Destination XL (US:DXLG)2025-12-11 21:49Financial Performance - Total sales for Q3 2025 were $101.9 million, down 5.2% from $107.5 million in Q3 2024, with comparable sales decreasing by 7.4%[5] - Net loss for Q3 2025 was $(4.1) million, or $(0.08) per diluted share, compared to a net loss of $(1.8) million, or $(0.03) per diluted share, in Q3 2024[22] - Adjusted EBITDA for Q3 2025 was $(2.0) million, a decline from $1.0 million in Q3 2024[23] - Comparable sales for the first five weeks of Q4 2025 were down 5.7%, showing an improvement in trend over Q3 2025[12] - For the three months ended November 1, 2025, net loss was $4.1 million, compared to a net loss of $1.8 million for the same period in fiscal 2024[48] - Adjusted EBITDA for the nine months ended November 1, 2025, was $2.8 million, a decrease from $15.7 million in the same period of 2024[51] - Free Cash Flow for the nine months ended November 1, 2025, was $(20.2) million, compared to $(7.0) million in the same period of 2024, indicating a significant decrease[53] - Adjusted EBITDA margin for the nine months ended November 1, 2025, was 0.9%, down from 4.5% in the same period of 2024[51] Cash and Investments - Cash and investments totaled $27.0 million as of November 1, 2025, down from $43.0 million a year earlier, with no outstanding debt[29] - Cash and cash equivalents increased to $14.594 billion in November 2025, up from $11.901 billion in November 2024, marking a rise of 22.5%[50] Inventory and Sales - As of November 1, 2025, inventory decreased by $4.1 million to $85.0 million compared to $89.1 million as of November 2, 2024, with clearance inventory at 10.0% of total inventory[31] - For the third quarter of fiscal 2025, direct sales were $27.3 million, representing 26.8% of total sales, down from $31.3 million or 29.1% in the same quarter of fiscal 2024[33] - The inventory turnover rate has improved by over 30% since fiscal 2019, indicating better inventory management[31] Expenses and Margins - Gross margin rate for Q3 2025 was 42.7%, down from 45.1% in Q3 2024, primarily due to increased occupancy costs and markdown activity[13][14] - SG&A expenses as a percentage of sales were 44.7% in Q3 2025, compared to 44.1% in Q3 2024, with a dollar decrease of $1.9 million[16] - The company anticipates that tariffs could negatively impact gross margin by approximately $2.0 million for fiscal 2025[42] Strategic Initiatives - The company plans to increase private brand sales penetration from 57% at the start of fiscal 2025 to over 60% in 2026 and over 65% in 2027[7] - FiTMAP technology has been implemented in 88 retail locations, with plans to expand to another 100 stores in the first half of fiscal 2026[8] - The company opened eight new DXL stores during the first nine months of fiscal 2025, with total retail square footage increasing to 1,999,000 sq ft as of November 1, 2025[32] - The merger with FullBeauty Brands is expected to close in the first half of fiscal 2026, pending shareholder approval[34] Capital Expenditures and Assets - Capital expenditures for fiscal 2025 are expected to range from $17.0 million to $19.0 million, net of tenant incentives[32] - Total assets increased to $401.539 billion in November 2025, up from $380.955 billion in November 2024, representing a growth of 5.5%[50] - Operating lease right-of-use assets rose to $198.303 billion in November 2025, compared to $171.084 billion in November 2024, an increase of 15.9%[50] - Stockholders' equity decreased to $137.204 billion in November 2025 from $141.223 billion in November 2024, a decline of 2.1%[50] - Capital expenditures for store development were $(9.3) million for the nine months ended November 1, 2025, slightly down from $(9.4) million in the same period of 2024[53]