What changed in this filing

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Item 1. Financial Statements

2025-12-11 compared with 2025-08-27 · 114 added, 97 removed, 422 unchanged (33% of the section changed)

3 unchanged sentences

(In thousands, except share data)

August 2, 2025

November 1, 2025

February 1, 2025

25 unchanged sentences

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

Common stock, $ 0.01 par value, 125,000,000 shares authorized, 79,725,568 and 79,403,349 shares issued at August 2, 2025 and February 1, 2025, respectively

Common stock, $ 0.01 par value, 125,000,000 shares authorized, 80,461,305 and 79,403,349 shares issued at November 1, 2025 and February 1, 2025, respectively

Additional paid-in capital

Treasury stock at cost, 25,908,533 shares at August 2, 2025 and February 1, 2025

Treasury stock at cost, 25,908,533 shares at November 1, 2025 and February 1, 2025

Accumulated deficit

6 unchanged sentences

For the Three Months Ended

For the Six Months Ended

August 2, 2025

August 3, 2024

August 2, 2025

August 3, 2024

For the Nine Months Ended

November 1, 2025

November 2, 2024

November 1, 2025

November 2, 2024

(Fiscal 2025)

32 unchanged sentences

Balance at August 2, 2025

Board of directors' compensation

Stock compensation expense

Issuance of common stock, upon RSUs release

Shares withheld for taxes related to net share settlement

Balance at November 1, 2025

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

15 unchanged sentences

Balance at August 3, 2024

Board of directors' compensation

Stock compensation expense

Issuance of common stock, upon RSUs release

Shares withheld for taxes related to net share settlement

Repurchase of common stock

Balance at November 2, 2024

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

2 unchanged sentences

(In thousands)

August 2, 2025

August 3, 2024

For the Nine Months Ended

November 1, 2025

November 2, 2024

(Fiscal 2025)

3 unchanged sentences

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

Amortization of deferred debt issuance costs

Amortization and writeoff of deferred debt issuance costs

Gain from the sale of equipment

18 unchanged sentences

Repurchase of common stock, excluding excise taxes

Debt issuance costs

Excise taxes paid on repurchase of common stock

62 unchanged sentences

Actual results and future changes in estimates may differ from the Company’s current estimates.

There were no grants of stock options in the first six months of fiscal 2025 and fiscal 2024.

There were no grants of stock options in the first nine months of fiscal 2025 and fiscal 2024.

Impairment of Long-Lived Assets

5 unchanged sentences

The amount of impairment, if any, is measured based on projected discounted future cash flows using a discount rate reflecting the Company’s average cost of funds.

There were no impairments or non-cash gains recognized in the first six months of fiscal 2025 and fiscal 2024.

There were no impairments or non-cash gains recognized in the first nine months of fiscal 2025 and fiscal 2024.

Advertising Costs

2 unchanged sentences

Direct response advertising costs, if any, are expensed in the period in which the mailing occurs.

Advertising expense, which is included in selling, general and administrative expenses, was $ 7.0 million and $ 11.0 million for second quarter of fiscal 2025 and fiscal 2024, respectively, and was $ 13.5 million and $ 18.3 million for the first six months of fiscal 2025 and fiscal 2024, respectively.

Advertising expense, which is included in selling, general and administrative expenses, was $ 6.2 million and $ 6.1 million for the third quarter of fiscal 2025 and fiscal 2024, respectively, and was $ 19.6 million and $ 24.4 million for the first nine months of fiscal 2025 and fiscal 2024, respectively.

The Company determines if an arrangement contains a lease at the inception of a contract.

6 unchanged sentences

The Company also made an accounting policy election that the recognition requirement of ASC 842 will not be applied to certain, if any, non-store leases, with a term of 12 months or less, recognizing those lease payments on a straight-line basis over the lease term.

At August 2, 2025 , the Company had no short-term leases.

At November 1, 2025 , the Company had no short-term leases.

The Company’s store leases typically contain options that permit renewals for additional periods of up to five years each.

21 unchanged sentences

The ASU allows for adoption on a prospective basis, with a retrospective option.

The Company is currently evaluating the impact of adopting this accounting standard on its financial statements and related disclosures.

The Company is currently evaluating the impact of adopting this accounting standard on its financial statements and related disclosures but expects to adopt this ASU on a prospective basis.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 2 20-40) ("ASU 2024-03"), which will require disclosure, in the notes to financial statements, of specified information about certain costs and expenses, including disclosure of amounts for (a) purchases of inventory, (b) employee compensation, (c) depreciation and (d) intangible asset amortization, included in each relevant expense caption.

3 unchanged sentences

The Company is currently evaluating the impact of this accounting standard on its financial statement presentation and related disclosures.

There were no other new accounting pronouncements, issued or effective during the first six months of fiscal 2025, which had or are expected to have a significant impact on the Company’s Consolidated Financial Statements.

There were no other new accounting pronouncements, issued or effective during the first nine months of fiscal 2025 , which had or are expected to have a significant impact on the Company’s Consolidated Financial Statements.

Revenue Recognition

9 unchanged sentences

Based o n historical redemption patterns, the Company can reasonably estimate the amount of gift cards, gift certificates, and credit vouchers for which redemption is remote, which is referred to as “breakage.” Breakage is recognized over two years in proportion to historical redemption trends and is recorded as sales in the Consolidated Statements of Operations.

The gift card liability, net of breakage, was $ 2.2 million and $ 3.3 million at August 2, 2025 and February 1, 2025, respectively.

The gift card liability, net of breakage, was $ 2.0 million and $ 3.3 million at November 1, 2025 and February 1, 2025, respectively.

Unredeemed Loyalty Coupons.

5 unchanged sentences

As such, at February 1, 2025 there was no outstanding loyalty accrual.

The loyalty accrual, net of breakage, was $ 0.5 million at August 2, 2025.

The loyalty accrual, net of breakage, was $ 0.7 million at November 1, 2025.

Shipping and handling costs are accounted for as fulfillment costs and are included in cost of sales for all periods presented.

5 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

(in thousands)

August 2, 2025

August 3, 2024

August 2, 2025

August 3, 2024

November 1, 2025

November 2, 2024

November 1, 2025

November 2, 2024

Credit Agreement with Citizens Bank, N.A.

The Company has a credit facility with Citizens Bank, N.A (the "Credit Facility").

Through the end of the second quarter of fiscal 2024, the borrowing commitment under the Credit Facility was $ 125.0 million and was to expire on October 28, 2026 .

Subsequent to the end of the second quarter of fiscal 2025, the Credit Facility was amended to extend the maturity date of the Credit Facility to August 13, 2030 and reduce the borrowing commitment under the Credit Facility from $ 125.0 million to $ 100.0 million, see Note 11 - Subsequent Event for a further description of the amendment.

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 swing line loans, which was reduced to $10.0 million as part of the amendment on August 13, 2025.

The Company has a credit facility with Citizens Bank, N.A., which was amended during the third quarter of fiscal 2025 (as amended, the "Credit Facility").

As amended, the borrowing commitment under the Credit Facility was reduced from $ 125.0 million to $ 100.0 million and the maturity date of the Credit Facility was extended to August 13, 2030 .

The Credit Facility includes a sublimit of $ 20.0 million for commercial and standby letters of credit and a sublimit of up to $ 10.0 million for swing line loans, which was reduced from $ 15.0 million as part of the amendment on August 13, 2025.

The Company’s ability to borrow under the Credit Facility is determined using an availability formula based on eligible assets .

7 unchanged sentences

If the Company’s availability under the Credit Facility at any time is less than the greater of (i) 10 % of the Revolving Loan Cap (the lesser of the aggregate revolving commitments or the borrowing base) and (ii) $ 7.5 million, then the Company is required to maintain a minimum consolidated fixed charge coverage ratio of 1.0 :1.0 until such time as availability has exceeded the greater of (1) 10 % of the Revolving Loan Cap and (2) $ 7.5 million for 30 consecutive days.

At August 2, 2025 , the Company had no borrowings outstanding under the Credit Facility and unused availability was $ 70.1 million.

The Company had no borrowings during the first six months of fiscal 2025, resulting in an average unused excess availability of approximately $ 71.8 million.

Outstanding standby letters of credit were $ 4.2 million at August 2, 2025.

At August 2, 2025, the Company’s prime-based interest rate was 7.75 % .

At November 1, 2025 , the Company had no borrowings outstanding under the Credit Facility and unused availability was $ 73.6 million.

The Company had no borrowings during the first nine months of fiscal 2025, resulting in an average unused excess availability of approximately $ 71.1 million.

Outstanding standby letters of credit were $ 3.6 million at November 1, 2025.

At November 1, 2025, the Company’s prime-based interest rate was 7.25 % .

The Company leases all of its store locations and its corporate headquarters, which also includes its distribution center, under operating leases.

6 unchanged sentences

Lease modification accounting requires the recalculation of the ROU asset, lease liability and lease expense over the respective lease term.

As of August 2, 2025, the Company’s operating leases liabilities represent the present value of the remaining future minimum lease payments updated based on concessions and lease modifications.

As of November 1, 2025, the Company’s operating leases liabilities represent the present value of the remaining future minimum lease payments updated based on concessions and lease modifications.

Lease costs related to store locations are included in cost of goods sold, including occupancy costs on the Consolidated Statements of Operations, and expenses and lease costs related to the corporate headquarters and equipment leases are included in selling, general and administrative expenses on the Consolidated Statements of Operations.

The following table is a summary of the Company’s components of net lease cost for the three and six months ended August 2, 2025 and August 3, 2024, respectively:

The following table is a summary of the Company’s components of net lease cost for the three and nine months ended November 1, 2025 and November 2, 2024, respectively:

for the Three Months ended

For the six months ended

August 2, 2025

August 3, 2024

August 2, 2025

August 3, 2024

For the Nine Months Ended

November 1, 2025

November 2, 2024

November 1, 2025

November 2, 2024

(in thousands)

3 unchanged sentences

(1) Variable lease costs include the cost of property taxes, insurance and common area maintenance fees related to leases.

Supplemental cash flow and balance sheet information related to leases as of and for the first six months ended August 2, 2025 and August 3, 2024 was as follows:

Supplemental cash flow and balance sheet information related to leases as of and for the first nine months ended November 1, 2025 and November 2, 2024 was as follows:

(dollars in thousands)

For the six months ended

For the Nine Months Ended

Cash paid for amounts included in the measurement of lease liabilities:

August 2, 2025

August 3, 2024

November 1, 2025

November 2, 2024

Operating cash flows for operating leases (1)

1 unchanged sentence

Right-of-use assets obtained in exchange for operating lease liabilities

August 2, 2025

August 3, 2024

November 1, 2025

November 2, 2024

Weighted average remaining lease term

Weighted average discount rate

(1) The cash paid for the first six months of fiscal 2025 and fiscal 2024 included prepaid rent of $ 4.6 million and $ 4.3 million, respectively.

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the Consolidated Balance Sheet as of August 2, 2025:

(1) The cash paid for the first nine months of fiscal 2025 and fiscal 2024 included prepaid rent of $ 4.7 million and $ 4.4 million, respectively.

(in thousands)

5 unchanged sentences

Long-term lease obligations

During the third quarter of fiscal 2025, the l andlord for one of the store locations exercised its right under the lease agreement, as amended, to terminate the lease agreement effective April 1, 2026 .

As consideration for the landlord's right to terminate prior to the end of the lease term, the landlord will pay the Company a termination fee of approximately $ 1.4 million, which will be recognized by the Company at the time of the lease termination.

Long-Term Incentive Plans

11 unchanged sentences

The award was granted in a combination of 50 % cash and 50 % restricted stock units ("RSUs").

All awards are subject to further vesting through August 31, 2025.

All awards were subject to further vesting through August 31, 2025.

In connection with the grant of 799,349 RSUs, the Company reclassified $ 1.0 million of its liability accrual from “Accrued expenses and other current liabilities” to “Additional paid-in capital” in the first quarter of fiscal 2025.

See the Consolidated Statement of Changes in Stockholders’ Equity.

At August 2, 2025 , the Company had three active LTIPs:

At November 1, 2025 , the Company had three active LTIPs:

the 2023-2025 LTIP, the 2024-2026 LTIP and the 2025-2027 LTIP.

2 unchanged sentences

The performance period for each LTIP is three years .

Awards for any achievement of performance targets will not be granted until the performance targets are achieved and then will be subject to an additional service requirement through August 31, 2026, August 31, 2027 and August 31, 2028, respectively.

Awards for any achievement of performance targets will not be granted until the performance targets are achieved and then will be subject to an additional service requirement through A ugust 31, 2026, August 31, 2027 and August 31, 2028, respectively.

The time-based awards under the 2023-2025 LTIP, the 2024-2026 LTIP, and the 2025-2027 LTIP vest in four equal installments through April 1, 2027, April 1, 2028 and April 1, 2029, respectively.

1 unchanged sentence

Approximately half of the compensation expense for each LTIP relates to the time-based awards, which are being expensed straight-line over 48 months, 49 months and 49 months, respectively.

At August 2, 2025 , the Company had accrued $ 0.2 million under the 2024-2026 LTIP and $ 0.1 million under the 2025-2027 LTIP for performance-based awards.

At November 1, 2025 , the Company had accrued $ 0.3 million under the 2024-2026 LTIP and $ 0.1 million under the 2025-2027 LTIP for performance-based awards.

There was no accrual for performance-based awards under the 2023-2025 LTIP.

3 unchanged sentences

A grant of a stock option award or stock appreciation right will reduce the outstanding reserve on a one-for-one basis, meaning one share for every share granted.

A grant of a full-value award, including, but not limited to, restricted stock, restricted stock units and deferred stock, will reduce the outstanding reserve by a fixed ratio of 1.9 shares for every share granted.

A grant of a full-value award, including, but not lim ited to, restricted stock, restricted stock units and deferred stock, will reduce the outstanding reserve by a fixed ratio of 1.9 shares for every share granted.

At the Company's Annual Meeting of Stockholders held on August 8, 2024, the Company's stockholders approved an increase of 6,150,000 shares authorized for future grant under the 2016 Plan.

At August 2, 2025 , 21,270,538 shares were authorized under the 2016 Plan, of which 4,405,907 shares remained available for grant.

At November 1, 2025 , 21,270,538 shares were authorized under the 2016 Plan, of which 4,266,280 shares remained available for grant.

The 2016 Plan is administered by the Compensation Committee.

2 unchanged sentences

Except with respect to 5 % of the shares available for awards under the 2016 Plan, no award will become exercisable unless such award has been outstanding for a minimum period of one year from its date of grant.

The following tables summarize the share activity and stock option activity for the first six months of fiscal 2025:

The following tables summarize the share activity and stock option activity for the first nine months of fiscal 2025:

Share Units (3)

5 unchanged sentences

Outstanding non-vested shares at end of quarter

(1) During the first six months of fiscal 2025, grants primarily related to the grant of time-based RSUs under its 2025-2027 LTIP and the grants of awards under the 2022-2024 LTIP in connection with the achievement of the performance target.

(1) During the first nine months of fiscal 2025, grants primarily related to the grant of time-based RSUs under its 2025-2027 LTIP and the grants of awards under the 2022-2024 LTIP in connection with the achievement of the performance target.

See Note 5, Long-Term Incentive Plans .

4 unchanged sentences

Kanter's employment agreement.

The award consists of nine tranches, with the first tranche vesting if and when the 30-day volume-weighted closing price of the Company's common stock is equal to or greater than $ 6.50 per share.

The award consists of nine tranches, with the first tranche vesting if and when the 3 0-

d ay volume-weighted closing price of the Company's common stock is equal to or greater than $ 6.50 per share.

Each subsequent tranche will vest upon achievement of the 30-day volume-weighted closing price of the Company's common stock in $0.25 increments with the ninth tranche vesting when such price is equal to or greater than $ 8.50 per share.

2 unchanged sentences

The respective fair value and derived service periods assigned to the PSUs were determined using a Monte Carlo model based on:

a weighted historical volatility of

57.8 %, a term of 3 years, stock price on the date of grant of $ 4.98 per share, a risk-free rate of 4.6 % and a cost of equity of 11.0 %.

a weighted historical volatility of 57.8 %, a term of 3 years, stock price on the date of grant of $ 4.98 per share, a risk-free rate of 4.6 % and a cost of equity of 11.0 %.

(4) Represented compensation, with a fair value of $ 182,241 , to certain directors, who are required to receive shares in lieu of cash, in order to satisfy their minimum equity ownership under the Non-Employee Director Compensation Plan.

12 unchanged sentences

Non-Employee Director Compensation Plan

The Company granted 34,107 shares of common stock, with a fair value of approximately $ 61,993 , to certain of its non-employee directors as compensation in lieu of cash in the first six months of fiscal 2025.

The Company granted 52,013 shares of common stock, with a fair value of approximately $ 84,555 , to certain of its non-employee directors as compensation in lieu of cash in the first nine months of fiscal 2025.

These shares are in addition to any shares that may be granted under the 2016 Plan related to the requirement to receive equity if a director has not yet satisfied his or her minimum equity ownership requirement under the Non-Employee Director Compensation Plan.

Stock Compensation Expense

The Company recognized total stock-based compensation expense of $ 0.7 million and $ 1.8 million for the first six months of fiscal 2025 and fiscal 2024, respectively.

The total compensation cost related to awards not yet recognized as of August 2, 2025 was approximately $ 2.5 million, net of estimated forfeitures, which will be expensed over a weighted average remaining life of 34 months.

The Company recognized total stock-based compensation expense of $ 1.1 million and $ 2.3 million for the first nine months of fiscal 2025 and fiscal 2024, respectively.

The total compensation cost related to awards not yet recognized as of November 1, 2025 was approximately $ 2.1 million, net of estimated forfeitures, which will be expensed over a weighted average remaining life of 32 months.

Equity and Earnings per Share

1 unchanged sentence

For the Three Months Ended

For the six months ended

August 2, 2025

August 3, 2024

August 2, 2025

August 3, 2024

For the Nine Months Ended

November 1, 2025

November 2, 2024

November 1, 2025

November 2, 2024

(in thousands )

3 unchanged sentences

Diluted weighted average common shares outstanding

(1) Common stock equivalents of 2.2 million and 2.4 million for the second quarter and first six months of fiscal 2025, respectively, were excluded from the determination of diluted weighted average common shares outstanding due to the net loss reported in each period.

(1) Common stock equivalents of 2.2 million and 2.3 million for the third quarter and first nine months of fiscal 2025, respectively, and 2.7 million for the third quarter of fiscal 2024 were excluded from the determination of diluted weighted average common shares outstanding due to the net loss reported in each period.

The following potential common stock equivalents were excluded from the computation of diluted earnings per share in each period, because the exercise price of such options was greater than the average market price per share of common stock for the respective periods or because the unearned compensation associated with stock options and restricted stock units had an anti-dilutive effect.

For the Three Months Ended

For the six months ended

August 2, 2025

August 3, 2024

August 2, 2025

August 3, 2024

For the Nine Months Ended

November 1, 2025

November 2, 2024

November 1, 2025

November 2, 2024

(in thousands, except exercise prices)

Stock options

Restricted stock units and deferred stock

Restricted stock units

Range of exercise prices of such options

3 unchanged sentences

$ 4.48 - $ 6.59

The above options, which were outstanding at August 2, 2025 , expire from September 11, 2026 to March 20, 2033 .

Excluded from the computation of basic and diluted earnings per share for the second quarter and first six months of fiscal 2025 and fiscal 2024 were 573,000 performance stock units.

The above options, which were outstanding at November 1, 2025, expire from September 11, 2026 to March 20, 2033 .

Excluded from the computation of basic and diluted earnings per share for the third quarter and first nine months of fiscal 2025 and fiscal 2024 were 573,000 performance stock units.

These performance-based awards will be included in the computation of basic and diluted earnings per share if, and when, the respective performance targets are achieved.

In addition, 524,309 shares and 455,469 shares of deferred stock at August 2, 2025 and August 3, 2024 , respectively, were excluded from the computation of basic earnings per share.

In addition, 553,078 shares and 466,225 shares of deferred stock at November 1, 2025 and November 2, 2024 , respectively, were excluded from the computation of basic earnings per share.

Shares of deferred stock are not considered issued and outstanding until the vesting date of the deferral period.

1 unchanged sentence

Each quarter, the Company updates its estimate of the annual effective tax rate and makes a year-to-date adjustment to the provision.

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

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.

For the first nine months of fiscal 2025 and 2024, the Company’s effective tax rate was 19.8 % and 38.8 % , respectively.

The effective tax rate for the first nine months of fiscal 2025 reflects an annual effective tax rate estimate of 18.3 %, net of discrete items and the impact of permanent book-to-tax differences as well as the impact of adjustments to our net operating losses reflected in our recently filed tax returns.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the U.S.

The legislation permanentl y extends certain expiring provisions of the Tax Cuts and Jobs Act, alters aspects of the U.S.

The legislation permanently extends certain expiring provisions of the Tax Cuts and Jobs Act, alters aspects of the U.S.

international tax regime, and reinstates certain business tax provisions, among other changes.

The OBBBA has multiple effective dates, with provisions becoming effective in 2025 through 2027.

There was no impact to the consolidated financial statements for the second quarter and first six months of fiscal 2025.

The Company is currently assessing the OBBBA’s expected impact on its consolidated financial statements going forward.

There was no impact to the consolidated financial statements for the third quarter and first nine months of fiscal 2025 .

The Company is assessing OBBBA but does not expect it to have a material impact on the Company's consolidated financial statements.

Fair Value Measurement

At August 2, 2025 and February 1, 2025, the Company held U.S.

At November 1, 2025 and February 1, 2025, the Company held U.S.

treasury bills, which were classified as held-to maturity and carried at amortized cost.

6 unchanged sentences

Short-term investments:

At August 2, 2025

At November 1, 2025

At February 1, 2025

4 unchanged sentences

The CODM evaluates the performance of the Company's operating segments and allocates resources based on sales performance, merchandise margins and 4-wall contribution, a non-GAAP measure.

The accounting policies are the same as those described in the Note A, Summary of Significant Accounting Policies included in the Company's consolidated financial statements for the year ended February 1, 2025.

The accounting policies are the same as those described in Note A, Summary of Significant Accounting Policies included in the Company's consolidated financial statements for the year ended February 1, 2025.

The Company defines 4-wall contribution, which the CODM considers the performance measure for segment profitability, as segment revenues less cost of goods sold, occupancy costs and selling expenses.

We aggregate our two operating segments because they are economically similar.

Both segments sell the same merchandise, at the same pricing, and share the same customer base, production, advertising spend and distribution.

Both segments sell the same merchandise, at the

same pricing, and share the same customer base, production, advertising spend and distribution.

Our distribution channels are available to our customers regardless of how they initiate their transaction.

4 unchanged sentences

For the Three Months Ended

For the six months ended

August 2, 2025

August 3, 2024

August 2, 2025

August 3, 2024

For the Nine Months Ended

November 1, 2025

November 2, 2024

November 1, 2025

November 2, 2024

(in thousands)

1 unchanged sentence

Occupancy costs

Store compensation

Store payroll and benefits

Other selling expenses

9 unchanged sentences

Subsequent Event

Subsequent to the end of the second quarter of fiscal 2025, on August 13, 2025, the Company entered into the Second Amendment to Credit Facility ("Second Amendment"), which amended the Credit Facility.

The Second Amendment amended the Credit Facility to:

(i) reduce the size of the revolving commitments from $ 125.0 million to $ 100.0 million, to more closely align the Credit Facility with the Company's lower inventory levels, which the Company has proactively reduced since fiscal 2020;

(ii) extend the maturity of the Credit Facility from October 28, 2026 to August 13, 2030 ;

(iii) reduce the sublimit for swing-line loans from $15.0 million to $10.0 million and (iv) amend the definition of a "Cash Dominion Event" from its previous definition which required the Company to maintain Availability (as defined in the Credit Facility) at all times greater than 12.5 % of the loan cap to requiring the Company to maintain Availability at all times equal to or greater than the greater of (x) 12.5 % of the revolving loan cap and (y) $ 10.0 million.

Agreement and Plan of Merger

On December 11, 2025, the Company, Divine Merger Sub I, Inc., a Delaware corporation and wholly owned direct subsidiary of the Company (“Merger Sub”), and FBB Holdings I, Inc., a Delaware corporation (“FBB” or "FullBeauty Brands"), entered into an Agreement and Plan of Merger (the “Merger Agreement”).

The Merger Agreement provides that, on the terms and subject to the conditions set forth therein, Merger Sub will merge with and into FBB, with FBB continuing as the surviving corporation as a wholly owned subsidiary of the Company (the “Merger”).

FullBeauty Brands, a private company, is a leading retailer in size inclusive fashions for plus-size women and big + tall men.

At the effective time of the Merger, each share of common stock, par value $ 0.01 per share, of FBB (“FBB Common Stock”) will be converted into the right to receive that number of fully paid and nonassessable shares of the common stock, par value $ 0.01 per share, of the Company (the “DXL Common Stock”) equal to the Exchange Ratio, as defined in the Merger Agreement.

A holder of FBB Common Stock who would otherwise be entitled to receive a fraction of a share of DXL Common Stock will have such fractional share rounded up to one whole share of DXL Common Stock.

Following the consummation of the Merger, holders of FBB Common Stock will own 55 % of the combined company and holders of DXL Common Stock will own 45 % of the combined company.

The consummation of the Merger is subject to DXL and FBB stockholder approval and other customary closing conditions and is expected to close in the first half of 2026.

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 1. Financial Statements