10-Q
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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 30, 2021

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

The 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, a 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 November 12, 2021, the registrant had 63,254,046 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 30, 2021

 

 

January 30, 2021

 

 

 

(Fiscal 2021)

 

 

(Fiscal 2020)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,937

 

 

$

18,997

 

Accounts receivable

 

 

1,604

 

 

 

6,416

 

Inventories

 

 

82,284

 

 

 

85,028

 

Prepaid expenses and other current assets

 

 

6,926

 

 

 

3,689

 

Total current assets

 

 

97,751

 

 

 

114,130

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation and amortization

 

 

45,769

 

 

 

56,552

 

Operating lease right-of-use assets

 

 

118,684

 

 

 

134,321

 

Intangible assets

 

 

1,150

 

 

 

1,150

 

Other assets

 

 

567

 

 

 

602

 

Total assets

 

$

263,921

 

 

$

306,755

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

29,765

 

 

$

27,091

 

Accrued expenses and other current liabilities

 

 

32,753

 

 

 

24,825

 

Operating leases, current

 

 

37,150

 

 

 

43,598

 

Borrowings under credit facility

 

 

 

 

 

59,521

 

Total current liabilities

 

 

99,668

 

 

 

155,035

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

Long-term debt

 

 

 

 

 

14,869

 

Operating leases, non-current

 

 

112,252

 

 

 

135,819

 

Other long-term liabilities

 

 

4,268

 

 

 

5,109

 

Total long-term liabilities

 

 

116,520

 

 

 

155,797

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity (deficit):

 

 

 

 

 

 

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

 

 

 

 

 

 

Common stock, $0.01 par value, 125,000,000 shares and 100,000,000 authorized at October 30, 2021 and January 30, 2021, respectively, 76,777,738 and 64,656,384 shares issued at October 30, 2021 and January 30, 2021, respectively

 

 

768

 

 

 

647

 

Additional paid-in capital

 

 

319,439

 

 

 

314,747

 

Treasury stock at cost, 12,755,873 shares at October 30, 2021 and January 30, 2021

 

 

(92,658

)

 

 

(92,658

)

Accumulated deficit

 

 

(173,788

)

 

 

(220,592

)

Accumulated other comprehensive loss

 

 

(6,028

)

 

 

(6,221

)

Total stockholders' equity (deficit)

 

 

47,733

 

 

 

(4,077

)

Total liabilities and stockholders' equity (deficit)

 

$

263,921

 

 

$

306,755

 

 

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 Nine Months Ended

 

 

 

October 30, 2021

 

 

October 31, 2020

 

 

October 30, 2021

 

 

October 31, 2020

 

 

 

(Fiscal 2021)

 

 

(Fiscal 2020)

 

 

(Fiscal 2021)

 

 

(Fiscal 2020)

 

 

 

 

 

Sales

 

$

121,486

 

 

$

85,171

 

 

$

371,570

 

 

$

218,840

 

Cost of goods sold including occupancy costs

 

 

60,529

 

 

 

54,099

 

 

 

188,178

 

 

 

153,057

 

Gross profit

 

 

60,957

 

 

 

31,072

 

 

 

183,392

 

 

 

65,783

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

41,962

 

 

 

32,820

 

 

 

120,856

 

 

 

90,727

 

Impairment of assets

 

 

(1,086

)

 

 

(1,135

)

 

 

(2,103

)

 

 

15,200

 

Depreciation and amortization

 

 

4,142

 

 

 

5,302

 

 

 

13,031

 

 

 

16,374

 

Total expenses

 

 

45,018

 

 

 

36,987

 

 

 

131,784

 

 

 

122,301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

15,939

 

 

 

(5,915

)

 

 

51,608

 

 

 

(56,518

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(2,189

)

 

 

(1,080

)

 

 

(4,256

)

 

 

(2,873

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before provision for income taxes

 

 

13,750

 

 

 

(6,995

)

 

 

47,352

 

 

 

(59,391

)

Provision for income taxes

 

 

94

 

 

 

27

 

 

 

548

 

 

 

71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

13,656

 

 

$

(7,022

)

 

$

46,804

 

 

$

(59,462

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share - basic

 

$

0.21

 

 

$

(0.14

)

 

$

0.74

 

 

$

(1.16

)

Net income (loss) per share - diluted

 

$

0.20

 

 

$

(0.14

)

 

$

0.69

 

 

$

(1.16

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

63,699

 

 

 

51,545

 

 

 

63,126

 

 

 

51,127

 

Diluted

 

 

68,644

 

 

 

51,545

 

 

 

67,378

 

 

 

51,127

 

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 Nine Months Ended

 

 

 

 

October 30, 2021

 

 

October 31, 2020

 

 

October 30, 2021

 

 

October 31, 2020

 

 

 

 

(Fiscal 2021)

 

 

(Fiscal 2020)

 

 

(Fiscal 2021)

 

 

(Fiscal 2020)

 

 

Net income (loss)

 

$

13,656

 

 

$

(7,022

)

 

$

46,804

 

 

$

(59,462

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income before taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

2

 

 

 

-

 

 

 

(40

)

 

 

(39

)

 

Pension plans

 

 

77

 

 

 

247

 

 

 

233

 

 

 

742

 

 

Other comprehensive income before taxes

 

 

79

 

 

 

247

 

 

 

193

 

 

 

703

 

 

Tax provision related to items of other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income, net of tax

 

 

79

 

 

 

247

 

 

 

193

 

 

 

703

 

 

Comprehensive income (loss)

 

$

13,735

 

 

$

(6,775

)

 

$

46,997

 

 

$

(58,759

)

 

 

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

 

4


 

 

 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(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 January 30, 2021

 

 

64,656

 

 

$

647

 

 

$

314,747

 

 

 

(12,755

)

 

$

(92,658

)

 

$

(220,592

)

 

$

(6,221

)

 

$

(4,077

)

Issuance of common stock through private direct offering, net of offering costs

 

 

11,111

 

 

 

111

 

 

 

4,264

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,375

 

Board of directors compensation

 

 

137

 

 

 

1

 

 

 

108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

109

 

Stock compensation expense

 

 

 

 

 

 

 

 

327

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

327

 

Issuance of common stock, upon RSUs release

 

 

308

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension plan, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

78

 

 

 

78

 

Foreign currency, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25

)

 

 

(25

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,697

 

 

 

 

 

 

8,697

 

Balance at May 1, 2021

 

 

76,212

 

 

$

762

 

 

$

319,443

 

 

 

(12,755

)

 

$

(92,658

)

 

$

(211,895

)

 

$

(6,168

)

 

$

9,484

 

Board of directors compensation

 

 

70

 

 

 

1

 

 

 

109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

110

 

Stock compensation expense

 

 

 

 

 

 

 

 

316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

316

 

Exercise of stock options

 

 

7

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

Accumulated other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension plan, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

78

 

 

 

78

 

Foreign currency, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17

)

 

 

(17

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,451

 

 

 

 

 

 

24,451

 

Balance at July 31, 2021

 

 

76,289

 

 

$

763

 

 

$

319,872

 

 

 

(12,755

)

 

$

(92,658

)

 

$

(187,444

)

 

$

(6,107

)

 

$

34,426

 

Board of directors compensation

 

 

15

 

 

 

 

 

 

77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

77

 

Stock compensation expense

 

 

 

 

 

 

 

 

295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

295

 

Issuance of common stock, upon PSUs release

 

 

240

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

423

 

 

 

4

 

 

 

342

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

346

 

Shares withheld for taxes related to net share settlements

 

 

(190

)

 

 

(2

)

 

 

(1,144

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,146

)

Accumulated other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension plan, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

77

 

 

 

77

 

Foreign currency, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

2

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,656

 

 

 

 

 

 

13,656

 

Balance at October 30, 2021

 

 

76,777

 

 

$

768

 

 

$

319,439

 

 

 

(12,755

)

 

$

(92,658

)

 

$

(173,788

)

 

$

(6,028

)

 

$

47,733

 

 

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

 

5


 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Treasury Stock