dxlg-10q_20190803.htm

 

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 August 3, 2019

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

04-2623104

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

555 Turnpike Street

Canton, MA

02021

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (781) 828-9300

 

Securities registered pursuant to Section 12(b) of the Act.

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

DXLG

NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of August 15, 2019, the registrant had 49,957,299 shares of common stock, $0.01 par value per share, outstanding.

 

 

 

 


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

DESTINATION XL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

  

 

August 3, 2019

 

 

February 2, 2019

 

 

 

(Fiscal 2019)

 

 

(Fiscal 2018)

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,493

 

 

$

4,868

 

Accounts receivable

 

 

4,397

 

 

 

4,420

 

Inventories

 

 

110,374

 

 

 

106,837

 

Prepaid expenses and other current assets

 

 

12,424

 

 

 

11,535

 

Total current assets

 

 

132,688

 

 

 

127,660

 

 

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation and amortization

 

 

85,953

 

 

 

92,525

 

Operating lease right-of-use assets

 

 

200,480

 

 

 

 

Intangible assets

 

 

1,150

 

 

 

1,150

 

Other assets

 

 

3,453

 

 

 

4,741

 

Total assets

 

$

423,724

 

 

$

226,076

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of deferred gain on sale-leaseback

 

 

 

 

 

1,465

 

Accounts payable

 

 

36,929

 

 

 

34,418

 

Accrued expenses and other current liabilities

 

 

17,499

 

 

 

30,140

 

Operating leases, current

 

 

41,372

 

 

 

 

Borrowings under credit facility

 

 

49,451

 

 

 

41,908

 

Total current liabilities

 

 

145,251

 

 

 

107,931

 

 

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Long-term debt, net of current portion

 

 

14,785

 

 

 

14,757

 

Operating leases, non-current

 

 

197,388

 

 

 

 

Deferred rent and lease incentives

 

 

 

 

 

31,839

 

Deferred gain on sale-leaseback, net of current portion

 

 

 

 

 

8,793

 

Other long-term liabilities

 

 

3,881

 

 

 

4,116

 

Total long-term liabilities

 

 

216,054

 

 

 

59,505

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued

 

 

 

 

 

 

Common stock, $0.01 par value, 100,000,000 shares authorized, 62,668,221 and 62,241,834 shares issued at August 3, 2019 and February 2, 2019, respectively

 

 

627

 

 

 

622

 

Additional paid-in capital

 

 

311,706

 

 

 

310,393

 

Treasury stock at cost, 12,755,873 shares at August 3, 2019 and February 2, 2019

 

 

(92,658

)

 

 

(92,658

)

Accumulated deficit

 

 

(151,301

)

 

 

(153,534

)

Accumulated other comprehensive loss

 

 

(5,955

)

 

 

(6,183

)

Total stockholders' equity

 

 

62,419

 

 

 

58,640

 

Total liabilities and stockholders' equity

 

$

423,724

 

 

$

226,076

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

2


DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

August 3, 2019

 

 

August 4, 2018

 

 

August 3, 2019

 

 

August 4, 2018

 

 

 

(Fiscal 2019)

 

 

(Fiscal 2018)

 

 

(Fiscal 2019)

 

 

(Fiscal 2018)

 

 

 

 

 

Sales

 

$

123,245

 

 

$

122,206

 

 

$

236,218

 

 

$

235,537

 

Cost of goods sold including occupancy costs

 

 

68,676

 

 

 

65,681

 

 

 

132,236

 

 

 

128,324

 

Gross profit

 

 

54,569

 

 

 

56,525

 

 

 

103,982

 

 

 

107,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

47,478

 

 

 

47,795

 

 

 

92,089

 

 

 

93,195

 

CEO transition costs

 

 

 

 

 

 

 

 

702

 

 

 

130

 

Corporate restructuring

 

 

 

 

 

1,570

 

 

 

 

 

 

1,630

 

Depreciation and amortization

 

 

6,210

 

 

 

7,382

 

 

 

12,548

 

 

 

14,706

 

Total expenses

 

 

53,688

 

 

 

56,747

 

 

 

105,339

 

 

 

109,661

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

881

 

 

 

(222

)

 

 

(1,357

)

 

 

(2,448

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(851

)

 

 

(958

)

 

 

(1,715

)

 

 

(1,844

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before provision for income taxes

 

 

30

 

 

 

(1,180

)

 

 

(3,072

)

 

 

(4,292

)

Provision (benefit) for income taxes

 

 

(8

)

 

 

5

 

 

 

(29

)

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

38

 

 

$

(1,185

)

 

$

(3,043

)

 

$

(4,295

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share - basic and diluted

 

$

0.00

 

 

$

(0.02

)

 

$

(0.06

)

 

$

(0.09

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

49,867

 

 

 

49,060

 

 

 

49,734

 

 

 

48,926

 

Diluted

 

 

50,175

 

 

 

49,060

 

 

 

49,734

 

 

 

48,926

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

3


DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

 

August 3, 2019

 

 

August 4, 2018

 

 

August 3, 2019

 

 

August 4, 2018

 

 

 

 

(Fiscal 2019)

 

 

(Fiscal 2018)

 

 

(Fiscal 2019)

 

 

(Fiscal 2018)

 

 

Net income (loss)

 

$

38

 

 

$

(1,185

)

 

$

(3,043

)

 

$

(4,295

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income before taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

(59

)

 

 

(94

)

 

 

(83

)

 

 

(239

)

 

Pension plans

 

 

191

 

 

 

156

 

 

 

392

 

 

 

330

 

 

Other comprehensive income before taxes

 

 

132

 

 

 

62

 

 

 

309

 

 

 

91

 

 

Tax provision related to items of other comprehensive income

 

 

(30

)

 

 

(21

)

 

 

(81

)

 

 

(47

)

 

Other comprehensive income, net of tax

 

 

102

 

 

 

41

 

 

 

228

 

 

 

44

 

 

Comprehensive income (loss)

 

$

140

 

 

$

(1,144

)

 

$

(2,815

)

 

$

(4,251

)

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

4


 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Treasury Stock

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amounts

 

 

Capital

 

 

Shares

 

 

Amounts

 

 

Deficit

 

 

Income (Loss)

 

 

Total

 

Balance at February 2, 2019

 

 

62,242

 

 

$

622

 

 

$

310,393

 

 

 

(12,755

)

 

$

(92,658

)

 

$

(153,534

)

 

$

(6,183

)

 

$

58,640

 

Board of directors compensation

 

 

36

 

 

 

 

 

 

 

142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

142

 

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

414

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

414

 

RSUs granted for achievement of performance-based compensation, reclassified from liability to equity (Note 5)

 

 

 

 

 

 

 

 

 

 

304

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

304

 

Issuance of common stock, upon RSUs release

 

 

374

 

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for taxes related to net share settlement of RSUs

 

 

(78

)

 

 

 

 

 

(192

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(192

)

Deferred stock vested

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in accounting principle due to adoption of ASC 842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,276

 

 

 

 

 

 

 

5,276

 

Accumulated other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension plan, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

150

 

 

 

150

 

Foreign currency, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24

)

 

 

(24

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,081

)

 

 

 

 

 

 

(3,081

)

Balance at May 4, 2019

 

 

62,576

 

 

$

626

 

 

$

311,057

 

 

 

(12,755

)

 

$

(92,658

)

 

$

(151,339

)

 

$

(6,057

)

 

$

61,629

 

Board of directors compensation

 

 

45

 

 

 

 

 

 

142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

142

 

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

514

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

514

 

Issuance of common stock, upon RSUs release

 

 

67

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for taxes related to net share settlement of RSUs

 

 

(3

)

 

 

 

 

 

(6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6

)

Cancellation of restricted stock

 

 

(20

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred stock vested

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension plan, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

142

 

 

 

142

 

Foreign currency, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(40

)

 

 

(40

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 

 

 

 

 

 

 

38

 

Balance at August 3, 2019

 

 

62,668

 

 

$

627

 

 

$

311,706

 

 

 

(12,755

)

 

$

(92,658

)

 

$

(151,301

)

 

$

(5,955

)

 

$

62,419

 

 

The accompanying notes are an integral part of the consolidated financial statements.


5


DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Treasury Stock

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amounts

 

 

Capital

 

 

Shares

 

 

Amounts

 

 

Deficit

 

 

Income (Loss)

 

 

Total

 

Balance at February 3, 2018

 

 

61,486

 

 

$

615

 

 

$

307,557

 

 

 

(12,755

)

 

$

(92,658

)

 

$

(139,285

)

 

$

(6,243

)

 

$

69,986

 

Board of directors compensation

 

 

37

 

 

 

 

 

 

140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

140

 

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

407

 

Restricted stock units (RSUs) granted for achievement of performance-based compensation, reclassified from liability to equity

 

 

 

 

 

 

 

 

 

 

381

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

381

 

Issuance of common stock, upon RSUs release

 

 

165

 

 

 

2

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of restricted stock

 

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred stock vested

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension plan, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

129

 

 

 

129

 

Foreign currency, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(126

)

 

 

(126

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,110

)

 

 

 

 

 

 

(3,110

)

Balance at May 5, 2018

 

 

61,721

 

 

$

617

 

 

$

308,483

 

 

 

(12,755

)

 

$

(92,658

)

 

$

(142,395

)

 

$

(6,240

)

 

$

67,807

 

Board of directors compensation

 

 

58

 

 

 

1

 

 

 

143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

144

 

Stock compensation expense