Destination XL (DXLG) - 2025 Q3 - Quarterly Report

Financial Performance - For the three months ended November 2, 2024, sales decreased to $107.5 million, down from $119.2 million in the prior quarter, representing a decline of 9.4%[82] - Comparable sales decreased by 11.3%, with store sales down 9.9% and direct business sales down 14.7%[82] - Total sales for Q3 fiscal 2024 were $107.5 million, down 10.4% from $119.2 million in Q3 fiscal 2023, primarily due to an 11.3% decrease in comparable sales[86] - Net loss for Q3 fiscal 2024 was $1.8 million, or $(0.03) per diluted share, compared to net income of $4.0 million, or $0.06 per diluted share, in Q3 fiscal 2023[93] Margins and Expenses - Gross margin as a percentage of sales was 45.1%, down from 47.5% in the previous quarter[82] - Gross margin rate for Q3 fiscal 2024 was 45.1%, a decrease of 240 basis points from 47.5% in Q3 fiscal 2023, driven by increased occupancy costs[87] - SG&A expenses as a percentage of sales increased to 44.1%, compared to 40.2% in the prior quarter[82] - SG&A expenses as a percentage of sales increased to 44.1% in Q3 fiscal 2024 from 40.2% in Q3 fiscal 2023, despite a dollar decrease of $0.6 million[88] Cash and Investments - Cash and investments as of November 2, 2024, were $43.0 million, down from $60.4 million at October 28, 2023, with no debt outstanding[82] - Cash flow from operations for the first nine months of fiscal 2024 was $12.5 million, down from $33.1 million in the same period of fiscal 2023[97] - The Company had no outstanding borrowings under the Credit Facility at November 2, 2024, and no borrowings during the first nine months of fiscal 2024[103] Inventory Management - Inventory levels decreased by 10.7% compared to October 28, 2023[82] - Inventory decreased by approximately $10.7 million to $89.1 million as of November 2, 2024, with clearance inventory at 9.2% of total inventory[95] Store Openings and Expansion Plans - The company has paused its brand campaign for Q4 fiscal 2024 and reduced the planned number of new store openings in fiscal 2025 due to continued sales pressure[83] - Four new stores were opened in the first nine months of fiscal 2024, with plans for four more[83] - The company plans to open 8 new stores in fiscal 2025, down from a previous expectation of 10[84] - The Company opened four new DXL stores and converted four Casual Male XL stores to the DXL format during the first nine months of fiscal 2024, expecting to open four additional DXL stores by the end of fiscal 2024[105] - The Company plans to potentially open approximately 50 net new DXL stores over the next five years, representing a 15% increase in total square footage[105] Stock Repurchase and Credit Facilities - A $15.0 million stock repurchase program was approved, with $10.2 million utilized to repurchase 3.6 million shares during Q3 fiscal 2024[82] - A new stock repurchase program was approved, allowing the company to repurchase up to $15.0 million of its common stock[101] - The Company has a $125.0 million revolving credit agreement with Citizens Bank, with a maturity date of October 28, 2026[102] - As of November 2, 2024, the average unused excess availability was approximately $72.9 million, with unused excess availability at $78.1 million[103] - Outstanding standby letters of credit were $4.2 million and documentary letters of credit were $0.3 million as of November 2, 2024[103] - The Company is subject to an unused line fee of 0.25% on the Credit Facility[102] Marketing and Consumer Engagement - The company is focusing on traditional marketing channels, including a video campaign on social media platforms, after positive results from a brand advertising campaign test[83] - The new eCommerce platform is fully operational, with 100% of site traffic migrated, aiming to enhance consumer experience and operational agility[84] Capital Expenditures - Capital expenditures for fiscal 2024 are expected to range from $21.0 million to $24.0 million, net of tenant incentives[105] - Free cash flow before capital expenditures for store development was $2.5 million for the nine months ended October 28, 2023[110] - Adjusted EBITDA for the nine months ended November 2, 2024, was $15.7 million, with an adjusted EBITDA margin of 44.2%[110]