Good day and welcome to the Fourth Quarter 2023 Destination XL Group Inc. Earnings Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. As a reminder, this call is being recorded. I would like to turn the call over to Shelly Mokas, Vice President of SEC and Finance Reporting. You may begin.

Thank you, Michelle, and good morning, everyone. Thank you for joining us on Destination XL Group’s fourth quarter and fiscal 2023 earnings call. On our call today are our President and Chief Executive Officer, Harvey Kanter; 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 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, long-range strategic plan, and other expectations for fiscal 2023. Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those assumptions mentioned today due to a variety of factors that affect the company. 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, Shelly, and good morning, everyone. I appreciate all of you taking the time to hear our update on the business. There are a few different topics that I will cover on the call today. First, I want to start with our Q4 and fiscal 2023 performance. After two years of unprecedented growth, delivering the strongest financial performance in the company's history, we certainly felt our customer pullback with their spending and the frequency of visits this year. The biggest challenge that we faced all year was traffic, but I am proud of the way we stayed true to our brand positioning and executed rigorously on those fundamentals that were within our control. In a minute, I'm going to get into more details regarding our fourth quarter and full-year performance and talk about where we are through the first six weeks of the first quarter and our near-term expectations for fiscal 2024. But before I do that, I want you to know that I am pleased with several areas in which we made significant progress this year. At the top of the list is further clarifying our vision, which culminated in the development of our long-range plan. We have been calling it the LRP, and I look forward to sharing with you today the opportunity we see in the long-range plan beginning to come to life in fiscal 2024. For well over a year now, I've talked to you on each quarterly earnings call about our orientation towards becoming a true growth company. We believe the men's big and tall business in the U.S. is approximately $23 billion a year. We also know this market is highly fragmented, where almost everyone who sells men's apparel dabbles to one degree or another in big and tall, while others skim off their customers who are already shopping to tap into whatever fragments of the market share they can find. For DXL, big and tall is all we do. In 2022, we did a lot of work on the total addressable market, or TAM as we referred to it, to outline the size of the opportunity, and for the past year, we have been planning how to attack it. The LRP that we are now executing is centered on the thesis that certain big and tall men do not shop with DXL because either they do not know who DXL is or even that an exclusively big and tall retailer exists. This presents an awareness opportunity. This is the opportunity for DXL as the only pure-play omni-channel big and tall retailer. They may know us, but they do not shop with us because there is no physical store in their vicinity or a store that is conveniently located near them, which represents the white space opportunity. Finally, they know us online but do not shop with us because we have not made the digital experience frictionless, which frustrates them; this is the digital opportunity. Our solution to capitalizing on all these opportunities resides in our ability to, one, overcome the lack of awareness, and two, improve accessibility to DXL and the DXL experience. By improving accessibility, I am referring to more stores, a better website, and collaborating with other retailers to bring the DXL experience to their customers. I would characterize 2023 as a year of great learning and preparation to take on this challenge. We have spent the past year developing and optimizing our plans to share with you today some of our specific initiatives and lay out what we intend to accomplish in 2024. I am hopeful you will have a better understanding of what we think is possible over the next three to five years. But before I can talk about the future, I must touch on the recent past and provide you with a little more color on our 2023 performance. Our customers bought fewer items and gravitated towards more opening price point products this year than they did over the past two years, and we saw deeper penetration into private brands. We experienced sales acceleration when we took in-season markdowns and clearance sales to expand on in-season markdowns. I'll remind you that we mentioned in November that seasonal categories such as sweaters, outerwear, and boots were off to a slow start, and that trend unfortunately continued throughout Q4. Inventory continues to be a focus for us in the regimen we have in managing the business and taking markdowns in season to manage risk; it's a proven way to minimize greater downstream liabilities. As I noted previously, inventory management continues to be a high watermark of our operating discipline. We strategically improved our inventory position on other fronts as well by optimizing receipt flow and reducing our inventory levels in our distribution center. We have made great progress rebalancing our receipt flow to align with sales demand, and compared to last year, our year-end inventory was down $12 million or 13%, while the inventory return has improved by over 30% from fiscal 2019 pre-pandemic. Last fall, we announced the launch of UNTUCKit, and I'm pleased to report that our customers love it. UNTUCKit has surpassed our expectations, emerging as one of DXL's most successful product launches ever. We have launched try-on capsules in 10 physical stores and are expanding that to 30 stores in spring, with a plan to grow that to 50 stores in fall. This has been a big win for DXL. Fit by DXL is critically important. We have mentioned previously that we continue to explore strategic collaborations with other brands that are widely recognized due to their industry-leading product offerings and marketing efforts, which complement our curated assortment. Our recent launch of Faherty and Boss, Hugo Boss's new line, are other examples of this, and both have been received well. Lastly, before I move on, I do want to share that we are in the final stages of an agreement with another retailer that will allow us to sell our product through a new distribution channel that is aligned with DXL’s leading retail consumer experience. There is not much more I can say at this point, but we are truly excited and optimistic. We will be able to elaborate more on alliances and collaborations later this spring. Now, regarding marketing, 2023 was a year of foundational improvements. There was work to be done below the surface to improve infrastructure, process, and capabilities. To position ourselves for accelerated growth, we first had to deliver a compelling and comprehensive brand framework. This began with reframing our brand positioning within the context of newly learned customer insight and allowed us to further drive into our differentiated and ownable brand pillars—the DXL factor, if you will. This all led to the articulation of 'Wear What You Want' and our brand ethos. This work provides the framework and cornerstone positioning for the upcoming brand campaign and ensuing greater investment in marketing in a long-range plan. We have now truly defined our unique, differentiated, and most importantly, relevant proposition for big and tall consumers. We expect and exist to provide the big and tall man with the freedom to choose his own style. Following an extensive review, we have selected a creative agency of record, Barrett Hofherr, and Media Agency, Mediassociates. Both agencies are world-class talents and will strategically and tactically help us further position DXL to deliver the growth we expect. The consumer insights we refer to have been driven by work we conducted in a brand awareness study with existing customers and big and tall consumers who do not shop with us. We feel that quantitative research deepens our customer understanding from purchase drivers to brand preference and value perception to awareness and competitive intelligence. This work validated our brand positioning while providing rich context and a better understanding of customer dynamics in the evolving customer environment. There was also considerable work done to improve our tech stack to deliver better investment and stronger performance in our email program, which was driven by shopping behavior and unique customer segmentation. We augmented our email program with new dynamic technology that allows us to personalize messages for specific customers based on segmentation. All of this will lead to significant and meaningful gains in both company results and our future opportunities. As we have previously discussed, improving our data and analytics capabilities continues to be a priority to deliver better investment decisions, provide customer intelligence, and enable more agile pivots in our marketing mix. We improved our omni-channel data infrastructure to better target specific customer segments and attribute sales to our marketing activity. We also enhanced our cloud data warehouse capabilities for use in marketing and see our applications and work progressing well with the migration to a new, more agile website platform. Finally, we are refining the mechanics of our loyalty program to improve its health while continuing to reward our best customers. We've evolved our messaging to address the consumer's changing macro environment and conditions. Our research showed that customers see our loyalty program as a key driver of value. Therefore, our messaging focused on the fact that certificates can be used on every purchase with no exclusions at any time our customer chooses. Given our brand positioning of not being promotional but offering exclusive loyalty events, the value embedded in our loyalty program is important and relates to customers spending more money, which then creates more loyalty certificates and the opportunity for additional downstream revenue as well. Despite all this progress I'm laying out for you, there is no escaping the fact that our fourth quarter results clearly missed our expectations, and our business continues to be challenged by a difficult macro environment. For the fourth quarter, comparable sales were down 10.1%, driven primarily by decreases in traffic. We were also coming off a consecutive year-over-year double-digit growth rate and record sales in 2021 and 2022. Given those results, specifically Q4, we were lapping a 10.8% prior year comp for the quarter and a 23.7% comp for January of 2023, making the year-over-year comparison challenging this past year. For the first six weeks of fiscal 2024, comp sales are roughly down 11%, but we are expecting modest improvements through the first six months of the year. We expect our marketing initiatives and our LRP, which I will discuss next, to start delivering small but incremental positive results in the second half of the year, which Peter is going to go through in our guidance for the year-end at the end of our call. I wanted to acknowledge our current trend before moving on to the next topic. As I said at the start of the call, I will share with you our longer view perspective. So here we go. We believe that DXL's growth trajectory can change, and to do that, we need to expose our brand to new consumers. As we head into fiscal 2024, there are four specific long-term growth initiatives that we are now starting to fund with resources and investment dollars. We are making specific investments in marketing, store expansion, the digital experience, and collaborations—all aimed at accelerating growth and acquiring greater market share. We have selected a creative agency of record to develop and execute our brand work. We have hired a real estate agency to lead our site selection and portfolio work. We've engaged with a best-in-class provider to develop our new e-commerce platform for our evolving digital online consumer experience. We have a bold and ambitious plan, and that plan will require us to make investments. We believe we can materially grow our top line while maintaining what we can consider a minimum acceptable level of profitability and free cash flow. Over the next five years, we expect to grow our top line significantly with scale and return to double-digit EBITDA margins. We are energized by the plans we have in place and believe they are necessary to unlock the potential that exists in the highly fragmented big and tall men's category and market. I will now spend a little more time taking you through each of these four areas in more detail. First is marketing and brand building. As I mentioned, we have selected a new creative agency and media agency to develop, build, and execute a campaign that will drive awareness and create an emotional connection to DXL. We are planning a multimedia matched market test and are targeting pre-Father's Day for the launch. We are prepared to conservatively invest in this initiative, with total marketing costs increasing to approximately 7% to 7.5% of sales, and with favorable results, we plan to fund our marketing and brand-building initiative at greater levels over time. Next is store development. While we have stores in every major metro market across the United States, there are geographic voids in certain markets where big and tall consumers are not served by a store. Our research indicates that 44% of big and tall men reported they do not shop with DXL because there is no store near them, while 35% self-reported they do not shop with us because a store location is not convenient. This past year, we opened three DXL stores, our first store openings since 2019. We plan to open eight stores in fiscal 2024 and 15 new stores in 2025 through 2027. We also converted 11 casual mail stores to DXL this year and expect to convert another five by the end of 2024. All new stores and conversion investments are subject to DXL's rigorous ROIC hurdles based on our prior history and experience. Third is our new website platform. We are upgrading our website platform from our legacy infrastructure to a new modern e-commerce platform with various features, headless architecture, and functionality launching throughout 2024. We believe this upgrade will provide immediate performance improvements and customer experience benefits by eliminating friction points, optimizing search capability, and enhancing speed and response times, which over time should grow conversion across multiple funnel elements. The new platform is engineered by commerce tools and will position us to respond faster and more effectively to ongoing required changes in the future. Finally, I want to talk about our ambition for alliances and collaborations. A few minutes ago, I mentioned that we are in the final stages of an agreement with another retailer that will allow us to sell our product through a new retail distribution channel aligned with DXL's leading retail consumer experience. While it is not yet final, we are working through the details, and I am very hopeful that we will be able to announce this alliance to better serve and engage the big and tall consumer across a much wider distribution network soon. DXL believes that a curated product assortment and a highly engaging consumer experience is an attractive asset for collaboration and greater alliances. We are in the early innings of collaborations, but we believe product collaborations and broader distribution relationships have incredible potential for the seasons ahead. I have shared our higher-level long-term view perspective and our belief that we can change DXL's growth trajectory, creating even greater inflection over time. Fiscal 2024 will be defined by the launch of our strategic growth initiatives. These initiatives are ambitious and necessary, requiring significant investments in our future. They will begin to come online in late spring and will act as a catalyst for sales growth for the balance of the year. We believe we can invest in these growth initiatives while maintaining an acceptable level of profitability and free cash flow, and over the next five years, we expect to grow our top line significantly and then return to double-digit EBITDA margins, unlocking the potential that exists in the big and tall men's market. Now with that, I'm going to turn the call over to Peter for a review of our financials. Peter.

Thank you, Harvey, and good morning, everyone. I'll start with some additional color around our fourth quarter and full year financial performance. As many of you saw in our press release that was filed this morning, sales for the fourth quarter came in at $137.1 million compared to $143.9 million in the fourth quarter of fiscal 2022. Our fiscal calendar included an extra 53rd week this year, which contributed $7.1 million of sales in the fourth quarter. After adjusting for this extra week and closed stores, our sales decreased by 10.1% on a comparable basis. This result was in the range of what we previously communicated in our holiday sales press release and reflects a further deceleration of the business in January. As Harvey noted, the decrease in comps was driven primarily by traffic, and January performance was up against a very strong prior year, which had a 23.7% sales increase. For the quarter, both our store channel and the direct business experienced similar trends, with stores down 9.4% and direct down 11.3%. Conversion rates and dollars per transaction held relatively flat, but we did observe a shift in consumer behavior towards our opening price point brands. For the full year, our comp sales decreased by 4.6%, but 2023 still marks the second-highest sales year in our company's history. Gross margins inclusive of occupancy costs for the fourth quarter were 47% compared to 47.7% a year ago. This decrease was primarily driven by the drop in sales, which caused our occupancy costs to deleverage by 90 basis points. We were pleased that our merchandise margins held up quite well and actually improved by 20 basis points over the prior year fourth quarter. Our merchandise margin improvement was primarily the result of decreased freight costs, which offset smaller increases in markdown rates and raw material costs. I'd like to emphasize two operational successes that allowed us to maintain our margins despite the traffic challenges. First, we resisted the temptation to prop up holiday sales by becoming hyper-promotional, even as many others around us employed those tactics to boost sales. Second, we remained laser-focused on disciplined inventory management, increasing markdowns on slower-moving seasonal products before they hit the clearance racks. For the full year, our gross margin rate was 48.4%, or a 150 basis point decrease from last year, which was slightly better than our 180 basis point estimate from November. For 2024, we expect our gross margins to experience some occupancy deleverage in the first half due to lower sales expectations, but we expect gross margin leverage to improve in the second half. For the full year, we expect a gross margin rate down approximately 30 to 40 basis points. Moving on to selling general and administrative expenses, our SG&A costs for the fourth quarter were 38.5% of sales compared to 37.8% of sales in the prior year, and for the full year, they were 37.7% of sales compared to 36.4% for fiscal 2022. On a dollar basis, SG&A decreased by $1.5 million for the quarter and $2.3 million for the year, with most of the decrease coming from marketing costs and performance-based incentive accruals, partially offset by new positions to support our growth initiatives and approximately $2.7 million of costs due to the 53rd week. Our results for the fourth quarter and fiscal year also reflect the termination of our frozen retirement plans, which we discussed earlier this year. This was a unique opportunity for us to capitalize on this year by taking advantage of higher interest rates in the current environment. The gap between our pension liability and our plan assets was relatively small, allowing us to eliminate this variable liability from our books at a low cash cost of approximately $2.5 million. We completed that process in the fourth quarter, and our results for the fourth quarter and full year include non-operating charges of $1.5 million and $5.7 million respectively to account for the previously unrealized loss from the retirement plans through the P&L. After adjusting for this one-time transaction, our adjusted EBITDA for the fourth quarter came in at $11.7 million, or 8.5% of sales, and for the full year, our adjusted EBITDA was $55.9 million or 10.7% of sales. Although this result is down from the prior two record-breaking years, we are proud of the fact that this was the third most profitable result in the company's history and demonstrated a strong operating discipline by the team. The significant EBITDA we have generated over the past three years, combined with improvements in working capital management, have helped DXL build up a significant balance of cash and short-term investments totaling $60 million at fiscal year-end. We produced $32.2 million of free cash flow in fiscal 2023, which included $49.6 million of operating cash flows, partially netted down by $17.4 million in capital expenditures. We returned much of this free cash flow back to shareholders in the form of a share repurchase program. Over the course of 2023, we bought back 5.4 million shares at a cost of $24.5 million. Our authorization was for up to $25 million, and we finished the remaining allotment in the first week of fiscal 2024. One question that I'm sure is on the minds of some of you is whether we intend to continue to buy back shares in 2024. At this time, we have chosen not to put another share repurchase plan in place for 2024, and the reason is twofold. First, we have discussed in detail our planned investments in the LRP. I'm going to go through our 2024 guidance in a minute, but we do expect to generate a modest amount of free cash flow this year. We are pleased to be in a strong liquidity position, but we will remain cautious, especially in the first half of the year, leading us to the second reason we are pausing share repurchase. Right now, the business is not performing at an acceptable level, and while we have expectations that our initiatives will take root and our business will improve in the second half of the year, we remain cautious over the first half. We will continue to revisit the share repurchase question periodically as we look for opportunities and the right timing to return capital to shareholders. With $60 million of cash and short-term investments, no debt, and a clean inventory position, we believe our balance sheet has never been stronger. As we embark on the LRP that Harvey spoke about, I have great confidence in our ability to financially support our investments and fund these initiatives to see them through to fruition. That leads me to the last topic that I would like to discuss today, which is our fiscal 2024 financial guidance. As we noted earlier, 2024 will be defined by the launch of the LRP and will include increased investments in marketing, stores, and e-commerce technology. We expect to increase marketing from 5.9% of sales in 2023 to a range of 7% to 7.5% of sales in 2024. We also expect to increase our capital expenditures from $17.4 million in 2023 to a range of $22 million to $25 million in 2024, with the increase primarily driven by stores and website development. However, it will take some time for these initiatives to build momentum to the point where they have a material impact on our sales results. In the meantime, we continue to face consumer headwinds arising from the past two years of elevated inflation, a shift in consumer spending from goods to services, and the uncertainty associated with an election year. We expect consumer discretionary spending to recover slowly over the course of 2024 and expect to see a small, modest return from our LRP initiatives starting in the second half of the year. Accordingly, we have set our sales guidance at $500 million to $530 million, which assumes a mid- to high-single digit decrease in comparable sales for the first half of the year, followed by improvement to a low to mid-single digit comparable sales increase for the second half of the year as our initiatives start to have limited impact. For the full year, this guidance corresponds to comparable sales in the range of negative 4.4% to positive 1.4%. From an earnings standpoint, we expect the midpoint of our sales range to result in net income of approximately $17 million and EBITDA of approximately $36 million. Our management team has dedicated a tremendous amount of time developing, sensitizing, and evaluating our LRP. Moving forward with this plan is not a light decision. There is no avoiding the fact that we are offering guidance this year that has a lower sales midpoint than we actually delivered in fiscal 2023. Nor can we ignore that we expect our adjusted EBITDA margins to compress by more than 300 basis points this year. We believe that a 7% adjusted EBITDA margin together with a credible growth strategy is an acceptable trade-off as we execute the LRP. We believe that the investments we are making today will generate enough scale to restore our double-digit EBITDA margin percentage on a significantly greater scale. I'm now going to turn it back over to Harvey for some closing thoughts.

Thanks, Peter. Given that consistency is defined by what is consistently done, I could not close without acknowledging that I remain incredibly inspired by the grit and perseverance of our entire DXL team. Through the challenges we've experienced, the volatility, and the ups and downs of our own success, we, and by we, I really mean they, work every day. What the team has achieved over the past four years is remarkable. From a company some thought would potentially not be around long to our most recent three years, every one of which could be characterized as one of the best in DXL's history. 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 of course in the guest engagement center. It is because of this talented team and the culture that we have created together that I want to get up every morning and keep moving on this journey. Thank you to DXL for all your hard work and commitment in our pursuit of serving big and tall men and making DXL the place where they can choose their own style and wear what they want. Now, operator, Peter, and I will be happy to take questions. Thanks.

Our first question comes from Raphi Savitz with RYS Advisors.

You had mentioned that traffic has been a challenge, but if you look at the total of 2023, are your active customers growing?

Raphi, our repeat rate is one of the greater challenges, and our new two-file is equally under some pressure. The absolute growth rate of our customer base has shrunk, reflecting the business itself. You can see the fourth quarter where that negative ten happened, so to directly answer your question, in Q4 we shrank overall for the year about held to our expectations.

And we're talking about a pretty significant investment program, both in terms of OpEx and CapEx. I guess what sort of operational metrics are you open to sharing along the way to show us that these investments are paying off?

The two things. First of all, I want to regroup and make sure it's crystal clear that the two investments we're making are driven by facts. They're not based on anecdotal perspective, they're not driven by opinion, and they are required, and we believe they are critically important to change the trajectory of our company. Let's be clear, the awareness level of our company unaided is under 10%, and the aided awareness level of DXL is under 30%. The fact that 44% of consumers say that they don't shop with us because there's no store near them or 35% saying there's no store conveniently near them—the facts require us to make the investments we're making, and we believe they will materially grow the business. Ultimately, the brand campaign, which is really the awareness campaign, will be judged by one single metric, which is the reversal of traffic decline. It requires us to see more people coming to our stores and more sessions on our website. From a store perspective, obviously it's some variance of that as well, but there are extensions beyond that. You'll have to drive traffic to our stores based on greater awareness and the accessibility of those store openings. We have sales plans for those stores, and they are driven by three key metrics: traffic, ultimately ticket—are they spending money in the stores because we have a great assortment—and it's keeping pace with our normal ticket. Lastly, conversion, which for us has been a high watermark and something we're quite excited about continuing to leverage based on the experience in the stores, the products we sell, and the price points we offer.

And will or maybe I should ask this a different way, is there openness to giving us additional disclosure on those various metrics going forward?

I think the biggest one that we'll continue to give guidance on, Raphi, is we'll certainly be talking about traffic every quarter. We will continue to discuss store openings. We've been pretty transparent in the size of the store. You can see what the store sales are and we can come up with expected sales for new openings. We'll continue to talk about how we're dealing with stores. We will continue to talk about brand awareness and will discuss customer growth to a certain level as well.

It may be helpful to think about providing context for the interplay among these metrics going forward and showing an example of a new store opening, how those sales developed, how the awareness changed and so forth.

I assume you have been on the site and seen the investor deck. We have provided a fair amount of detail in what a store opening looks like and store growth. Yes, to your question, we will provide updates each quarter on the success of our store openings and the timeline. The question you asked earlier is whether our customer base is growing, which our file will grow if we drive trial through greater awareness, which leads to traffic to our stores and our website. With conversion, our 12-month customer file will grow, addressing your initial question about our absolute customer growth. We intend for greater scale to reflect not just revenue but also an increased share of market which starts with share of eyeballs, share of voice, and ultimately leads to share of market, which is revenue-driven. The opportunity to make good on that has to happen.

The next question comes from Michael Baker with D.A. Davidson.

Keegan on from Mike right now. I just wanted to ask on profitability. You said it's going to go down to 7% this year. I was wondering, with the investment process, what is the plan for ramping it back up to double digits? Is this kind of a one-time investment year or is it a multi-year investment cycle?

I'll start and then Peter will follow up as needed. The most important thing you need to hear is, if you're going to develop a greater level of brand awareness, unaided or aided, it's not like a light switch. It takes time. Hopefully, you heard that our initial launch of the brand campaign is a matched multi-market test. We will launch in three markets, test it before investing at a greater level. We acknowledge we will conservatively invest, and with outcomes we are comfortable with, we will continue to increase our investments. This is not a one-and-done scenario. If building awareness were that easy, we would have no backbone if we didn’t work persistently until it succeeded. That's a fact. The truth is, not enough people know who DXL is.

Our next question comes from CJ Dipollino with Craig-Hallum Capital Group.

It's CJ on for Jeremy Hamblin. I wanted to touch on same-store sales a little bit. I know some of it's the math of passing easier comps in the second half of the year, but are there any additional drivers beyond the math and the LRP that can contribute to that?

For sure. It's not just comp mathematics. Year-over-year comparisons can work in our favor or against us, but they are not the sole factor in our growth. We intend to grow based on four key initiatives: overall marketing efforts, including our brand campaign pre-Father's Day and fourth-quarter efforts based on its success; evolving our brand positioning; and maintaining comprehensive consumer outreach. The brand campaign will leverage a multitude of platforms—linear and cable TV, video assets such as YouTube, shopping behavior-based emails, social media, and our core reason for being as a company that addresses a significant market need. Additionally, UNTUCKit is expanding from a test phase to more stores, further driving foot traffic. The launch of Faherty and Hugo Boss products also supports these growth efforts, as do our marketing improvements. These strategies combined with enhancements on our website should help us achieve our targets over the coming periods.

It looks like you guided adjusted EBITDA about $20 million below where you came in this year. I get that some of it is going to come from marketing investments and a little gross margin deleverage. Is there anything else that you could point to that fills in that gap?

The biggest piece you mentioned, which is the brand marketing campaign at up to 7.5% of sales this year—that's significant for us. Additionally, we expect SG&A increases due to the initiatives we are pursuing: technology investments, store development, site selection, and rising operational costs tied to inflation effects. Those factors contribute to the gentle decline we forecast. Operator, it does not look like there are any other calls. So without anyone else in the queue, I'd like to thank you for attending our conference call today. We greatly appreciate your ongoing interest in DXL and look forward to bringing in May our updated quarterly results.

Thank you for your participation. This does conclude the program, and you may now disconnect. Everyone, have a great day.