What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-27 compared with 2025-05-29 · 151 added, 104 removed, 134 unchanged (66% of the section changed)

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In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “estimate,” “intend,” “plan,” “continue,” “believe,” “expect” or “anticipate” or the negatives thereof, variations thereon or similar terminology.

The forward-looking statements contained in this Quarterly Report are generally located in the material set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but may be found in other locations as well, and include statements regarding our belief that our performance was due to the challenges present in the current economic downcycle and does not reflect on the opportunity in our total addressable market or the longer-term potential for our brand;

our belief that the broader macroeconomic challenges and uncertainty within the apparel industry are impacting consumer sentiment and discretionary spending;

our belief that our customers are trading down from national designer brands to our private label brands;

our belief that our targeted promotions and the introduction of new value-driven brands have had a positive impact on our store traffic;

our belief that our recently implemented initiatives will help to drive enhanced value and affinity for our brand;

our belief that the impact of current tariffs on our financial results for fiscal 2025 could be an increase in costs of less than $2.0 million, or approximately 40 basis points as a percentage of sales;

our ability to manage inventory;

The forward-looking statements contained in this Quarterly Report are generally located in the material set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but may be found in other locations as well, and include statements regarding our belief that the challenging macroeconomic and geopolitical environment is affecting consumer discretionary spending;

our belief that our customer has been gravitating more towards lower priced goods and select promotions which we believe is signaling a consumer who is carefully choosing where and how he spends his money;

our focus on bringing product to market that offers higher quality, lower price points and greater value;

our belief that we are working to expand the core assortment in our private brands and refining our promotional strategy to prioritize relevance, competitiveness, and a stronger perception of value;

our belief that because we own and design our private brand merchandise we are able to better control the margins than with our national designer brands;

our belief that our actions will directly address ongoing consumer sector and macro challenges;

our belief that our targeted promotions will drive greater incremental sales growth;

our belief that the impact of current tariffs on our financial results for fiscal 2025 could be an increase of just under $4.0 million in the cost of inventory purchased;

our belief that our broad and measured actions taken will ultimately improve our results and move the business forward;

our go-forward approach that treats promotions like a managed category, with a clear and deliberate intent around timing, product focus, and purpose to drive sales, engagement, and brand equity;

our believe that we are now better positioned to maximize the return on every markdown dollar, better aligned with strategic imperatives, and precisely target specific customer cohorts;

our belief that reducing investment in underperforming national brands will drive higher profitability and enable us to leverage strategic promotions to fuel customer acquisition and sales growth;

our belief that we can grow our private brand sales penetration from today’s 56.5% to greater than 60% in 2026 and to greater than 65% in 2027;

our belief that we can drive greater customer loyalty and position our private brands as a primary reason customers choose DXL;

our belief that our FiTMAP® technology will enhance customer engagement, attract new customers and establish DXL as a technology leader in men’s big + tall apparel;

our expected expansion of FiTMAP to additional stores by the end of fiscal 2025 and the end of fiscal 2027;

expected marketing costs;

expected capital expenditures in 2025;

expected store openings and store conversions for the remainder of fiscal 2025;

expected marketing costs and expected capital expenditures in fiscal 2025;

expected store openings and store conversions in fiscal 2025;

our ability to manage inventory;

and our expectations regarding liquidity needs for the next 12 months.

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Numerous factors could cause our actual results to differ materially from such forward-looking statements.

The Company encourages readers to refer to its filings with the SEC that set forth certain risks and uncertainties that may have an impact on future results and direction of our Company, including risks related to changes in consumer spending in response to economic factors, the impact of current tariffs, the impact of any further increases in tariffs, the Company's ability to proactively react to the potential changes in tariffs to minimize risk, rising costs, high interest rates;

We encourage readers to refer to our filings with the SEC that set forth certain risks and uncertainties that may have an impact on future results and direction of our Company, including risks related to changes in consumer spending in response to economic factors, the impact of current tariffs, the impact of any further increases in tariffs, our ability to proactively react to the current and further potential changes in tariffs to minimize risk, our ability to grow our private brand;

rising costs, high interest rates;

the impact of ongoing worldwide conflicts on the global economy;

and the Company’s ability to execute on its marketing, digital, store and collaboration strategies, ability to grow its market share, predict customer tastes and fashion trends, compete successfully in the United States men’s big + tall apparel market, and the other risks and uncertainties as set forth in the “Risk Factors” section in Part I, Item 1A of our Fiscal 2024 Annual Report.

and our ability to execute on our marketing, digital, store and collaboration strategies, ability to grow our market share, predict customer tastes and fashion trends, compete successfully in the United States men’s big + tall apparel market, and the other risks and uncertainties as set forth in the “Risk Factors” section in Part I, Item 1A of our Fiscal 2024 Annual Report.

All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing.

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We operate under the trade names of Destination XL ® , DXL ® , DXL Outlets, Casual Male XL ® and Casual Male XL Outlets.

At May 3, 2025, we operated 251 Destination XL stores, 15 DXL outlet stores, 6 Casual Male XL retail stores, 18 Casual Male XL outlet stores and a digital business, including an e-commerce site at dxl.com and a mobile site, m.destinationXL.com, mobile app and third-party marketplaces.

At August 2, 2025, we operated 257 Destination XL stores, 16 DXL outlet stores, 4 Casual Male XL retail stores, 17 Casual Male XL outlet stores and a digital business, including an e-commerce site at dxl.com and a mobile site, m.destinationXL.com, mobile app and third-party marketplaces.

Unless the context indicates otherwise, all references to “we,” “our,” “us” and “the Company” refer to Destination XL Group, Inc.

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For the three months ended

For the six months ended

August 2, 2025

August 3, 2024

August 2, 2025

August 3, 2024

(in millions, except percentage of sales and per share data)

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Net income (loss)

We are currently managing our business through an economic downcycle, and our performance does not reflect the opportunity in our total addressable market or the longer-term potential for our brand.

We believe the broader macroeconomic challenges and uncertainty within the apparel industry are further impacting consumer sentiment and discretionary spending.

We have observed many customers trading down from national designer brands to our private label brands, which have lower average retail prices but higher margins.

Despite these macroeconomic headwinds, we saw a slight improvement in sales over the quarter, largely driven by our stores, which showed improvements in store traffic and conversion versus prior trends.

Our comparable sales for the first quarter of fiscal 2025 were down 9.4%, but we saw gradual improvement over the course of the quarter with comparable sales down 13.9% in February, down 8.2% in March, and further improving to down 7.2% in April.

We remain focused on key initiatives aimed specifically to appeal to our value-driven customers who are more price sensitive and less inclined to shop during this downward economic cycle.

In late 2024, we implemented our price match guarantee, and during the first quarter of fiscal 2025, we launched fit exchange, a first responder program and our new loyalty program, all of which we believe is helping to drive affinity for our brand.

We are also very excited about our FiTMAP sizing technology program, which allows customers to engage with our brand in a much more personalized manner using full body scanning technology.

We have an exclusive license until 2030 for this proprietary FiTMAP Sizing Technology for big + tall men.

Although our overall sales performance was below expectations, we saw some improvement in sales velocity, while still maintaining a healthy merchandise margin and controlling costs.

Our net loss for the first quarter was $(0.04) per diluted share, primarily driven by the sales shortfall.

The situation with tariffs is very fluid and we continue to monitor trade discussions and changes to policy as they develop.

We are leaning into relationships with our vendors and suppliers around the world and we are working very hard to mitigate the cost of those tariffs.

Our discussions with our private label vendors have been productive.

On the domestic side, we are also having dialogue with our national brands as we all try to navigate this environment.

Where possible, we also accelerated the receipt of inventory within the quarter, ahead of certain tariffs, to minimize cost and ensure that we are well positioned ahead of Father's Day.

Looking forward, we will continue to monitor these evolving trade discussions and look for opportunities to proactively mitigate the potential impact of such tariffs.

As of May 3, 2025, we had cash and investments of $29.1 million as compared to $53.2 million at May 4, 2024 with no debt outstanding and unused excess availability of $77.1 million.

Since May 4, 2024, we have used $13.6 million of our available cash to repurchase shares of our common stock.

Our cash and investments balance also reflects a seasonal inventory build.

We continued to maintain our strong financial position, successfully managing our liquidity and our inventory levels, which were down 6.3% to May 4, 2024.

Our second quarter results continue to reflect the challenging macroeconomic and geopolitical environment affecting consumer discretionary spending.

Over the past year, our customer has been gravitating more towards lower priced goods and select promotions, signaling a consumer who is carefully choosing where and how he spends his money.

In response to these challenges, and given our customers' shift to our private brands, we recognize and are focused on bringing product to market that offers higher quality, lower price points and greater value.

As discussed below under Strategic Priorities, we are working to expand the core assortment in our private brands and refining our promotional strategy to prioritize relevance, competitiveness, and a stronger perception of value.

During the second quarter of fiscal 2025, our comparable sales were down 9.2%, primarily driven by a decrease in traffic.

Sales trends improved month over month, with comparable sales down 10.4% in May, down 9.6% in June, and down 7.0% in July.

While our sales performance this quarter was disappointing, we were pleased that we were able to manage our merchandise margins and reduce our operating costs, resulting in an adjusted EBITDA for the second quarter of 4.0% of sales.

As of August 2, 2025, we had cash and investments of $33.5 million as compared to $63.2 million at August 3, 2024 with no debt outstanding and unused excess availability of $70.1 million.

The decrease in cash and investments from the second quarter of fiscal 2024, included the use of $13.6 million in the second half of fiscal 2024 to repurchase shares of common stock and $14.6 million on capital spent over the past 12 months for new store development.

We continued to maintain our strong financial position, successfully managing our liquidity and our inventory level, which was up slightly by 0.4% compared to August 3, 2024, due to the acceleration of receipts in an effort to mitigate the impact of increased costs due to tariffs.

There remains a significant amount of volatility in the market, particularly surrounding tariffs and the impact that these costs will have on an already concerned consumer.

The actions we are taking, we believe, will directly address these ongoing consumer sector and macro challenges.

Assuming the current global tariff rate policies and applications do not change for the remainder of fiscal 2025 and no new tariffs are added, we estimate the impact to add just under $4.0 million to our inventory receipts this year.

We are leaning into our relationships with our vendors and suppliers around the world and we are working hard to mitigate the impact of those tariffs, as well as with a limited focus making retail changes in pricing select elements of the private brand offering.

While there are a number of moving parts, and the clearer horizon is at best a ways ahead, we believe our broad and measured actions taken will ultimately improve our results and move the business forward.

Strategic Priorities

Promotional Strategy:

We have reframed our promotional strategy around a more disciplined, strategic framework that prioritizes relevance, competitiveness, and a stronger perception of value.

Our customer has been telling us that we need to create greater levels of value, and our go-forward approach treats promotions like a managed category, with a clear and deliberate intent around timing, product focus, and purpose to drive sales, engagement, and brand equity.

We are now better positioned to maximize the return on every markdown dollar, better aligned with strategic imperatives, and precisely targeting specific customer cohorts.

Over the course of the next two years, we will be strategically shifting our assortment to prioritize private brands, which deliver consistent fit and the flexibility to balance trend-right fashion with core essentials and stronger margins.

To support this focus, we are reducing investment in underperforming national brands which will drive higher profitability and enable us to leverage strategic promotions to fuel customer acquisition and sales growth.

Our intent is to grow private brand sales penetration from today’s 56.5% to greater than 60% in 2026 and to greater than 65% in 2027.

We are confident that with the strength of our assortment, enhanced storytelling, and strategic marketing efforts, we can drive greater customer loyalty and position our private brands as a primary reason customers choose DXL.

Over the past two years, we have been working with and testing a proprietary FiTMAP® Sizing Technology for which we have an exclusive license for Big + Tall men until 2030.

This innovative, contactless, digital scanning technology captures 243 unique measurements and offers custom clothing options and a great fit for all our customers.

FiTMAP offers a unique experience for our customers, whether selecting from our Ready-to-Wear clothing or opting for custom garments.

We are able to provide recommended sizes in all of our private brands, as well as 15 of our national brands.

We believe this technology will enhance customer engagement, attract new customers and establish DXL as a technology leader in men's big + tall apparel.

To date, we have scanned over 23,000 customers.

At the end of the second quarter of fiscal 2025, FiTMAP was in 62 DXL retail locations.

Subsequent to the end of the second quarter, we opened another 24 stores in August, bringing us to 86 store locations leading into the fall season.

We have a plan to further expand to as many as 200 stores by the end of fiscal 2027.

RESULTS OF OPERATIONS

The following table presents sales by segment for the three months ended May 3, 2025 and May 4, 2024:

The following table presents sales by segment for the three months ended August 2, 2025 and August 3, 2024:

For the Three Months Ended

For the Six Months Ended

(in thousands)

Total sales for the first quarter of fiscal 2025 were $105.5 million, as compared to $115.5 million in the first quarter of fiscal 2024.

The decrease in total sales was primarily attributable to a decrease in comparable sales for the first quarter of 9.4%, partially offset by an increase in non-comparable sales.

Sales trends improved month over month, with comparable sales down 13.9% in February, down 8.2% in March, and down 7.2% in April.

Overall, the first quarter decline was consistent with the sales trend in fiscal 2024, as customers are continuing to pull back on discretionary spending.

We continued to see customers shift toward our private-label merchandise and value-driven brands.

The first quarter comparable sales decrease of 9.4% consisted of a comparable sales decrease of 6.6% from stores and a comparable decrease of 16.2% from our direct business.

While store traffic remained negative for the first quarter of fiscal 2025, there was a gradual improvement over the course of the first quarter.

We believe that our targeted promotions, which include our Fit Exchange by DXL, our Hero/First Responder discounts as well as the introduction of new value-driven brands, have had a positive impact on our store traffic.

The direct business, which includes our website, app and marketplaces, struggled during the first quarter of fiscal 2025 and was challenged by decreases in online traffic and average order value, while conversion was relatively flat.

In addition, in connection with our website conversion, we identified and corrected certain functionalities which we believe likely had a negative impact on sales in the beginning of the first quarter.

August 2, 2025

August 3, 2024

August 2, 2025

August 3, 2024

Total sales for the second quarter of fiscal 2025 were $115.5 million, as compared to $124.8 million in the second quarter of fiscal 2024.

The decrease in total sales was primarily attributable to a decrease in comparable sales for the second quarter of 9.2%, partially offset by an increase in non-comparable sales.

Sales trends improved month over month, with comparable sales down 10.4% in May, down 9.6% in June, and down 7.0% in July.

Comparable sales performance during the second quarter was similar to our first quarter performance, as our customers continued to pull back on discretionary spending and shifted purchases towards our private brand merchandise and value-driven brands.

The second quarter comparable sales decrease of 9.2% consisted of a comparable sales decrease of 7.1% from stores and a comparable sales decrease of 14.4% from our direct business.

The decrease in traffic continued to be the primary driver for the decrease in comparable sales.

While our conversion rate was slightly up, our dollars per transaction were down, partly due to the shift in product mix toward more value-driven merchandise.

We have seen positive results from our Price Match Guarantee, Fit Exchange by DXL, and our Heroes discount and believe that these programs helped to offset some of the negative traffic.

Sales performance from our direct business, which includes our website, app and marketplaces, improved slightly from the first quarter but continued to be challenged by decreases in online traffic and average order value.

In addition, we have experienced some challenges with our new e-commerce platform, which we are actively addressing, that could be contributing to the sales performance for our direct business.

For the first six months of fiscal 2025, total sales of $221.0 million decreased 8.0% as compared to $240.3 million for the first six months of fiscal 2024.

The decrease was primarily driven by a decrease in comparable sales of 9.3%, with stores down 6.8% and our direct business down 15.3%.

Subsequent to the end of the second quarter of fiscal 2025, our store traffic is showing modest improvement with comparable sales for August trending slightly better than July.

Gross Margin Rate

For the first quarter of fiscal 2025, our gross margin rate, inclusive of occupancy costs, was 45.1% as compared to a gross margin rate of 48.2% for the first quarter of fiscal 2024.

For the second quarter of fiscal 2025, our gross margin rate, inclusive of occupancy costs, was 45.2% as compared to a gross margin rate of 48.2% for the second quarter of fiscal 2024.

Our gross margin rate decreased by 300 basis points, which was driven by an increase of 240 basis points in occupancy costs, as a percentage of sales, due to the deleveraging from lower sales and increased rents from new stores and lease extensions.

Merchandise margin for the first quarter decreased by 30 basis points, as compared to the first quarter of fiscal 2024, primarily due to an increase in markdown activity and promotional offers associated with our new marketing initiatives, including the new loyalty program, as well as an increase in freight costs associated with the acceleration of inventory receipts.

These increases were partially offset by an increase in merchandise margins as a result of a shift in product mix.

There remains significant uncertainty with respect to evolving trade policies and the enactment of additional tariffs globally.

We are proactively taking measures to mitigate the impact of such tariffs and trade restrictions on our business.

Given the volatility that currently exists around these trade discussions, it is difficult to determine the potential impact that these tariffs may have on our financial results.

However, if currently enacted rates remain in effect throughout this fiscal year, we estimate that the impact on our

financial results for fiscal 2025 could be an increase in costs of less than $2.0 million, or approximately 40 basis points as a percentage of sales.

Merchandise margin for the second quarter decreased by 60 basis points, as compared to the second quarter of fiscal 2024, primarily due to an increase in freight costs associated with the acceleration of inventory receipts in advance of certain tariffs and markdown activity and promotional offers associated with our new marketing initiatives.

These increases were partially offset by an increase in merchandise margins as a result of a shift in product mix toward our private brand merchandise.

For the first six months of fiscal 2025, our gross margin rate, inclusive of occupancy costs, was 45.1% as compared to a gross margin rate of 48.2% for the first six months of fiscal 2024.

The decrease of 310-basis points was due to an increase of 260-basis points in occupancy costs due to the deleveraging of sales and increased rents and a 50 basis point decrease in merchandise margin.

The decrease in merchandise margin was due to an increase in freight costs associated with the acceleration of inventory receipts partially offset by an increase in merchandise margins as a result of a shift in product mix.

As discussed above, there remains significant uncertainty with respect to evolving trade policies and the enactment of additional tariffs globally.

However, if currently enacted rates remain in effect throughout the remainder of the fiscal year, and no new tariffs are added, we estimate that the impact of tariffs on fiscal 2025 receipts will be just under $4.0 million, which will be recognized through our financial results as inventory turns.

Through the first six months of fiscal 2025, the impact of tariffs on merchandise margins was estimated to be approximately 10 basis points as a percentage of sales.

Selling, General and Administrative Expenses

As a percentage of sales, selling, general and administrative ("SG&A") expenses for the first quarter of fiscal 2025 were 45.0% as compared to 41.1% for the first quarter of fiscal 2024.

On a dollar basis, SG&A expenses decreased by $0.1 million for the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024.

The decrease was primarily due to a decrease in marketing and incentive-based compensation, partially offset by an increase in store payroll and healthcare costs.

On a percentage of sales basis, SG&A expenses increased due to the decrease in sales for the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024.

Marketing costs were 6.1% of sales for the first quarter of fiscal 2025 as compared to 6.3% of sales for the first quarter of fiscal 2024.

For fiscal 2025, marketing costs are expected to be approximately 5.9%.

As a percentage of sales, selling, general and administrative ("SG&A") expenses for the second quarter of fiscal 2025 were 41.2% as compared to 43.0% for the second quarter of fiscal 2024.

For the first six months of fiscal 2025, SG&A expenses, as a percentage of sales, were 43.0% as compared to 42.1% for the first six months of fiscal 2024.

On a dollar basis, SG&A expenses decreased by $6.1 million for both the second quarter and first six months of fiscal 2025.

The decrease in both periods primarily was due to a decrease in marketing and incentive-based compensation, partially offset by an increase in healthcare benefit costs.

For the first six months of fiscal 2025, on a percentage of sales basis, SG&A expenses increased due to the decrease in sales as compared to the first six months of fiscal 2024.

Marketing costs were 6.1% of sales for the second quarter of fiscal 2025 as compared to 8.8% of sales for the second quarter of fiscal 2024, with the decrease primarily attributable to the brand campaign in the second quarter of fiscal 2024.

For the first six months of fiscal 2025, marketing costs were 6.1% of sales as compared to 7.6% of sales for the first six months of fiscal 2024.

For fiscal 2025, marketing costs are expected to be approximately 5.9% of sales.

Management views SG&A expenses through two primary cost centers:

Customer Facing Costs and Corporate Support Costs.

Customer Facing Costs, which include store payroll, marketing and other store and direct operating costs, represented 25.2% of sales in the first quarter of fiscal 2025 as compared to 23.0% of sales in the first quarter of fiscal 2024.

Corporate Support Costs, which include the distribution center and corporate overhead costs, represented 19.8% of sales in the first quarter of fiscal 2025 as compared to 18.1% of sales in the first quarter of fiscal 2024.

Customer Facing Costs, which include store payroll, marketing and other store and direct operating costs, represented 24.6% of sales for the first six months of fiscal 2025 as compared to 24.2% of sales for the first six months of fiscal 2024.

Corporate Support Costs, which include the distribution center and corporate overhead costs, represented 18.4% of sales for the first six months of fiscal 2025 as compared to 17.9% of sales for the first six months of fiscal 2024.

Depreciation and Amortization

Depreciation and amortization for the first quarter of fiscal 2025 increased slightly to $3.6 million as compared to $3.3 million for the first quarter of fiscal 2024.

Our capital expenditures have increased in fiscal 2025 due to the opening of new store locations and investments in certain other infrastructure and technology projects.

Depreciation and amortization for the second quarter of fiscal 2025 increased to $3.9 million as compared to $3.4 million for the second quarter of fiscal 2024.

For the first six months of fiscal 2025, depreciation and amortization was $7.5 million as compared to $6.7 million for the first six months of fiscal 2024.

The increase in depreciation and amortization in fiscal 2025 is due to the opening of new store locations and investments in certain other infrastructure and technology projects.

Interest Income, Net

Net interest income for the first quarter of fiscal 2025 was $0.3 million as compared to $0.6 million for the first quarter of fiscal 2024.

For both periods, interest income was earned from investments in U.S.

Net interest income for the second quarter of fiscal 2025 was $0.2 million as compared to $0.6 million for the second quarter of fiscal 2024.

For the first six months of fiscal 2025, net interest income was $0.5 million as compared to $1.1 million for the first six months of fiscal 2024.

The decrease in interest income for the second quarter and first six months of fiscal 2025 was primarily due to the decrease in the average balance of investments as compared to the second quarter and first six months of fiscal 2024.

For both years, interest income was earned from investments in U.S.

government-backed investments and money market accounts.

The decrease in interest income was due to the decrease in the average balance of investments during the first quarter of fiscal 2025 as compared to the prior year period.

Interest costs for both periods were minimal because we had no outstanding debt and no borrowings under our credit facility.

Interest costs for all periods were minimal because we had no outstanding debt and no borrowings under our credit facility.

Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any.

Each quarter, we update our estimate of the annual effective tax rate and make a year-to-date adjustment to the provision.

For the first quarter of fiscal 2025 and fiscal 2024, our effective tax rate was 39.7% and 30.4%, respectively.

The increase in the effective tax rate for the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, was primarily due to permanent book-to-tax differences.

While in dollars, these permanent book-to-tax differences are down, the impact as a percentage of our estimated annual pretax income is greater.

For the first six months of fiscal 2025 and 2024, the Company’s effective tax rate was 4.6% and 32.3%, respectively.

The effective tax rate for the first six months of fiscal 2025 reflects an annual effective tax rate estimate of 6.9% net of discrete items and the impact of permanent book-to-tax differences.

On an annual basis, while in dollars these permanent book-to-tax differences are down, the impact as a percentage of our estimated annual pretax earnings is greater.

Net Income (Loss)

For the first quarter of fiscal 2025, we recorded a net loss of $1.9 million, or $(0.04) per diluted share, as compared to net income of $3.8 million, or $0.06 per diluted share, for the first quarter of fiscal 2024.

The decrease in earnings for the first quarter of fiscal 2025 was driven primarily by the decrease in sales.

As of May 3, 2025, our inventory decreased by approximately $5.8 million to $85.5 million, as compared to $91.2 million at May 4, 2024.

For the second quarter of fiscal 2025, we recorded a net loss of $(0.3) million, or $0.00 per diluted share, as compared to net income of $2.4 million, or $0.04 per diluted share, for the second quarter of fiscal 2024.

For the first six months of fiscal 2025, the net loss was $(2.2) million, or $(0.04) per diluted share, as compared to net income of $6.2 million, or $0.10 per diluted share, for the first six months of fiscal 2024.

The decrease in earnings for the second quarter and first six months of fiscal 2025 was driven primarily by the decrease in sales.

As of August 2, 2025, our inventory increased by $0.3 million to $78.9 million, as compared to $78.6 million at August 3, 2024.

We continue to take proactive measures to manage our inventory and adjust our receipt plan given the ongoing macroeconomic factors affecting consumer spending while, at the same time, accelerating certain receipts to avoid the impact of potential tariffs.

At May 3, 2025, our clearance inventory was 9.5% of our total inventory, as compared to 9.7% at May 4, 2024.

Our inventory position is very strong and our clearance levels are in line with our benchmark of 10% even with the 6.3% decrease in total inventory.

At August 2, 2025, our clearance inventory was 10.2% of our total inventory, as compared to 10.4% at August 3, 2024.

Our inventory position is

very strong and our clearance levels are in line with our benchmark of 10%.

Our inventory turnover rate has improved by over 30% from fiscal 2019.

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Our primary sources of liquidity are our cash and cash equivalents, short-term investments, cash generated from operations and availability under our credit facility, which is discussed below.

At May 3, 2025, we had no outstanding debt, including no borrowings under our credit facility during the first three months of fiscal 2025.

At August 2, 2025, we had no outstanding debt, including no borrowings under our credit facility during the first six months of fiscal 2025.

Cash that is in excess of our forecasted needs may be invested in money market accounts and U.S.

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However, we remain cautious regarding the effect that the current macroeconomic conditions may have on consumer spending, including geopolitical conflicts around the world, the imposition of tariffs, inflation and high interest costs.

We also believe that cash flows from operating activities and cash on hand will be sufficient to satisfy our current capital requirements and our stock repurchase program.

We also believe that cash flows from operating activities and cash on hand will be sufficient to satisfy our current capital requirements.

In the longer term, to the extent future capital requirements exceed cash on hand plus cash flows from operating activities, we anticipate that working capital will be financed by our credit facility.

For the first three months of fiscal 2025, cash flow from operations was $(12.0) million as compared to $(1.1) million for the first three months of fiscal 2024.

The decrease in cash flow from operations was primarily due to a decrease in earnings and the timing of payables associated with the acceleration of inventory receipts during the first quarter of fiscal 2025.

We operate in a seasonal business that typically includes greater uses of cash in the first quarter as we build inventory in anticipation of the summer selling season.

Free cash flow, before capital expenditures for store development, a non-GAAP measure, was $(14.5) million for the first three months of fiscal 2025 as compared to $(4.6) million for the first three months of fiscal 2024.

Free cash flow, a non-GAAP measure, was $(18.8) million for the first three months of fiscal 2025 as compared to $(7.0) million for the first three months of fiscal 2024.

For the three months ended

For the first six months of fiscal 2025, cash flow from operations was $(2.1) million as compared to $16.0 million for the first six months of fiscal 2024.

The decrease in cash flow from operations was primarily due to a decrease in earnings and the timing of payables associated partly with the acceleration of inventory receipts during the first six months of fiscal 2025 and the timing of other working capital.

Free cash flow, before capital expenditures for store development, a non-GAAP measure, was $(7.6) million for the first six months of fiscal 2025 as compared to $8.4 million for the first six months of fiscal 2024.

Free cash flow, a non-GAAP measure, was $(14.2) million for the first six months of fiscal 2025 as compared to $3.2 million for the first six months of fiscal 2024.

For the six months ended

(in millions)

August 2, 2025

August 3, 2024

Cash flow from operating activities (GAAP basis)

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Free Cash Flow (non-GAAP basis)

Cash flow provided by investing activities was $8.3 million as compared to cash flow used for investing activities of $10.0 million for the first three months of fiscal 2024.

The increase in cash flow provided by investing activities of $18.3 million was primarily due to the maturity, net of purchases, of short-term investments, partially offset by an increase in capital expenditures.

Cash flow provided by investing activities was $4.4 million as compared to cash flow used for investing activities of $(21.9) million for the first six months of fiscal 2024.

The increase in cash flow provided by investing activities of $26.3 million was primarily due to the maturity of short-term investments and a decrease in the amount of short-term investments purchased.

Credit Facility

The Company has a $125.0 million revolving credit agreement with Citizens Bank, N.A., with a maturity date of October 28, 2026 (the "Credit Facility").

The Credit Facility includes a sublimit of $20.0 million for commercial and standby letters of credit and a sublimit of up to $15.0 million for swingline loans.

Borrowings under the Credit Facility bear interest at either a Base Rate or Daily Simple SOFR rate, at the Company's option.

We have a $125.0 million revolving credit agreement with Citizens Bank, N.A., with a maturity date of October 28, 2026 (the "Credit Facility").

On August 13, 2025, subsequent to the end of the second quarter of fiscal 2025, the Credit Facility was amended by entering into the Second Amendment to Credit Facility.

As a result of the amendment, the maturity date was extended to August 13, 2030 and the revolving commitments under the facility were reduced from $125.0 million to $100.0 million, to more closely align with our average inventory levels, which serve as the primary borrowing base for the Credit Facility.

In addition, the sublimit for swing-line loans was reduced from $15.0 million to $10.0 million.

The Credit Facility continues to include a sublimit of $20.0 million for commercial and standby letters of credit.

Our availability under the Credit Facility did not materially change as a result of the amendment.

Borrowings under the Credit Facility bear interest at either a Base Rate or Daily Simple SOFR rate, at our option.

Base Rate loans will bear interest at a rate equal to (i) the greater of:

(a) the Prime Rate, (b) the Federal Funds effective rate plus 0.50% per annum and (c) the Daily Simple SOFR rate plus 1.00% per annum (provided the Base Rate shall never be less than the Floor (as defined in the Credit Facility)), plus (ii) a varying percentage, based on the Company’s average excess availability, of either 0.25% or 0.50% (the “Applicable Margin”).

(a) the Prime Rate, (b) the Federal Funds effective rate plus 0.50% per annum and (c) the Daily Simple SOFR rate plus 1.00% per annum (provided the Base Rate shall never be less than the Floor (as defined in the Credit Facility)), plus (ii) a varying percentage, based on our average excess availability, of either 0.25% or 0.50% (the “Applicable Margin”).

Daily Simple SOFR loans will bear interest at a rate equal to (i) the Daily Simple SOFR rate plus an adjustment of 0.10% (provided the Daily Simple SOFR rate shall never be less than the Floor), plus (ii) the Applicable Margin.

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We are subject to an unused line fee of 0.25%.

We had no outstanding borrowings under the Credit Facility at May 3, 2025 and no borrowings during the first three months of fiscal 2025.

At May 3, 2025, outstanding standby letters of credit were $4.2 million.

The average unused excess availability during the first three months of fiscal 2025 was approximately $68.7 million and the unused excess availability at May 3, 2025 was $77.1 million.

We had no outstanding borrowings under the Credit Facility at August 2, 2025 and no borrowings during the first six months of fiscal 2025.

At August 2, 2025, outstanding standby letters of credit were $4.2 million.

The average unused excess availability during the first six months of fiscal 2025 was approximately $71.8 million and the unused excess availability at August 2, 2025 was $70.1 million.

Capital Expenditures

The following table sets forth the open stores and related square footage at May 3, 2025 and May 4, 2024, respectively:

The following table sets forth the open stores and related square footage at August 2, 2025 and August 3, 2024, respectively:

August 2, 2025

August 3, 2024

Store Concept

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Casual Male Outlets

During the first three months of fiscal 2025, we opened two new DXL stores and converted one Casual Male XL retail store and one Casual Male XL outlet to DXL stores.

We expect to open six additional DXL stores during fiscal 2025 and expect our capital expenditures to range from $19.0 million to $21.0 million, net of tenant incentives.

Over the past two years, we have been working with and testing a proprietary FiTMAP Sizing Technology for which we have an exclusive license for big + tall men until 2030.

This innovative, contactless, digital scanning technology captures 242 unique measurements and offers custom clothing options for all our customers, and size recommendations across the variety of brands for a great fit.

FiTMAP offers a unique experience for our customers, whether selecting from our Ready-to-Wear clothing or opting for custom garments.

This technology currently provides recommended sizes in all of our private label brands, as well as 15 of our exclusive national brands.

We believe this technology will enhance customer engagement, attract new customers and establish DXL as a technology leader in men's big + tall apparel.

To date, we have scanned over 20,000 customers.

FiTMAP is currently in 52 DXL retail locations with a plan to end fiscal 2025 with 85 stores and to further expand to as many as 200 stores by the end of fiscal 2027.

During the first six months of fiscal 2025, we opened six new DXL stores, converted three Casual Male XL retail stores and one Casual Male XL outlet to DXL retail stores and one Casual Male XL outlet to a DXL outlet.

We expect to open two additional DXL stores during fiscal 2025 and expect our capital expenditures to range from $17.0 million to $19.0 million, net of tenant incentives.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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We define free cash flow as cash flow from operating activities less capital expenditures.

We define free cash flow before capital expenditures for store development as cash flow from operations activities less all capital expenditures except capital expenditures for store development.

We define free cash flow before capital expenditures for store development as cash flow from operations less all capital expenditures except capital expenditures for store development.

Capital expenditures for store development includes capital expenditures for new stores, conversions of Casual Male XL stores to DXL and remodels.

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The following table reconciles free cash flow:

For the three months ended

For the six months ended

(in millions)

August 2, 2025

August 3, 2024

Cash flow from operating activities (GAAP basis)

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For the three months ended

For the six months ended

August 2, 2025

August 3, 2024

August 2, 2025

August 3, 2024

(in millions)

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis