic challenges and uncertainties regarding consumer spending seen throughout the retail industry, We are currently trending towards the lower end of our previously reported guidance for fiscal 2023. How we get there is through a low single-digit negative comp for Q2. We are optimistic that we can be flat in Q3 and back to a low single-digit positive comp in Q4. Accordingly, for the 53-week period, we are guiding to sales of approximately $550 million and an adjusted EBITDA margin of approximately 12.5%. Our outlook assumes that the sales trends we have seen in March, April, and May will continue to persist through the second quarter, but we are expecting to see small sequential improvement from consumer-driven marketing initiatives, which come online over the months ahead. We believe these efforts will drive a return to positive comps in the second half of the year. We remain focused on executing the strategies we have spoken about today. We are optimistic that this will allow us to outperform the broader apparel market. I would now like to turn it back over to Harvey for some closing thoughts. Harvey? Thanks, Peter. Before I move on to Q&A, I'd like to just briefly summarize what we believe are the most critically important elements for us, and hopefully you as investors, as you think about investment in DXL as part of your portfolios. We posted a comp sales increase for the first quarter of +0.6% and remain encouraged by our ability to drive another quarter of comp growth, and that growth is now over nine consecutive quarters. While DXL is unique on many levels, we are still impacted by volatility, consumer psyche, and sentiment of the economic reality. We believe that our first quarter results have outperformed the broader retail market on a relative basis, and because we conserve the consumer, we're bringing to market a clearly differentiated brand, driven by more personalized, more relevant communication, structurally built on a positioning that leverages fit, assortment, and experience. To that, we remain optimistic for our long-term ability to take market share. We believe that the strategic transformational changes we have made are increasing our share of wallet and attracting and retaining new customers who have not yet experienced The DXL Factor. From a sales and profit, from a marketing and strategic planning perspective, we continue to employ an eye on the road and eye on the horizon in our approach to driving outcomes this year, but also investing for the future. At an operating level, we continue to have a very strong operating process, structure, and discipline, and proven out as an example by our lean inventory, which at quarter end was 11% below pre-pandemic levels, and turnover, which was up 25% over pre-pandemic levels in 2019. We are maintaining our shift away from discounting, driving gross margins in the upper 40s% and EBITDA in the low-to-mid double digits%. We believe we are setting ourselves up to continue to navigate meaningful growth over the next 2-3 years and are prepared to weather this most recent round of volatility. We remain incredibly excited and enthusiastic about DXL's prospects in the year ahead, as a market leader, as an incredibly important brand, serving an incredibly underserved consumer. With that, operator, we will now take questions. Thank you. As a reminder, to ask a question, you'll need to press star 1 on your telephone. To withdraw your question, please press star 1 again. Please wait for your name to be announced. Please stand by while we compile the Q&A roster. 1 moment for our first question. Our first question comes from the line of Jeremy Hamblin with Craig-Hallum Capital Group. Your line is now open. Thanks, congrats on the strong results in a tough environment. So I wanted to just start by asking about your gross margin, and making sure that I understood in terms of the, you know, roughly 140 basis points or so year-over-year decline. You noted a couple of reasons for that, including the loyalty program costs, you know, higher shipping costs and some occupancy deleverage as well. Wanted to see if you could, you know, be a little bit or provide us more color in terms of the splits of how those components factored into the year-over-year decline and what you expect to have on that guidance for down 100 basis points on the year. Sure. I'll take that one, Jeremy. I think the biggest part of the decline in the merchandise margin, it really came in the IMU deterioration. You know, across the board, we saw it, but it was most impactful in wovens and knits. I think the other three pieces, the loyalty costs and the shipping costs, which are really what we saw on the direct-to-consumer side, those were more or less offset by the savings that we saw on the ocean freights and the container freight costs that we saw. The piece that I would point to the most is, again, it's the product cost. You know, keep in mind, we recognize that cost when we sell through the product. This is product that we would have taken receipts on, you know, It could have been a year ago, even as much as a year and a half ago, when cotton prices were higher and some of the other prices were a bit higher. But hopefully that gives you just a little more clarity on where some of the splits are coming from. Yeah, that's definitely helpful. In terms of your same store sales color and expectation for the year, I think you said Q2, you know, down low single digits, flattish for Q3, and then returning to positive low single digit in Q4. In terms of getting there, again, tough environment out there. You guys are clearly doing a lot better than most of the competition. What does it assume in terms of, you know, performance on a relative basis to where we are today? You know, does this kind of factor in, we know the traffic is, has been the big driver here. Your conversion remains strong, and as Harvey noted, average order value is still strong as well. What are you building into that? How are you factoring in, let's say, the new stores and, you know, some of these conversions, which I would assume would also have a positive benefit here in the second half of the year? Jeremy, it's Harvey. I'll address that from a customer-facing perspective, and then Peter might add a little value in terms of some of the underlying KPIs. We, as you know, have been very oriented around transformationally restructuring how we engage consumers. Whether it's the things we've already done, like the beginning of the loyalty program, which I'll remind you, is literally not going to anniversary itself until really the first of November. It was mid-October when we did that. We believe there's upside in elements such as that. We also believe that the new trigger email program is another example, as well as the CDP. I use the words more personalized, more relevant marketing communication. Ultimately, we have some small expectation we might be able to impact traffic by things like localized inventory advertising, where we can literally advertise based on searches and local inventory in stores, and then serve that up to consumers. On one level, pretty tactical, but important. On another level, at a higher, more strategic perspective, the concept of more personalized marketing and more relevant communication to consumers to ultimately accomplish what we want to engage consumers about why we are so different, is what's really driving the change. As more of those things come online, we're hopeful what we'll see is greater level of conversion, greater level of potential AOV, and not material change in traffic, although we're hopeful that there's some level of movement in that regard. Unfortunately, that's the kind of the element that is unknown, right? Where we are overall in a business climate. Are things gonna get worse? Are things gonna get better? We believe at some level, we'll be able to push water uphill by some of our own initiatives, and if they're just neutral to where we are today, we'll win. If they deteriorate, there's the, obviously, the potential fall short, and if they improve, there's actually the opportunity to be upside. It's a challenge, as one of our board members says, "Often, if we could predict the future, we probably wouldn't be doing what we're doing." I think if anyone could truly predict the future at this moment in time, it would be remarkable. Hopefully, I give you a little bit of perspective around the consumer-facing elements, which we think are meaningful. The one piece that I'll add to that is, you know, we did deliberately try to give you a little more direction on what we're expecting to see quarter by quarter. We typically don't do that. We typically just stick with a an assumption for the year, but we felt it was important to just show how we're thinking of the year. Relative to other performance, you know, as we said, it's we're talking low single digits, either negative or positive, which is where we've been trending for the last few months. You know, we're not looking for a Herculean change in the business, but we definitely are expecting that the second half of the year, for all of the reasons that Harvey just laid out, that we're trying to control from a micro level, plus we're hoping we get a little bit of tailwind from hopefully an improving macro environment. There are elements that we are focusing on deploying here within the company that we think are gonna help lead to a better second half. Yeah, that's great context, especially on top of last year's +11% comp. I wanted to also just get into your customer support costs. You know, inclusive of your D.C., your corporate overhead, you know, that's up, I think it was up 110 basis points year-over-year in Q1. You know, in terms of thinking about the environment we're in, and we've had enough retailers report now that, you know, there's been a softening across the board. In terms of thinking about the ability, if you felt it was necessary, that there was some additional slippage in the economy, that, you know, employment rates fell a little bit, do you feel, like, is there a little bit of wiggle room in terms of being able to, you know, pull a little bit out of that if you felt like you needed to? I wanted to just understand. I know that you're in a different phase for this company, that you're now entering in a phase with some unit growth, when you're generating these conversions that are going to be helpful overall. You know, what's your ability to potentially nip at that if you felt like you had to pull back a little on the structural cost side? Again, I'll take this one, it's a really good question, and we talk about this a lot. I think that we've been pretty transparent with what we're trying to achieve with the company in terms of growing our analytics capabilities, growing our store base. We've been upgrading our roster and bringing on great people that are gonna help really propel the business. You know, on the other side of the coin, you could say, all right, well, do we really wanna stop doing those things and, you know, maybe save another half a million or a million dollars of expense? I really don't think that we get the credit for making those kinds of difficult decisions. You know, we come out of this a year from now, and we just have to restart everything all over again. I think that it's important to just be clear that, you know, we do believe this is a moment in time with where the economy is, and we think that what we've done with the brand and the transformation and creating this haven for big and tall guys, that's going to, that's going to get us past this moment. You know, I don't think We're not looking at making drastic cuts, you know, because it's just going to leave us empty and not have those initiatives when we do come out of this. Yeah, Jeremy, I wanna underline what Peter said and make sure you heard the most important thing. We are trying to position ourselves for growth, it's in the public markets, it's a little challenging, to say the least, navigating quarter-to-quarter. Our board and management team is very oriented towards growth, and we believe that... I've said this before, we believe, why aren't we a billion-dollar company, let alone something greater than that? That's not guidance in any shape, manner, or form. I definitely want to express the fact that our actions and strategy is oriented towards growth over the next 2 to 3 years, the challenge is managing quarter-to-quarter. Got it. No message, heard loud and clear. All right, best wishes. Thanks for taking the questions, guys. Thanks so much. Have a great day. Thank you. One moment for our next question, please. Question comes from the line of Michael Baker with D.A. Davidson. Your line is now open. Good morning. Thanks, Scott. Hi, how are you? I wanted to ask you a couple questions, but one, let's start. I'm curious what you're seeing in some of the remodel efforts that you've done. I think you talked about doing one in Chicago. I think you already You're doing a remodel or did a remodel in Warwick, Rhode Island, I believe. What did you change there, and what are you seeing in terms of the sales lift versus cost? In terms of the remodels, we've remodeled two stores. One is in Warwick, Rhode Island, the other is in Troy, Michigan. The third store that we're doing, which is currently underway, is in the Chicago market. We do believe that we're gonna get four more underway in this year. I'm hoping we can get four finished this year, but I'm not sure we'll have them all finished by the end of January, but we're definitely gonna get four more started and see where they are. The thing I'll say about performance is that in both Warwick and in Troy, they have outperformed both their regional store peers and the chain in total. I think it's still early for us to make any real definitive conclusions because, again, it's only two stores, and that's why we wanna get five more open. We'll have a little bit broader of a sample to make some judgment on. In, in both cases, traffic's improved, our Net Promoter Score has improved in those stores, and our new-to-file's improved in those stores. You know, we're encouraged, but we still need to learn more. The only other thing I'll add, Mike, is the strategic intent of our remodel is to create a stronger relationship with consumers. The best example of that is literally, if you've been in our stores, which obviously I know you have, in most stores, the cash wrap, for lack of a better way to say it, where you check out, where the cash registers are, if you will, the POS terminals, are at the front of the store. We've actually dismantled that entire front of the store. It is now all window. It is open to the world. We have great lighting and great visibility into the store. What we've done is embed in the store, for lack of a better way to say it, two small kitchens. When I say kitchens, as most people recognize, that when they have a party at their house, everyone seems to all hang out in the kitchen around the island, and we have two islands embedded deeper in the stores. Those islands give the opportunity, with a POS terminal, a digital consumer interface, to show our universe offering, which is all of the things offered online, where color extensions and size extensions and style extensions exist, and the ability to be right near the fitting room so that we can interact with consumer in a more one-on-one relationship and actually create that relationship by sitting down. That center island has bar stools, it has a computer terminal, and we literally look to kind of share a cup of coffee and talk about the product. We present the product on that island. It's a much more engaging relationship. We're obviously looking to drive AOV. We're looking to drive UPTs and ultimately become stickier, so that they remember not just that they purchased something and made a transaction, but they worked with Bob and had an incredible experience and might even refer to Bob as their friend at DXL. It's a different way to think about it, but in the business that we do, with such an underserved consumer and such a fair relationship in most retail stores where they don't serve this consumer the way we do, we think the strategic intent of the remodel is really an important variable. It makes sense. I think they look great. Couple other questions. One, let me ask a short-term question and then a long-term question. In the short term, of all the factors you highlighted that have impacted comp sales, which I think are, you know, pretty well known, but what about tax refunds? Do you have any data to suggest that that impacts your customer? I know your customer is typically a little bit higher end, but any impact there, as that sort of now fades into the background, that whole tax refund issue? I'll take that one, Mike. I think, to some degree, yes, that's impacting us, but not nearly as much as what I've heard other retailers talking about, relative to that. I think one of the things that Harvey talked about in his prepared remarks was that all retailers are fighting for that ever-tightening share of the consumer's wallet, and that gets impacted by, you know, what's the cash coming in so that he can make his discretionary purchases. I don't think it's as pronounced for us as it is at other retailers, but I would say there's certainly some elements of that we saw in the first quarter results. Fair enough. A longer term question. You talked first of all, you said gross margins high forties. I think in the past you had said about 50%, subtle change, you know, what's? Did something change in your long term, even this year, long-term gross margin perspective? You talked about growing sales over the next couple of years. Can you frame what you think a proper top-line sales number should be over the next couple of years? The third part of that is, you said EBITDA low to mid-teens. Oh, sorry, low to mid-teens. I think that mid is, you know, higher than you've gotten certainly this year. What can drive you back to that mid-teen number? Thanks. Sure. On the EBITDA piece, the low to mid-teens, you know, we've said from day one, many years ago, we wanna have a sustained EBITDA margin in excess of 10%. We've clearly been well beyond that. I think, you know, as we've talked about with the investments that we're making in marketing and real estate and store development, that comes at the short-term expense of margin. I would expect that in these years where we're continuing to try to build out 50 stores and build out our analytics practice. I don't wanna get into specific numbers, but if we're saying low to mid double digits, that's 10%-15%. We're gonna continue to be floating in that space as we continue to build out. The whole purpose of that is to make the right investments now, so that we emerge a few years from now with a bigger, stronger store portfolio, digital practice, direct-to-consumer business, that it makes us a more powerful company. Yep, fair enough. What about gross margins a little bit lower? Oh, sorry. For gross margins, yeah, I mean, we said for this year, we're expecting them to be down about 100 basis points from last year. I think last year we were right at 50%. This year we're thinking we're gonna be around 49%. Right. Again, it's all 3 factors that I mentioned before. It's the lower IMU, it's the cost of loyalty. You know, that, those are the bigger pieces of it. That's what we're assuming this year. Well, yeah, I guess just to push on that, though. The, I think on your last call, correct me if I'm wrong, but the target was closer to 50%, so it's down a little bit. Of all those things that you outlined, I guess a lot of those, you know, you could've... What has changed? What is making it worse? Is it just, you know, less leverage on the occupancy if you're at the lower end of sales, or just trying to figure out what changed versus a few months ago on the gross margin? Yeah. I, I wouldn't point to any one thing. I would say all three of them have come in a little bit lower than what our initial expectations were. That and combined with, you know, lower leverage on lower of a sales base, you know, initially we were at a $550-$570 range, and now we're coming in at the low end of that. There's no one silver bullet that suddenly blew up in our face. It was all a lot of little things that altogether have just led us to, we think we're gonna be down about 100 basis points. Mike, I would stress that 100 basis points from the 50 is in direct comparison to, you know, let's just say 43 and change. It's not like we're in any shape, manner, or form suggesting we're going back to where we've historically. To Peter's point, there's a lot of variables that we're challenged to address, and there were high watermarks at 50. Yep, makes sense. Understood. Thank you. Thank you. As a reminder, ladies and gentlemen, that's star 1 1 to ask your question. One moment for our next question. Our next question comes from Rafi Savitz, he's a private investor. Your line is now open. Hey, Harvey. I guess you've been at the helm for four years or so. Can you maybe take a moment to reflect on, you know, what's gone according to plan and what hasn't met your expectations in your time there? Yeah, I think there's 3 things that I'm incredibly excited about. One, a recognition of our place in the market. Building a strategy to execute against that. We have a customer that historically has not been honored and respected in a way that most individuals that are, let's say, more of average builds, can shop anywhere they want with the clothes that fit them and styles they want. We have, I think, not evolved the assortment as much because I think the assortment was pretty powerful, but we've really evolved the way we engage and communicate and marketed the business. Whether it's the lack of promotion with the recognition that The DXL Factor is driven by the experience and a unique fit, that clothes really fit them in ways that they didn't recognize before, we have really done a good job. We're not where we end up ultimately want to be, we're continuing to work against that marketing element. That is a really important strategic element and shift from the way we've communicated and marketed the business before. If you have tracked literally the business prior to my arrival, we were very promotional, maybe almost 100% promotional in most of the things we did for the 2 or 3 years prior to my arrival. The second thing is really, I think, really engage and empower the team. We have an incredible group of people today that are doing really a yeoman's work. The fact of the matter is that in the accountability and ownership, we've spread that throughout the organization. Our stores group is incredibly passionate. They know what they're responsible for. They are bonused and incented against those elements. We've provided them a different level of tools and marketing, messaging, and execution that we haven't done before. Last but not least is obviously, I think, the investments we're making. I think we've made really important investments. One might say that we had technical debt. We've addressed so many of those elements with changes in the CRM system and the loyalty program, that the technical debt and the other investments with stores and marketing. You look at the shift in marketing, we were historically been a 4% in change marketing company. Today, we're closer to 6%. We've done what we needed to do, I think, to really engage and communicate in the ways I just referred to. I think when you and kind of sort of the way Peter talked about margin, there's no one silver bullet. I believe that it's the combination of multiple elements and a lot of heavy lifting. I might even go so far as to say a greater level of blocking and tackling to recognize execution is everything. We have a plan. We know what it is. We have objectives for every person in the company to execute against those. We empower them, the folks, and then we hold them accountable, and inclusive of myself. Hopefully that was some sense of what it is we've done. Yeah, that's helpful, Harvey. Maybe on that point, do you think about kind of the go-forward strategy here? What would you say the major risks are in that strategy, and how are you know, doing your best to mitigate those? I think that, you know, I would say the most major risk is really the economy. I think we believe we're in the fourth year of a non-normal year. You know, the unfortunate reality is, in my first seven months, we had a strategy. We executed against the way I just referred to it. We made small but, you know, a meaningful growth. We went from a negative comp to a positive comp. We went from single-digit growth online to double-digit growth online. The pandemic hit. Literally since basically February, March of 2020, no year, one year to the next, has looked the same. We're trying to navigate this, an incredible level of ambiguity. Mind you, we've gone from a $23 million EBITDA to a $75 million EBITDA. We've gone from $473 million of revenue to $500 and, let's say, 550, and we have measurably moved EBITDA from 10% to, you know, double digits, excuse me, single digits to 10% and north of that. It's just an incredibly challenging period of time for every retailer, and quite honestly, probably every business and humanity, to navigate the issues that we're all facing, no matter whether you're in business or not in business, just navigating the world today. Maybe my last question here. I guess in terms of kind of market share growth, either, you know, kind of where you're getting that growth today or where you think you'll get that growth in the future, I mean, is it primarily taking it from, let's say, department stores that aren't servicing these men as well as you are? Or is it, you know, or is the expectation that, you know, you think you're creating a much better experience, and ultimately, you know, these folks that aren't really shopping and aren't really buying that much will be buying, you know, they'll be spending more of their disposable income on clothing because of DXL? Yeah. Our belief is that there are a lot of players in this space that dabble in this. We've often referred to They have a fixture or some version of a number of web pages that represent product to serve the underserved consumer. In reality, we're the only ones, literally, that have the full service across stores and web, and we believe we'll take share from a lot of different places. You know, we asked the question, and I didn't flippantly say: Why aren't we a $1 billion? We asked the question: Why aren't we a $1 billion? Why aren't we something north of that? We have a meaningful market share, but I often say we're an 800 pound gorilla, but the reality is we're probably a 100 pound gorilla with a lot of 20 pound chimpanzees around us. We're just not as big as we should be, and there's incredible opportunity to grow, and I think we started that process. I really appreciate the question. Thanks, Harvey. Great one. You bet. Operator, I think we have time for one last question, and then we'll have to roll. Thank you. Our next question, one moment, please. Our next question comes from the line of Pete Johnson with Johnson Inc. Your line is now open. Yes, good morning. You have a fair amount of cash in the balance sheet, and I think you said that you didn't buy back any shares recently. Is part of the concern perhaps that the overhang from two of your biggest investors, AWM and Wynnefield Capital, have been selling shares recently, and you want to wait for that overhang to pass? I'll take that one. I guess the only comment I'll make on the buyback is, as I said, we plan to start executing that in Q2. When we started the quarter, I think our stock was up over $7 at the beginning of the year, as it's been slowly coming down, it's certainly a much more attractive price for us to acquire at. You know, it's really been the last four or five weeks, six, seven weeks, that it's come down much more meaningfully. We do fully intend to start executing on that very soon. Okay. Has either AWM or Wolf given you any sense of their sort of medium to long-term plans? Yeah, that's just something unfortunately, we wouldn't comment on. I thank you for the question, but we just won't make a comment on that. Okay, fair enough. You certainly have enough cash in your balance sheet to be able to put some aside for the buyback at this point, I would say. Indeed, that's why the board has supported that initiative, and we expect it will be more than likely in market. Excellent. Thank you. Operator, with that, we are a little over. We really appreciate everyone's support. I wish you all a wonderful Memorial Day, safe and sound. We look forward to talking to you in our next quarterly earnings call. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.