SEC Filing | Destination XL Group, Inc.

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10-Q

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 28, 2023


☐	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.

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 a mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 8, 2023, the registrant had 60,182,080 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 28, 2023			January 28, 2023
	(Fiscal 2023)			(Fiscal 2022)

ASSETS
Current assets:
Cash and cash equivalents	$	10,723		$	52,074
Short-term investments		49,632			—
Accounts receivable		2,955			1,720
Inventories		99,858			93,004
Prepaid expenses and other current assets		7,332			7,214
Total current assets		170,500			154,012

Non-current assets:
Property and equipment, net of accumulated depreciation and amortization		38,429			39,062
Operating lease right-of-use assets		139,907			124,356
Deferred income taxes, net of valuation allowance		22,223			31,455
Intangible assets		1,150			1,150
Other assets		451			563
Total assets	$	372,660		$	350,598

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	28,256		$	27,548
Accrued expenses and other current liabilities		31,945			36,875
Operating leases, current		40,838			37,329
Total current liabilities		101,039			101,752

Long-term liabilities:
Operating leases, non-current		119,502			106,912
Other long-term liabilities		1,352			4,706
Total long-term liabilities		120,854			111,618

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, 78,885,187 and 78,229,861 shares issued at October 28, 2023 and January 28, 2023, respectively		789			782
Additional paid-in capital		324,141			321,516
Treasury stock at cost, 18,712,467 shares at October 28, 2023 and 15,625,172 shares at January 28, 2023		(120,356	)		(105,386	)
Accumulated deficit		(52,136	)		(74,756	)
Accumulated other comprehensive loss		(1,671	)		(4,928	)
Total stockholders' equity		150,767			137,228
Total liabilities and stockholders' equity	$	372,660		$	350,598

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 28, 2023			October 29, 2022			October 28, 2023			October 29, 2022
	(Fiscal 2023)			(Fiscal 2022)			(Fiscal 2023)			(Fiscal 2022)

Sales	$	119,188		$	129,671		$	384,673		$	401,960
Cost of goods sold including occupancy costs		62,577			64,856			196,767			197,960
Gross profit		56,611			64,815			187,906			204,000

Expenses:
Selling, general and administrative		47,962			48,383			143,689			144,441
Impairment (gain) of assets		—			—			—			(398	)
Depreciation and amortization		3,393			3,769			10,338			11,748
Total expenses		51,355			52,152			154,027			155,791

Operating income		5,256			12,663			33,879			48,209

Loss on termination of retirement plans		(57	)		—			(4,231	)		—
Interest income (expense), net		564			(107	)		1,408			(350	)

Income before provision (benefit) for income taxes		5,763			12,556			31,056			47,859
Provision (benefit) for income taxes		1,743			2,083			8,436			(32,944	)


Net income	$	4,020		$	10,473		$	22,620		$	80,803


Net income per share - basic	$	0.07		$	0.17		$	0.37		$	1.28
Net income per share - diluted	$	0.06		$	0.16		$	0.35		$	1.20

Weighted-average number of common shares outstanding:
Basic		60,169			62,016			61,612			62,928
Diluted		63,464			66,229			64,995			67,106

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

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	For the Three Months Ended						For the Nine Months Ended
	October 28, 2023			October 29, 2022			October 28, 2023			October 29, 2022
	(Fiscal 2023)			(Fiscal 2022)			(Fiscal 2023)			(Fiscal 2022)
Net income	$	4,020		$	10,473		$	22,620		$	80,803

Other comprehensive income before taxes:
Foreign currency translation		—			(3	)		—			(10	)
Retirement plans		66			68			197			203
Recognized loss on termination of retirement plans		31			—			4,205			—
Other comprehensive income before taxes		97			65			4,402			193
Tax effect related to items of other comprehensive income		(17	)		—			(1,145	)		—
Other comprehensive income, net of tax		80			65			3,257			193
Comprehensive income	$	4,100		$	10,538		$	25,877		$	80,996

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			Loss			Total
Balance at January 28, 2023		78,230		$	782		$	321,516			(15,625	)	$	(105,386	)	$	(74,756	)	$	(4,928	)	$	137,228
Board of directors' compensation		15			—			108			—			—			—			—			108
Stock compensation expense		—			—			404			—			—			—			—			404
Restricted stock units (RSUs) granted for achievement of performance-based compensation, reclassified from liability to equity		—			—			1,146			—			—			—			—			1,146
Issuance of common stock, upon RSUs release		251			3			(3	)		—			—			—			—			—
Shares withheld for taxes related to net share settlement		(81	)		(1	)		(445	)		—			—			—			—			(446	)
Exercise of stock options		81			1			215			—			—			—			—			216
Other comprehensive income, net of taxes		—			—			—			—			—			—			49			49
Net income		—			—			—			—			—			6,967			—			6,967
Balance at April 29, 2023		78,496		$	785		$	322,941			(15,625	)	$	(105,386	)	$	(67,789	)	$	(4,879	)	$	145,672

Board of directors' compensation		25			—			112			-			—			—			—			112
Stock compensation expense		—			—			411			-			—			—			—			411
Exercise of stock options		85			1			48			-			—			—			—			49
Repurchase of common stock, including excise tax		—			—			—			(2,249	)		(10,905	)		—			—			(10,905	)
Other comprehensive income, net of taxes		—			—			—			—			—			—			3,128			3,128
Net income		—			—			—			—			—			11,633						11,633
Balance at July 29, 2023		78,606		$	786		$	323,512			(17,874	)	$	(116,291	)	$	(56,156	)	$	(1,751	)	$	150,100

Board of directors' compensation		22			—			112			—			—			—			—			112
Stock compensation expense		—			—			800			—			—			—			—			800
Exercise of stock options		44			1			31			—			—			—			—			32
Issuance of common stock, upon RSUs release		285			3			(3	)		—			—			—			—			—
Shares withheld for taxes related to net share settlement		(72	)		(1	)		(311	)		—			—			—			—			(312	)
Repurchase of common stock, including excise tax		—			—			—			(838	)		(4,065	)		—			—			(4,065	)
Other comprehensive income, net of taxes		—			—			—			—			—			—			80			80
Net income		—			—			—			—			—			4,020			—			4,020
Balance at October 28, 2023		78,885		$	789		$	324,141			(18,712	)	$	(120,356	)	$	(52,136	)	$	(1,671	)	$	150,767

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)