Destination XL Group, Inc. (NASDAQ:DXLG) Q4 2020 Results Earnings Conference Call March 18, 2021 9:00 AM ET Company Participants Shelly Mokas - Director of Financial Reporting, SEC Compliance Harvey Kanter - President, Chief Executive Officer, Director Peter Stratton - Executive Vice President, Chief Financial Officer, Treasurer Conference Call Participants Eric Beder - SCC Research Alex Silverman - AWM Investments Operator Ladies and gentlemen, thank you for standing by and welcome to the Q4 2020 Destinati ...

PART I [Item 1. Business](index=3&type=section&id=Item%201.%20Business) Destination XL Group, Inc. is the largest specialty retailer of big & tall men's clothing and shoes, operating an omni-channel model with retail stores, outlet stores, and a significant digital business. - Destination XL Group, Inc. is the largest specialty retailer of big & tall men's clothing and shoes, operating **226 DXL retail stores**, **17 DXL outlet stores**, **46 Casual Male XL retail stores**, **22 Casual Male XL outlet stores**, and a digital business (dxl.com) as of January 30, 2021, also having launched a wholesale business unit in fiscal 2018[9](index=9&type=chunk)[13](index=13&type=chunk) - The big & tall men's clothing market is defined as starting at a waist size of **38" and greater**, and tops sized **1XL and greater**, with opportunities for market share growth from men with **38" to 43" waist sizes** and those with **54" or greater waist sizes**[10](index=10&type=chunk) - The company's fiscal 2021 business strategy focuses on building digital growth, executing targeted marketing, shifting merchandising towards casual wear, rightsizing the store portfolio through lease negotiations, and managing liquidity and debt[14](index=14&type=chunk)[15](index=15&type=chunk) - The company offers over **5,000 styles**, with tops up to **8XL and 8XLT**, bottoms with waist sizes **38" to 70"**, and shoes in sizes **10W to 18W**, emphasizing unique specifications for proper fit[16](index=16&type=chunk) - The direct business grew **14.7%** in fiscal 2020, representing approximately **40.4% of total retail sales**, up from **23.1% in fiscal 2019**, primarily driven by the DXL.com website and app due to increased online shopping during the pandemic[24](index=24&type=chunk) - Approximately **50% of all product needs** were sourced directly in fiscal 2020, with a significant percentage of private-label merchandise manufactured primarily in Southeast Asian countries, reducing dependency on China[35](index=35&type=chunk) Store Locations (as of January 30, 2021) | United States | DXL retail and outlet stores | Casual Male XL retail and outlet stores | | :------------ | :--------------------------- | :-------------------------------------- | | Alabama | 2 | 1 | | Arizona | 6 | — | | Arkansas | — | 1 | | California | 26 | 7 | | Colorado | 3 | 1 | | Connecticut | 3 | 1 | | Delaware | 2 | — | | Florida | 12 | 8 | | Georgia | 4 | 2 | | Idaho | 1 | — | | Illinois | 11 | 4 | | Indiana | 6 | 3 | | Iowa | 3 | 1 | | Kansas | 2 | — | | Kentucky | 3 | — | | Louisiana | 3 | 1 | | Maine | 2 | — | | Maryland | 6 | 3 | | Massachusetts | 5 | 2 | | Michigan | 13 | 1 | | Minnesota | 2 | 2 | | Mississippi | — | 2 | | Missouri | 5 | 2 | | Montana | 1 | — | | Nebraska | 2 | — | | Nevada | 3 | — | | New Hampshire | 3 | — | | New Jersey | 8 | 5 | | New Mexico | 1 | — | | New York | 17 | 1 | | North Carolina | 4 | 4 | | North Dakota | — | 1 | | Ohio | 10 | 1 | | Oklahoma | 2 | — | | Oregon | 2 | 1 | | Pennsylvania | 11 | 6 | | Rhode Island | 1 | — | | South Carolina | 4 | — | | South Dakota | 1 | — | | Tennessee | 7 | 1 | | Texas | 25 | 3 | | Utah | 2 | — | | Vermont | 1 | — | | Virginia | 6 | 2 | | Washington | 5 | — | | West Virginia | — | 1 | | Wisconsin | 5 | — | | **International** | | | | Toronto, Canada | 2 | — | [Item 1A. Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks, primarily from the ongoing COVID-19 pandemic impacting financial results, liquidity, supply chain, and workforce. - The COVID-19 pandemic has adversely affected the company's business, financial results, liquidity, supply chain, and workforce, leading to furloughs, salary reductions, cost restructuring, and lease renegotiations[50](index=50&type=chunk)[51](index=51&type=chunk) - Key operational risks include the ability to execute growth strategies, develop e-commerce and omni-channel initiatives, manage the wholesale segment, and maintain the centralized distribution center, alongside global supply chain disruptions and intense market competition[56](index=56&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk)[65](index=65&type=chunk)[67](index=67&type=chunk) - Financial risks encompass dependence on adequate capital, potential asset impairment charges (especially due to COVID-19), and increased interest costs from the LIBOR transition, with the business being seasonal and generating most operating income in the fourth quarter[55](index=55&type=chunk)[68](index=68&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - Other risks include reliance on third-party manufacturers, vulnerability to security breaches, challenges in predicting fashion trends, potential loss of key trademarks, labor shortages or increased costs, raw material price fluctuations, and complex regulatory compliance[69](index=69&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[83](index=83&type=chunk) - Stock-related risks include potential volatility and sporadic trading of common stock on the OTCQX market (following Nasdaq delisting) and transfer restrictions that could inhibit acquisition bids[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[88](index=88&type=chunk) [Item 1B. Unresolved Staff Comments](index=20&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC. - No unresolved staff comments[90](index=90&type=chunk) [Item 2. Properties](index=20&type=section&id=Item%202.%20Properties) The company's corporate offices and retail distribution center are located in a 755,992 sq ft building in Canton, Massachusetts, and it operates 311 leased stores across the United States and Canada. - The corporate offices and retail distribution center are located at 555 Turnpike Street, Canton, MA, in a **755,992 gross square foot building** on approximately **27.3 acres**, leased under a twenty-year agreement from January 30, 2006[91](index=91&type=chunk) - As of January 30, 2021, the company operated a total of **311 leased stores**, comprising **226 DXL retail stores**, **17 DXL outlet stores**, **46 Casual Male XL retail stores**, and **22 Casual Male XL outlet stores**, located in the United States and Toronto, Canada[91](index=91&type=chunk) - Store sites are selected based on demographic profiles, types of surrounding retailers, store layout, and financial models projecting profitability, including sales per square foot, estimated occupancy costs, and return on investment requirements[91](index=91&type=chunk) [Item 3. Legal Proceedings](index=21&type=section&id=Item%203.%20Legal%20Proceedings) The company is subject to various legal proceedings and claims in the ordinary course of business, but management believes their resolution will not materially impact future operations or financial position. - The company is subject to various legal proceedings and claims that arise in the ordinary course of business[95](index=95&type=chunk) - Management believes that the resolution of these matters will not have a material adverse impact on the company's future results of operations or financial position[95](index=95&type=chunk) [Item 4. Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company. - Not applicable[97](index=97&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock, previously traded on Nasdaq, was voluntarily delisted on December 22, 2020, and now trades on the OTCQX Marketplace under the symbol "DXLG." - The company's common stock was voluntarily delisted from Nasdaq on December 22, 2020, and began trading on the OTCQX Marketplace under the symbol "DXLG"[99](index=99&type=chunk) - As of March 15, 2021, there were approximately **83 holders of record** of the company's common stock[100](index=100&type=chunk) - There were no stock repurchases during fiscal 2020[101](index=101&type=chunk) [Item 6. Selected Financial Data](index=22&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable to the company. - Not Applicable[101](index=101&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2020 was significantly impacted by the COVID-19 pandemic, leading to a **32.7% decrease** in total sales and a net loss of **$(64.5) million**. - The COVID-19 pandemic negatively affected the global economy, supply chains, and retail markets, leading to a significant adverse effect on the company's business, financial condition, and results of operations in fiscal 2020[105](index=105&type=chunk) - In fiscal 2020, total sales decreased **32.7% to $318.9 million** from **$474.0 million** in fiscal 2019, with comparable sales down **32.6%**, store comparable sales down **47.1%**, and direct business sales up **14.9%** (DXL.com sales up **38.6%**)[118](index=118&type=chunk) Key Financial Metrics (in millions, except per share data) | Metric | Fiscal 2020 | Fiscal 2019 | Fiscal 2018 | | :----------------------------------- | :---------- | :---------- | :---------- | | Net loss | $(64.5) | $(7.8) | $(13.5) | | Adjusted net loss (1) | $(36.7) | $(3.2) | $(3.5) | | EBITDA | $(39.0) | $20.2 | $18.5 | | Adjusted EBITDA (1) | $(24.2) | $23.5 | $27.4 | | Impairment charges | $14.8 | $0.9 | $4.6 | | Diluted loss per share: Net loss | $(1.26) | $(0.16) | $(0.28) | | Adjusted net loss | $(0.72) | $(0.06) | $(0.07) | | Cash flow from operating activities | $(1.2) | $15.8 | $15.7 | | Free cash flow | $(5.5) | $2.4 | $2.8 | - The company took decisive steps to preserve liquidity in fiscal 2020, including drawing **$30.0 million** from its credit facility, furloughing staff, cancelling inventory orders, reducing capital spending, and renegotiating lease agreements, resulting in **$10.0 million** of rent abatements and deferments and **$13.5 million** in savings over the life of restructured leases[111](index=111&type=chunk)[113](index=113&type=chunk)[119](index=119&type=chunk)[121](index=121&type=chunk) - Subsequent to fiscal 2020, the company raised **$5 million** (gross) from a common stock offering and entered into a new **$17.5 million** FILO loan, replacing the existing **$15.0 million** FILO loan, providing an additional **$5.0 million to $10.0 million** in borrowing capacity[114](index=114&type=chunk) Fiscal 2021 Financial Outlook | Metric | Range | | :------------------- | :------------------- | | Expected Sales | $385.0 - $402.0 million | | Adjusted EBITDA | $11.0 - $18.0 million | | Free Cash Flow | Positive | | Comparable Sales (vs. FY2019) | -10.8% to -14.8% | | Comparable Store Sales (vs. FY2019) | -23.8% to -27.8% | | Direct Business Sales (vs. FY2019) | +26.9% to +30.7% | [Forward Looking Statements](index=23&type=section&id=FORWARD%20LOOKING%20STATEMENTS) This section discusses future operational and financial outlooks, acknowledging inherent risks and potential material differences from actual results. - This Annual Report contains "forward-looking statements" regarding future operations, financial outlook for fiscal 2021 (sales, comparable sales, adjusted EBITDA, free cash flows), and the company's ability to mitigate the impact of the COVID-19 pandemic[103](index=103&type=chunk) - These statements are based on management's reasonable estimates but actual results could differ materially due to various factors, including risks outlined in Item 1A, Risk Factors[103](index=103&type=chunk) [Segment Reporting](index=23&type=section&id=Segment%20Reporting) The company aggregates its stores and direct businesses into a single retail segment, with the wholesale segment also combined due to immateriality. - The company has three principal operating segments: stores, direct business, and wholesale business[104](index=104&type=chunk) - The stores and direct business segments are aggregated into one reportable segment, 'retail segment,' due to similar economic characteristics, production processes, and operations, consistent with an omni-channel approach[104](index=104&type=chunk) - The wholesale segment's operating results are aggregated with the retail segment for all periods due to its immateriality in revenues, profits, and assets[104](index=104&type=chunk) [Impact of COVID-19 Pandemic on Our Business](index=23&type=section&id=Impact%20of%20COVID-19%20Pandemic%20on%20Our%20Business) The pandemic severely impacted the company's business, shifting consumer demand online and necessitating store closures and operational adjustments. - The COVID-19 pandemic negatively affected the global economy, supply chains, and retail markets, significantly disrupting consumer demand for men's clothing and accessories[105](index=105&type=chunk) - All retail stores were temporarily closed on March 17, 2020, and gradually reopened by the end of June 2020 with reduced hours, while the direct business played a vital role due to customers shifting to online shopping[105](index=105&type=chunk) - The company experienced a shift from event-driven shopping to need-based shopping, with improvements in core and basic categories, a trend expected to continue into early fiscal 2021[105](index=105&type=chunk) [Comparable Sales and E-Commerce (Direct) Sales Definition](index=23&type=section&id=Comparable%20Sales%20and%20E-Commerce%20%28Direct%29%20Sales%20Definition) This section defines how the company calculates store sales, e-commerce sales, and comparable sales for performance measurement. - Store sales are defined as sales that originate and are fulfilled directly at the store level[106](index=106&type=chunk) - E-commerce sales, or direct sales, are defined as sales that originate online, whether through the website, at the store level, or through a third-party marketplace[108](index=108&type=chunk) - Comparable sales include stores open for **13 months or more**, including remodeled or relocated stores, but exclude clearance centers or stores expanded by more than **25%** for the first **13 months**[108](index=108&type=chunk) [Non-GAAP Measures](index=24&type=section&id=Non-GAAP%20Measures) The company uses non-GAAP financial measures like adjusted net loss and EBITDA to provide additional insights, which are not substitutes for GAAP. - The company monitors non-GAAP financial measures such as adjusted net loss, adjusted net loss per diluted share, free cash flow, EBITDA, and adjusted EBITDA to track business progress and assist investors[109](index=109&type=chunk) - These non-GAAP measures are not comparable to similar measures used by other companies and should not be considered superior to or a substitute for GAAP measures[109](index=109&type=chunk) [Executive Overview](index=24&type=section&id=EXECUTIVE%20OVERVIEW) Fiscal 2020 saw a net loss and significant sales decline due to COVID-19, prompting aggressive liquidity management and cost reductions, while digital sales grew. Key Financial Metrics (in millions, except per share data) | Metric | Fiscal 2020 | Fiscal 2019 | Fiscal 2018 | | :----------------------------------- | :---------- | :---------- | :---------- | | Net loss | $(64.5) | $(7.8) | $(13.5) | | Adjusted net loss (1) | $(36.7) | $(3.2) | $(3.5) | | EBITDA | $(39.0) | $20.2 | $18.5 | | Adjusted EBITDA (1) | $(24.2) | $23.5 | $27.4 | | Impairment charges | $14.8 | $0.9 | $4.6 | | Exit costs associated with London operations | — | $1.7 | — | | CEO transition costs | — | $0.7 | $2.4 | | Corporate restructuring | — | — | $1.9 | | Diluted loss per share: Net loss | $(1.26) | $(0.16) | $(0.28) | | Adjusted net loss | $(0.72) | $(0.06) | $(0.07) | | Cash flow from operating activities | $(1.2) | $15.8 | $15.7 | | Free cash flow | $(5.5) | $2.4 | $2.8 | - In fiscal 2020, the company focused on managing liquidity and took immediate steps including drawing **$30.0 million** from its credit facility, furloughing staff, cancelling inventory orders, and negotiating rent deferments and abatements[111](index=111&type=chunk) - Cost-reduction measures included reducing the field organization by approximately **54%** and corporate workforce by **29%**, with expected annualized savings of **$9.7 million** from actions taken in November 2020[113](index=113&type=chunk) - The DXL.com site experienced significant growth, with sales increasing **38.6%** over the prior year, serving as a bright spot amidst a **47.1% decline** in comparable store sales due to the pandemic[113](index=113&type=chunk) [Subsequent Events](index=25&type=section&id=Subsequent%20Events) Post-fiscal year-end, the company raised **$5.0 million** through an equity offering and refinanced its FILO loan, increasing borrowing capacity. - On February 5, 2021, the company sold **11.1 million shares** of common stock in a registered direct offering, raising **$5.0 million** (gross) for working capital and general corporate purposes[114](index=114&type=chunk) - On March 16, 2021, the company refinanced its existing **$15.0 million** FILO loan with a new **$17.5 million** senior secured FILO loan, which is expected to provide an additional **$5.0 million to $10.0 million** in borrowing capacity, albeit with higher interest rates (**250 to 300 basis points**)[114](index=114&type=chunk) [Financial Outlook](index=25&type=section&id=Financial%20Outlook) For fiscal 2021, the company projects sales between **$385.0-$402.0 million** and positive adjusted EBITDA, assuming vaccine rollout and market recovery. Fiscal 2021 Financial Projections | Metric | Range | | :------------------- | :------------------- | | Expected Sales | $385.0 - $402.0 million | | Adjusted EBITDA | $11.0 - $18.0 million | | Free Cash Flow | Positive | | Comparable Sales (vs. FY2019) | -10.8% to -14.8% | | Comparable Store Sales (vs. FY2019) | -23.8% to -27.8% | | Direct Business Sales (vs. FY2019) | +26.9% to +30.7% | - These projections assume widespread availability and administration of COVID-19 vaccines by the end of Spring 2021 and a gradual improvement in apparel demand as customers return to pre-COVID-19 activities[115](index=115&type=chunk) [Sales](index=26&type=section&id=SALES) Total sales decreased by **32.7%** in fiscal 2020 due to the pandemic, with store sales significantly down, partially offset by strong direct business growth. Sales Performance (in millions) | Metric | Fiscal 2020 | Fiscal 2019 | | :------------------- | :---------- | :---------- | | Total Sales | $318.9 | $474.0 | | Comparable Sales | -32.6% | N/A | | Store Comparable Sales | -47.1% | N/A | | Direct Business Sales | +14.9% | N/A | | DXL.com Sales | +38.6% | N/A | | Universe Sales | -50.4% | N/A | | Wholesale Revenues | $16.6 | $12.5 | - The significant sales decrease in fiscal 2020 was primarily due to temporary store closures and reduced in-person shopping demand caused by the COVID-19 pandemic[118](index=118&type=chunk) - The increase in wholesale revenues was primarily due to the sale of masks during the second quarter of fiscal 2020[118](index=118&type=chunk) [Gross Margin](index=26&type=section&id=GROSS%20MARGIN) The gross margin rate decreased by **10.2 percentage points** in fiscal 2020, primarily due to increased promotions and deleveraging of occupancy costs. - Gross margin rate for fiscal 2020 decreased by **10.2 percentage points to 32.9%** from **43.1%** in fiscal 2019[119](index=119&type=chunk) - The decrease was attributed to a **5.6 percentage point decrease** in merchandise margin (due to increased promotions) and a **4.6 percentage point decrease** from the deleveraging of occupancy costs against lower sales[119](index=119&type=chunk) - Occupancy costs decreased **$8.3 million** (**11.8%**) due to lease restructuring efforts and store closures, including **$10.0 million** in favorable rent abatements and deferments negotiated in the first half of fiscal 2020[119](index=119&type=chunk)[121](index=121&type=chunk) [Selling, General and Administrative Expenses](index=27&type=section&id=SELLING%2C%20GENERAL%20AND%20ADMINISTRATIVE%20EXPENSES) SG&A expenses decreased by **$51.6 million** in fiscal 2020 due to cost reductions, but increased as a percentage of lower sales. - SG&A expenses decreased **$51.6 million**, or **28.6%**, to **$129.1 million** in fiscal 2020 compared to **$180.7 million** in fiscal 2019, but increased as a percentage of sales to **40.5%** from **38.1%**[122](index=122&type=chunk) - The decrease was driven by reductions in variable-based costs (store payroll, supplies, travel), advertising, corporate payroll, professional services, and director compensation, partially offset by increases in performance-based incentives and insurance costs[123](index=123&type=chunk) - Cost savings initiatives, including workforce reductions (**54% field, 29% corporate**) and termination of service agreements, are expected to result in annualized savings of **$9.7 million**, mostly realized in fiscal 2021[123](index=123&type=chunk) [Impairment of Assets](index=27&type=section&id=IMPAIRMENT%20OF%20ASSETS) The company recorded a significant asset impairment charge of **$14.8 million** in fiscal 2020, primarily due to the impact of the COVID-19 pandemic on store operations. - The company recorded a significant asset impairment charge of **$14.8 million** in fiscal 2020, primarily due to the impact of the COVID-19 pandemic on store operations[124](index=124&type=chunk) - This charge included **$13.3 million** for the write-down of operating lease right-of-use assets and **$4.1 million** for the write-down of store assets, partially offset by a **$2.6 million** non-cash gain from revaluation of lease liabilities due to store closures[124](index=124&type=chunk) - In comparison, the asset impairment charge for fiscal 2019 was **$0.9 million**[124](index=124&type=chunk) [Depreciation and Amortization](index=28&type=section&id=DEPRECIATION%20AND%20AMORTIZATION) Depreciation and amortization expense decreased to **$21.5 million** in fiscal 2020, reflecting the completion of new store growth in prior years. - Depreciation and amortization expense decreased to **$21.5 million** in fiscal 2020 from **$24.6 million** in fiscal 2019[126](index=126&type=chunk) - This decrease is attributed to the majority of new store growth being complete in prior years[126](index=126&type=chunk) [Interest Expense, Net](index=28&type=section&id=INTEREST%20EXPENSE%2C%20NET) Net interest expense increased to **$3.9 million** in fiscal 2020 due to higher average borrowings and increased effective borrowing rates. - Net interest expense increased to **$3.9 million** in fiscal 2020 from **$3.3 million** in fiscal 2019[127](index=127&type=chunk) - The increase was due to higher average borrowings (including a **$30.0 million** draw on the revolving credit facility in March 2020) and an increase in effective borrowing rates (approximately **150 basis points** higher due to a credit facility amendment)[127](index=127&type=chunk) [Income Taxes](index=28&type=section&id=INCOME%20TAXES) The company maintains a full valuation allowance against deferred tax assets due to current and forecasted losses, with federal NOLs expiring through 2037. - Realization of deferred tax assets, including **$158.2 million** in federal net operating loss carryforwards (expiring fiscal 2022-2037) and **$43.1 million** non-expiring, depends on generating sufficient taxable income[128](index=128&type=chunk) - A full valuation allowance against net deferred tax assets remains appropriate due to current period losses in fiscal 2020 and the forecast for fiscal 2021[128](index=128&type=chunk) - The current tax provision for fiscal 2020 and 2019 was primarily due to current state margin tax[128](index=128&type=chunk) [Net Loss](index=28&type=section&id=NET%20LOSS) The company reported a net loss of **$(64.5) million** in fiscal 2020, significantly higher than the prior year, primarily due to pandemic impacts and impairment charges. - Net loss for fiscal 2020 was **$(64.5) million**, or **$(1.26) per diluted share**, compared to **$(7.8) million**, or **$(0.16) per diluted share**, in fiscal 2019[129](index=129&type=chunk) - Fiscal 2020 results included **$14.8 million** (**$0.29 per diluted share**) in asset impairment charges[130](index=130&type=chunk) - On a non-GAAP basis, adjusted net loss per share for fiscal 2020 was **$(0.72)**, compared to **$(0.06)** for fiscal 2019, excluding asset impairments, London exit costs, and CEO transition costs, and assuming a normalized tax rate of **26%**[130](index=130&type=chunk) [Seasonality](index=29&type=section&id=SEASONALITY) The business is seasonal, with the fourth quarter traditionally generating the majority of operating income, though fiscal 2020 was heavily impacted by pandemic-related store closures. - The company's business is seasonal, with the majority of operating income traditionally generated in the fourth quarter due to the holiday selling season[132](index=132&type=chunk) - Fiscal 2020 sales results reflect the significant impact of the COVID-19 pandemic, especially in the first and second quarters when stores were temporarily closed[132](index=132&type=chunk) Quarterly Sales (in millions, except percentages) | Quarter | Fiscal 2020 | % of Total | Fiscal 2019 | % of Total | Fiscal 2018 | % of Total | | :-------------------------------------- | :---------- | :--------- | :---------- | :--------- | :---------- | :--------- | | First quarter | $57.2 | 17.9% | $113.0 | 23.8% | $113.3 | 23.9% | | Second quarter | $76.4 | 24.0% | $123.2 | 26.0% | $122.2 | 25.8% | | Third quarter | $85.2 | 26.7% | $106.6 | 22.5% | $107.1 | 22.6% | | Fourth quarter | $100.1 | 31.4% | $131.2 | 27.7% | $131.2 | 27.7% | | **Total** | **$318.9** | **100.0%** | **$474.0** | **100.0%** | **$473.8** | **100.0%** | [Effects of Inflation](index=29&type=section&id=EFFECTS%20OF%20INFLATION) The company does not believe inflation has materially affected its operating results over the past three fiscal years. - The company does not believe that inflation has had a material effect on its results of operations in the last three fiscal years[134](index=134&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's liquidity relies on cash from operations and its credit facility, with recent equity and loan refinancing bolstering its position for the next 12 months. - Primary sources of liquidity are cash generated from operations and availability under the credit facility with Bank of America, N.A[135](index=135&type=chunk) - The company believes its cash on hand, proceeds from the recent equity offering, availability under the amended Credit Facility, the new FILO loan, and cash from operations will be sufficient to cover working capital and limited capital expenditures for the next **12 months**[135](index=135&type=chunk) Liquidity Position (in millions) | Metric | Fiscal 2020 | Fiscal 2019 | | :----------------------------------- | :---------- | :---------- | | Cash flow from operating activities | $(1.2) | $15.8 | | Capital expenditures | $(4.2) | $(13.4) | | Free Cash Flow | $(5.5) | $2.4 | | Cash on hand, at year end | $19.0 | $4.3 | | Total debt, net of unamortized debt issuance costs | $74.4 | $54.1 | | Unused excess availability under Credit Facility | $11.5 | $48.5 | Total Debt Outstanding (January 30, 2021, in thousands) | Debt Type | Gross Debt Outstanding | Less Debt Issuance Costs | Net Debt Outstanding | | :----------------- | :--------------------- | :----------------------- | :------------------- | | Credit facility | $59,733 | $(212) | $59,521 | | FILO loan | $15,000 | $(131) | $14,869 | | **Total debt** | **$74,733** | **$(343)** | **$74,390** | - Total inventories decreased by **$17.4 million**, or **17%**, to **$85.0 million** at January 30, 2021, as a result of conservative inventory management and reduced receipts to align with lower sales volumes[141](index=141&type=chunk) [Off-Balance Sheet Arrangements](index=30&type=section&id=OFF-BALANCE%20SHEET%20ARRANGEMENTS) The company has no off-balance sheet arrangements as defined by Regulation S-K. - The company has no off-balance sheet arrangements as defined by 303(a)(4) of Regulation S-K[142](index=142&type=chunk) [Contractual Obligations](index=31&type=section&id=CONTRACTUAL%20OBLIGATIONS) As of January 30, 2021, total contractual obligations were **$255.6 million**, primarily comprising operating leases and merchandise purchase obligations. Contractual Obligations (January 30, 2021, in millions) | Obligation Type | Total | Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | | :------------------------------- | :------ | :--------------- | :----------- | :----------- | :---------------- | | Operating leases | $207.6 | $53.6 | $87.7 | $51.2 | $15.1 | | Long-term debt obligations (FILO) | $15.0 | — | $15.0 | — | — | | Interest on long-term debt | $3.0 | $0.9 | $2.1 | — | — | | Merchandise purchase obligations | $30.0 | $10.0 | $20.0 | — | — | | **Total Commitments** | **$255.6** | **$64.5** | **$124.8** | **$51.2** | **$15.1** | - The table excludes **$59.7 million** outstanding under the credit facility and unfunded pension obligations (**$4.5 million**) and Supplemental Employee Retirement Plan obligations (**$0.6 million**) due to uncertainty over future contributions[144](index=144&type=chunk) - As of January 30, 2021, the company had approximately **$62.4 million** in open purchase orders, with an estimated **95%** considered non-cancelable[144](index=144&type=chunk) [Capital Expenditures](index=31&type=section&id=CAPITAL%20EXPENDITURES) Capital expenditures significantly decreased to **$4.2 million** in fiscal 2020, reflecting a focus on liquidity preservation and no new store openings planned for fiscal 2021. Store Count and Square Footage (in thousands) | Store Concept | At January 30, 2021 (Number of Stores) | At January 30, 2021 (Square Footage) | At February 1, 2020 (Number of Stores) | At February 1, 2020 (Square Footage) | | :------------------ | :------------------------------------- | :----------------------------------- | :------------------------------------- | :----------------------------------- | | DXL Retail | 226 | 1,718 | 228 | 1,729 | | DXL Outlet | 17 | 82 | 17 | 82 | | Casual Male XL Retail | 46 | 152 | 50 | 164 | | Casual Male XL Outlet | 22 | 66 | 28 | 85 | | **Total Stores** | **311** | **2,018** | **323** | **2,060** | - Capital expenditures for fiscal 2020 were **$4.2 million**, a significant decrease from **$13.4 million** in fiscal 2019, as all non-essential capital projects were eliminated to preserve liquidity during the pandemic[145](index=145&type=chunk) - The company closed **12 stores** during fiscal 2020 and does not plan to open any new stores or rebrand existing Casual Male XL stores in fiscal 2021, focusing instead on rightsizing its store portfolio through lease renegotiations or expirations for **131 stores** with options in the next two years[145](index=145&type=chunk)[147](index=147&type=chunk) [Non-GAAP Reconciliations](index=32&type=section&id=Non-GAAP%20Reconciliations) This section provides reconciliations for non-GAAP financial measures such as adjusted net loss, free cash flow, EBITDA, and adjusted EBITDA. Adjusted Net Loss and Adjusted Net Loss Per Diluted Share (in thousands, except per share data) | Metric | Fiscal 2020 | Per diluted share | Fiscal 2019 | Per diluted share | Fiscal 2018 | Per diluted share | | :----------------------------------------- | :---------- | :---------------- | :---------- | :---------------- | :---------- | :---------------- | | Net loss, GAAP basis | $(64,538) | $(1.26) | $(7,796) | $(0.16) | $(13,531) | $(0.28) | | Add back: Impairment of assets | $14,841 | $0.29 | $889 | $0.02 | $4,579 | $0.09 | | Add back: Exit costs (London) | — | — | $1,737 | $0.03 | — | — | | Add back: CEO transition costs | — | — | $743 | $0.01 | $2,404 | $0.05 | | Add back: Corporate restructuring | — | — | — | — | $1,904 | $0.04 | | Adjusted loss before income taxes | $(49,591) | $(0.97) | $(4,322) | $(0.09) | $(4,694) | $(0.10) | | Income tax benefit (normalized 26%) | $(12,894) | $(0.25) | $(1,124) | $(0.02) | $(1,220) | $(0.02) | | **Adjusted net loss, non-GAAP basis** | **$(36,697)** | **$(0.72)** | **$(3,198)** | **$(0.06)** | **$(3,474)** | **$(0.07)** | Free Cash Flow (in millions) | Metric | Fiscal 2020 | Fiscal 2019 | Fiscal 2018 | Projected 2021 | | :----------------------------------- | :---------- | :---------- | :---------- | :------------- | | Cash flow from operating activities (GAAP) | $(1.2) | $15.8 | $15.7 | >$4.3 | | Capital expenditures | $(4.2) | $(13.4) | $(13.0) | $4.3 | | **Free cash flow (non-GAAP)** | **$(5.5)** | **$2.4** | **$2.8** | **>$0.0** | EBITDA and Adjusted EBITDA (in millions) | Metric | Fiscal 2020 | Fiscal 2019 | Fiscal 2018 | | :----------------------------------------- | :---------- | :---------- | :---------- | | Net loss, GAAP basis | $(64.5) | $(7.8) | $(13.5) | | Add back: Provision (benefit) for income taxes | $0.1 | $0.1 | $(0.1) | | Add back: Interest expense | $3.9 | $3.3 | $3.5 | | Add back: Depreciation and amortization | $21.5 | $24.6 | $28.7 | | **EBITDA (non-GAAP)** | **$(39.0)** | **$20.2** | **$18.5** | | Add back: Exit costs associated with London operations | — | $1.7 | — | | Add back: CEO transition costs | — | $0.7 | $2.4 | | Add back: Corporate restructuring | — | — | $1.9 | | Add back: Impairment of assets | $14.8 | $0.9 | $4.6 | | **Adjusted EBITDA (non-GAAP)** | **$(24.2)** | **$23.5** | **$27.4** | [Critical Accounting Policies; Use of Estimates](index=33&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%3B%20USE%20OF%20ESTIMATES) The company's critical accounting policies involve significant estimates for LTIPs, impairment of long-lived assets, and leases, particularly impacted by COVID-19. - The company's critical accounting policies involve significant estimates and assumptions, particularly for Long-Term Incentive Plans (LTIPs), impairment of long-lived assets, and leases[153](index=153&type=chunk) - For LTIPs, performance targets for the 2018-2020 LTIP were not achieved, and an accrual of **$0.2 million** was made for performance awards under the 2020-2022 LTIP[154](index=154&type=chunk) - Impairment of long-lived assets (property, plant, equipment, and operating lease right-of-use assets) is evaluated at the store level using projected undiscounted and discounted cash flow analyses, with fiscal 2020 recording **$14.8 million** in charges due to COVID-19 uncertainty[158](index=158&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks primarily from interest rate movements on borrowings and foreign currency fluctuations. - The company's financial position is subject to market risk from interest rate movements on borrowings under its Credit Facility and FILO loan, which bear variable rates based on the Federal Funds rate or LIBOR[162](index=162&type=chunk) - As of January 30, 2021, outstanding borrowings included approximately **$59.7 million** under the Revolving Facility (mostly LIBOR-based at ~**4.00%**) and **$15.0 million** under the FILO loan (LIBOR-based at **6.00%**)[162](index=162&type=chunk) - A sensitivity analysis indicates that a **50 basis point increase** in interest rates would have increased interest expense by approximately **$0.4 million** on an annualized basis, based on average outstanding borrowings during fiscal 2020[162](index=162&type=chunk) - Foreign currency risk is considered immaterial, as sales from the two DXL stores in Toronto, Canada, are not material to consolidated sales[157](index=157&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=35&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for Destination XL Group, Inc. and its subsidiaries, along with accompanying notes and the independent auditor's report. - KPMG LLP, the independent registered public accounting firm, audited the consolidated financial statements and provided an unqualified opinion, noting a change in accounting principle for leases due to the adoption of ASU 2016-02 and ASU 2018-11 as of February 3, 2019[167](index=167&type=chunk) - The evaluation of the recoverability of long-lived store assets (property and equipment, operating lease right-of-use assets) was identified as a critical audit matter, involving significant auditor judgment in evaluating internally-developed assumptions for forecasted sales and gross margin[169](index=169&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) Consolidated Balance Sheets (in thousands) | ASSETS | Jan 30, 2021 | Feb 1, 2020 | | :----------------------------------- | :----------- | :---------- | | Cash and cash equivalents | $18,997 | $4,338 | | Inventories | $85,028 | $102,420 | | Total current assets | $114,130 | $123,860 | | Property and equipment, net | $56,552 | $78,279 | | Operating lease right-of-use assets | $134,321 | $186,413 | | Total assets | $306,755 | $390,917 | | LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | | | | Borrowings under credit facility | $59,521 | $39,301 | | Total current liabilities | $155,035 | $130,363 | | Long-term debt | $14,869 | $14,813 | | Operating leases, noncurrent | $135,819 | $182,051 | | Total long-term liabilities | $155,797 | $202,131 | | Total stockholders' equity (deficit) | $(4,077) | $58,423 | | Total liabilities and stockholders' equity (deficit) | $306,755 | $390,917 | Consolidated Statements of Operations (in thousands) | Metric | Jan 30, 2021 (Fiscal 2020) | Feb 1, 2020 (Fiscal 2019) | Feb 2, 2019 (Fiscal 2018) | | :----------------------------------- | :------------------------- | :------------------------ | :------------------------ | | Sales | $318,946 | $474,038 | $473,756 | | Gross profit | $104,865 | $204,201 | $211,289 | | Selling, general and administrative | $129,062 | $180,663 | $183,868 | | Impairment of assets | $14,841 | $889 | $4,579 | | Operating loss | $(60,515) | $(4,394) | $(10,119) | | Net loss | $(64,538) | $(7,796) | $(13,531) | | Net loss per share - basic and diluted | $(1.26) | $(0.16) | $(0.28) | Consolidated Statements of Cash Flows (in thousands) | Metric | Jan 30, 2021 (Fiscal 2020) | Feb 1, 2020 (Fiscal 2019) | Feb 2, 2019 (Fiscal 2018) | | :----------------------------------- | :------------------------- | :------------------------ | :------------------------ | | Net cash provided by (used for) operating activities | $(1,200) | $15,803 | $15,741 | | Net cash used for investing activities | $(4,200) | $(13,399) | $(12,961) | | Net cash provided by (used for) financing activities | $20,155 | $(2,934) | $(3,274) | | Net increase (decrease) in cash and cash equivalents | $14,759 | $(530) | $(494) | | Cash and cash equivalents: End of period | $18,997 | $4,338 | $4,868 | [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=64&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with accountants on accounting and financial disclosure. - There were no changes in or disagreements with accountants on accounting and financial disclosure[276](index=276&type=chunk) [Item 9A. Controls and Procedures](index=64&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of January 30, 2021. - Management, under the supervision of the CEO and CFO, evaluated and concluded that the company's disclosure controls and procedures were effective as of January 30, 2021[277](index=277&type=chunk) - Management assessed the design and effectiveness of the internal control over financial reporting as of January 30, 2021, using the COSO framework (2013), and determined it was effective[278](index=278&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of fiscal 2020 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[279](index=279&type=chunk) [Item 9B. Other Information](index=64&type=section&id=Item%209B.%20Other%20Information) The company reported no other information. - None[279](index=279&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=65&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information required for this item is incorporated by reference from the company's definitive proxy statement for the 2021 Annual Meeting of Stockholders. - Information for this item is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[283](index=283&type=chunk) [Item 11. Executive Compensation](index=65&type=section&id=Item%2011.%20Executive%20Compensation) Information required for this item is incorporated by reference from the company's definitive proxy statement for the 2021 Annual Meeting of Stockholders. - Information for this item is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[284](index=284&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=65&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information required for this item is incorporated by reference from the company's definitive proxy statement for the 2021 Annual Meeting of Stockholders. - Information for this item is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[285](index=285&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=65&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information required for this item is incorporated by reference from the company's definitive proxy statement for the 2021 Annual Meeting of Stockholders. - Information for this item is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[286](index=286&type=chunk) [Item 14. Principal Accounting Fees and Services](index=65&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information required for this item is incorporated by reference from the company's definitive proxy statement for the 2021 Annual Meeting of Stockholders. - Information for this item is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[287](index=287&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=66&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and a comprehensive index of exhibits filed as part of the Annual Report on Form 10-K. - The list of consolidated financial statements and notes required by this Item 15(a)(1) is set forth in the "Index to Consolidated Financial Statements" on page 35 of this Annual Report[290](index=290&type=chunk) - All financial statement schedules have been omitted because the required information is not applicable or is not present in amounts sufficient to require submission, or because the information is included in the financial statements or notes thereto[291](index=291&type=chunk) - A comprehensive list of exhibits required by this Item 15(a)(3) is set forth in the "Index to Exhibits" beginning on page 67 of this Annual Report[291](index=291&type=chunk)[294](index=294&type=chunk) [Item 16. Form 10-K Summary](index=66&type=section&id=Item%2016.%20Form%2010-K%20Summary) The Form 10-K Summary is omitted at the registrant's option. - The Form 10-K Summary is omitted at the registrant's option[292](index=292&type=chunk) [Signatures](index=71&type=section&id=Signatures) The report is duly signed on behalf of Destination XL Group, Inc. by its President and Chief Executive Officer, Chief Financial Officer and Treasurer, Vice President and Managing Director of Finance, Chief Accounting Officer and Corporate Controller, and members of the Board of Directors, as of March 19, 2021. - The report was signed on March 19, 2021, by Harvey S. Kanter (President and Chief Executive Officer), Peter H. Stratton, Jr. (Executive Vice President, Chief Financial Officer and Treasurer), John F. Cooney (Vice President and Managing Director of Finance, Chief Accounting Officer and Corporate Controller), and members of the Board of Directors[301](index=301&type=chunk)

Financial Data and Key Metrics Changes - Comparable sales for Q3 2020 were down 20.5% year-over-year, an improvement from a 38.6% decline in Q2 2020 [12] - Store sales decreased by 31.5%, while DXL.com sales increased by 28.4%, with total direct sales up 18.2% [12] - Gross margin rate was 36.5%, down from 41.1% in Q3 2019, reflecting a 460-basis point decrease [37] - SG&A expenses were $32.8 million, or 38.5% of sales, compared to $42.1 million, or 39.5% of sales, in the prior year [38] - Adjusted EBITDA was negative $1.7 million, compared to positive $1.7 million in Q3 2019 [40] Business Line Data and Key Metrics Changes - Direct sales accounted for 33.4% of total retail revenue, with stores fulfilling $10.6 million worth of e-commerce demand, an increase of 87.3% from last year [12][16] - Casual sportswear and loungewear drove business, while tailored clothing remained challenging [22] - Inventory levels decreased by over 21% from last year's Q3, with a focus on conservative inventory management [26] Market Data and Key Metrics Changes - October sales momentum slowed by 600 basis points due to COVID-19 flare-ups and other distractions [12] - The company experienced a good September but faced a decline in October, attributed to external factors like wildfires and the election [56] Company Strategy and Development Direction - The company is focused on cash management and has implemented a corporate restructuring to align costs with lower sales levels, estimating annualized savings of $9.7 million [19][20] - DXL aims to enhance its omnichannel capabilities, with a significant focus on e-commerce and direct fulfillment from stores [17][28] - The company is committed to diversity and inclusion initiatives, including a CEO Advisory Council and ongoing training programs [10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for recovery, emphasizing the importance of maintaining liquidity and financial flexibility [45] - The company anticipates a slow improvement in sales trends and continued growth in its direct business [45] - Management acknowledged the challenges posed by the pandemic but remains hopeful for a return to normalcy with the potential availability of a vaccine [47] Other Important Information - The company has eliminated 101 corporate positions, representing 29% of its corporate workforce, and reduced field personnel by 1,078 positions, or 54% [20] - The company is actively negotiating with landlords to reduce occupancy costs and has successfully secured rent abatements and deferrals [21][41] Q&A Session Summary Question: How is the company responding to the changing dynamics of Black Friday and customer traffic? - The company has started promotions earlier and segmented offers to drive traffic while being cautious about over-promotion [49][50] Question: Can you provide insights on sales performance in October and November? - October sales trailed off unexpectedly, but there has been a recent material change in customer behavior as Thanksgiving approaches [56][57] Question: What is the composition of the increase in accrued expenses? - The increase is attributed to restructuring accruals and long-term incentive accruals [58] Question: How does the company view its inventory structure moving forward? - The company aims to maintain lower inventory levels while balancing the need to drive revenue [53][67] Question: Can you elaborate on the relationship with Amazon? - The relationship with Amazon is seen as having significant potential, with the company expanding its offerings within Amazon's private brand program [68][69]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 01-34219 DESTINATION XL GROUP, INC. (Exact Name of Registrant as Specified in its Charter) Delaware (State or other jurisdiction of incorporation or organization) 55 ...

Destination XL Group, Inc. (NASDAQ:DXLG) Q2 2020 Earnings Conference Call August 27, 2020 9:00 AM ET Company Participants Nitza McKee - ICR Harvey Kanter - President and Chief Executive Officer Peter Stratton - Chief Financial Officer Conference Call Participants Eric Beder - SCC Research Alex Silverman - AWM Investments Operator Ladies and gentlemen, thank you for standing by and welcome to the Second Quarter 2020 Destination XL Group, Incorporated Earnings Call. At this time, all participants are in a lis ...

PART I. FINANCIAL INFORMATION Presents the company's unaudited consolidated financial statements and management's analysis for the period [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements for Q2 fiscal 2020, covering balance sheets, operations, comprehensive income, equity, cash flows, and notes [Consolidated Balance Sheets](index=2&type=section&id=Consolidated%20Balance%20Sheets) | (In thousands, except share data) (Unaudited) | August 1, 2020 (Fiscal 2020) | February 1, 2020 (Fiscal 2019) | | :-------------------------------------------- | :--------------------------- | :----------------------------- | | **ASSETS** | | | | Current assets: | | | | Cash and cash equivalents | $ 20,414 | $ 4,338 | | Accounts receivable | 2,574 | 6,219 | | Inventories | 87,388 | 102,420 | | Prepaid expenses and other current assets | 9,908 | 10,883 | | Total current assets | 120,284 | 123,860 | | Non-current assets: | | | | Property and equipment, net | 65,258 | 78,279 | | Operating lease right-of-use assets | 157,095 | 186,413 | | Intangible assets | 1,150 | 1,150 | | Other assets | 593 | 1,215 | | Total assets | $ 344,380 | $ 390,917 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Current liabilities: | | | | Accounts payable | $ 18,533 | $ 31,763 | | Accrued expenses and other current liabilities| 20,899 | 18,123 | | Operating leases, current | 45,626 | 41,176 | | Borrowings under credit facility | 66,545 | 39,301 | | Total current liabilities | 151,603 | 130,363 | | Long-term liabilities: | | | | Long-term debt | 14,841 | 14,813 | | Operating leases, non-current | 165,310 | 182,051 | | Other long-term liabilities | 5,241 | 5,267 | | Total long-term liabilities | 185,392 | 202,131 | | Stockholders' equity: | | | | Common stock | 638 | 633 | | Additional paid-in capital | 313,874 | 312,933 |\n| Treasury stock at cost | (92,658) | (92,658) |\n| Accumulated deficit | (208,494) | (156,054) |\n| Accumulated other comprehensive loss | (5,975) | (6,431) |\n| Total stockholders' equity | 7,385 | 58,423 |\n| Total liabilities and stockholders' equity | $ 344,380 | $ 390,917 | [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) | (In thousands, except share data) (Unaudited) | For the Three Months Ended August 1, 2020 (Fiscal 2020) | For the Three Months Ended August 3, 2019 (Fiscal 2019) | For the Six Months Ended August 1, 2020 (Fiscal 2020) | For the Six Months Ended August 3, 2019 (Fiscal 2019) | | :-------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | :---------------------------------------------------- | :---------------------------------------------------- | | Sales | $ 76,442 | $ 123,245 | $ 133,669 | $ 236,218 |\n| Cost of goods sold including occupancy costs | 54,945 | 68,676 | 98,958 | 132,236 |\n| Gross profit | 21,497 | 54,569 | 34,711 | 103,982 |\n| Expenses: | | | | |\n| Selling, general and administrative | 25,795 | 47,478 | 57,907 | 92,089 |\n| CEO transition costs | — | — | — | 702 |\n| Impairment of assets | — | — | 16,335 | — |\n| Depreciation and amortization | 5,340 | 6,210 | 11,072 | 12,548 |\n| Total expenses | 31,135 | 53,688 | 85,314 | 105,339 |\n| Operating income (loss) | (9,638) | 881 | (50,603) | (1,357) |\n| Interest expense, net | (1,052) | (851) | (1,793) | (1,715) |\n| Income (loss) before provision (benefit) for income taxes | (10,690) | 30 | (52,396) | (3,072) |\n| Provision (benefit) for income taxes | 24 | (8) | 44 | (29) |\n| Net income (loss) | $ (10,714) | $ 38 | $ (52,440) | $ (3,043) |\n| Net income (loss) per share - basic and diluted | $ (0.21) | $ 0.00 | $ (1.03) | $ (0.06) |\n| Weighted-average number of common shares outstanding: | | | | |\n| Basic | 51,078 | 49,867 | 50,918 | 49,734 |\n| Diluted | 51,078 | 50,175 | 50,918 | 49,734 | [Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) | (In thousands) (Unaudited) | For the Three Months Ended August 1, 2020 (Fiscal 2020) | For the Three Months Ended August 3, 2019 (Fiscal 2019) | For the Six Months Ended August 1, 2020 (Fiscal 2020) | For the Six Months Ended August 3, 2019 (Fiscal 2019) | | :-------------------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | :---------------------------------------------------- | :---------------------------------------------------- | | Net income (loss) | $ (10,714) | $ 38 | $ (52,440) | $ (3,043) |\n| Other comprehensive income before taxes: | | | | |\n| Foreign currency translation | (5) | (59) | (39) | (83) |\n| Pension plans | 253 | 191 | 495 | 392 |\n| Other comprehensive income before taxes | 248 | 132 | 456 | 309 |\n| Tax provision related to items of other comprehensive income | — | (30) | — | (81) |\n| Other comprehensive income, net of tax | 248 | 102 | 456 | 228 |\n| Comprehensive income (loss) | $ (10,466) | $ 140 | $ (51,984) | $ (2,815) | [Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) | (in thousands) | Common Shares | Common Stock Amounts | Additional Paid-in Capital | Treasury Stock Shares | Treasury Stock Amounts | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total |\n| :-------------------------------------------- | :------------ | :------------------- | :------------------------- | :-------------------- | :--------------------- | :------------------ | :-------------------------------------------- | :---- |\n| Balance at February 1, 2020 | **63,297** | **$ 633** | **$ 312,933** | (**12,755**) | **$ (92,658)** | **$ (156,054)** | **$ (6,431)** | **$ 58,423** |\n| Board of directors compensation | **93** | **1** | **148** | | | | | **149** |\n| Stock compensation expense | | | **452** | | | | | **452** |\n| Issuance of common stock, upon RSUs release | **437** | **4** | (**4**) | | | | | — |\n| Deferred stock vested | **6** | — | — | | | | | — |\n| Accumulated other comprehensive income (loss):| | | | | | | | |\n| Pension plan, net of taxes | | | | | | | **242** | **242** |\n| Foreign currency, net of taxes | | | | | | | (**34**) | (**34**) |\n| Net loss | | | | | | (**41,726**) | | (**41,726**) |\n| Balance at May 2, 2020 | **63,833** | **$ 638** | **$ 313,529** | (**12,755**) | **$ (92,658)** | **$ (197,780)** | **$ (6,223)** | **$ 17,506** |\n| Stock compensation expense | | | **345** | | | | | **345** |\n| Deferred stock vested | **8** | — | — | | | | | — |\n| Accumulated other comprehensive income (loss):| | | | | | | | |\n| Pension plan, net of taxes | | | | | | | **253** | **253** |\n| Foreign currency, net of taxes | | | | | | | (**5**) | (**5**) |\n| Net loss | | | | | | (**10,714**) | | (**10,714**) |\n| Balance at August 1, 2020 | **63,840** | **$ 638** | **$ 313,874** | (**12,755**) | **$ (92,658)** | **$ (208,494)** | **$ (5,975)** | **$ 7,385** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | (In thousands) (Unaudited) | For the Six Months Ended August 1, 2020 (Fiscal 2020) | For the Six Months Ended August 3, 2019 (Fiscal 2019) |\n| :----------------------------------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- |\n| **Cash flows from operating activities:** | | |\n| Net loss | $ (52,440) | $ (3,043) |\n| Adjustments to reconcile net loss to net cash provided by (used for) operating activities: | | |\n| Amortization of deferred debt issuance costs | 72 | 69 |\n| Impairment of assets | 16,335 | — |\n| Depreciation and amortization | 11,072 | 12,548 |\n| Stock compensation expense | 797 | 928 |\n| Board of directors stock compensation | 149 | 284 |\n| Changes in operating assets and liabilities: | | |\n| Accounts receivable | 3,645 | 23 |\n| Inventories | 15,032 | (3,537) |\n| Prepaid expenses and other current assets | 975 | (889) |\n| Other assets | 622 | (441) |\n| Accounts payable | (13,230) | 2,511 |\n| Operating leases, net | 4,487 | (2,115) |\n| Accrued expenses and other liabilities | 3,488 | (5,420) |\n| Net cash provided by (used for) operating activities | (8,996) | 918 |\n| **Cash flows from investing activities:** | | |\n| Additions to property and equipment, net | (2,128) | (7,597) |\n| Net cash used for investing activities | (2,128) | (7,597) |\n| **Cash flows from financing activities:** | |\n| Net borrowings under credit facility | 27,225 | 7,502 |\n| Debt issuance costs associated with credit facility amendment| (25) | — |\n| Tax withholdings paid related to net share settlements of RSUs | — | (198) |\n| Net cash provided by financing activities | 27,200 | 7,304 |\n| Net increase in cash and cash equivalents | 16,076 | 625 |\n| Cash and cash equivalents: | |\n| Beginning of period | 4,338 | 4,868 |\n| End of period | $ 20,414 | $ 5,493 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide essential context and detail for the consolidated financial statements, covering the basis of presentation, the significant impact of the COVID-19 pandemic on operations and liquidity, segment information, accounting for intangibles, accounts payable, fair value measurements, and accumulated other comprehensive income. They also detail revenue recognition policies, debt agreements, lease accounting, long-term incentive plans, stock-based compensation, earnings per share calculations, income tax provisions, CEO transition costs, and the company's Nasdaq listing compliance [Note 1. Basis of Presentation](index=8&type=section&id=1.%20Basis%20of%20Presentation) [Impact of COVID-19 Pandemic on Business](index=8&type=section&id=Impact%20of%20COVID-19%20Pandemic%20on%20Business) - All store locations temporarily closed on March **17**, **2020**, with gradual reopening starting in late April and all stores reopened by end of June **2020**, though operating with reduced hours[19](index=19&type=chunk) - Significant precautionary measures taken to reduce expenses and preserve liquidity, including furloughs, layoffs (**34** employees in May, **430** store associates in July), temporary salary reductions for management (**10%-20%**), and suspension of non-employee director compensation[19](index=19&type=chunk) - Drew **$30.0 million** from revolving facility in March **2020**, amended credit facility in April **2020** to increase borrowing base and permit promissory notes with vendors, and negotiated rent concessions with landlords[19](index=19&type=chunk) [Segment Information](index=8&type=section&id=Segment%20Information) - The Company operates three principal segments: stores, direct, and wholesale businesses. Stores and direct segments are aggregated into one 'retail segment' due to similar economic characteristics and omni-channel approach[20](index=20&type=chunk) - Wholesale segment's operating results are aggregated with the retail segment due to immateriality of its revenues, profits, and assets[20](index=20&type=chunk) [Intangibles](index=9&type=section&id=Intangibles) - The 'dxl.com' domain name, with a carrying value of **$1.2 million**, is considered an indefinite-lived asset[21](index=21&type=chunk) - Qualitative review performed as of May **2**, **2020**, and August **1**, **2020**, concluded no impairment of the intangible asset despite the COVID-19 pandemic's impact[21](index=21&type=chunk) [Accounts Payable](index=9&type=section&id=Accounts%20Payable) - Company received extended payment terms from certain merchandise vendors through short-term notes totaling **$3.5 million**, accruing interest at **4.0%** annually[21](index=21&type=chunk) - Outstanding balance of these notes was **$2.0 million** at August **1**, **2020**, included in Accounts Payable[21](index=21&type=chunk) [Fair Value of Financial Instruments](index=9&type=section&id=Fair%20Value%20of%20Financial%20Instruments) - Fair value of long-term debt is classified within Level **2** of the valuation hierarchy, approximating carrying amount at August **1**, **2020**[22](index=22&type=chunk) - The 'dxl.com' domain name's fair value is measured on a non-recurring basis (Level **3**) during annual impairment tests[22](index=22&type=chunk) - Carrying amounts of cash, receivables, payables, accrued expenses, and short-term borrowings approximate fair value due to their short maturity[22](index=22&type=chunk) [Accumulated Other Comprehensive Income (Loss) - ("AOCI")](index=10&type=section&id=Accumulated%20Other%20Comprehensive%20Income%20(Loss)%20-%20(%22AOCI%22)) | (in thousands) | For the three months ended: August 1, 2020 | For the three months ended: August 3, 2019 | For the six months ended: August 1, 2020 | For the six months ended: August 3, 2019 |\n| :--------------------------------------------------------------------------- | :----------------------------------------- | :----------------------------------------- | :--------------------------------------- | :--------------------------------------- |\n| **Balance at beginning of the quarter** | **Pension Plans** $ (6,236) | **Pension Plans** $ (5,371) | **Pension Plans** $ (6,478) | **Pension Plans** $ (5,521) |\n| | **Foreign Currency** $ 13 | **Foreign Currency** $ (686) | **Foreign Currency** $ 47 | **Foreign Currency** $ (662) |\n| | **Total** $ (6,223) | **Total** $ (6,057) | **Total** $ (6,431) | **Total** $ (6,183) |\n| Other comprehensive income (loss) before reclassifications, net of taxes | Pension Plans: 77 | Pension Plans: 27 | Pension Plans: 154 | Pension Plans: 55 |\n| | Foreign Currency: (5) | Foreign Currency: (40) | Foreign Currency: (39) | Foreign Currency: (64) |\n| | Total: 72 | Total: (13) | Total: 115 | Total: (9) |\n| Amounts reclassified from accumulated other comprehensive income, net of taxes | Pension Plans: 176 | Pension Plans: 115 | Pension Plans: 341 | Pension Plans: 237 |\n| | Foreign Currency: — | Foreign Currency: — | Foreign Currency: — | Foreign Currency: — |\n| | Total: 176 | Total: 115 | Total: 341 | Total: 237 |\n| Other comprehensive income (loss) for the period | Pension Plans: 253 | Pension Plans: 142 | Pension Plans: 495 | Pension Plans: 292 |\n| | Foreign Currency: (5) | Foreign Currency: (40) | Foreign Currency: (39) | Foreign Currency: (64) |\n| | Total: 248 | Total: 102 | Total: 456 | Total: 228 |\n| **Balance at end of quarter** | **Pension Plans** $ (5,983) | **Pension Plans** $ (5,229) | **Pension Plans** $ (5,983) | **Pension Plans** $ (5,229) |\n| | **Foreign Currency** $ 8 | **Foreign Currency** $ (726) | **Foreign Currency** $ 8 | **Foreign Currency** $ (726) |\n| | **Total** $ (5,975) | **Total** $ (5,955) | **Total** $ (5,975) | **Total** $ (5,955) | [Note 2. Revenue Recognition](index=12&type=section&id=2.%20Revenue%20Recognition) [Disaggregation of Revenue](index=13&type=section&id=Disaggregation%20of%20Revenue) | (in thousands) | For the three months ended August 1, 2020 | For the three months ended August 3, 2019 | For the six months ended August 1, 2020 | For the six months ended August 3, 2019 |\n| :------------- | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- |\n| Store sales | $ 38,465 (**53.9%**) | $ 95,119 (**78.9%**) | $ 70,792 (**55.9%**) | $ 181,834 (**78.7%**) |\n| Direct sales | 32,959 (**46.1%**) | 25,406 (**21.1%**) | 55,841 (**44.1%**) | 49,239 (**21.3%**) |\n| Retail segment | $ 71,424 | $ 120,525 | $ 126,633 | $ 231,073 |\n| Wholesale segment | 5,018 | 2,720 | 7,036 | 5,145 |\n| Total Sales | $ 76,442 | $ 123,245 | $ 133,669 | $ 236,218 | [Note 3. Debt](index=13&type=section&id=3.%20Debt) [Credit Agreement with Bank of America, N.A.](index=13&type=section&id=Credit%20Agreement%20with%20Bank%20of%20America,%20N.A.) - Third Amendment to Credit Facility (April **15**, **2020**) extended FILO loan advance rate, lowered Loan Cap, increased Applicable Margins by **150 basis points**, and allowed up to **$15.0 million** in vendor promissory notes[31](index=31&type=chunk) - **Borrowings and Repayments under Revolving Facility (Six Months Ended):** | (in thousands) | August 1, 2020 | August 3, 2019 |\n| :------------- | :------------- | :------------- |\n| Borrowings | $ 53,471 | $ 72,384 |\n| Repayments | (26,246) | (64,882) |\n| Net borrowings | $ 27,225 | $ 7,502 | - At August **1**, **2020**, outstanding borrowings under the Revolving Facility were **$66.8 million**, with **$12.4 million** in unused excess availability[32](index=32&type=chunk) [Long-Term Debt](index=14&type=section&id=Long-Term%20Debt) - FILO loan borrowing capacity is based on eligible accounts and inventory, with advance rates extended to December **2020** before stepping down[32](index=32&type=chunk) - Applicable margin rates for FILO loan borrowings increased by approximately **150 basis points** due to advance rate extension[32](index=32&type=chunk) - **Long-Term Debt (in thousands):** | Item | August 1, 2020 | February 1, 2020 |\n| :---------------------------------- | :------------- | :--------------- |\n| FILO Loan | $ 15,000 | $ 15,000 |\n| Less: unamortized debt issuance costs | (159) | (187) |\n| Total long-term debt | $ 14,841 | $ 14,813 | [Note 4. Leases](index=15&type=section&id=4.%20Leases) - Company leases all store locations and corporate headquarters under operating leases, typically **5-10** year initial terms for stores and **20** years for headquarters[35](index=35&type=chunk) - Due to COVID-19, rent payments were held from April-June **2020**, leading to concessions (deferrals, abatements, extensions) with most landlords, accounted for as lease modifications[35](index=35&type=chunk) - **Total Lease Costs (in thousands):** | Item | For the three months ended August 1, 2020 | For the three months ended August 3, 2019 | For the six months ended August 1, 2020 | For the six months ended August 3, 2019 |\n| :---------------- | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- |\n| Operating lease cost | $ 11,300 | $ 13,215 | $ 23,932 | $ 26,468 |\n| Variable lease costs | 3,266 | 3,954 | 7,069 | 7,999 |\n| Total lease costs | $ 14,566 | $ 17,169 | $ 31,001 | $ 34,467 | - **Lease Liabilities Reconciliation (in thousands) as of August 1, 2020:** | Year | Undiscounted Cash Flows |\n| :--------------- | :---------------------- |\n| 2020 (remaining) | $ 27,978 |\n| 2021 | 58,166 |\n| 2022 | 49,959 |\n| 2023 | 41,321 |\n| 2024 | 31,031 |\n| Thereafter | 38,509 |\n| Total minimum lease payments | $ 246,964 |\n| Less: interest | 36,028 |\n| Present value of future minimum lease payments | $ 210,936 |\n| Less: current obligations | 45,626 |\n| Long-term lease obligations | $ 165,310 | [Note 5. Long-Term Incentive Plans](index=16&type=section&id=5.%20Long-Term%20Incentive%20Plans) - Company has three active LTIPs (**2018-2020**, **2019-2021**, **2020-2022**), with **50%** time-based and **50%** performance-based vesting[38](index=38&type=chunk) - Time-based awards for **2020-2022** LTIP were granted as **50%** stock options and **50%** cash[38](index=38&type=chunk) - Estimated compensation expense for each LTIP is approximately **$3.7 million** to **$3.8 million**, expensed straight-line over **41-46** months for time-based awards[38](index=38&type=chunk) [Note 6. Stock-Based Compensation](index=16&type=section&id=6.%20Stock-Based%20Compensation) [Non-Employee Director Compensation Plan](index=18&type=section&id=Non-Employee%20Director%20Compensation%20Plan) - **23,148** shares of common stock, with a fair value of approximately **$24,999**, were granted to non-employee directors as compensation in lieu of cash in the first six months of fiscal **2020**[42](index=42&type=chunk) - Non-employee directors suspended their compensation for the second quarter of fiscal **2020**[42](index=42&type=chunk) [Stock Compensation Expense](index=18&type=section&id=Stock%20Compensation%20Expense) - Total stock-based compensation expense recognized was **$0.8 million** for the first six months of fiscal **2020**, down from **$0.9 million** in fiscal **2019**[42](index=42&type=chunk) - Unrecognized compensation cost for time-vested awards was approximately **$2.7 million** as of August **1**, **2020**, to be expensed over a weighted average remaining life of **32** months[42](index=42&type=chunk) [Note 7. Earnings per Share](index=18&type=section&id=7.%20Earnings%20per%20Share) - **Weighted-Average Common Shares Outstanding (in thousands):** | Item | For the three months ended August 1, 2020 | For the three months ended August 3, 2019 | For the six months ended August 1, 2020 | For the six months ended August 3, 2019 |\n| :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- |\n| Basic weighted average common shares outstanding | 51,078 | 49,867 | 50,918 | 49,734 |\n| Common stock equivalents – stock options and restricted stock | — | 308 | — | — |\n| Diluted weighted average common shares outstanding | 51,078 | 50,175 | 50,918 | 49,734 | - **720,000** shares of unvested performance stock units and **327,382** shares of deferred stock (at August **1**, **2020**) were excluded from EPS computations due to unachieved performance targets or unvested status[45](index=45&type=chunk) [Note 8. Income Taxes](index=19&type=section&id=8.%20Income%20Taxes) - Company maintains a full valuation allowance against its deferred tax assets (**$107.4 million** total deferred tax assets, **$47.4 million** liabilities, **$60.0 million** valuation allowance at August **1**, **2020**) due to uncertainty in generating sufficient taxable income[46](index=46&type=chunk) - Federal net operating loss carryforwards of **$158.2 million** (expiring **2022-2036**) and **$34.0 million** (no expiration), plus state and Canadian NOLs[46](index=46&type=chunk) - CARES Act provided a **$1.2 million** refundable employee retention tax credit and accelerated **$1.1 million** in refundable alternative minimum tax (AMT) credit in Q2 fiscal **2020**[46](index=46&type=chunk) [Note 9. CEO Transition Costs](index=19&type=section&id=9.%20CEO%20Transition%20Costs) - First six months of fiscal **2019** included **$0.7 million** in CEO transition costs[47](index=47&type=chunk) [Note 10. Nasdaq Notification of Non-Compliance](index=19&type=section&id=10.%20Nasdaq%20Notification%20of%20Non-Compliance) - Received Nasdaq non-compliance notification on April **9**, **2020**, for failing to meet the **$1.00** minimum bid price requirement[48](index=48&type=chunk) - Grace period extended to December **21**, **2020**, due to COVID-19 tolling of compliance periods[49](index=49&type=chunk) - Shareholders approved a reverse stock split (**1-for-2** to **1-for-5**) to regain compliance, but no assurance of success[49](index=49&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's analysis of financial condition and results, highlighting COVID-19 impact, liquidity, sales, and non-GAAP measures [Forward-Looking Statements](index=21&type=section&id=FORWARD-LOOKING%20STATEMENTS) - This section contains forward-looking statements regarding the Company's ability to withstand the COVID-19 pandemic, manage costs, expected inventory levels, direct sales impact, store operations, and liquidity for the next **12** months[51](index=51&type=chunk) - Readers are encouraged to refer to 'Risk Factors' in Part II, Item **1A**, which discusses risks including the COVID-19 pandemic, corporate strategy execution, and market competition[51](index=51&type=chunk) [Business Summary](index=21&type=section&id=BUSINESS%20SUMMARY) - Destination XL Group, Inc. is the largest specialty retailer of big and tall men's clothing, operating retail, wholesale, and direct businesses in the US and Canada[52](index=52&type=chunk) - As of August **1**, **2020**, the Company operated **228** Destination XL stores, **17** DXL outlet stores, **49** Casual Male XL retail stores, and **23** Casual Male XL outlet stores, supported by its e-commerce site dxl.com[52](index=52&type=chunk) [Segment Reporting](index=21&type=section&id=SEGMENT%20REPORTING) - The Company has three operating segments: stores, direct business, and wholesale business. Stores and direct businesses are aggregated into a single 'retail segment' due to similar economic characteristics and an omni-channel approach[53](index=53&type=chunk) - The wholesale segment's operating results are aggregated with the retail segment due to its immateriality[53](index=53&type=chunk) [Direct Sales](index=21&type=section&id=DIRECT%20SALES) - The Company is adapting to evolving customer shopping preferences across multiple channels, with stores capable of fulfilling online orders and customers able to order online for in-store or curbside pickup[54](index=54&type=chunk) - E-commerce sales (direct sales) are defined as sales originating online, including via website, in-store online, or third-party marketplaces, distinct from store sales fulfilled directly at the store level[56](index=56&type=chunk) [Comparable Sales](index=22&type=section&id=COMPARABLE%20SALES) - Comparable sales discussion is omitted for Q2 and first six months of fiscal **2020** because temporary store closures and reduced hours due to COVID-19 make it an unmeaningful metric[57](index=57&type=chunk) [Results of Operations](index=22&type=section&id=RESULTS%20OF%20OPERATIONS) [Impact of COVID-19 Pandemic on Our Business](index=22&type=section&id=Impact%20of%20COVID-19%20Pandemic%20on%20Our%20Business) - COVID-19 significantly impacted the business, leading to temporary store closures (March **17**, **2020**, all reopened by end of June with reduced hours) and a shift to online shopping[58](index=58&type=chunk) - Direct business sales increased by **$7.6 million** in Q2 fiscal **2020**, accounting for **46.1%** of retail sales (vs. **21.1%** prior year), driven by digital strategies and changing customer preferences[58](index=58&type=chunk) - Proactive measures included restructuring to reduce operating costs (furloughs, layoffs of **34** corporate and **430** store associates, temporary salary reductions for management), negotiating rent relief (**$10.0 million** reduction for fiscal **2020**), and managing cash flow by drawing **$30.0 million** from credit facility[58](index=58&type=chunk) [Financial Summary](index=23&type=section&id=Financial%20Summary) - **Financial Summary (in millions, except per share data):** | Item | For the three months ended August 1, 2020 | For the three months ended August 3, 2019 | For the six months ended August 1, 2020 | For the six months ended August 3, 2019 |\n| :---------------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- |\n| Net income (loss) | $ (10.7) | $ 0.0 | $ (52.4) | $ (3.0) |\n| Adjusted EBITDA (Non-GAAP basis) | $ (4.3) | $ 7.1 | $ (23.2) | $ 11.9 |\n| Per diluted share: | | | | |\n| Net income (loss) | $ (0.21) | $ 0.00 | $ (1.03) | $ (0.06) |\n| Adjusted net income (loss) (Non-GAAP basis) | $ (0.15) | $ 0.00 | $ (0.52) | $ (0.04) | [Sales](index=23&type=section&id=Sales) - **Total Sales (in thousands):** | Sales Channel | For the three months ended August 1, 2020 | For the three months ended August 3, 2019 | For the six months ended August 1, 2020 | For the six months ended August 3, 2019 |\n| :--------------- | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- |\n| Store sales | $ 38,465 (**53.9%**) | $ 95,119 (**78.9%**) | $ 70,792 (**55.9%**) | $ 181,834 (**78.7%**) |\n| Direct sales | 32,959 (**46.1%**) | 25,406 (**21.1%**) | 55,841 (**44.1%**) | 49,239 (**21.3%**) |\n| Retail segment | $ 71,424 | $ 120,525 | $ 126,633 | $ 231,073 |\n| Wholesale segment| 5,018 | 2,720 | 7,036 | 5,145 |\n| Total Sales | $ 76,442 | $ 123,245 | $ 133,669 | $ 236,218 | - Total sales for Q2 fiscal **2020** decreased **38.0%** to **$76.4 million** (from **$123.2 million**), and for the first six months decreased **43.4%** to **$133.7 million** (from **$236.2 million**), primarily due to store closures and reduced consumer spending from COVID-19[60](index=60&type=chunk) - Direct business sales increased **69%** over prior year Q2, driven by DXL.com, and wholesale sales increased to **$5.0 million** (from **$2.7 million**) due to **$4.1 million** in protective mask sales[60](index=60&type=chunk) [Gross Margin Rate](index=23&type=section&id=Gross%20Margin%20Rate) - Gross margin rate for Q2 fiscal **2020** was **28.1%**, a **16.2%** decrease from **44.3%** in Q2 fiscal **2019**, due to **5.1%** deleveraging in occupancy costs and **11.1%** decrease in merchandise margins[61](index=61&type=chunk)[62](index=62&type=chunk) - For the first six months, gross margin was **26.0%**, an **18.1%** decrease from **44.0%** in fiscal **2019**, reflecting **8.6%** deleveraging in occupancy costs and **9.5%** decrease in merchandise margins, plus a **$0.7 million** increase in inventory reserves[62](index=62&type=chunk) - Merchandise margins improved significantly post-Father's Day, with a **1260 basis point** improvement in July compared to May, despite increased shipping costs from direct channel growth and free shipping promotions[62](index=62&type=chunk) [Selling, General and Administrative Expenses](index=24&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) - SG&A expenses decreased by **$21.7 million** (**45.7%**) to **33.7%** of sales in Q2 fiscal **2020** (from **38.5%** in Q2 fiscal **2019**), and by **$34.2 million** (**37.1%**) to **43.3%** of sales for the first six months (from **39.0%** in fiscal **2019**)[63](index=63&type=chunk) - Cost reduction steps included furloughs, marketing cost reductions, temporary salary cuts for management, suspension of non-employee director compensation, and elimination of **34** corporate positions and **430** store associates[63](index=63&type=chunk) - Customer Facing Costs were **20.0%** of sales for the first six months of fiscal **2020** (vs. **23.3%** prior year), while Corporate Supporting Costs were **23.3%** of sales (vs. **15.7%** prior year)[63](index=63&type=chunk) [Impairment of Assets](index=24&type=section&id=Impairment%20of%20Assets) - A **$16.3 million** impairment charge was recorded in Q1 fiscal **2020**, comprising **$12.5 million** for right-of-use assets and **$3.8 million** for property and equipment, due to the COVID-19 pandemic's impact on store operations and projected cash flows[63](index=63&type=chunk) - No material impairment of long-lived assets occurred in Q2 fiscal **2020** or the first six months of fiscal **2019**[25](index=25&type=chunk)[63](index=63&type=chunk) [Depreciation and Amortization](index=24&type=section&id=Depreciation%20and%20Amortization) - Depreciation and amortization decreased to **$5.3 million** in Q2 fiscal **2020** (from **$6.2 million** in Q2 fiscal **2019**) and to **$11.1 million** for the first six months (from **$12.5 million** in fiscal **2019**)[64](index=64&type=chunk) [Interest Expense, Net](index=24&type=section&id=Interest%20Expense,%20Net) - Net interest expense increased to **$1.1 million** in Q2 fiscal **2020** (from **$0.9 million** in Q2 fiscal **2019**) and to **$1.8 million** for the first six months (from **$1.7 million** in fiscal **2019**)[64](index=64&type=chunk) - Increase was due to higher average borrowings and a **150 basis point** increase in interest rates under the Credit Facility amendment in April **2020**, plus a **$30.0 million** draw on the revolving credit facility in March **2020**[64](index=64&type=chunk)[65](index=65&type=chunk) [Income Taxes](index=25&type=section&id=Income%20Taxes) - A full valuation allowance against deferred tax assets has been maintained since fiscal **2013**, deemed appropriate for fiscal **2020** due to current period losses and state margin tax[66](index=66&type=chunk) - The total income tax benefit for Q2 and first six months of fiscal **2019** included a deferred tax impact of **$30,000** and **$81,000**, respectively, in other comprehensive income (loss)[66](index=66&type=chunk) [Net Loss](index=25&type=section&id=Net%20Loss) - Net loss for Q2 fiscal **2020** was **$(10.7) million**, or **$(0.21)** per diluted share, compared to net income of **$0.0 million**, or **$0.00** per diluted share, in Q2 fiscal **2019**[67](index=67&type=chunk) - Net loss for the first six months of fiscal **2020** was **$(52.4) million**, or **$(1.03)** per diluted share, compared to **$(3.0) million**, or **$(0.06)** per diluted share, in fiscal **2019**[67](index=67&type=chunk) - Adjusted net loss per diluted share (non-GAAP) was (**$0.15**) for Q2 and (**$0.52**) for the first six months of fiscal **2020**, compared to adjusted net income (loss) of **$0.00** and (**$0.04**) respectively, in fiscal **2019**[67](index=67&type=chunk) [Inventory](index=25&type=section&id=Inventory) - Inventory at August **1**, **2020**, decreased by approximately **$23.0 million** to **$87.4 million**, compared to **$110.4 million** at August **3**, **2019**[67](index=67&type=chunk) - The Company cancelled approximately **$148 million** (at retail) of open merchandise orders for fiscal **2020** and expects fall inventory buys to be below fiscal **2019** levels[67](index=67&type=chunk) - Clearance inventory decreased by **$2.2 million** and represented **11.3%** of total inventory at August **1**, **2020** (vs. **10.9%** prior year)[67](index=67&type=chunk) [Seasonality](index=25&type=section&id=SEASONALITY) - Consistent with the retail industry, the Company historically experiences seasonal fluctuations, with a significant portion of operating and net income generated in the fourth quarter due to the 'Holiday' season[68](index=68&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - Primary liquidity sources are cash from operations and the Credit Facility. Management believes current liquidity is sufficient for the next **12** months, assuming no further significant economic shutdowns[69](index=69&type=chunk) - Cash flow from operations decreased by **$9.9 million** to **$(9.0) million** for the first six months of fiscal **2020** (from **$0.9 million** in fiscal **2019**)[69](index=69&type=chunk) - Cash flow from financing activities increased **$19.9 million** to **$27.2 million** for the first six months of fiscal **2020**, primarily due to a **$30.0 million** draw on the Credit Facility in March **2020**[69](index=69&type=chunk) - **Total Debt Outstanding (in thousands) at August 1, 2020:** | Item | Gross Debt Outstanding | Less Debt Issuance Costs | Net Debt Outstanding |\n| :---------------- | :--------------------- | :----------------------- | :------------------- |\n| Credit facility | $ 66,803 | $ (258) | $ 66,545 |\n| FILO Loan | 15,000 | (159) | 14,841 |\n| Total debt | $ 81,803 | $ (417) | $ 81,386 | [FILO Loan](index=26&type=section&id=FILO%20Loan) - The Credit Facility includes a **$15.0 million** FILO loan, with borrowing capacity based on eligible accounts and inventory, whose advance rates were extended to December **2020**[72](index=72&type=chunk) - Borrowings under the FILO loan bear interest at variable rates (Federal Funds or LIBOR) plus increased applicable margins (e.g., **6.00%** LIBOR-based at August **1**, **2020**)[72](index=72&type=chunk) [Capital Expenditures](index=26&type=section&id=Capital%20Expenditures) - Capital expenditures for the first six months of fiscal **2020** were reduced to **$2.1 million** (from **$7.6 million** in fiscal **2019**) to preserve liquidity[72](index=72&type=chunk) - **Store Count and Square Footage (in thousands) at August 1, 2020 vs. August 3, 2019:** | Store Concept | August 1, 2020 (Number of Stores) | August 1, 2020 (Square Footage) | August 3, 2019 (Number of Stores) | August 3, 2019 (Square Footage) |\n| :---------------------- | :-------------------------------- | :------------------------------ | :-------------------------------- | :------------------------------ |\n| DXL Retail | 228 | 1,729 | 220 | 1,697 |\n| DXL Outlets | 17 | 82 | 16 | 82 |\n| Casual Male XL Retail | 49 | 160 | 60 | 200 |\n| Casual Male Outlets | 23 | 69 | 29 | 88 |\n| Rochester Clothing | - | - | 3 | 36 |\n| Total Stores | 317 | 2,040 | 328 | 2,103 | - During the first six months of fiscal **2020**, five Casual Male XL outlets and one Casual Male XL retail store were closed[72](index=72&type=chunk) [Critical Accounting Policies](index=27&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) - No material changes to critical accounting policies and estimates were disclosed compared to the Form **10-K** for the year ending February **1**, **2020**[75](index=75&type=chunk) [Non-GAAP Financial Measures](index=27&type=section&id=Non-GAAP%20Financial%20Measures) - Adjusted net income (loss), adjusted net income (loss) per diluted share, free cash flow, and Adjusted EBITDA are non-GAAP measures used by management to evaluate performance and liquidity[75](index=75&type=chunk) - **Adjusted Net Income (Loss) (Non-GAAP Basis) (in thousands, except per share data):** | Item | For the three months ended August 1, 2020 | For the three months ended August 3, 2019 | For the six months ended August 1, 2020 | For the six months ended August 3, 2019 |\n| :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- |\n| Net income (loss) (GAAP basis) | $ (10,714) | $ 38 | $ (52,440) | $ (3,043) |\n| Adjust: CEO transition costs | - | - | - | 702 |\n| Impairment of assets | - | - | 16,335 | - |\n| Add back actual income tax provision (benefit) | 24 | (8) | 44 | (29) |\n| Add income tax (provision) benefit, assuming a normal tax rate of 26% | 2,779 | (8) | 9,376 | 616 |\n| Adjusted net income (loss) (non-GAAP basis) | $ (7,911) | $ 22 | $ (26,685) | $ (1,754) |\n| Per diluted share: | $ (0.15) | $ 0.00 | $ (0.52) | $ (0.04) | - **Free Cash Flow (Non-GAAP Basis) (in millions):** | Item | For the six months ended August 1, 2020 | For the six months ended August 3, 2019 |\n| :------------------------------------------ | :-------------------------------------- | :-------------------------------------- |\n| Cash flow from operating activities (GAAP basis) | $ (9.0) | $ 0.9 |\n| Capital expenditures, infrastructure projects | (1.4) | (5.2) |\n| Capital expenditures for DXL stores | (0.7) | (2.4) |\n| Free Cash Flow (non-GAAP basis) | $ (11.1) | $ (6.7) | - **Adjusted EBITDA (Non-GAAP Basis) (in millions):** | Item | For the three months ended August 1, 2020 | For the three months ended August 3, 2019 | For the six months ended August 1, 2020 | For the six months ended August 3, 2019 |\n| :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- |\n| Net income (loss) (GAAP basis) | $ (10.7) | $ 0.0 | $ (52.4) | $ (3.0) |\n| Add back: CEO transition costs | - | - | - | 0.7 |\n| Impairment of assets | - | - | 16.3 | - |\n| Provision (benefit) for income taxes | - | - | 0.0 | - |\n| Interest expense | 1.1 | 0.9 | 1.8 | 1.7 |\n| Depreciation and amortization | 5.3 | 6.2 | 11.1 | 12.5 |\n| Adjusted EBITDA (non-GAAP basis) | $ (4.3) | $ 7.1 | $ (23.2) | $ 11.9 | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Discusses market risks, primarily interest rate exposure on borrowings and immaterial foreign currency fluctuations [Interest Rates](index=28&type=section&id=Interest%20Rates) - Borrowings under the Credit Facility and FILO loan bear variable interest rates based on Bank of America's prime rate or LIBOR[79](index=79&type=chunk) - At August **1**, **2020**, **$66.8 million** outstanding borrowings under Credit Facility (**$62.0 million** LIBOR-based at ~**4.00%**, remainder prime-based at **5.25%**) and **$15.0 million** FILO loan (LIBOR-based at **6.00%**)[79](index=79&type=chunk) - A **50 basis point** increase in interest rates would result in an approximate **$421,000** increase in annualized interest expense[79](index=79&type=chunk) [Foreign Currency](index=28&ty

Destination XL Group, Inc. (NASDAQ:DXLG) Q1 2020 Earnings Conference Call June 4, 2020 9:00 AM ET Company Participants Nitza McKee - IR, ICR Harvey Kanter - President & CEO Peter Stratton - CFO Conference Call Participants Eric Beder - SCC Research Glenn Krevlin - Glenhill Capital Advisors Operator Good day ladies and gentlemen, and welcome to the DXLG Fiscal First Quarter Year 2020 Financial Results Conference Call. Today’s call is being recorded. [Operator Instructions] At this time, I would like to turn ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 2, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 01-34219 DESTINATION XL GROUP, INC. (Exact Name of Registrant as Specified in its Charter) Canton, MA (Address of principal executive offices) (Zip Code) | --- | --- | |- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 1, 2020 (Fiscal 2019) Commission File Number 01-34219 DESTINATION XL GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 04-2623104 (State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.) 555 Turnpike Street, Canton, MA 02021 (Address of principa ...

Destination XL Group, Inc. (NASDAQ:DXLG) Q4 2019 Earnings Conference Call March 19, 2020 9:00 AM ET Company Participants Nitza McKee - ICR Harvey Kanter - President, CEO & Director Peter Stratton - EVP, CFO & Treasurer Conference Call Participants Operator Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter 2019 Destination XL Group, Incorporated Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to your host today, Ms. Nitza Mckee ...