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 April 30, 2022

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 May 10, 2022, the registrant had 63,646,745 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)

 

 

 

April 30, 2022

 

 

January 29, 2022

 

 

 

(Fiscal 2022)

 

 

(Fiscal 2021)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,540

 

 

$

15,506

 

Accounts receivable

 

 

1,172

 

 

 

2,110

 

Inventories

 

 

96,868

 

 

 

81,764

 

Prepaid expenses and other current assets

 

 

8,077

 

 

 

6,615

 

Total current assets

 

 

113,657

 

 

 

105,995

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation and amortization

 

 

42,150

 

 

 

44,442

 

Operating lease right-of-use assets

 

 

129,877

 

 

 

127,812

 

Intangible assets

 

 

1,150

 

 

 

1,150

 

Other assets

 

 

560

 

 

 

559

 

Total assets

 

$

287,394

 

 

$

279,958

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

29,413

 

 

$

25,165

 

Accrued expenses and other current liabilities

 

 

28,445

 

 

 

35,102

 

Operating leases, current

 

 

36,504

 

 

 

35,191

 

Total current liabilities

 

 

94,362

 

 

 

95,458

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

Operating leases, non-current

 

 

118,941

 

 

 

120,414

 

Other long-term liabilities

 

 

6,031

 

 

 

5,867

 

Total long-term liabilities

 

 

124,972

 

 

 

126,281

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

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

 

 

 

 

 

 

Common stock, $0.01 par value, 125,000,000 shares authorized, 77,323,419 and 77,025,419 shares issued at April 30, 2022 and January 29, 2022, respectively

 

 

773

 

 

 

770

 

Additional paid-in capital

 

 

320,745

 

 

 

319,511

 

Treasury stock at cost, 13,701,974 shares and 12,755,873 shares at April 30, 2022 and January 29, 2022, respectively

 

 

(97,505

)

 

 

(92,658

)

Accumulated deficit

 

 

(150,491

)

 

 

(163,879

)

Accumulated other comprehensive loss

 

 

(5,462

)

 

 

(5,525

)

Total stockholders' equity

 

 

68,060

 

 

 

58,219

 

Total liabilities and stockholders' equity

 

$

287,394

 

 

$

279,958

 

 

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

 

 

 

 

April 30, 2022

 

 

May 1, 2021

 

 

 

 

(Fiscal 2022)

 

 

(Fiscal 2021)

 

 

 

 

 

Sales

 

$

127,655

 

 

$

111,494

 

 

Cost of goods sold including occupancy costs

 

 

63,788

 

 

 

60,661

 

 

Gross profit

 

 

63,867

 

 

 

50,833

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

 

46,597

 

 

 

37,118

 

 

Impairment (gain) of assets

 

 

(351

)

 

 

(652

)

 

Depreciation and amortization

 

 

3,987

 

 

 

4,500

 

 

Total expenses

 

 

50,233

 

 

 

40,966

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

13,634

 

 

 

9,867

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(143

)

 

 

(1,142

)

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

13,491

 

 

 

8,725

 

 

Provision for income taxes

 

 

103

 

 

 

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

13,388

 

 

$

8,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

 

$

0.21

 

 

$

0.14

 

 

Net income per share - diluted

 

$

0.20

 

 

$

0.14

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

64,080

 

 

 

62,153

 

 

Diluted

 

 

68,370

 

 

 

63,000

 

 

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

 

3


 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

 

 

April 30, 2022

 

 

May 1, 2021

 

 

 

 

(Fiscal 2022)

 

 

(Fiscal 2021)

 

 

Net income

 

$

13,388

 

 

$

8,697

 

 

 

 

 

 

 

 

 

 

Other comprehensive income before taxes:

 

 

 

 

 

 

 

Foreign currency translation

 

 

(4

)

 

 

(25

)

 

Pension plans

 

 

67

 

 

 

78

 

 

Other comprehensive income before taxes

 

 

63

 

 

 

53

 

 

Tax provision related to items of other comprehensive income

 

 

 

 

 

 

 

Other comprehensive income, net of tax

 

 

63

 

 

 

53

 

 

Comprehensive income

 

$

13,451

 

 

$

8,750

 

 

 

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

 

4


 

 

 

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

 

 

Loss

 

 

Total

 

Balance at January 29, 2022

 

 

77,025

 

 

$

770

 

 

$

319,511

 

 

 

(12,755

)

 

$

(92,658

)

 

$

(163,879

)

 

$

(5,525

)

 

$

58,219

 

Board of directors compensation

 

 

29

 

 

 

 

 

 

125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

125

 

Stock compensation expense

 

 

 

 

 

 

 

 

366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

366

 

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

 

 

 

 

 

 

 

 

1,138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,138

 

Issuance of common stock, upon RSUs release

 

 

313

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for taxes related to net share settlement

 

 

(85

)

 

 

(1

)

 

 

(414

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(415

)

Exercise of stock options

 

 

41

 

 

 

1

 

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

Repurchase of common stock

 

 

 

 

 

 

 

 

 

 

 

(946

)

 

 

(4,847

)

 

 

 

 

 

 

 

 

(4,847

)

Accumulated other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension plan, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67

 

 

 

67

 

Foreign currency, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

(4

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,388

 

 

 

 

 

 

13,388

 

Balance at April 30, 2022

 

 

77,323

 

 

$

773

 

 

$

320,745

 

 

 

(13,702

)

 

$

(97,505

)

 

$

(150,491

)

 

$

(5,462

)

 

$

68,060

 

 

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

 

5


 

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

 

 

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

 

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

 

6


 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

April 30, 2022

 

 

May 1, 2021

 

 

 

(Fiscal 2022)

 

 

(Fiscal 2021)

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

13,388

 

 

$

8,697

 

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

 

 

 

 

 

 

Amortization and write-off of deferred debt issuance costs

 

 

19

 

 

 

215

 

Impairment (gain) of assets

 

 

(351

)

 

 

(652

)

Depreciation and amortization

 

 

3,987

 

 

 

4,500

 

Stock compensation expense

 

 

366

 

 

 

327

 

Board of directors stock compensation

 

 

125

 

 

 

109

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

938

 

 

 

1,745

 

Inventories

 

 

(15,104

)

 

 

(3,362

)

Prepaid expenses and other current assets

 

 

(1,462

)

 

 

(2,692

)

Other assets

 

 

(20

)

 

 

4

 

Accounts payable

 

 

4,248

 

 

 

4,548

 

Operating leases, net

 

 

(1,874

)

 

 

(6,318

)

Accrued expenses and other liabilities

 

 

(5,803

)

 

 

644

 

Net cash provided by (used for) operating activities

 

 

(1,543

)

 

 

7,765

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Additions to property and equipment, net

 

 

(1,184

)

 

 

(803

)

Net cash used for investing activities

 

 

(1,184

)

 

 

(803

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Repurchase of common stock

 

 

(4,847

)

 

 

 

Proceeds from issuance of common stock from private direct offering, net of offering costs

 

 

 

 

 

4,375

 

Repayment of FILO loan

 

 

 

 

 

(15,000

)

Proceeds from new FILO loan

 

 

 

 

 

17,500

 

Net repayments under credit facility

 

 

 

 

 

(26,173

)

Debt issuance costs

 

 

 

 

 

(818

)

Tax withholdings paid related to net share settlements

 

 

(415

)

 

 

 

Proceeds from the exercise of stock options

 

 

23

 

 

 

 

Net cash used for financing activities

 

 

(5,239

)

 

 

(20,116

)

Net decrease in cash and cash equivalents

 

 

(7,966

)

 

 

(13,154

)

Cash and cash equivalents:

 

 

 

 

 

 

Beginning of period

 

 

15,506

 

 

 

18,997