Destination XL (DXLG) - 2026 Q2 - Quarterly Report

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