Accessibility StatementSkip Navigation PEMBROKE PINES, Fla., Oct. 1, 2025 /PRNewswire/ -- Destination XL Group, Inc. (Nasdaq: DXLG), the leading integrated-commerce retailer specializing in Big + Tall men's clothing and shoes, announces the grand opening of its latest store in Pembroke Pines, FL, located in Boulevard Square at 11010 Pines Blvd. This marks DXL's eighth new store opening of the fiscal year. After decades of designing, creating and offering high-quality clothes that truly fit Big + Tall men, ...

PART I. FINANCIAL INFORMATION This section presents the Company's unaudited consolidated financial statements, notes, and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Destination XL Group, Inc., including the Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, and Statements of Cash Flows for the periods ended August 2, 2025, and August 3, 2024 (or February 1, 2025, for balance sheet) [Consolidated Balance Sheets](index=2&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates | ASSETS (in thousands) | August 2, 2025 (Fiscal 2025) | February 1, 2025 (Fiscal 2024) | | :---------------------- | :--------------------------- | :----------------------------- | | Cash and cash equivalents | $14,015 | $11,901 | | Short-term investments | $19,529 | $36,516 | | Total current assets | $122,645 | $131,887 | | Total assets | $408,843 | $380,955 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | August 2, 2025 (Fiscal 2025) | February 1, 2025 (Fiscal 2024) | | :-------------------------------- | :--------------------------- | :----------------------------- | | Total current liabilities | $81,622 | $90,696 | | Total long-term liabilities | $186,293 | $149,036 | | Total stockholders' equity | $140,928 | $141,223 | | Total liabilities and stockholders' equity | $408,843 | $380,955 | [Consolidated Statements of Operations](index=3&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section details the Company's financial performance over specific periods, including sales, gross profit, operating income, and net income | (in thousands, except per share data) | For the Three Months Ended August 2, 2025 | For the Three Months Ended August 3, 2024 | For the Six Months Ended August 2, 2025 | For the Six Months Ended August 3, 2024 | | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Sales | $115,505 | $124,820 | $221,038 | $240,309 | | Gross profit | $52,183 | $60,171 | $99,765 | $115,853 | | Operating income (loss) | $703 | $3,124 | $(2,794) | $8,005 | | Net income (loss) | $(265) | $2,383 | $(2,204) | $6,176 | | Net income (loss) per share - diluted | $0.00 | $0.04 | $(0.04) | $0.10 | [Consolidated Statements of Changes in Stockholders' Equity](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS'%20EQUITY) This section outlines changes in the Company's equity over time, reflecting net income/loss and other equity transactions | (in thousands) | Balance at February 1, 2025 | Net loss (3 months) | Balance at May 3, 2025 | Net loss (3 months) | Balance at August 2, 2025 | | :------------- | :-------------------------- | :------------------ | :--------------------- | :------------------ | :------------------------ | | Total Stockholders' Equity | $141,223 | $(1,939) | $140,709 | $(265) | $140,928 | | (in thousands) | Balance at February 3, 2024 | Net income (3 months) | Balance at May 4, 2024 | Net income (3 months) | Balance at August 3, 2024 | | :------------- | :-------------------------- | :-------------------- | :--------------------- | :-------------------- | :------------------------ | | Total Stockholders' Equity | $148,953 | $3,793 | $153,550 | $2,383 | $156,954 | [Consolidated Statements of Cash Flows](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section presents the Company's cash inflows and outflows from operating, investing, and financing activities | (in thousands) | For the Six Months Ended August 2, 2025 | For the Six Months Ended August 3, 2024 | | :------------- | :-------------------------------------- | :-------------------------------------- | | Net cash provided by (used for) operating activities | $(2,114) | $15,972 | | Net cash provided by (used for) investing activities | $4,398 | $(21,908) |\n| Net cash used for financing activities | $(170) | $(179) | | Net increase (decrease) in cash and cash equivalents | $2,114 | $(6,115) |\n| Cash and cash equivalents, End of period | $14,015 | $21,475 | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited consolidated financial statements, covering the basis of presentation, significant accounting policies, revenue recognition, debt, leases, long-term incentive plans, stock-based compensation, equity and earnings per share, income taxes, fair value measurement, segment disclosures, and a subsequent event [Note 1. Basis of Presentation and Significant Accounting Policies](index=7&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This note describes the foundational principles and key accounting methods used in preparing the financial statements - The Company's financial statements are unaudited and include all necessary adjustments for fair presentation, but do not include all annual disclosures[17](index=17&type=chunk) - Management makes estimates and assumptions, and results of interim periods are not necessarily indicative of full-year results due to seasonality[18](index=18&type=chunk) - The Company has two operating segments (stores and direct business) but aggregates them into one reportable segment due to similar economic characteristics and an integrated commerce approach[20](index=20&type=chunk) - **Advertising expense**, included in SG&A, **decreased significantly**: **$7.0 million** (Q2 FY25) vs. **$11.0 million** (Q2 FY24) and **$13.5 million** (6M FY25) vs. **$18.3 million** (6M FY24)[32](index=32&type=chunk) - The Company adopted the lessee non-lease component separation practical expedient and does not apply ASC 842 to non-store leases with terms of 12 months or less[34](index=34&type=chunk) - As of August 2, 2025, there were no short-term leases[34](index=34&type=chunk) - The FASB issued ASU 2023-09 (Income Taxes) and ASU 2024-03/2025-01 (Expense Disaggregation Disclosures), which will be effective for the Company's annual disclosures for fiscal 2025 and fiscal 2027/2028, respectively[39](index=39&type=chunk)[40](index=40&type=chunk) - The Company is evaluating the impact of these new ASUs[39](index=39&type=chunk)[40](index=40&type=chunk) [Note 2. Revenue Recognition](index=11&type=section&id=Note%202.%20Revenue%20Recognition) This note details the Company's policies and methods for recognizing revenue from various sales channels - Revenue is recognized when control of promised goods is transferred to customers[42](index=42&type=chunk) - Sales tax is excluded from revenue[42](index=42&type=chunk) - Unredeemed gift cards, gift certificates, and credit vouchers are recognized as sales based on historical breakage patterns over two years[43](index=43&type=chunk) - The liability for unredeemed items **decreased from $3.3 million** (Feb 1, 2025) to **$2.2 million** (Aug 2, 2025)[43](index=43&type=chunk) - The Company's new loyalty program launched in fiscal 2025, with a loyalty accrual of **$0.5 million** at August 2, 2025, after the legacy program ended in fiscal 2024[45](index=45&type=chunk) | Sales Channel (in thousands) | For the Three Months Ended August 2, 2025 | For the Three Months Ended August 3, 2024 | For the Six Months Ended August 2, 2025 | For the Six Months Ended August 3, 2024 | | :--------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Store sales | $83,695 (72.5%) | $87,845 (70.4%) | $160,166 (72.5%) | $168,693 (70.2%) | | Direct sales | $31,810 (27.5%) | $36,975 (29.6%) | $60,872 (27.5%) | $71,616 (29.8%) | | Total sales | $115,505 | $124,820 | $221,038 | $240,309 | [Note 3. Debt](index=11&type=section&id=Note%203.%20Debt) This note provides information on the Company's debt arrangements, including its credit facility and outstanding borrowings - The Company has a Credit Facility with Citizens Bank, N.A. which was amended on August 13, 2025 (subsequent event) to extend maturity to August 13, 2030, and reduce the borrowing commitment from **$125.0 million to $100.0 million**[48](index=48&type=chunk)[89](index=89&type=chunk) - At August 2, 2025, the Company had **no outstanding borrowings** under the Credit Facility and unused availability was **$70.1 million**[53](index=53&type=chunk) - Outstanding standby letters of credit were **$4.2 million**[53](index=53&type=chunk) [Note 4. Leases](index=13&type=section&id=Note%204.%20Leases) This note outlines the Company's lease arrangements, including operating lease costs and right-of-use assets - The Company leases all store locations and its corporate headquarters/distribution center under operating leases[54](index=54&type=chunk) - Store leases typically have 5-10 year initial terms with renewal options[54](index=54&type=chunk) - In Q2 FY25, the corporate lease was extended from Feb 1, 2026, to Jan 31, 2033, with a **$4.7 million** improvement allowance from the landlord[55](index=55&type=chunk) | (in thousands) | For the three months ended August 2, 2025 | For the three months ended August 3, 2024 | For the six months ended August 2, 2025 | For the six months ended August 3, 2024 | | :------------- | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Operating lease cost | $13,277 | $12,222 | $26,258 | $23,699 | | Variable lease costs | $3,878 | $3,151 | $7,503 | $6,544 | | Total lease costs | $17,155 | $15,373 | $33,761 | $30,243 | | (dollars in thousands) | For the six months ended August 2, 2025 | For the six months ended August 3, 2024 | | :--------------------- | :-------------------------------------- | :-------------------------------------- | | Operating cash flows for operating leases | $27,747 | $25,750 | | Right-of-use assets obtained in exchange for operating lease liabilities | $53,413 | $43,087 | | Weighted average remaining lease term | 5.9 yrs. | 5.4 yrs. | | Weighted average discount rate | 6.50% | 6.38% | [Note 5. Long-Term Incentive Plans](index=14&type=section&id=Note%205.%20Long-Term%20Incentive%20Plans) This note describes the Company's long-term incentive programs for employees, including vesting schedules and compensation expense - The Company has three active Long-Term Incentive Plans (LTIPs) for 2023-2025, 2024-2026, and 2025-2027[65](index=65&type=chunk) - Each LTIP covers a three-year performance period, with **50% time-based** and **50% performance-based vesting**[66](index=66&type=chunk) - For the 2022-2024 LTIP, awards totaling **$2.4 million** were approved on March 19, 2025, for performance achievement, granted as 50% cash and 50% restricted stock units (RSUs)[64](index=64&type=chunk) - Estimated compensation expense for the 2023-2025, 2024-2026, and 2025-2027 LTIPs is approximately **$4.8 million, $4.9 million, and $4.9 million**, respectively, assuming target achievement[66](index=66&type=chunk) [Note 6. Stock-Based Compensation](index=16&type=section&id=Note%206.%20Stock-Based%20Compensation) This note details the Company's stock-based compensation plans, including share availability and expense recognition - The 2016 Incentive Compensation Plan is the active stock-based compensation plan[68](index=68&type=chunk) - As of August 2, 2025, **4,405,907 shares** remained available for grant under the plan[68](index=68&type=chunk) | Shares (in thousands) | Outstanding non-vested shares at beginning of year | Shares granted | Shares vested and/or issued | Shares forfeited | Outstanding non-vested shares at end of quarter | | :-------------------- | :------------------------------------------------- | :------------- | :-------------------------- | :--------------- | :---------------------------------------------- | | Total Number of Shares | 1,813.781 | 1,843.534 | (316.584) | (235.735) | 3,104.996 | | Stock Options (in thousands) | Number of Shares | Weighted Average Exercise Price Per Option | Remaining Contractual Term | Aggregate Intrinsic Value (000's) | | :--------------------------- | :--------------- | :--------------------------------------- | :------------------------- | :-------------------------------- | | Outstanding options at beginning of year | 2,971,460 | $0.65 | — | $6,207 | | Options exercised | (3,025) | $0.69 | — | $3 | | Outstanding options at end of quarter | 2,968,435 | $0.65 | 5.1 years | $1,921 | - Total stock-based compensation expense was **$0.7 million** for the first six months of fiscal 2025, down from **$1.8 million** in fiscal 2024[75](index=75&type=chunk) - Approximately **$2.5 million** in compensation cost remains unrecognized[75](index=75&type=chunk) [Note 7. Equity and Earnings per Share](index=18&type=section&id=Note%207.%20Equity%20and%20Earnings%20per%20Share) This note provides details on the Company's equity structure and the calculation of basic and diluted earnings per share | (in thousands) | For the three months ended August 2, 2025 | For the three months ended August 3, 2024 | For the six months ended August 2, 2025 | For the six months ended August 3, 2024 | | :------------- | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Basic weighted average common shares outstanding | 53,816 | 58,233 | 53,708 | 58,135 | | Diluted weighted average common shares outstanding | 53,816 | 61,117 | 53,708 | 61,035 | - Common stock equivalents of **2.2 million** (Q2 FY25) and **2.4 million** (6M FY25) were excluded from diluted EPS due to the net loss reported in each period, making them anti-dilutive[76](index=76&type=chunk) - **573,000 performance stock units** were excluded from EPS computation for both periods, as they are performance-based and not yet vested[79](index=79&type=chunk) [Note 8. Income Taxes](index=20&type=section&id=Note%208.%20Income%20Taxes) This note explains the Company's income tax provisions, including effective tax rates and the impact of new tax legislation - The effective tax rate for the first six months of fiscal 2025 was **4.6%**, significantly lower than **32.3%** for the same period in fiscal 2024[81](index=81&type=chunk) - This reflects an annual effective tax rate estimate of **6.9%** for FY25, net of discrete items and permanent book-to-tax differences[81](index=81&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, extending certain Tax Cuts and Jobs Act provisions and altering international tax regimes[82](index=82&type=chunk) - The Company is assessing its future impact[82](index=82&type=chunk) [Note 9. Fair Value Measurement](index=20&type=section&id=Note%209.%20Fair%20Value%20Measurement) This note describes the Company's fair value measurements for financial instruments, particularly short-term investments - The Company holds U.S. treasury bills classified as held-to-maturity and carried at amortized cost[83](index=83&type=chunk) | (in thousands) | Carrying value | Fair Value (Level 1) | | :------------- | :------------- | :------------------- | | At August 2, 2025 | $19,529 | $19,529 | | At February 1, 2025 | $36,516 | $36,560 | [Note 10. Segment Disclosures](index=20&type=section&id=Note%2010.%20Segment%20Disclosures) This note provides financial information about the Company's operating segments, aggregated into one reportable segment - The Company operates two segments: stores and direct business, which are aggregated into one reportable segment due to economic similarity (same merchandise, pricing, customer base, production, advertising, and distribution)[85](index=85&type=chunk)[87](index=87&type=chunk) - The Chief Operating Decision Maker (CODM) evaluates segment performance based on sales, merchandise margins, and 4-wall contribution (segment revenues less cost of goods sold, occupancy, and selling expenses)[86](index=86&type=chunk) | (in thousands) | For the three months ended August 2, 2025 | For the three months ended August 3, 2024 | For the six months ended August 2, 2025 | For the six months ended August 3, 2024 | | :------------- | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Sales | $115,505 | $124,820 | $221,038 | $240,309 | | 4-wall contribution | $31,427 | $39,671 | $58,797 | $76,004 | | Net income (loss) | $(265) | $2,383 | $(2,204) | $6,176 | [Note 11. Subsequent Event](index=22&type=section&id=Note%2011.%20Subsequent%20Event) This note discloses significant events that occurred after the balance sheet date, such as amendments to the credit facility - On August 13, 2025, the Company amended its Credit Facility, extending the maturity to August 13, 2030, and reducing revolving commitments from **$125.0 million to $100.0 million** to align with lower inventory levels[89](index=89&type=chunk) - The amendment also reduced the swing-line loan sublimit from **$15.0 million to $10.0 million** and revised the definition of a 'Cash Dominion Event'[89](index=89&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, highlighting the impact of macroeconomic factors, strategic priorities, and detailed financial performance for the second quarter and first six months of fiscal 2025 compared to fiscal 2024 [Forward-Looking Statements](index=23&type=section&id=Forward-Looking%20Statements) This section highlights statements about future expectations and risks that could cause actual results to differ materially - The report contains forward-looking statements regarding consumer spending, product strategy (higher quality, lower price, greater value), private brand expansion, promotional strategy, tariff impacts, FiTMAP technology expansion, marketing costs, capital expenditures, store openings, inventory management, and liquidity[90](index=90&type=chunk) - Numerous factors, including changes in consumer spending, tariffs, rising costs, interest rates, global conflicts, and execution of strategies, could cause actual results to differ materially[91](index=91&type=chunk) [Business Summary](index=23&type=section&id=Business%20Summary) This section provides an overview of Destination XL Group, Inc. as a specialty retailer of big and tall men's clothing - Destination XL Group, Inc. is the largest specialty retailer of big + tall men's clothing, operating **257 Destination XL stores, 16 DXL outlet stores, 4 Casual Male XL retail stores, 17 Casual Male XL outlet stores**, and a digital business[93](index=93&type=chunk) [Segment Reporting](index=25&type=section&id=Segment%20Reporting) This section explains the Company's operating segments and their aggregation into a single reportable segment - The Company has two operating segments (stores and direct business) which are aggregated into one reportable segment due to similar economic characteristics and an omni-channel business approach[95](index=95&type=chunk) [Comparable Sales](index=25&type=section&id=Comparable%20Sales) This section defines how comparable sales are calculated and what factors are included or excluded - Store sales originate and are fulfilled at the store level, while digital commerce (direct) sales originate online[96](index=96&type=chunk) - The calculation of comparable sales includes stores open for at least 13 months, including remodeled or relocated stores, but excludes expanded stores for the first 13 months and temporarily closed stores[97](index=97&type=chunk) [Recent Developments - Tariffs](index=25&type=section&id=Recent%20Developments%20-%20Tariffs) This section discusses the impact of new tariffs on the U.S. economy and the Company's retail sector operations - The U.S. economy faces disruptions affecting the retail sector, with new tariffs increasing uncertainty and impacting global sourcing strategies, supply chain, and cost management[98](index=98&type=chunk) [Executive Summary](index=25&type=section&id=Executive%20Summary) This section provides a high-level overview of the Company's financial performance and key strategic initiatives | (in millions, except percentage of sales and per share data) | For the three months ended August 2, 2025 | For the three months ended August 3, 2024 | For the six months ended August 2, 2025 | For the six months ended August 3, 2024 | | :--------------------------------------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Sales | $115.5 | $124.8 | $221.0 | $240.3 | | Net income (loss) | $(0.3) | $2.4 | $(2.2) | $6.2 | | Adjusted EBITDA (non-GAAP basis) | $4.6 | $6.5 | $4.7 | $14.7 | | Gross margin, as a percentage of sales | 45.2% | 48.2% | 45.1% | 48.2% | | SG&A expenses, as a percentage of sales | 41.2% | 43.0% | 43.0% | 42.1% | | Adjusted EBITDA margin (non-GAAP basis) | 4.0% | 5.2% | 2.1% | 6.1% | | Net income (loss) per diluted share | $0.00 | $0.04 | $(0.04) | $0.10 | - Second quarter results reflect a challenging macroeconomic environment, with comparable sales **down 9.2%** due to decreased traffic[99](index=99&type=chunk)[100](index=100&type=chunk) - Sales trends improved month-over-month (May **-10.4%**, June **-9.6%**, July **-7.0%**)[100](index=100&type=chunk) - Cash and investments were **$33.5 million** at August 2, 2025, down from **$63.2 million** at August 3, 2024, due to share repurchases (**$13.6 million**) and capital expenditures for new store development (**$14.6 million**)[101](index=101&type=chunk) - The Company has **no debt** and **$70.1 million** in unused excess availability[101](index=101&type=chunk) - The Company estimates a tariff impact of just under **$4.0 million** on inventory receipts for fiscal 2025, actively working to mitigate this through vendor relationships and limited pricing changes[102](index=102&type=chunk) [Strategic Priorities](index=26&type=section&id=Strategic%20Priorities) This section outlines the Company's key strategic initiatives to drive future growth and profitability [Promotional Strategy](index=26&type=section&id=Promotional%20Strategy) This section outlines the Company's approach to refining its promotional activities to drive sales and enhance brand value - The Company is refining its promotional strategy to prioritize relevance, competitiveness, and value perception, treating promotions as a managed category with clear intent to drive sales, engagement, and brand equity[103](index=103&type=chunk) [Assortment](index=26&type=section&id=Assortment) This section details the Company's strategy to shift its product mix towards private brands and reduce national brand investment - The Company plans to strategically shift its assortment to prioritize private brands, aiming to increase private brand sales penetration from **56.5% to over 60% in 2026** and **over 65% in 2027**, while reducing investment in underperforming national brands[104](index=104&type=chunk) [FiTMAP](index=26&type=section&id=FiTMAP) This section describes the expansion and capabilities of the Company's proprietary FiTMAP® Sizing Technology - The proprietary FiTMAP® Sizing Technology, with an exclusive license until 2030, captures 243 measurements for custom clothing and recommended sizes[105](index=105&type=chunk) - It was in **62 DXL retail locations** at Q2 FY25, expanded to **86 stores** in August, and plans to reach **200 stores** by the end of fiscal 2027[105](index=105&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the Company's financial performance across key operational metrics [Sales](index=27&type=section&id=Sales) This section analyzes the Company's sales performance, including total sales, store sales, and direct sales by channel | (in thousands) | For the Three Months Ended August 2, 2025 | For the Three Months Ended August 3, 2024 | For the Six Months Ended August 2, 2025 | For the Six Months Ended August 3, 2024 | | :------------- | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Store sales | $83,695 (72.5%) | $87,845 (70.4%) | $160,166 (72.5%) | $168,693 (70.2%) | | Direct sales | $31,810 (27.5%) | $36,975 (29.6%) | $60,872 (27.5%) | $71,616 (29.8%) | | Total sales | $115,505 | $124,820 | $221,038 | $240,309 | - Total sales decreased by **$9.3 million (7.4%)** in Q2 FY25 and **$19.3 million (8.0%)** in 6M FY25, primarily due to a **9.2% comparable sales decrease** in Q2 and **9.3% in 6M**, driven by decreased traffic and a shift to value-driven merchandise[106](index=106&type=chunk)[107](index=107&type=chunk)[110](index=110&type=chunk) - Direct business sales were challenged by decreases in online traffic and average order value, with some issues related to a new e-commerce platform[109](index=109&type=chunk) [Gross Margin Rate](index=27&type=section&id=Gross%20Margin%20Rate) This section examines changes in the Company's gross margin rate and the factors influencing it, such as occupancy costs and merchandise margins | Gross Margin Rate | For the Three Months Ended August 2, 2025 | For the Three Months Ended August 3, 2024 | For the Six Months Ended August 2, 2025 | For the Six Months Ended August 3, 2024 | | :---------------- | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Gross margin rate | 45.2% | 48.2% | 45.1% | 48.2% | - The gross margin rate decreased by **300 basis points** in Q2 FY25 and **310 basis points** in 6M FY25[111](index=111&type=chunk)[113](index=113&type=chunk) - This was primarily due to a **240-260 basis point increase** in occupancy costs (as a % of sales) from lower sales deleveraging and increased rents, and a **50-60 basis point decrease** in merchandise margin due to higher freight costs (from accelerated inventory receipts for tariffs) and promotional activity[112](index=112&type=chunk)[113](index=113&type=chunk) - The impact of tariffs on merchandise margins was estimated at approximately **10 basis points** as a percentage of sales through the first six months of fiscal 2025[114](index=114&type=chunk) [Selling, General and Administrative Expenses](index=29&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) This section details the Company's SG&A expenses, including changes in marketing costs and compensation | SG&A Expenses | For the Three Months Ended August 2, 2025 | For the Three Months Ended August 3, 2024 | For the Six Months Ended August 2, 2025 | For the Six Months Ended August 3, 2024 | | :------------ | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | | As % of sales | 41.2% | 43.0% | 43.0% | 42.1% | | Dollar basis (in millions) | Decreased by $6.1 | Decreased by $6.1 | Decreased by $6.1 | Decreased by $6.1 | - The dollar decrease in SG&A was due to lower marketing and incentive-based compensation, partially offset by increased healthcare benefit costs[116](index=116&type=chunk) - As a percentage of sales, SG&A increased for the six-month period due to lower sales[116](index=116&type=chunk) - Marketing costs were **6.1% of sales** for Q2 and 6M FY25, down from **8.8%** (Q2 FY24) and **7.6%** (6M FY24), with an expected **5.9% of sales** for full fiscal 2025[117](index=117&type=chunk) [Depreciation and Amortization](index=29&type=section&id=Depreciation%20and%20Amortization) This section explains the trends in depreciation and amortization expenses, linked to capital investments | (in millions) | For the Three Months Ended August 2, 2025 | For the Three Months Ended August 3, 2024 | For the Six Months Ended August 2, 2025 | For the Six Months Ended August 3, 2024 | | :------------ | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Depreciation and amortization | $3.9 | $3.4 | $7.5 | $6.7 | - The increase in depreciation and amortization is attributed to new store openings and investments in infrastructure and technology projects[119](index=119&type=chunk) [Interest Income, Net](index=29&type=section&id=Interest%20Income,%20Net) This section reports on the Company's net interest income, primarily influenced by investment balances | (in millions) | For the Three Months Ended August 2, 2025 | For the Three Months Ended August 3, 2024 | For the Six Months Ended August 2, 2025 | For the Six Months Ended August 3, 2024 | | :------------ | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Interest income, net | $0.2 | $0.6 | $0.5 | $1.1 | - The decrease in net interest income was primarily due to a lower average balance of investments[120](index=120&type=chunk) - Interest costs were minimal due to no outstanding debt[121](index=121&type=chunk) [Income Taxes](index=29&type=section&id=Income%20Taxes) This section discusses the Company's effective tax rate and the impact of tax legislation on its financial results | Effective Tax Rate | For the Six Months Ended August 2, 2025 | For the Six Months Ended August 3, 2024 | | :----------------- | :-------------------------------------- | :-------------------------------------- | | Effective tax rate | 4.6% | 32.3% | - The effective tax rate for the first six months of fiscal 2025 was **4.6%**, reflecting an annual effective tax rate estimate of **6.9%** adjusted for discrete items and permanent book-to-tax differences[123](index=123&type=chunk) [Net Income (Loss)](index=29&type=section&id=Net%20Income%20(Loss)) This section summarizes the Company's net income or loss and earnings per diluted share for the reporting periods | (in millions, except per diluted share) | For the Three Months Ended August 2, 2025 | For the Three Months Ended August 3, 2024 | For the Six Months Ended August 2, 2025 | For the Six Months Ended August 3, 2024 | | :-------------------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net income (loss) | $(0.3) | $2.4 | $(2.2) | $6.2 | | Net income (loss) per diluted share | $0.00 | $0.04 | $(0.04) | $0.10 | - The decrease in earnings for both periods was primarily driven by the decrease in sales[124](index=124&type=chunk) [Inventory](index=29&type=section&id=Inventory) This section provides an overview of the Company's inventory levels, clearance inventory, and turnover rate - As of August 2, 2025, inventory increased slightly by **$0.3 million** to **$78.9 million** compared to August 3, 2024, due to accelerated receipts to mitigate potential tariff impacts[125](index=125&type=chunk) - Clearance inventory was **10.2% of total inventory** at August 2, 2025, in line with the **10% benchmark**[125](index=125&type=chunk) - Inventory turnover rate has improved **over 30%** since fiscal 2019[126](index=126&type=chunk) [Seasonality](index=31&type=section&id=Seasonality) This section describes the seasonal nature of the Company's business and its impact on financial performance - The Company's business is seasonal, with a significant portion of operating income, net income, and free cash flow typically generated in the second and fourth quarters[127](index=127&type=chunk) - Inventory usually peaks by the end of the third quarter[127](index=127&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the Company's ability to meet its short-term and long-term financial obligations and fund operations - Primary liquidity sources include cash, short-term investments, cash from operations, and the credit facility[128](index=128&type=chunk) - The Company believes these sources are adequate for the next 12 months, despite macroeconomic uncertainties[129](index=129&type=chunk) | (in millions) | For the six months ended August 2, 2025 | For the six months ended August 3, 2024 | | :------------ | :-------------------------------------- | :-------------------------------------- | | Cash flow from operating activities (GAAP basis) | $(2.1) | $16.0 | | Free Cash Flow before capital expenditures for store development (non-GAAP basis) | $(7.6) | $8.4 | | Free Cash Flow (non-GAAP basis) | $(14.2) | $3.2 | - Cash flow from operations decreased to **$(2.1) million** for 6M FY25 (from **$16.0 million** in 6M FY24) due to lower earnings and timing of payables/working capital, partly from accelerated inventory receipts[130](index=130&type=chunk) - Cash flow from investing activities increased by **$26.3 million** to **$4.4 million** (from **$(21.9) million** in 6M FY24) due to maturity of short-term investments and decreased purchases[132](index=132&type=chunk) [Credit Facility](index=31&type=section&id=Credit%20Facility) This section details the Company's revolving credit facility, including its terms, availability, and recent amendments - The **$125.0 million** revolving credit facility was amended on August 13, 2025, extending maturity to August 13, 2030, and reducing commitments to **$100.0 million** to align with lower inventory levels[133](index=133&type=chunk) - At August 2, 2025, there were **no outstanding borrowings**, and unused excess availability was **$70.1 million**[135](index=135&type=chunk) - The average unused excess availability for 6M FY25 was **$71.8 million**[135](index=135&type=chunk) [Capital Expenditures](index=32&type=section&id=Capital%20Expenditures) This section outlines the Company's investments in new stores, store conversions, and infrastructure projects | Store Concept (square footage in thousands) | August 2, 2025 (Number of Stores) | August 2, 2025 (Square Footage) | August 3, 2024 (Number of Stores) | August 3, 2024 (Square Footage) | | :---------------------------------------- | :-------------------------------- | :------------------------------ | :-------------------------------- | :------------------------------ | | DXL Retail | 257 | 1,847 | 233 | 1,729 | | DXL Outlets | 16 | 82 | 15 | 76 | | Casual Male XL Retail | 4 | 12 | 17 | 55 | | Casual Male Outlets | 17 | 50 | 19 | 57 | | Total Stores | 294 | 1,991 | 284 | 1,917 | - During 6M FY25, the Company opened **six new DXL stores** and converted **four Casual Male XL stores** to DXL formats[136](index=136&type=chunk) - Two additional DXL stores are expected to open in FY25, with capital expenditures projected at **$17.0-$19.0 million** (net of tenant incentives)[136](index=136&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms no material changes to the Company's key accounting policies and estimates - There have been no material changes to the critical accounting policies and estimates previously disclosed in the Fiscal 2024 Annual Report[137](index=137&type=chunk) [Non-GAAP Financial Measures](index=32&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the Company's use of non-GAAP financial measures to provide additional insights into performance - The Company uses non-GAAP measures like Free Cash Flow, Free Cash Flow before capital expenditures for store development, Adjusted EBITDA, and Adjusted EBITDA Margin to provide additional insights into performance and liquidity, as they are not presented in accordance with GAAP[138](index=138&type=chunk)[139](index=139&type=chunk) | (in millions) | For the six months ended August 2, 2025 | For the six months ended August 3, 2024 | | :------------ | :-------------------------------------- | :-------------------------------------- | | Cash flow from operating activities (GAAP basis) | $(2.1) | $16.0 | | Capital expenditures, excluding store development | $(5.5) | $(7.6) | | Free Cash Flow before capital expenditures for store development (non-GAAP basis) | $(7.6) | $8.4 | | Capital expenditures for store development | $(6.6) | $(5.2) | | Free Cash Flow (non-GAAP basis) | $(14.2) | $3.2 | | (in millions) | For the three months ended August 2, 2025 | For the three months ended August 3, 2024 | For the six months ended August 2, 2025 | For the six months ended August 3, 2024 | | :------------ | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net income (loss) (GAAP basis) | $(0.3) | $2.4 | $(2.2) | $6.2 | | Adjusted EBITDA (non-GAAP basis) | $4.6 | $6.5 | $4.7 | $14.7 | | Sales | $115.5 | $124.8 | $221.0 | $240.3 | | Adjusted EBITDA margin (non-GAAP basis), as a percentage of sales | 4.0% | 5.2% | 2.1% | 6.1% | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there have been no material changes to the Company's interest rate market risk disclosures since the Fiscal 2024 Annual Report - The Company's financial position is subject to market risk, particularly interest rate movements on borrowings[142](index=142&type=chunk) - No material changes to interest rate disclosures were reported since the Fiscal 2024 Annual Report[143](index=143&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=34&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on the effectiveness of the Company's disclosure controls and procedures - As of August 2, 2025, management, under the supervision of the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective[144](index=144&type=chunk) [Changes in Internal Control over Financial Reporting](index=34&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section confirms whether any material changes occurred in internal control over financial reporting - No material changes in internal control over financial reporting occurred during the three months ended August 2, 2025[145](index=145&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses legal proceedings and claims against the Company - The Company is subject to various legal proceedings and claims in the ordinary course of business, but believes their resolution will not materially adversely impact future results or financial position[146](index=146&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the Company's previously disclosed risk factors - There have been no material changes to the risk factors previously disclosed in Part I, Item 1A of the Fiscal 2024 Annual Report[147](index=147&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on any unregistered sales of equity securities and the application of their proceeds - There were no unregistered sales of equity securities or use of proceeds to report[148](index=148&type=chunk) [Item 3. Defaults Upon Senior Securities](index=35&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports on any defaults related to the Company's senior securities - There were no defaults upon senior securities to report[149](index=149&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section clarifies the applicability of mine safety disclosures to the Company's operations - Mine safety disclosures are not applicable to the Company[150](index=150&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) This section provides additional information not covered in other parts of the report - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended August 2, 2025[151](index=151&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q - Exhibits include an Amendment to Lease Agreement (June 20, 2025), Second Amendment to Credit Agreement (August 13, 2025), CEO and CFO certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350), and Inline XBRL documents[154](index=154&type=chunk) [Signatures](index=37&type=section&id=Signatures) This section contains the official signatures required for the filing of the report - The report was signed on August 27, 2025, by John F. Cooney, Senior Vice President, Chief Accounting Officer and Corporate Controller[158](index=158&type=chunk)

Financial Data and Key Metrics Changes - Net sales for Q2 were $115.5 million, down from $124.8 million in the same quarter last year, primarily due to a 9.2% decline in comparable sales [30][31] - Gross margin rate decreased to 45.2% from 48.2% year-over-year, with a 300 basis point decrease attributed to higher occupancy costs and increased markdowns [31] - EBITDA for the quarter was $4.6 million, down from $6.5 million in Q2 of the previous year, driven by lower sales [34] Business Line Data and Key Metrics Changes - Comparable store sales declined 7.1%, while direct sales were down 14.4%, indicating that stores outperformed direct sales [6][7] - Sequential improvement in comparable sales was noted, with declines of 10.4% in May, 9.6% in June, and 7% in July [7][30] Market Data and Key Metrics Changes - The apparel market remains under pressure, with consumers gravitating towards lower-priced goods and promotions, leading to a negative sales trend [4][5] - Store traffic has begun to improve, with August showing a modest improvement in comparable sales compared to July [5] Company Strategy and Development Direction - The company is shifting its focus towards private brands, aiming to increase private brand sales penetration from 56.5% today to over 60% by 2026 and over 65% by 2027 [14][49] - A strategic realignment is underway to reduce investment in underperforming national brands to drive higher profitability [13][14] - The company is also enhancing its promotional strategy to create greater value for customers while maintaining merchandise margins above pre-pandemic levels [11][12] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about future business prospects despite current challenges, with preparations for 2026 already in progress [6] - The macro environment is described as dynamic and uncertain, impacting consumer behavior and spending [5][6] - The company is actively monitoring tariff impacts, estimating a potential increase in inventory costs of nearly $4 million for fiscal 2025 due to tariffs [20][21] Other Important Information - The company opened six new stores in the past quarter, with plans to open two more, although new store performance has been below expectations [26][27] - Cash and short-term investments at the end of the quarter were $33.5 million, down from $63.2 million a year ago, with no outstanding debt [34][35] - The company signed a seven-year lease extension for its corporate headquarters and distribution center, providing operational stability [36][37] Q&A Session Summary Question: Strategy of shifting to more private brands - The company is currently at 56.5% private brand penetration and expects to exceed 60% by fall of next year and 65% by 2027, with private brands offering higher margins compared to national brands [45][49] Question: Impact of tariffs on future costs - The estimated impact of tariffs for fiscal 2025 is around $4 million, but the company cannot provide a reliable range for 2026 due to the volatile nature of tariff implementations [53] Question: Capital expenditure plans for 2026 - The company is pausing new store development and anticipates maintenance CapEx to be in the range of $5 million to $12 million annually, depending on business stabilization [56][57] Question: In-store media strategy - The company utilizes in-store audio and digital signage to enhance customer experience rather than direct promotions, focusing on fit and brand relevance [61][62]

Financial Data and Key Metrics Changes - Net sales for Q2 2025 were $115.5 million, down from $124.8 million in Q2 2024, primarily due to a 9.2% decline in comparable sales [32][34] - Gross margin rate decreased to 45.2% from 48.2% year-over-year, with a 300 basis point decrease attributed to higher occupancy costs and increased markdowns [34] - EBITDA for the quarter was $4.6 million, down from $6.5 million in the same quarter last year, driven by lower sales [37] Business Line Data and Key Metrics Changes - Comparable store sales declined 7.1%, while direct sales were down 14.4% [6][7] - Sequential improvement in comparable sales was noted, with declines of 10.4% in May, 9.6% in June, and 7% in July [6][34] - Clearance penetration remained at 10.2%, consistent with long-term targets [27] Market Data and Key Metrics Changes - The macro environment remains dynamic and uncertain, impacting consumer spending behavior [5][6] - The company observed a shift towards lower-priced goods and selective promotions among consumers [5] Company Strategy and Development Direction - The company is shifting its assortment strategy to prioritize private brands, aiming to increase private brand sales penetration from 56.5% today to over 60% in 2026 and over 65% in 2027 [15][51] - A focus on enhancing the private brand portfolio is intended to improve margins and customer loyalty [15][17] - The company is also addressing increased competition in the big and tall apparel space from traditional retailers and direct-to-consumer brands [17][18] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about future business prospects despite current sales challenges, with expectations for improvement in the second half of 2025 [6][34] - The company is actively monitoring tariff impacts, estimating a potential increase in inventory costs of nearly $4 million for fiscal 2025 [21][22] - Efforts are underway to implement strategic pricing adjustments to mitigate tariff risks and enhance profitability [25] Other Important Information - The company has opened six new stores in the past two years, with plans to open two more in Q3 2025, although new store performance has been below expectations [28][30] - A seven-year lease extension for the corporate headquarters and distribution center was signed, providing operational stability [39] - The company has extended its credit facility with Citizens Bank for five years, ensuring financial security [40] Q&A Session Summary Question: Strategy of shifting to more private brands - The company is currently at 56.5% private brand penetration and expects to reach over 60% by fall 2026 and over 65% by 2027, with private brands offering higher margins compared to national brands [47][51] Question: Impact of tariffs for fiscal 2025 and 2026 - The estimated impact of tariffs for fiscal 2025 is just under $4 million, but the unpredictable nature of tariffs makes it difficult to project for 2026 [21][55] Question: Capital expenditure plans for 2026 - The company is pausing new store development and anticipates maintenance CapEx to be in the range of $5 million to $12 million annually, depending on business stabilization [58][59] Question: In-store media strategy - The company utilizes in-store audio and digital signage to enhance customer experience rather than direct promotions, focusing on fit and brand relevance [62][66]

[Executive Summary & Business Overview](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Overview) [Second Quarter Financial Highlights](index=1&type=section&id=Second%20Quarter%20Financial%20Highlights) Destination XL Group reported a challenging Q2 fiscal 2025 with sales down 7.5% and a net loss, reflecting sector softness Second Quarter Fiscal 2025 Financial Highlights | Metric | Q2 Fiscal 2025 | Q2 Fiscal 2024 | Change (YoY) | | :-------------------------------- | :------------- | :------------- | :----------- | | Total Sales | $115.5 million | $124.8 million | -7.5% | | Comparable Sales | -9.2% | N/A | -9.2% | | Net Income (Loss) | $(0.3) million | $2.4 million | -112.5% | | Diluted EPS | $0.00 | $0.04 | -100% | | Adjusted EBITDA | $4.6 million | $6.5 million | -29.2% | | Cash and Investments (as of Aug 2, 2025) | $33.5 million | $63.2 million | -47.0% | - The company extended its credit facility through August 13, 2030, providing access to up to **$100 million** of future borrowing capacity[1](index=1&type=chunk)[6](index=6&type=chunk) [Management's Comments](index=1&type=section&id=Management%27s%20Comments) Management acknowledged sector softness and macroeconomic challenges, focusing on private brands and refining promotions - Consumer behavior is shifting towards lower-priced goods and select promotions, indicating careful spending[4](index=4&type=chunk) - The company is focusing on private brands to offer higher quality, lower price points, and greater value, aiming to better control margins[5](index=5&type=chunk) - A reframed promotional strategy prioritizes relevance, competitiveness, and a stronger perception of value, including programs like Fit Exchange and Heroes Discount[5](index=5&type=chunk) [Strategic Priorities](index=2&type=section&id=Strategic%20Priorities) Destination XL Group is implementing several strategic initiatives to address market challenges and drive long-term growth [Promotional Strategy](index=2&type=section&id=Promotional%20Strategy) - The promotional strategy is being reframed around a disciplined, strategic framework to prioritize relevance, competitiveness, and value, treating promotions as a managed category to maximize return on markdown dollars[8](index=8&type=chunk) [Assortment](index=2&type=section&id=Assortment) - The company plans to strategically shift its assortment over the next two years to prioritize private brands, aiming to increase private brand sales penetration from **56.5% to over 60% in 2026** and **over 65% in 2027**[9](index=9&type=chunk) - Investment in underperforming national brands will be reduced to drive higher profitability and leverage strategic promotions for customer acquisition[9](index=9&type=chunk) [FiTMAP Technology](index=2&type=section&id=FiTMAP%20Technology) - DXL holds an exclusive license for FiTMAP® Sizing Technology until 2030, a contactless digital scanning technology capturing 243 unique measurements for custom clothing options and fit recommendations[10](index=10&type=chunk) - FiTMAP was in **62 DXL retail locations** at the end of Q2 fiscal 2025, expanded to **86 stores in August**, and plans to reach up to **200 stores by the end of fiscal 2027**[10](index=10&type=chunk) [Second Quarter Financial Results](index=2&type=section&id=Second%20Quarter%20Financial%20Results) [Sales Performance](index=2&type=section&id=Sales%20Performance) Total sales for Q2 fiscal 2025 decreased to $115.5 million, down 7.5% year-over-year, driven by a 9.2% decline in comparable sales Sales Performance (Q2 Fiscal 2025 vs. Q2 Fiscal 2024) | Metric | Q2 Fiscal 2025 | Q2 Fiscal 2024 | Change (YoY) | | :-------------------- | :------------- | :------------- | :----------- | | Total Sales | $115.5 million | $124.8 million | -7.5% | | Comparable Sales | -9.2% | N/A | -9.2% | | Store Comparable Sales | -7.1% | N/A | -7.1% | | Direct Business Comparable Sales | -14.4% | N/A | -14.4% | - Comparable sales trends improved month-over-month in Q2, with May down **10.4%**, June down **9.6%**, and July down **7.0%**, with August trends slightly better than July[11](index=11&type=chunk)[15](index=15&type=chunk) - Direct business sales were challenged by decreases in online traffic and average order value, with additional issues from a new e-commerce platform being addressed[14](index=14&type=chunk) [Gross Margin](index=3&type=section&id=Gross%20Margin) The gross margin rate for Q2 fiscal 2025 decreased by 300 basis points to 45.2% due to higher occupancy costs and lower merchandise margin Gross Margin Rate (Q2 Fiscal 2025 vs. Q2 Fiscal 2024) | Metric | Q2 Fiscal 2025 | Q2 Fiscal 2024 | Change (YoY) | | :-------------------- | :------------- | :------------- | :----------- | | Gross Margin Rate | 45.2% | 48.2% | -300 bps | - Occupancy costs increased by **240 basis points** as a percentage of sales due to deleveraging from lower sales and increased rents[17](index=17&type=chunk) - Merchandise margin decreased by **60 basis points**, primarily due to increased freight costs from accelerated inventory receipts (tariff mitigation) and promotional offers, partially offset by a shift to private brands[17](index=17&type=chunk) [Selling, General & Administrative (SG&A)](index=3&type=section&id=Selling%2C%20General%20%26%20Administrative%20%28SG%26A%29) SG&A expenses as a percentage of sales decreased to 41.2% in Q2 fiscal 2025, primarily driven by lower marketing and incentive compensation SG&A Expenses (Q2 Fiscal 2025 vs. Q2 Fiscal 2024) | Metric | Q2 Fiscal 2025 | Q2 Fiscal 2024 | Change (YoY) | | :-------------------------------- | :------------- | :------------- | :----------- | | SG&A as % of Sales | 41.2% | 43.0% | -180 bps | | SG&A (dollar basis) | N/A | N/A | -$6.1 million | | Marketing Costs as % of Sales | 6.1% | 8.8% | -270 bps | - The decrease in SG&A dollars was primarily driven by lower marketing and incentive-based compensation, partially offset by increased healthcare benefit costs[19](index=19&type=chunk) [Interest Income, Net](index=4&type=section&id=Interest%20Income%2C%20Net) Net interest income for Q2 fiscal 2025 decreased to $0.2 million, mainly due to a lower average balance of investments Net Interest Income (Q2 Fiscal 2025 vs. Q2 Fiscal 2024) | Metric | Q2 Fiscal 2025 | Q2 Fiscal 2024 | Change (YoY) | | :-------------------- | :------------- | :------------- | :----------- | | Net Interest Income | $0.2 million | $0.6 million | -66.7% | - The decrease in interest income was primarily due to a lower average balance of investments, partly tied to the stock buyback program in H2 fiscal 2024[23](index=23&type=chunk) [Income Taxes](index=4&type=section&id=Income%20Taxes) The income tax provision for Q2 fiscal 2025 was $1.2 million, reflecting an estimated annual effective tax rate of 6.9% Income Tax Provision (Q2 Fiscal 2025 vs. Q2 Fiscal 2024) | Metric | Q2 Fiscal 2025 | Q2 Fiscal 2024 | Change (YoY) | | :-------------------- | :------------- | :------------- | :----------- | | Income Tax Provision | $1.2 million | $1.3 million | -7.7% | | Annual Effective Tax Rate Estimate | 6.9% | N/A | N/A | [Net Income (Loss)](index=4&type=section&id=Net%20Income%20%28Loss%29) For Q2 fiscal 2025, the company reported a net loss of $(0.3) million, a significant decline from net income in the prior year Net Income (Loss) (Q2 Fiscal 2025 vs. Q2 Fiscal 2024) | Metric | Q2 Fiscal 2025 | Q2 Fiscal 2024 | Change (YoY) | | :-------------------- | :------------- | :------------- | :----------- | | Net Income (Loss) | $(0.3) million | $2.4 million | -112.5% | | Diluted EPS | $0.00 | $0.04 | -100% | - The decrease in earnings was primarily driven by the decrease in sales[26](index=26&type=chunk) [Adjusted EBITDA](index=4&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA for Q2 fiscal 2025 was $4.6 million, down from $6.5 million in the prior year, reflecting reduced profitability Adjusted EBITDA (Q2 Fiscal 2025 vs. Q2 Fiscal 2024) | Metric | Q2 Fiscal 2025 | Q2 Fiscal 2024 | Change (YoY) | | :-------------------- | :------------- | :------------- | :----------- | | Adjusted EBITDA | $4.6 million | $6.5 million | -29.2% | [Cash Flow](index=4&type=section&id=Cash%20Flow) Cash flow from operations for the first six months of fiscal 2025 was negative $(2.

Core Insights - Destination XL Group, Inc. reported total sales of $115.5 million for the second quarter of fiscal 2025, a decrease of 7.5% from $124.8 million in the same quarter of fiscal 2024 [7][11] - The company experienced a net loss of $0.3 million, or $0.00 per diluted share, compared to a net income of $2.4 million, or $0.04 per diluted share, in the prior year [26] - Adjusted EBITDA for the second quarter was $4.6 million, down from $6.5 million in the same quarter of fiscal 2024 [27] Financial Performance - Total sales decreased by 7.5% year-over-year, with comparable sales down 9.2% [7][11] - The gross margin rate for the second quarter was 45.2%, down from 48.2% in the previous year, primarily due to increased occupancy costs and freight costs [17][18] - Selling, general, and administrative (SG&A) expenses as a percentage of sales were 41.2%, down from 43.0% in the prior year [20][22] Strategic Initiatives - The company is focusing on enhancing its private brand offerings, aiming to increase private brand sales penetration from 56.5% to over 60% in 2026 and over 65% in 2027 [9] - A new promotional strategy has been implemented to prioritize relevance and competitiveness, with programs like the Fit Exchange and Heroes Discount contributing to this effort [5][8] - The company has extended its credit facility to August 2030, providing access to up to $100 million for future borrowing [7][33] Market Conditions - The company noted softness in the Big & Tall sector and macroeconomic challenges affecting consumer discretionary spending [4][6] - There is ongoing volatility in the market due to tariffs, which the company is actively working to mitigate [6][19] - Direct sales, which include online and app sales, accounted for 27.5% of total sales, down from 29.6% in the previous year [36] Operational Developments - The company opened six new DXL stores and converted several Casual Male XL stores to DXL format, with plans to further expand its store count [35] - FiTMAP® Sizing Technology is being tested in 62 retail locations, with plans to expand to 200 stores by the end of fiscal 2027 [10] - Cash and investments decreased to $33.5 million from $63.2 million year-over-year, reflecting share repurchases and capital expenditures for new store development [32]

Group 1 - Destination XL Group, Inc. will release its second quarter of fiscal 2025 financial results on August 27, 2025, before the market opens [1] - The conference call to discuss the financial results will be hosted by President and CEO Harvey Kanter and CFO Peter Stratton at 9:00 a.m. ET on the same day [1] - The company is a leading integrated commerce retailer specializing in Big + Tall men's clothing and shoes, operating both physical stores and an e-commerce platform [3] Group 2 - Destination XL Group operates DXL Big + Tall retail and outlet stores, as well as Casual Male XL retail and outlet stores across the United States [3] - The company provides a multi-channel shopping experience through its e-commerce website DXL.COM and mobile app, offering a wide selection of products for Big + Tall men [3] - Destination XL Group is headquartered in Canton, Massachusetts, and its common stock is listed on the Nasdaq Global Market under the symbol "DXLG" [3]

Core Insights - Destination XL Group, Inc. (DXLG) has opened a new store in Selma, Texas, marking its sixth new store opening of the fiscal year [1][4] - The new location aims to enhance the shopping experience for Big + Tall men, offering exclusive styles and brands tailored to their needs [2][4] - DXL has introduced its proprietary FiTMAP® Sizing Technology in the new store, allowing for personalized measurements and accurate size recommendations [3] Company Overview - Destination XL Group, Inc. is the leading retailer specializing in Big + Tall men's apparel, operating both physical and online stores [5] - The company provides a multi-channel shopping experience through its retail and outlet stores, as well as its e-commerce platform DXL.COM [5] - DXL is headquartered in Canton, Massachusetts, and is publicly traded on the Nasdaq Global Market under the symbol "DXLG" [5]

Core Insights - Destination XL Group, Inc. (DXLG) has opened a new store in Boca Raton, FL, marking its fifth new store opening of the fiscal year [1][4] - The new store aims to provide a superior shopping experience for Big + Tall men, featuring exclusive styles and brands [2][4] - DXL has introduced its proprietary FiTMAPSM Sizing Technology in the new store, allowing for personalized size recommendations [3] Company Overview - Destination XL Group, Inc. is the leading retailer specializing in Big + Tall men's apparel, operating both retail and outlet stores across the United States [5] - The company offers a multi-channel shopping experience through its e-commerce website and mobile app, providing extensive product selections for Big + Tall men [5] - DXL is headquartered in Canton, Massachusetts, and is publicly traded on the Nasdaq Global Market under the symbol "DXLG" [5]

Financial Performance - Total sales for the first quarter of fiscal 2025 were $105.5 million, down from $115.5 million in the first quarter of fiscal 2024, reflecting a decrease in comparable sales of 9.4%[96] - The net loss for the first quarter was $(1.9) million, or $(0.04) per diluted share, primarily driven by the sales shortfall[96] - The company recorded a net loss of $1.9 million, or $(0.04) per diluted share, in Q1 fiscal 2025, compared to net income of $3.8 million, or $0.06 per diluted share, in Q1 fiscal 2024[115] - Cash flow from operations was $(12.0) million in Q1 fiscal 2025, a decrease from $(1.1) million in Q1 fiscal 2024, primarily due to decreased earnings and timing of payables[120] - Free cash flow was $(18.8) million in Q1 fiscal 2025, compared to $(7.0) million in Q1 fiscal 2024, reflecting increased capital expenditures[121] Sales and Comparable Sales - Comparable sales showed a gradual improvement over the quarter, with February down 13.9%, March down 8.2%, and April down 7.2%[97] - The direct business segment saw a comparable sales decrease of 16.2%, while store sales decreased by 6.6% in the first quarter of fiscal 2025[102] Margins and Expenses - The gross margin rate for the first quarter of fiscal 2025 was 45.1%, a decrease of 310 basis points from 48.2% in the first quarter of fiscal 2024[103] - Selling, general and administrative (SG&A) expenses as a percentage of sales increased to 45.0% in the first quarter of fiscal 2025, compared to 41.1% in the first quarter of fiscal 2024[107] - Customer Facing Costs represented 25.2% of sales in Q1 fiscal 2025, up from 23.0% in Q1 fiscal 2024; Corporate Support Costs increased to 19.8% from 18.1%[110] Cash and Investments - Cash and investments as of May 3, 2025, were $29.1 million, down from $53.2 million at May 4, 2024, with no debt outstanding[100] Tax and Interest - The effective tax rate increased to 39.7% in Q1 fiscal 2025 from 30.4% in Q1 fiscal 2024, primarily due to permanent book-to-tax differences[114] - Net interest income decreased to $0.3 million in Q1 fiscal 2025 from $0.6 million in Q1 fiscal 2024 due to a lower average balance of investments[112] Inventory and Depreciation - Inventory decreased by approximately $5.8 million to $85.5 million as of May 3, 2025, with clearance inventory at 9.5% of total inventory, down from 9.7%[116] - Depreciation and amortization rose to $3.6 million in Q1 fiscal 2025 from $3.3 million in Q1 fiscal 2024, driven by increased capital expenditures for new store openings and technology projects[111] Future Plans and Technology - The company plans to open six additional DXL stores during fiscal 2025, with capital expenditures expected to range from $19.0 million to $21.0 million[125] - FiTMAP Sizing Technology is currently in 52 DXL retail locations, with plans to expand to 85 stores by the end of fiscal 2025 and up to 200 stores by the end of fiscal 2027[126] - The company has an exclusive license for the FiTMAP Sizing Technology until 2030, aimed at enhancing customer engagement and personalization[97] Marketing Costs - Marketing costs were 6.1% of sales for the first quarter of fiscal 2025, slightly down from 6.3% in the first quarter of fiscal 2024, with expectations of approximately 5.9% for fiscal 2025[109] Tariffs Impact - The company expects the impact of current tariffs on financial results for fiscal 2025 could be an increase in costs of less than $2.0 million, or approximately 40 basis points as a percentage of sales[106]