Destination XL (US:DXLG)2025-12-11 22:01Financial Performance - For the third quarter of fiscal 2025, sales decreased by 5.2% to $101.9 million compared to $107.5 million in the prior year, primarily due to a 7.4% decline in comparable store sales [106]. - Net loss for the third quarter was $4.1 million, compared to a loss of $1.8 million in the same period last year [106]. - Gross margin as a percentage of sales was 42.7%, down from 45.1% in the prior year [106]. - Total sales for Q3 fiscal 2025 were $101.9 million, a decrease of 5.8% compared to $107.5 million in Q3 fiscal 2024, primarily due to a 7.4% decline in comparable sales [116]. - Comparable sales decreased by 8.7% for the first nine months of fiscal 2025, with store sales down 6.3% and direct sales down 14.6% [119]. - Gross margin rate for Q3 fiscal 2025 was 42.7%, down from 45.1% in Q3 fiscal 2024, driven by a 210 basis point increase in occupancy costs [120][121]. - SG&A expenses as a percentage of sales increased to 44.7% in Q3 fiscal 2025 from 44.1% in Q3 fiscal 2024, although dollar SG&A expenses decreased by $1.9 million [124][125]. - The company recorded a net loss of $(4.1) million, or $(0.08) per diluted share, for Q3 fiscal 2025, compared to a net loss of $(1.8) million, or $(0.03) per diluted share, in Q3 fiscal 2024 [134]. - Sales for the nine months ended November 1, 2025, were $322.9 million, compared to $347.8 million for the same period in the previous year [150]. - Free cash flow for the nine months ended November 1, 2025, was $(20.2) million, compared to $(7.0) million for the same period in the previous year [150]. - Adjusted EBITDA for the nine months ended November 1, 2025, was $2.8 million, with an adjusted EBITDA margin of 0.9% [150]. Cash Flow and Investments - Cash and investments as of November 1, 2025, were $27.0 million, down from $43.0 million a year earlier, with no debt outstanding [110]. - Cash flow from operations was $(3.2) million for the first nine months of fiscal 2025, a decrease from $12.5 million in the same period of fiscal 2024 [139]. - Free cash flow before capital expenditures for store development was $(10.9) million for the first nine months of fiscal 2025, compared to $2.5 million in the same period of fiscal 2024 [140]. - Outstanding standby letters of credit as of November 1, 2025, were $3.6 million [144]. - The company is subject to an unused line fee of 0.25% on the Credit Facility [143]. Store Operations and Expansion - The company has opened 18 new DXL stores and converted 24 Casual Male XL stores to the DXL format since the beginning of fiscal 2023 [110]. - The company opened eight new DXL stores during the first nine months of fiscal 2025, increasing the total number of stores to 296, with a total square footage of 1,999 thousand [145]. - The company aims to expand FiTMAP technology to an additional 100 stores by the end of the first half of fiscal 2026 [1]. - FiTMAP technology has scanned over 30,000 customers and is available in 88 retail locations, with plans to expand to another 100 stores in the first half of fiscal 2026 [113]. Strategic Initiatives - The company plans to grow private brand sales penetration from 57% at the start of fiscal 2025 to over 60% in 2026 and over 65% in 2027 [1]. - Strategic initiatives include enhancing product assortment, expanding FiTMAP technology, and refining promotional strategies to improve competitiveness and value perception [111]. Mergers and Financial Facilities - The merger with FullBeauty Brands is expected to close in the first half of 2026, with FBB shareholders owning 55% of the combined company [104][105]. - The maturity date of the Credit Facility was extended from October 28, 2026, to August 13, 2030, with revolving commitments reduced from $125.0 million to $100.0 million [142]. - As of November 1, 2025, there were no outstanding borrowings under the Credit Facility, and the average unused excess availability during the first nine months of fiscal 2025 was approximately $71.1 million [144]. - The sublimit for swing-line loans was reduced from $15.0 million to $10.0 million as part of the Credit Facility amendment [142]. - Capital expenditures for fiscal 2025 are expected to range from $17.0 million to $19.0 million, net of tenant incentives [145].