SEC Filing | Destination XL Group, Inc.

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dxlg-10q_20201031.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 October 31, 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 November 13, 2020, the registrant had 51,880,030 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)

	October 31, 2020			February 1, 2020
	(Fiscal 2020)			(Fiscal 2019)

ASSETS
Current assets:
Cash and cash equivalents	$	21,417		$	4,338
Accounts receivable		5,222			6,219
Inventories		94,898			102,420
Prepaid expenses and other current assets		5,535			10,883
Total current assets		127,072			123,860

Non-current assets:
Property and equipment, net of accumulated depreciation and amortization		60,617			78,279
Operating lease right-of-use assets		147,540			186,413
Intangible assets		1,150			1,150
Other assets		540			1,215
Total assets	$	336,919		$	390,917

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	28,580		$	31,763
Accrued expenses and other current liabilities		22,837			18,123
Operating leases, current		45,616			41,176
Borrowings under credit facility		68,019			39,301
Total current liabilities		165,052			130,363

Long-term liabilities:
Long-term debt		14,855			14,813
Operating leases, non-current		150,906			182,051
Other long-term liabilities		5,049			5,267
Total long-term liabilities		170,810			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, 64,323,455 and 63,297,598 shares issued at October 31, 2020 and February 1, 2020, respectively		643			633
Additional paid-in capital		314,316			312,933
Treasury stock at cost, 12,755,873 shares at October 31, 2020 and February 1, 2020		(92,658	)		(92,658	)
Accumulated deficit		(215,516	)		(156,054	)
Accumulated other comprehensive loss		(5,728	)		(6,431	)
Total stockholders' equity		1,057			58,423
Total liabilities and stockholders' equity	$	336,919		$	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 Nine Months Ended
	October 31, 2020			November 2, 2019			October 31, 2020			November 2, 2019
	(Fiscal 2020)			(Fiscal 2019)			(Fiscal 2020)			(Fiscal 2019)

Sales	$	85,171		$	106,581		$	218,840		$	342,799
Cost of goods sold including occupancy costs		54,099			62,776			153,057			195,012
Gross profit		31,072			43,805			65,783			147,787

Expenses:
Selling, general and administrative		32,820			42,108			90,727			134,197
CEO transition costs		—			—			—			702
Impairment of assets		(1,135	)		—			15,200			—
Exit costs associated with London operations		—			1,737			—			1,737
Depreciation and amortization		5,302			6,329			16,374			18,877
Total expenses		36,987			50,174			122,301			155,513

Operating loss		(5,915	)		(6,369	)		(56,518	)		(7,726	)

Interest expense, net		(1,080	)		(870	)		(2,873	)		(2,585	)

Loss before provision (benefit) for income taxes		(6,995	)		(7,239	)		(59,391	)		(10,311	)
Provision (benefit) for income taxes		27			(49	)		71			(78	)


Net loss	$	(7,022	)	$	(7,190	)	$	(59,462	)	$	(10,233	)


Net loss per share - basic and diluted	$	(0.14	)	$	(0.14	)	$	(1.16	)	$	(0.21	)

Weighted-average number of common shares outstanding:
Basic		51,545			50,089			51,127			49,853
Diluted		51,545			50,089			51,127			49,853

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 Nine Months Ended
	October 31, 2020			November 2, 2019			October 31, 2020			November 2, 2019
	(Fiscal 2020)			(Fiscal 2019)			(Fiscal 2020)			(Fiscal 2019)
Net loss	$	(7,022	)	$	(7,190	)	$	(59,462	)	$	(10,233	)

Other comprehensive income before taxes:
Recognition of accumulated foreign currency translation adjustment		—			792			—			792
Foreign currency translation		—			2			(39	)		(81	)
Pension plans		247			196			742			588
Other comprehensive income before taxes		247			990			703			1,299
Tax provision related to items of other comprehensive income		—			(70	)		—			(151	)
Other comprehensive income, net of tax		247			920			703			1,148
Comprehensive loss	$	(6,775	)	$	(6,270	)	$	(58,759	)	$	(9,085	)

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
Board of directors compensation		252		3		117																120
Stock compensation expense						326																326
Issuance of common stock, upon RSUs release		131		1		(1	)															—
Deferred stock vested		100		1		—		</