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 |
|
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.
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
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
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
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 |
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||