SEC Filing | Destination XL Group, Inc.

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dxlg-10q_20200801.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 1, 2020


☐	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.

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, 2020, the registrant had 51,554,917 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 1, 2020			February 1, 2020
	(Fiscal 2020)			(Fiscal 2019)

ASSETS
Current assets:
Cash and cash equivalents	$	20,414		$	4,338
Accounts receivable		2,574			6,219
Inventories		87,388			102,420
Prepaid expenses and other current assets		9,908			10,883
Total current assets		120,284			123,860

Non-current assets:
Property and equipment, net of accumulated depreciation and amortization		65,258			78,279
Operating lease right-of-use assets		157,095			186,413
Intangible assets		1,150			1,150
Other assets		593			1,215
Total assets	$	344,380		$	390,917

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	18,533		$	31,763
Accrued expenses and other current liabilities		20,899			18,123
Operating leases, current		45,626			41,176
Borrowings under credit facility		66,545			39,301
Total current liabilities		151,603			130,363

Long-term liabilities:
Long-term debt		14,841			14,813
Operating leases, non-current		165,310			182,051
Other long-term liabilities		5,241			5,267
Total long-term liabilities		185,392			202,131

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, 63,840,794 and 63,297,598 shares issued at August 1, 2020 and February 1, 2020, respectively		638			633
Additional paid-in capital		313,874			312,933
Treasury stock at cost, 12,755,873 shares at August 1, 2020 and February 1, 2020		(92,658	)		(92,658	)
Accumulated deficit		(208,494	)		(156,054	)
Accumulated other comprehensive loss		(5,975	)		(6,431	)
Total stockholders' equity		7,385			58,423
Total liabilities and stockholders' equity	$	344,380		$	390,917

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

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 1, 2020			August 3, 2019			August 1, 2020			August 3, 2019
	(Fiscal 2020)			(Fiscal 2019)			(Fiscal 2020)			(Fiscal 2019)

Sales	$	76,442		$	123,245		$	133,669		$	236,218
Cost of goods sold including occupancy costs		54,945			68,676			98,958			132,236
Gross profit		21,497			54,569			34,711			103,982

Expenses:
Selling, general and administrative		25,795			47,478			57,907			92,089
CEO transition costs		—			—			—			702
Impairment of assets		—			—			16,335			—
Depreciation and amortization		5,340			6,210			11,072			12,548
Total expenses		31,135			53,688			85,314			105,339

Operating income (loss)		(9,638	)		881			(50,603	)		(1,357	)

Interest expense, net		(1,052	)		(851	)		(1,793	)		(1,715	)

Income (loss) before provision (benefit) for income taxes		(10,690	)		30			(52,396	)		(3,072	)
Provision (benefit) for income taxes		24			(8	)		44			(29	)


Net income (loss)	$	(10,714	)	$	38		$	(52,440	)	$	(3,043	)


Net income (loss) per share - basic and diluted	$	(0.21	)	$	0.00		$	(1.03	)	$	(0.06	)

Weighted-average number of common shares outstanding:
Basic		51,078			49,867			50,918			49,734
Diluted		51,078			50,175			50,918			49,734

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

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	August 1, 2020			August 3, 2019			August 1, 2020			August 3, 2019
	(Fiscal 2020)			(Fiscal 2019)			(Fiscal 2020)			(Fiscal 2019)
Net income (loss)	$	(10,714	)	$	38		$	(52,440	)	$	(3,043	)

Other comprehensive income before taxes:
Foreign currency translation		(5	)		(59	)		(39	)		(83	)
Pension plans		253			191			495			392
Other comprehensive income before taxes		248			132			456			309
Tax provision related to items of other comprehensive income		—			(30	)		—			(81	)
Other comprehensive income, net of tax		248			102			456			228
Comprehensive income (loss)	$	(10,466	)	$	140		$	(51,984	)	$	(2,815	)

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

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS 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 1, 2020		63,297	$	633	$	312,933			(12,755	)	$	(92,658	)	$	(156,054	)	$	(6,431	)	$	58,423
Board of directors compensation		93		1		148															149
Stock compensation expense						452															452
Issuance of common stock, upon RSUs release		437		4		(4	)														—
Deferred stock vested		6		—		—															—
Accumulated other comprehensive income (loss):
Pension plan, net of taxes																		242			242
Foreign currency, net of taxes																		(34	)		(34	)
Net loss															(41,726	)					(41,726	)
Balance at May 2, 2020		63,833	$	638	$	313,529			(12,755	)	$	(92,658	)	$	(197,780	)	$	(6,223	)	$	17,506
Stock compensation expense						345															345
Deferred stock vested		8		—		—															—
Accumulated other comprehensive income (loss):
Pension plan, net of taxes																		253			253
Foreign currency, net of taxes																		(5	)		(5	)
Net loss															(10,714	)					(10,714	)
Balance at August 1, 2020		63,841	$	638	$	313,874			(12,755	)	$	(92,658	)	$	(208,494	)	$	(5,975	)	$	7,385

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

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

Accumulated

Additional

Other

Common Stock

Paid-in

Treasury Stock

Accumulated

Comprehensive

Amounts

Capital

Amounts

Deficit

Income (Loss)

Total

Balance at February 2, 2019

62,242

622

310,393

(12,755

)

(92,658

)