DXLG 10-K & 10-Q changes, risk factors and insider trading
Destination Xl Group, Inc. · Nasdaq · Retail-Family Clothing Stores · CIK 813298 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “If we are unable to complete the announced Merger with FullBeauty, it could have a material adverse effect on our business, results of operations, financial condition, cash flows, and stock price, and, even if the Merger is completed, there can be no assurance that the combined company will realize the anticipated benefits of the Merger or achieve expected results.”
New heading “Changes in consumer health trends, including the increased use of GLP-1 and similar weight-loss medications, could adversely affect demand for our merchandise, though such trends may also create new opportunities.”
New heading “We may be unable to effectively implement, manage, or adapt our artificial intelligence initiatives, and the steps we take may be insufficient relative to our competitors.”
New heading “We may not be able to maintain the listing of our common stock on Nasdaq.”
Largest changes
“Our business is subject to federal, state, and increasing local rules and regulations, such as state and local wage and hour laws, the Employee Retirement Income Security Act (“ERISA”), securities laws, import and export laws (including customs regulations), state privacy and information security regulations, unclaimed property laws, and many others. Some of these laws and regulations may increase the cost of doing business and have a material impact on our earnings. …”see in full comparison
“Our business is subject to federal, state, and increasing local rules and regulations, such as state and local wage and hour laws, the Employee Retirement Income Security Act (“ERISA”), securities laws, import and export laws (including customs regulations), state privacy and information security regulations, unclaimed property laws, and many others. Some of these laws and regulations may increase the cost of doing business and have a material impact on our earnings. …”see in full comparison
“If we are unable to comply with Nasdaq’s continued listing standards and our common stock is delisted, our common stock would be eligible for quotation on "over-the-counter" markets, which are generally considered less efficient than Nasdaq and other national exchanges because of lower trading volumes, transaction delays and reduced security analyst and news media coverage. Any delisting of our common stock could adversely affect the market liquidity of our common stock, and the market price of our common stock could decrease. …”see in full comparison
“We may be unable to effectively implement, manage, or adapt our artificial intelligence initiatives, and the steps we take may be insufficient relative to our competitors.”see in full comparison
“In 2025, the U.S. government announced the imposition of additional tariffs on certain goods imported from numerous countries, including Vietnam, India and Bangladesh. Multiple nations responded with reciprocal tariffs and other trade actions. The recent imposition and subsequent invalidation of tariffs by the U.S. government, along with the unpredictability of the rates and other potential actions that may be taken by the U.S. …”see in full comparison
“In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided a compliance period of 180 calendar days, or until August 3, 2026, in which to regain compliance with the minimum bid price requirement. In order to regain compliance, the consolidated closing bid price of the Company’s common stock must be at least $1.00 per share for a minimum of 10 consecutive business days during this period. …”see in full comparison
Full comparison: every changed paragraph (59)
If we are unable to complete the announced Merger with FullBeauty, it could have a material adverse effect on our business, results of operations, financial condition, cash flows, and stock price, and, even if the Merger is completed, there can be no assurance that the combined company will realize the anticipated benefits of the Merger or achieve expected results.
On December 11, 2025, we announced that we had entered into a Merger Agreement with FullBeauty. The Merger, which is expected to close during the second quarter of fiscal 2026, is subject to customary closing conditions, including approval by the Company's stockholders. There is no assurance that all of the conditions will be satisfied, that the Merger will be completed on the announced terms, or that our stockholders will approve the Merger within the expected timeframe or at all. The closing of the Merger may be delayed, or the Merger may not be completed, for any number of reasons, including a failure to obtain stockholder approval.
If the Merger is not completed, we could suffer consequences that may adversely affect our business, financial condition, operating results, cash flows and stock price. To the extent that the market price of our common stock reflects the assumption that the Merger will be completed, the price of our stock could decline if it is not completed. We may experience adverse effects or changes to our relationships with customers, employees, suppliers, or other parties during the transition period or following a failure to complete the Merger. We may also experience increased employee attrition due to the uncertainties regarding future employment or job responsibilities as a result of the Merger. In addition, there may be potential litigation relating to the Merger instituted against us.
Further, even if the Merger is completed, there can be no assurance that we will be able to successfully integrate and scale our operations or realize the anticipated benefits and synergies of the Merger.
grow our store portfolio;
build successful collaborations and alliances, similar to our alliances with UNTUCKit and Nordstrom;
manage and grow our store portfolio;
Changes in consumer health trends, including the increased use of GLP-1 and similar weight-loss medications, could adversely affect demand for our merchandise, though such trends may also create new opportunities.
The growing availability and adoption of GLP-1 receptor agonists and other prescription medications used for weight management may contribute to changes in body size, weight distribution, and apparel needs among consumers. To the extent these medications lead to sustained weight loss or reduced demand for extended-size apparel, particularly among men who historically have required big + tall sizing, demand for our core product offerings could decline, which could adversely affect our sales, inventory planning, and operating results.
In addition, rapid or uneven changes in customer sizing preferences could increase inventory risk, including higher markdowns to clear excess inventory, and may require adjustments to our merchandising strategy, sourcing, and supply chain that we may not be able to execute efficiently or on favorable terms.
At the same time, these trends may also present potential opportunities for our business. Customers experiencing weight changes may require replacement wardrobes more frequently, including during transitional sizing periods, which could increase purchase frequency or demand for a broader range of sizes and fits. On the other hand, big + tall customers on a weight loss journey may shop less often to avoid buying clothing in interim sizes. We may benefit from opportunities to expand adjacent size categories, introduce new fits or product lines, or strengthen customer relationships through personalized customer service, loyalty programs, or fit-focused offerings. We believe that our FiTMAP® technology, which is an innovative, contactless digital scanning technology licensed by Formcut until January 1, 2030 that captures 243 unique measurements, and our proprietary Size Mapping tool, which ensures a great fit for our scanned customers with most of our best-selling brands, as well as our custom clothing offerings, uniquely position us to help consumers respond to the positive effects of these medications. However, our ability to realize any such benefits will depend on our ability to anticipate and respond effectively to evolving consumer preferences, manage inventory and costs, and execute our strategic initiatives successfully.
Our marketing programs and efforts to drive awareness and traffic and to convert that traffic into an increased loyal customer base are critical to achieving market share growth within the big + tall men’s apparel market and may not be successful.
Our ability to increase our share of the big + tall men’s apparel market is largely dependent on effectively marketing our brand and merchandise to all of our target customers in several diverse market segments so that they will become loyal shoppers who spend a greater portion of their wallets on our product offerings. In order to grow our market share, we depend on the success of our marketing and advertising in a variety of ways, including streaming media advertising, advertising events, our loyalty program, direct mail, paid search, and digital marketing, including social media and customer prospecting. Our business is directly impacted by the success of these efforts and those of our vendors. Future marketing efforts by us, our vendors or our other licensors,licensors may be more costly than prior years and, if not successful, may negatively affect our ability to meet our sales goals and gain market share.
We have made significant investments in capital spending and labor to develop our direct channels and increased investments in digital marketing to attract new customers. The growth of our overall sales is dependent on customers’customers continuing to expand their online purchases in addition to in-store purchases. While it is our objective to continue to grow this business, there can be no assurance that this growth will continue or be sustainable.
Our success in growing our direct business will depend in part upon our development of an increasingly sophisticated e-commerce experience and infrastructure. Increasing sophistication requires that we provide additional website features, functionality and messaging in order to be competitive in the marketplace and maintain market share. By the end of fiscal 2024, we were in the final stages of launching our new updated e-commerce platform. There can be no assurance that this change will drive additional traffic and conversion or that our customers will respond positively to the changes.
Our business may be adversely affected if we are unable to manage and grow our store portfolio successfully.
One of our long-term strategic initiatives is to grow our store portfolio over the next several years and we have identified multiple white space opportunities in new or underpenetrated markets. However, given the current market conditions and economic headwinds, we have paused opening new stores in fiscal 2026. We arecontinue alsoto actively reviewingreview opportunities to relocate or convert the majoritysome of our remaining Casual Male XL stores to DXL. If we are unable to find locations or obtain favorable lease terms, we may not be able to grow or maintain our current store base and the lack of store growth could negatively affect our ability to grow revenue and market share. Depending on market conditions and our Company's performance, the pace at which we open store locations may have to be slowed or paused.
If we are unable to obtain favorable lease terms, we may not be able to maintain our current store base. In addition, the lack of store growth could negatively affect our ability to grow revenue and market share. Depending on market conditions and our Company's performance, similar to what we have seen in fiscal 2025, the pace at which we open store locations may have to be paused beyond fiscal 2026.
Disruptions in the global supply chain in foreign ports, the impact of tariffs, the impact of climate changechange, and the shortages of vessels and shipping containers may impact our ability to import inventory in a timely manner. InstabilityThe inimposition theof Middle East has made accessing the Suez Canal a risk, thereby prompting vessels to avoid this route, which adds timetariffs and cost. In addition, statements from the current administration regarding potentialreciprocal tariffs, sanctions, import/export restrictions and other future actions may have a negative impact on the supply chain and may limit the availability of certain raw materials and result in anincreased increasecosts. Instability in the Middle East continues to make accessing the Suez Canal a risk, thereby prompting vessels to avoid this route, which adds time and cost. Insurance costs to cover shipments have significantly increased due to risk of associatedattacks cost.on commercial vessels. In the event that commercial transportation is curtailed or substantially delayed, we may not be able to maintain adequate inventory levels of important merchandise on a consistent basis, which would negatively impact our sales and potentially erode the confidence of our customer base, leading to loss of sales and an adverse impact on our results of operations. Furthermore, we may continue to incur incremental freight costs, which could negatively harm our gross margin rates.
In 2025, the U.S. government announced the imposition of additional tariffs on certain goods imported from numerous countries, including Vietnam, India and Bangladesh. Multiple nations responded with reciprocal tariffs and other trade actions. The recent imposition and subsequent invalidation of tariffs by the U.S. government, along with the unpredictability of the rates and other potential actions that may be taken by the U.S. government and foreign governments (including trade restrictions, new or increased tariffs or quotas, embargoes, sanctions and counter sanctions, safeguards or customs restrictions) may materially increase our costs and reduce our margins. The unpredictability surrounding tariffs and trade policies has resulted in substantial uncertainty and may negatively impact our operational management and our ability to forecast with confidence.
In light of the implications of new tariffs, many companies, including ours, have had to reassess their global sourcing strategy in an effort to minimize the impact of these tariffs. During fiscal 2025, we took several actions to mitigate the impact of these tariffs, including acceleration of receipts, further diversifying suppliers and re-sourcing to countries with lower tariffs, working with longstanding factory partners to reduce costs, identifying further cost reductions across our business and planning for strategic price increases and growing our participation in the First Sale Initiative (a U.S. Customs approved program) with a majority of our vendors. However, there can be no assurance that our current or future actions to mitigate such tariffs will be successful.
Given the uncertainty regarding the treatment of tariff amounts previously paid and the scope and durability of current and future tariff measures, as well as the potential for additional trade actions by the U.S. or other countries, the specific impact to our business, results of operations, cash flows and financial condition is uncertain, but could be material. Further, any emerging nationalist trends in specific countries could alter the trade environment and consumer purchasing behavior which, in turn, could have a material effect on our financial condition and results of operations.
The recent discussion of tariffs on various products by the United States and other countries may create greater uncertainty with respect to trade policies and government regulations affecting trade between the United States and other countries. Furthermore, it is possible that other forms of trade restriction, including tariffs, quotas and customs restrictions, will be put into place in the United States or in countries from which we source our products. We cannot predict whether any of the countries in which our merchandise currently is manufactured or may be manufactured in the future will be subject to additional trade restrictions imposed by the United States or other foreign governments, including the likelihood, type, or effect of any such restrictions. Any of these actions, if ultimately enacted, could adversely affect our results of operations or profitability. Further, any emerging nationalist trends in specific countries could alter the trade environment and consumer purchasing behavior which, in turn, could have a material effect on our financial condition and results of operations.
In addition, even if our current manufacturers continue to manufacture our products, they may not maintain adequate controls with respect to product specifications and quality and may not continue to produce products that are consistent with our standards. If we are forced to rely on manufacturers who produce products of inferior quality, then our brand and customer satisfaction would likely suffersuffer, which would negatively impact our business. These manufacturers may also increase the cost to us of the products we purchase from them.
The UnitedU.S. StatesDepartment of the Treasury Department has placed sanctions on China’s Xinjiang Production and Construction Corporation ("XPCC") for serious human rights abuses against ethnic minorities in China’s Xinjiang Uyghur Autonomous Region. In addition, in January 2021, the U.S. Customs and Border Protection issued a Withhold Release Order on products made in Xinjiang. In response to the problems in Xinjiang, we developed a Compliance Certificate of Traceability for our cotton vendors. Although we prohibit our vendors from doing business with XPCC, we could be subject to penalties, fines or sanctions and our brand could be harmed if any of the vendors from which we purchase product is found to have done business, directly or indirectly, with XPCC.
We work with a third-party audit vendor to ensure a responsible and ethical supply chain. We are and will continue to pursue our corporate responsibilities and create a positive effect on human rights as well as the environment. The Company publishes a Vendor Code of Conduct, which is a part of every agreement requiring compliance by the manufacturing facilities. If, despite third-party audits, the manufacturing facilities engage in workplace or human rights violations and we are unable to identify or correct it,such violations, it may negatively affect our business and harm our brand.
On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs imposed by the current administration under the International Emergency Economic Powers Act in 2025, including tariffs on global imports from China, Canada, and Mexico, were unlawful. However, not all tariffs imposed in 2025 will be impacted by this decision, and new tariffs have, and may continue to be, implemented under other statutory authorities. Following the U.S. Supreme Court’s ruling, the current administration issued a presidential proclamation imposing additional tariffs under U.S. trade laws, which can remain in effect for up to 150 days unless further extended by the U.S. Congress. The current administration may continue to impose additional tariffs under U.S. trade laws. These events introduce uncertainty regarding the treatment of tariff amounts previously paid and the scope and durability of current and future tariff measures. Even if certain tariffs affecting our Company are ultimately invalidated, we may not be able to fully recover increased costs associated with product delivery and related services from international vendors.
The United States big + tall men’s apparel market is highly competitive with many national and regional department stores, mass merchandisers, specialty apparel retailers, discount stores and online retailers offering a broad range of apparel products similar to the products that we sell. Besides retail competitors, we consider any manufacturer of big + tall men’s merchandise operating in outlet malls throughout the United States to be a competitor. It is also possible that another competitor, either a mass merchant or a men’s specialty store or specialty apparel catalog, could gain market share in big + tall men’s apparel due to more favorable pricing, locations, brand and fashion assortment and size availability. Many of our competitors and potential competitors may have substantially greater financial, manufacturing and marketing resources than we do.
We maintain exclusivity arrangements with several of our national brands. The loss, reduction, or non‑renewal of these exclusivity agreements could diminish customer traffic, reduce our ability to command premium pricing, and negatively affect sales. Our strategic shift toward a higher private-brand penetration may reduce this risk. However, if the performance of our private brands does not meet expectations due to a lack of customer acceptance or a failure to provide competitive pricing, our revenues and gross margins may be negatively affected.
In addition, we maintain exclusivity arrangements with several of the brands that we carry. If we were to lose any of these exclusivity arrangements or brands altogether, our revenues may be adversely affected.
We may be unable to effectively implement, manage, or adapt our artificial intelligence initiatives, and the steps we take may be insufficient relative to our competitors.
Our adoption of artificial intelligence (“AI”) technologies exposes us to operational, strategic, and compliance risks. Successful implementation of AI depends on the effective integration of new tools and processes, and we may experience delays, technical challenges, or disruptions that could adversely affect our operations. In addition, our planned investments in AI may not achieve the expected efficiencies or competitive advantages.
Our current use of AI is limited to AI platforms provided through our existing third‑party service providers. These tools are proprietary to us and are primarily used to improve workflow efficiencies. Changes by these third‑party service providers, including pricing adjustments, modifications to functionality, reduced service availability, or compatibility issues, could negatively impact our operations or increase costs. In addition, the growing consumer shift toward AI‑driven search and discovery may reduce the effectiveness of traditional digital channels. If we do not adapt to these changes, our customer acquisition and engagement efforts could be adversely affected.
The use of AI to process and analyze customer data increases our exposure to data privacy, cybersecurity, and regulatory risks. Any failure to protect data, comply with applicable regulations, or appropriately govern AI‑enabled processes could result in legal, financial, or reputational harm. Ensuring that our associates use only Company‑approved AI technologies presents an additional governance and compliance challenge. Integrating AI into our business processes may also require significant employee training and change‑management efforts, and resistance to such changes could negatively impact productivity.
If we are unable to effectively implement, manage, or adapt our AI initiatives, our business, financial condition, and results of operations, could be materially adversely affected.
The concern that a gradual rise in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases ("GHG") in the atmosphere is very real and the belief that this will cause significant changes in weather patterns is widely held. This appears to be resulting in an increase in the frequency, severity, and duration of extreme weather conditions and natural disasters, as well as water scarcity and poor water quality. These events could adversely impact the availability and price of cotton and other raw materials, disrupting the supply chain and our ability to secure merchandise. Further, extreme weather conditions caused by climate change could negatively impact our financial results if our retail locations are unable to open, customers are unable to travel or our distribution center is unable to fulfill orders or deliverydeliver inventory. These events could also create adverse economic conditions and impact consumer confidence and discretionary spending. As a result, the effects of climate change could have a long-term adverse impact on our business and results of operations. We are working to develop policies, standards and goals to help mitigate these risks, including working closely with our vendors and business partners to help identify such risks, develop standards and improve processes.
We use a risk-based approach to evaluate the environmental impact throughout our value chain. We have an Environmental Policy, which describes our efforts to safeguard the environment and minimize our global footprint. We are also working to develop additional policies, standards and goals to help mitigate the risks associated with the effects of climate change, including working closely with our vendors and business partners to help identify such risks, develop standards and improve processes.
We are committed to corporate social responsibility and sustainability, and we recognize the importance of environmental, social and governance ("ESG") issues. Our Sustainability and Governance Committee, comprising a cross-discipline of corporate management, haspreviously engagedworked with a third-party firm to assist us in the development of the Company's policies and initiatives.initiatives and may again in the future. The ability to achieve our objectives is subject to risks and uncertainties, and we may fail to achieve our objectives. We may also incur additional costs and require additional resources to implement such policies and initiatives.
An increased focus by local, state, regional, national, and international regulatory bodies on GHG emissions and climate change issues increases the risk to our business if we are unable to comply with the multiple and evolving policy changes. For example, in March 2024, the SEC adopted rules to enhance and standardize climate-related disclosures by public companies so that there is more consistent, comparable, and reliable information about the financial effects of climate-related risks on a public company’s operations and how it manages those risks. InHowever, addition,those rules have not taken effect due to ongoing legal challenges and a judicial stay, and in OctoberMarch 2023, California enacted2025, the ClimateSEC Corporateannounced Datathat Accountabilityit Actvoted andto end its defense of the Climate Related Financial Risk Act that require large public and private companies that do business within the state to disclose their Scopes 1, 2, and 3 GHG emissions, with third-party assurance of GHG emissions information for certain entities, and issue public reports on their climate-related financial risk and related mitigation measures.rules.
In addition, in October 2023, California enacted the Climate Corporate Data Accountability Act and the Climate Related Financial Risk Act that require large public and private companies that do business within the state to disclose their Scopes 1, 2, and 3 GHG emissions, with third-party assurance of GHG emissions information for certain entities, and to issue public reports on their climate-related financial risk and related mitigation measures, but those statutes are also subject to legal challenges, regulatory implementation uncertainty, and potential delays or changes in enforcement.
Given that both the SEC rules and the California statutes remain subject to ongoing litigation, it is unclear when, or in what form, these requirements will ultimately become effective. Courts could uphold, invalidate, narrow, or remand these rules, and regulators may revise or re-propose requirements in response to judicial decisions or changes in policy priorities. As a result, we face uncertainty regarding the scope, timing, and substance of future climate-related obligations. This uncertainty complicates our ability to plan for and implement compliance systems, internal controls, data collection processes, and assurance procedures. We may incur significant costs to prepare for compliance with requirements that are delayed, modified, or never implemented, or we may be required to make rapid and costly changes to our disclosures and operations if new or revised requirements take effect on an accelerated timeline. These efforts could divert management attention and resources from our core business activities.
Investor advocacy groups, certain institutional investors, investment funds, other market participants, stockholders, and customers have focused increasingly on the ESG or sustainability practices of companies, including those associated with climate change. If our ESG practices do not meet investor or other industry stakeholder expectations and standards, which continue to evolve, our brand, reputation and employee retention may be negatively impacted. Any disclosures that we make may include our policies and practices on a variety of social and ethical matters, including corporate governance, environmental compliance, employee health and safety practices, human capital management, product quality, supply chain management, and workforce inclusion and diversity. It is possible that stakeholders may not be satisfied with our environmental, social and governance practices or the speed of their adoption.
In addition, our operations may be negatively affected by local, regional or national political and economic conditions, such as levels of disposable consumer income, inflation, rising energy costs, consumer debt, interest rates, consumer confidence and other macro issues. The volatile political environment increases the chance of other legislative and regulatory changes at both the federal and state level that could affect us in ways we cannot predict. In addition, global economies, conflicts, trade negotiations and policies may directly or indirectly affect our business.
Our success depends on the personal efforts, performance, and abilities of our key management, including our executive officers and senior leaders. The loss of any member of senior management could result in diminished organizational focus, weaker operating execution, reduced ability to identify and pursue strategic initiatives, challenges in identifying new store locations, and limitations on our ability to consummate potential acquisitions. Competition for highly skilled individuals with relevant industry experience is intense, and we may not be able to attract or retain employees of the caliber necessary to achieve our objectives.
We may experience increased associate attrition in connection with organizational changes, evolving leadership structures, or shifts in strategic priorities. Such changes can create uncertainty regarding future roles and responsibilities, disrupt established ways of working, and place pressure on our culture. These dynamics may lead to reduced employee engagement, weakened collaboration, or erosion of institutional knowledge across all levels of the company. Any significant loss of personnel or deterioration in culture could adversely affect our operations and impair our ability to execute our business strategy.
Any labor shortage, particularly those of which occur in our distribution facility and our stores or during peak selling periods, may negatively impact our ability to process inventory in a timely manner and effectively staff our stores. Because of the tight labor market, our hourly rates have increased to attract candidates. If we are unable to pass on these higher costs through price increases or reduced workforce hours, our margins and profitability may be adversely impacted, which could have a material adverse effect on our business, results of operations or financial condition.
Our business is subject to federal, state, and increasing local rules and regulations, such as state and local wage and hour laws, the Employee Retirement Income Security Act (“ERISA”), securities laws, import and export laws (including customs regulations), state privacy and information security regulations, unclaimed property laws, and many others. Some of these laws and regulations may increase the cost of doing business and have a material impact on our earnings. In addition, the complexity of the regulatory environment in which we operate and the related cost of compliance are both increasing due to legal and regulatory requirements and increased enforcement. We may also be subject to investigations or audits by governmental authorities and regulatory agencies, which can occur in the ordinary course of business or result from increased scrutiny from a particular agency toward an industry, country or practice. If we fail to comply with laws, rules and regulations or the manner in which they are interpreted or applied, we may be subject to government enforcement action, class action or other litigation, damage to our reputation, civil and criminal liability, damages, fines and penalties, and increased costs of regulatory compliance, any of which could adversely affect our results of operations and financial performance.
The COVID-19 pandemic and its variants caused global uncertainty and disruption andthat had a material impact on our business,business predominately in fiscal 2020 and early fiscal 2021, butas hadwell as a lingering negative effect on the global economy that directly impacted our business,business specifically as it related tobeyond the economy,initial COVID-19 pandemic, including rising interest rates, labor shortages, increased material costs, global supply chain issues, inflationary pressures, and changes in consumer spending behaviors beyond the initial COVID-19 pandemic.behaviors. With concerns about RSV, influenza, the measles, and avian flu in the news, another health pandemic could materially affect our financial results, access to sources of liquidity and inventory.
Our success is dependent on the personal efforts, performance and abilities of our key management, which includes our executive officers as well as members of our senior management. The loss of any of our senior management may result in a loss of organizational focus, poor operating execution, an inability to identify and execute strategic initiatives, an impairment in our ability to identify new store locations, and an inability to consummate possible acquisitions. The competition is intense for the type of highly skilled individuals with relevant industry experience that we require, and we may not be able to continue to attract and retain new employees of the caliber needed to achieve our objectives.
Any labor shortage, particularly those of which occur in our distribution facility and our stores or during peak-selling periods, may negatively impact our ability to process inventory in a timely manner and effectively staff our stores. Because of the tight labor market, our hourly rates have increased to attract candidates. If we are unable to pass on these higher costs through price increases or reduced workforce hours, our margins and profitability may be adversely impacted, which could have a material adverse effect on our business, results of operations or financial condition.
Our business is subject to federal, state, and increasing local rules and regulations, such as state and local wage and hour laws, the Employee Retirement Income Security Act (“ERISA”), securities laws, import and export laws (including customs regulations), state privacy and information security regulations, unclaimed property laws, and many others. Some of these laws and regulations may increase the cost of doing business and have a material impact on our earnings. In addition, the complexity of the regulatory environment in which we operate and the related cost of compliance are both increasing due to legal and regulatory requirements and increased enforcement. We may also be subject to investigations or audits by governmental authorities and regulatory agencies, which can occur in the ordinary course of business or result from increased scrutiny from a particular agency towards an industry, country or practice. If we fail to comply with laws, rules and regulations or the manner in which they are interpreted or applied, we may be subject to government enforcement action, class action or other litigation, damage to our reputation, civil and criminal liability, damages, fines and penalties, and increased costs of regulatory compliance, any of which could adversely affect our results of operations and financial performance.
The market price of our common stock has been and will likely continue to fluctuate substantially as a result of many factors, some of which are beyond our control. For example, from September 8, 2021, when we relisted on the Nasdaq Global market, through FebruaryMarch 1,9, 2025,2026, the reported price of our common stock has ranged from a low of $2.15$0.49 on DecemberMarch 19,9, 2024,2026 to a high of $8.99 on November 17, 2021. Factors that could cause fluctuations in the market price of our common stock include the following:
announced merger;
We may not be able to maintain the listing of our common stock on Nasdaq.
Our common stock currently trades on The Nasdaq Global Market. Nasdaq has continued listing standards that we must maintain to avoid delisting, including, among others, a minimum consolidated closing bid price requirement of $1.00 per share as set forth in Nasdaq Listing Rule 5450(a)(1). On February 4, 2026, we received a notice from Nasdaq indicating that, based upon the closing bid price of the Company’s common stock for the last 30 consecutive trading days, the Company no longer meets this requirement.
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided a compliance period of 180 calendar days, or until August 3, 2026, in which to regain compliance with the minimum bid price requirement. In order to regain compliance, the consolidated closing bid price of the Company’s common stock must be at least $1.00 per share for a minimum of 10 consecutive business days during this period. In the event that the Company does not regain compliance within this period, the Company may be eligible to seek an additional compliance period of 180 calendar days if it (i) transfers its listing to the Nasdaq Capital Market and (ii) meets the continued listing requirement for market value of publicly traded shares and all other initial listing standards for the Nasdaq Capital Market (other than the minimum bid price requirement) and provides written notice to Nasdaq of its intent to cure the deficiency during this additional compliance period by effecting a reverse stock split, if necessary. There can be no assurance that the Company will be able to cure the deficiency. There also remains a risk that, if it appears to Nasdaq that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, the Company’s common stock may be subject to delisting. There can be no assurance that the Company will be able to regain compliance with the minimum bid price requirement or maintain compliance with the other listing requirements.
If we are unable to comply with Nasdaq’s continued listing standards and our common stock is delisted, our common stock would be eligible for quotation on "over-the-counter" markets, which are generally considered less efficient than Nasdaq and other national exchanges because of lower trading volumes, transaction delays and reduced security analyst and news media coverage. Any delisting of our common stock could adversely affect the market liquidity of our common stock, and the market price of our common stock could decrease. Furthermore, if our common stock is delisted, it could adversely affect our ability to obtain financing for the continuation of our operations and/or result in the loss of confidence by investors, customers, suppliers and employees.
Our certificate of incorporation, as amended, contains provisions that restrict any person or entity from attempting to purchase our stock, without the prior permissionapproval fromof the Board, to the extent that such transfer would (i) create or result in an individual or entity becoming a five-percent or greater stockholder of our stock, or (ii) increase the stock ownership percentage of any existing five-percent stockholder.stockholder without the prior approval of the Board. These provisions provide that any transfer that violates such provisions shall be null and void and would require the purported transferee, upon demand by us, to transfer the shares that exceed the five percent limit to an agent designated by us for the purpose of conducting a sale of such excess shares. These provisions would make the acquisition of our Company more expensive to the acquirer and could significantly delay, discourage, or prevent third parties from acquiring our Company without the prior approval of our Board.
In addition, we are subject to certain provisions of Delaware law, which could also delay or make more difficult a merger, tender offer or proxy contest involving us. In particular, Section 203 of the Delaware General Corporation Law prohibits a Delaware corporation from engaging in certain business combinations with any interested stockholder for a period of three years unless specific conditions are met. In addition, certain provisions of Delaware law could have the effect of delaying, deferring or preventing a change in control of our Company, including, without limitation, discouraging a proxy contest or making more difficult the acquisition of a substantial block of our common stock. Such provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock.
Management's Discussion & Analysis (MD&A)
New heading “Recent Developments”
New heading “Transaction-Related Costs”
Removed heading “LOSS FROM TERMINATION OF RETIREMENT PLANS”
Removed heading “Stock Repurchase Program”
Largest changes
“There remains significant volatility with respect to evolving trade policies and the imposition of tariffs globally. On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs imposed by the current administration under the International Emergency Economic Powers Act in 2025, including tariffs on global imports from China, Canada, and Mexico, were unlawful. However, not all tariffs imposed in 2025 will be impacted by this decision. Following the U.S. Supreme Court’s ruling, the current administration issued a presidential proclamation imposing additional tariffs under U.S. …”see in full comparison
“Despite the sales decline, we made meaningful progress on key sales initiatives. We expanded our private brand offerings, refined our value‑driven national brand assortment, expanded the roll out of FiTMAP®, launched a new loyalty program, and strengthened our strategic relationship with Nordstrom. Operationally, we continued to diversify our sourcing base and drove cost efficiencies to mitigate tariff pressures.”see in full comparison
“For fiscal 2024, the Company recorded a total asset impairment charge of $1.3 million for certain store property. For fiscal 2023, the Company recorded a total asset impairment charge of $0.1 million, which included a write-down for certain store property and equipment and operating lease right-of-use assets.”see in full comparison
“We are monitoring the emerging situation with tariffs, and we have minimal exposure in China, Mexico and Canada. Collectively, these three countries represent less than 5% of our own-sourced product and we expect that the impact on gross margin in fiscal 2025 would be less than 10 basis points. However, our exposure could grow if tariffs become more widespread.”see in full comparison
For fiscalsee in full comparison2024,2025, gross margin, inclusive of occupancy costs, was46.5%43.4% as compared to48.4%46.5% for fiscal2023.2024. The decrease of190310 basis points was primarily due to an increase of230220 basis points in occupancy costs, as a percentage of sales, primarily due to the deleveraging from lower sales and increased rents from lease extensions. Occupancy costs, on a dollar basis, increased $5.3 million, or 8.5%, as compared to fiscal 2024, as a result of new stores and lease extensions. Merchandise margin for fiscal20242025increaseddecreased4090 basispointspoints, as compared to fiscal 2024, primarily due tofavorabletheoutboundimpactshippingofcosts,tariffs and increased markdown activity and promotional offers associated with our marketing initiatives. For fiscal 2025, the impact of tariffs on merchandise margins was estimated to be approximately 50 basis points, as a percentage of sales. These increased costs were partially offset by an improvement in merchandise margins as a result of a shift in productmix,mixandtowardaourdecreaseprivateinbrandloyalty expense partially offset by an increase in markdown activity.merchandise.
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Fiscal 2024 included 52 weeks as compared to fiscal 2023, which included 53 weeks. Accordingly, year-over-year comparisons of total sales for the fourth quarter and full year are affected by an extra week of sales in fiscal 2023. However, for comparable sales, the Company is reporting on a comparable weeks basis (i.e., the 13 and 52 weeks ended February 1, 2025 compared with the 13 and 52 weeks ended February 3, 2024).
Our customer’s shopping experience continues to evolve across multiple channels, and we are continually adapting to meet the customer's needs. The majority of our stores have the capability to fulfill online orders if merchandise is not available in the warehouse. As a result, we continue to see more transactions that begin onlineonline, but are ultimately completed at the store level. Similarly, if a customer visits a store and the item is out of stock, the associate can order the item through our website. A customer also has the ability to order online and pick up in a store or at curbside. We define store sales as sales that originate and are fulfilled directly at the store level. E-commerce sales, which we also refer to as direct sales, are defined as sales that originate online, whether through our website, at the store level, our Guest Engagement Center, or through a third-party marketplace.
We monitor certain financial measures other than those that are in accordance with U.S. generally accepted accounting principles (“GAAP”) on a regular basis in order to track the progress of our business. These non-GAAP financial measures include free cash flow, free cash flow before capital expenditures for store development, adjusted net income,income (loss), adjusted net income (loss) per share, adjusted EBITDA and adjusted EBITDA margin. We believe that these measures provide helpful information with respect to the Company’s operating performance and that the inclusion of these measures is important to assist investors in comparing our performance in fiscal 20242025 to fiscal 2023.2024. However, these measures may not be comparable to similar measures used by other companies and should not be considered superior to or as a substitute for net income,income (loss), net income (loss) per diluted share or cash flow from operating activities in accordance with GAAP. See “Non-GAAP Reconciliations” below for additional information regarding these non-GAAP financial measures and reconciliations to comparable GAAP financial measures.
Our fiscal year is a 52-week or 53-week period ending on the Saturday closest to January 31. Fiscal 2025 and fiscal 2024 waswere each a 52-week period and fiscal 2023 was a 53-week period.
Our results for fiscal 2025 reflect continuing challenges facing the big + tall retail sector, which negatively impacted sales, across both our stores and direct channels. A weaker macroeconomic environment and pressured consumer sentiment led to reduced discretionary spending, lower shopping frequency, and increased emphasis on essentials and lower price points. While difficult to quantify, we believe that the increased use of GLP-1 medications also negatively impacted demand. As a result, our comparable sales for fiscal 2025 were down 8.4%. In addition, the imposition of tariffs created a significant headwind weighing on merchandise margin, particularly in the second half of the year. In response, we remained disciplined, carefully managed expenses, and proactively controlled inventory.
Despite the sales decline, we made meaningful progress on key sales initiatives. We expanded our private brand offerings, refined our value‑driven national brand assortment, expanded the roll out of FiTMAP®, launched a new loyalty program, and strengthened our strategic relationship with Nordstrom. Operationally, we continued to diversify our sourcing base and drove cost efficiencies to mitigate tariff pressures.
For fiscal 2025, we reported a net loss of $(0.66) per diluted share as compared to a net income of $0.05 per diluted share in fiscal 2024. Fiscal 2025 results included a charge of $20.4 million to establish a full valuation allowance against our net deferred tax assets and $4.2 million of transaction-related costs associated with the pending Merger with FullBeauty, which is discussed in more detail below and under Item 1, Business - Recent Developments.
On an adjusted basis, excluding the charge to establish a full valuation allowance, transaction-related costs, impairment charges and a non-recurring legal accrual recorded in fiscal 2024, the adjusted net loss for fiscal 2025 was $(0.21) per diluted share as compared to adjusted net income of $0.07 per diluted share for fiscal 2024. The decrease was driven primarily by the sales shortfall.
We maintained a strong liquidity position, ending fiscal 2025 with $28.8 million in cash and investments as compared to $48.4 million in fiscal 2024. We improved our inventory position, which was down 2.6%, as compared to fiscal 2024. During fiscal 2025, we amended our credit facility to extend the maturity of the facility from October 28, 2026 to August 13, 2030. We had no borrowings under our credit facility during fiscal 2025, and at January 31, 2026, our availability under our credit facility was $55.1 million. The strength of our balance sheet gives us flexibility and resilience as we continue to navigate a challenging big + tall retail sector.
Recent Developments
As discussed above under Item 1, Business, Recent Developments, in December 2025, we announced a proposed Merger with FullBeauty. We believe bringing DXL together with FullBeauty's inclusive women's brands and KingSize would create a comprehensive and diverse size-inclusive brand portfolio spanning value to premium price points across lifestyles and occasions. By leveraging complementary strengths across gender, product and channels, we believe the combined company will be positioned to accelerate growth, improve operational efficiency and enhance customer experience through a comprehensive, innovative, multi-channel strategy.
We are currently preparing a proxy statement that we plan to distribute to the stockholders of DXL in connection with their votes on the approval of the Merger and the issuance of DXL Common Stock in connection with the Merger, as well as other matters to be voted upon in connection with the approval of the Merger. The transaction is expected to close in the second quarter of fiscal 2026, subject to customary closing conditions and approval by DXL stockholders.
Our financial results for fiscal 2024 were below expectations given a difficult men’s apparel sector that negatively impacted traffic levels to our stores and online conversion. We believe that our customers have pulled back from shopping for apparel and when they do shop, they have been very price conscious, gravitating toward our more moderate and entry-level price points. Our comparable sales for fiscal 2024 decreased 10.6%, with comparable sales from our stores down 9.6% and our direct business down 12.8%. Despite the disappointing sales performance, we have maintained our disciplined operating regimen and improved our merchandise margin, thereby enabling us to maintain profitability and positive free cash flow. Despite our diligence to manage operating expenses, certain elements of our cost structure, including occupancy expense, were deleveraged by the sales shortfall.
Net income for fiscal 2024 of $0.05 per diluted share included an impairment charge of $1.3 million and a non-recurring accrual for estimated legal settlement costs of $1.0 million. Net income for fiscal 2023 of $0.43 per diluted share included a non-recurring pretax charge of $5.7 million recognized in connection with the termination of our frozen retirement plans and an impairment charge of $0.1 million. Adjusting for these non-recurring charges and impairment charges, adjusted net income for fiscal 2024 was $0.07 per diluted share as compared to $0.50 per diluted share for fiscal 2023.
We have maintained a strong balance sheet with cash and investments of $48.4 million and a healthy inventory position, which was down 6.8% to fiscal 2023. We had no borrowings under our credit facility during fiscal 2024, and at February 1, 2025 our availability under our credit facility was $64.7 million. We generated cash flow from operations of $29.6 million and utilized $27.7 million for capital expenditures, resulting in free cash flow for fiscal 2024 of $1.9 million. Approximately $13.7 million of our $27.7 million in capital expenditures was spent on store development with the balance used primarily for technology projects, including our new e-commerce site. During fiscal 2024, we used our free cash flow, together with available cash on hand, to repurchase approximately $13.7 million, or 4.9 million shares of our common stock.
We have not observed any improvement in the men's apparel market, and as we head into fiscal 2025 we believe that we will likely remain in a down sales cycle through at least the early half of fiscal 2025. As such, we are taking a measured and balanced approach to our business in fiscal 2025. Although we have a responsibility to grow the business, we are seeking to find the right balance between growth and a minimum level of profitability. While this orientation in balancing growth levels against profit is critical, it does force us to further prioritize our strategic objectives appropriately and with rigor. We believe that consumer sentiment among Big + Tall consumers will recover over time and protecting the foundational infrastructure of the operations we have built will benefit top-line and bottom-line performance in the future.
We are monitoring the emerging situation with tariffs, and we have minimal exposure in China, Mexico and Canada. Collectively, these three countries represent less than 5% of our own-sourced product and we expect that the impact on gross margin in fiscal 2025 would be less than 10 basis points. However, our exposure could grow if tariffs become more widespread.
For fiscal 2024,2025, total sales decreased 10.5%6.9% to $467.0$435.0 million from $521.8$467.0 million for fiscal 2023.2024. The decrease was primarily due to a decrease in comparable sales of 10.6%,8.4%, with stores down 9.6%6.9% and the direct business down 12.8%11.8%. andThese thedecreases impact of the 53rd week in fiscal 2023,were partially offset by an increase in non-comparable store sales and reduced loyalty program costs. Sales for the 53rd week of fiscal 2023 were $7.1 million.sales.
A decrease in traffic continued to be the primary driver for the decrease in comparable sales. While conversion rate was up slightly, our dollars per transaction were down, partly due to the shift in product mix toward more value-driven merchandise, as our customers continue to be price sensitive due to reduced discretionary spending. During the fourth quarter of fiscal 2025, our comparable sales were down 7.3%, with stores down 8.6% and the direct business down 4.3%. Our direct business saw a marked improvement in the fourth quarter as compared to the previous three quarters of fiscal 2025, where comparable sales for the direct business were down double digits. We believe this improvement was driven by more effective digital marketing spend that drove improved traffic during the holiday season.
While we saw positive results from our loyalty program, Price Match Guarantee, FiTMAP, and our Heroes discount in fiscal 2025, our total active customer file continued to be under pressure as customers were spending less and shopping less frequently in the current environment.
Through the first month of fiscal 2026, we have seen improvement in traffic and average order value, both of which contributed to an improvement in sales during February. Comparable sales in February were down 1.3%, with our direct business being up 3.4%, partially offset by our stores, which were down 3.1%.
For fiscal 2024,2025, gross margin, inclusive of occupancy costs, was 46.5%43.4% as compared to 48.4%46.5% for fiscal 2023.2024. The decrease of 190310 basis points was primarily due to an increase of 230220 basis points in occupancy costs, as a percentage of sales, primarily due to the deleveraging from lower sales and increased rents from lease extensions. Occupancy costs, on a dollar basis, increased $5.3 million, or 8.5%, as compared to fiscal 2024, as a result of new stores and lease extensions. Merchandise margin for fiscal 20242025 increaseddecreased 4090 basis pointspoints, as compared to fiscal 2024, primarily due to favorablethe outboundimpact shippingof costs,tariffs and increased markdown activity and promotional offers associated with our marketing initiatives. For fiscal 2025, the impact of tariffs on merchandise margins was estimated to be approximately 50 basis points, as a percentage of sales. These increased costs were partially offset by an improvement in merchandise margins as a result of a shift in product mix,mix andtoward aour decreaseprivate inbrand loyalty expense partially offset by an increase in markdown activity.merchandise.
There remains significant volatility with respect to evolving trade policies and the imposition of tariffs globally. On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs imposed by the current administration under the International Emergency Economic Powers Act in 2025, including tariffs on global imports from China, Canada, and Mexico, were unlawful. However, not all tariffs imposed in 2025 will be impacted by this decision. Following the U.S. Supreme Court’s ruling, the current administration issued a presidential proclamation imposing additional tariffs under U.S. trade laws, which can remain in effect for up to 150 days unless further extended by the U.S. Congress. Through vendor negotiations, sourcing diversification and cost mitigation programs, such as the First Sale program, we have and will continue to take proactive measures to mitigate the impact of tariffs and trade restrictions on our business and our customers. Given the volatility that currently exists around trade discussions, it is difficult to determine the potential impact that tariffs may have on our financial results for fiscal 2026. However, if currently enacted rates remain in effect throughout fiscal 2026, and no additional tariffs, including those under U.S. trade laws, are added, we estimate that the impact of tariffs on gross margin will be approximately 150 basis points.
Selling, general and administrative (“SG&A”) expenses were $187.4 million, or 43.1% of sales, for fiscal 2025 as compared to $198.3 million, or 42.5% of sales, for fiscal 2024. SG&A expenses, as a percentage of sales, were deleveraged due to the lower sales base.
On a dollar basis, SG&A expenses decreased $10.9 million due to a decrease in marketing costs, incentive-based compensation and supporting payroll. In addition, results for fiscal 2024 included an accrual for estimated non-recurring legal settlement costs of $1.0 million.
Selling, general and administrative (“SG&A”) expenses were $198.3 million, or 42.5% of sales, for fiscal 2024 as compared to $196.5 million, or 37.7% of sales, for fiscal 2023. Despite a modest increase of $1.8 million, or 0.9%, SG&A expenses, as a percentage of sales, were deleveraged by 480 basis point due to the lower sales base. The increase of $1.8 million was due to an increase in marketing costs, which included our brand campaign in the second quarter, an increase in healthcare costs and technology costs as well as a $1.0 million accrual for estimated non-recurring legal settlement costs. SG&A expenses for fiscal 2023 also included costs for the 53rd week of approximately $2.7 million.
For fiscal 2024,2025, marketing costs were 6.8%6.1% of sales as compared to 5.9%6.8% in fiscal 2023. For fiscal 2025, we expect our marketing costs to be approximately 6.0% of sales, and we do not plan to pursue our brand awareness campaign at this time.2024.
Transaction-Related Costs
Transaction-related costs for fiscal 2025 were $4.2 million and primarily related to fees paid for professional services in connection with the Company's pending Merger.
IMPAIRMENT (GAIN) OF ASSETS
For fiscal 2025 and fiscal 2024, the Company recorded a total asset impairment charge of $0.2 million and $1.3 million, respectively, for certain store property.
For fiscal 2024, the Company recorded a total asset impairment charge of $1.3 million for certain store property. For fiscal 2023, the Company recorded a total asset impairment charge of $0.1 million, which included a write-down for certain store property and equipment and operating lease right-of-use assets.
Depreciation and amortization expense for fiscal 2024 was $13.9$15.3 million, as compared to $13.8$13.9 million in fiscal 2023.2024. The slight increase in depreciation and amortization expense reflects the increase in capital expenditures over the past fewtwo years as we invest in our stores, e-commerce and other technology projects.
LOSS FROM TERMINATION OF RETIREMENT PLANS
During fiscal 2023, we terminated the frozen Casual Male Noncontributory Pension Plan “Casual Male Corp. Retirement Plan,” which was previously known as the J. Baker, Inc. Qualified Plan (the “Pension Plan”) and the frozen Casual Male Supplemental Executive Retirement Plan (the “SERP”). Through the purchase of nonparticipating annuities, we completed a final settlement of the SERP in the third quarter and a final settlement of the Pension Plan in the fourth quarter.
For fiscal 2023, we recognized a charge of $5.7 million representing the recognition of the unrealized loss that was part of Accumulated Other Comprehensive Loss on the Consolidated Balance Sheet.
Net interest income for fiscal 20242025 and fiscal 20232024 was $2.1$0.8 million forand each$2.1 period.million, respectively. We invest excess cash in short-term, USU.S. government-backed investments. The decrease in interest income for fiscal 2025 as compared to the prior year was primarily due to the decrease in the average balance of investments as well as a decrease in interest rates. Interest costs for both fiscal years were immaterial because we had no outstanding debt and no borrowings under our credit facility during either period.
In the fourth quarter of fiscal 2025, we recorded a charge of $20.4 million to establish a full valuation allowance against our net deferred tax assets. Over the past two years, the big + tall sector has been adversely affected by general economic weakness, including inflation and rising costs, which has reduced discretionary consumer spending. Consistent with these trends, the Company has experienced declining revenue over the past two fiscal years and generated a net operating loss in fiscal 2025. Realization of our deferred tax assets, which primarily relate to net operating loss carryforwards, depends on the generation of future taxable income. Federal net operating losses include $4.4 million that will expire by fiscal 2037 and $59.7 million that do not expire. State net operating losses were $46.1 million, some of which will expire from fiscal 2026 through 2046. While we believe that profitability will return over the long term, we are forecasting operating losses in the near term. Management concluded that this negative evidence outweighs available positive evidence regarding realizability of its deferred tax assets.
For fiscal 2024 and fiscal 2023, the Company’sThe effective tax rate for fiscal 2025, before the $20.4 million charge to establish a full valuation allowance, was 10.7% as compared to 47.5% andfor 27.4%,fiscal respectively.2024. TheThis increasedecrease in the effective tax rate inreflects fiscalthe 2024impact wasof primarilycertain duediscrete toitems and permanent book-to-tax differences combinedas with a lower pretax incomewell as comparedthe impact of adjustments to our net operating losses reflected in our tax returns filed in fiscal 2023.2025. See Note F to the Consolidated Financial Statements.
At January 31, 2026, we have a full valuation allowance against our net deferred tax assets of $21.8 million.
At February 1, 2025, we have a valuation allowance of $1.5 million, primarily against certain state and foreign net operating losses ("NOLs").
Realization of our deferred tax assets, which relate principally to federal net operating loss carryforwards, of which approximately $3.4 million will expire in fiscal 2037 and $39.9 million that do not expire, is dependent on generating sufficient taxable income. For state income tax purposes, we have $38.3 million of net operating losses that are available to offset future taxable income, the majority of which will expire from fiscal 2025 through fiscal 2045. The utilization of our NOLs reduces our taxable income and, as a result, we have minimal cash taxes.
NET INCOME (LOSS)
Net income for fiscal 2024 was $3.1 million, or $0.05 per diluted share, as compared to a net income for fiscal 2023 of $27.9 million, or $0.43 per diluted share. Net income for fiscal 2023 included net income for the 53rd week, which was approximately $1.2 million.
On a non-GAAP basis, adjusting for any asset impairment (gain), accrual for estimated non-recurring legal settlement costs and theNet loss from the termination of the retirement plans, adjusted net income for fiscal 20242025 was $4.3$(35.9) million, or $0.07$(0.66) per diluted share, as compared to adjusted net income for fiscal 2024 of $32.1$3.1 million, or $0.50$0.05 per diluted share for fiscal 2023.share.
The decrease in earnings for fiscal 2025 as compared to fiscal 2024 was driven primarily by a decrease in sales as well as a charge to establish a full valuation allowance against our net deferred tax assets. Results for fiscal 2025 included a non-cash charge of $20.4 million to establish a full valuation allowance against net deferred tax assets, transaction-related costs of $4.2 million and an impairment charge against certain store assets of $0.2 million. Results for fiscal 2024 included an impairment charge of $1.3 million against certain store assets and a charge of $1.0 million for an accrual for estimated non-recurring legal settlement costs.
On a non-GAAP basis, adjusting for the non-cash charge to establish a valuation allowance against net deferred tax assets, transaction-related costs, accrual for estimated non-recurring legal settlement costs, and asset impairments, adjusted net loss for fiscal 2025 was $(11.5) million, or $(0.21) per diluted share, as compared to adjusted net income of $4.3 million, or $0.07 per diluted share, for fiscal 2024.
Consistent with the retail apparel industry, our business experiences seasonal fluctuations in sales due to the timing of certain holidays and key retail shopping periods. Accordingly, our sales results for a particular quarter may not be indicative of the sales results we expect for the full year.
A comparison of sales in each quarter of the past two fiscal years is presented below. The amounts shown are not necessarily indicative of actual trends because such amounts also reflect the addition of new stores and the remodeling and closing of other stores during these periods. Consistent with the retail apparel industry, our business is seasonal. (Certain columns may not foot due to rounding.)
(1) Fiscal 2023 was a 53-week year as compared to fiscal 2024, which was a 52-week year and, as such, the fourth quarter of fiscal 2023 included an additional week of sales of $7.1 million.
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. We believe that these sources of liquidity will be sufficient to fund our working capital requirements, commitments and capital expenditures. Cash that is in excess of our forecasted needs may be invested in money market accounts and U.S. government-backed securities.
At FebruaryJanuary 1,31, 20252026, our material contractual obligations primarily consisted of our operating lease obligations, as disclosed in Note E, Leases, to the Consolidated Financial Statements. In addition to our lease obligations, at FebruaryJanuary 1,31, 2025,2026, we were also contractually committed pursuant to a merchandise purchase obligation to meet minimum purchases of $10.0 million annually through fiscal 2028.
For fiscal 2024,2025, cash flow from operations decreased to $29.6$2.1 million as compared to $49.6$29.6 million for fiscal 2023.2024, primarily due to the decrease in operating income in fiscal 2025. Free cash flow, a non-GAAP measure, decreased to $(18.0) million for fiscal 2025 as compared to $1.9 million for fiscal 2024 as compared to $32.2 million for fiscal 2023. The decrease in free cash flow was due primarily to a decrease in operating income and an increase in capital expenditures.2024.
Cash flow provided by (used for) investing activities was $31.3$10.4 million as compared to $(31.3) million for fiscal 2024 as compared to $49.1 million for fiscal 2023.2024. The decreaseincrease in cash flow usedprovided forby investing activities was primarily due to aan reductionincrease in purchasesthe maturity of short-term investments, net of maturities,purchases, of $28.2$34.1 million,million partiallyand offseta by an increasedecrease in capital expenditures of $10.3$7.6 million.
Cash flow used for financing activities for fiscal 20242025 and fiscal 20232024 ofwas $13.9$0.6 million and $24.9$13.9 million, respectively,respectively. The use of cash in fiscal 2024 was primarily fordue to the repurchase of our common stock.
During fiscal 2025, we amended our revolving credit agreement with Citizens Bank, N.A. by entering into the Second Amendment to Credit Facility (as amended, the "Credit Facility"). As a result of the amendment, the maturity date of the Credit Facility was extended from October 28, 2026 to August 13, 2030 and the revolving commitments under the Credit 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 under the Credit Facility 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.
On October 28, 2021, the Company entered into a $125.0 million revolving credit agreement with Citizens Bank, N.A., with a maturity date of October 28, 2026. On April 20, 2023, the Company entered into the First Amendment to Credit Agreement which provided for the replacement of the London Interbank Offering Rate (“LIBOR”) interest rate options with the secured overnight financing rate ("SOFR") based options (as amended, 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. Effective April 20, 2023, borrowingsBorrowings under the Credit Facility bear interest at either a Base Rate or Daily Simple SOFR rate, at the Company'sour 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’sour 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. Any swingline loan will continue to bear interest at a rate equal to the Base Rate plus the Applicable Margin. We are subject to an unused line fee of 0.25%.
We had no outstanding borrowings under the Credit Facility at FebruaryJanuary 1,31, 2025.2026. At FebruaryJanuary 1,31, 2025,2026, outstanding standby letters of credit were $4.2$3.6 million. There were no outstanding documentary letters of credit at FebruaryJanuary 1,31, 2025.2026. The Credit Facility was not utilized during fiscal 2024,2025, resulting in average unused excess availability during fiscal 20242025 of $73.6$70.7 million. Unused excess availability at January 31, 2026 was $55.1 million as compared to $64.7 million at February 1, 20252025. The decrease in availability under the Credit Facility at January 31, 2026 was $64.7the million.result of the 2.6% decrease in inventory and a decrease in other eligible assets as well as a slightly lower appraised value as a result of current market conditions. Our obligations under the Credit Facility are secured by a lien on substantially all of our assets. The Company was subject to an unused line fee of 0.25% of the total commitment less average outstanding letters of credit.
Stock Repurchase Program
During the first quarter of fiscal 2024, the Company repurchased 52,802 shares at a total cost, including fees, of $0.2 million, completing its stock repurchase program that was approved by the Board in March 2023.
What changed in the latest 10-Q
Risk Factors
There have been no material changes to the risk factors as previously disclosed in Part I, Item 1A of our Fiscal 2025 Annual Report.
No wording changes found in this section.
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Management's Discussion & Analysis (MD&A)
Largest changes
Certain statements contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”) constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. 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 regardingsee in full comparisonengagementthe proposed Merger withFullBeautyFullBeauty,Brands in constructive discussions to determineincluding thebestfilingpathofforward;a definitive proxy statement, theBoard’sBoard'sbeliefcontinuedin the industrial logicevaluation of thecombination;proposed transaction, theBoard’sfactors considered by the Board in changing its recommendation with respect to the Issuance Proposal, stockholder voting matters, and the potential consummation of the proposed Merger and related transactions; our belief thatgivenour business historically has been seasonal in nature, and that theincreasingly challenging consumer environment since the executionresults of theMergerinterimAgreementperiodsinpresentedDecemberare2025notandnecessarilyFullBeauty Brands’ indebtedness, the existing termsindicative of theMergerresultsAgreementto be expected for the full year; our expectation that ASU-2023-06 will not have a material impact on our Consolidated Financial Statements or related disclosures because we arenotcurrentlyinsubject to thebestreportinginterestsrequirements oftheRegulationCompany'sS-Xstockholdersand Regulation S-K; our belief that profitabilitywouldwill return over the long term, while forecasting operating losses in the near term; our continued conclusion that the negative evidence outweighs available positive evidence regarding realizability ofitsour deferred tax assets and that the full valuation allowance should remain againstitsour net deferred tax assets; our belief that the macro and sector headwinds are influencing the core DXL big + tall consumer and are materially affectingtraffic, which remains very challenged, particularly in storestraffic;despiteourthe shortfall in absolute traffic, guestsbelief thatdoourvisitdisciplinedDXLoperatingare buying, with conversionapproach andaveragefocusorderonvalueexecutionupwillinpositionbothusstorestoanddriveonline,improvedwhichperformanceweasbelievefiscalreinforces2026 progresses; our belief that our customer is responding positively to the adjustments we are making to our assortment, promotional strategy, and customer experienceare aligning better with today’s value-conscious consumer; ouradvancementbeliefofin several strategic initiatives designed to strengthen our market leadership in the big + tall sector while enhancing the customer experience across channels; our belief that FiTMAP remains one of theadjustmentsCompany’swemostareimportantmakinglong-term growth drivers; our belief that early results for FiTMAP technology continue to reinforce its value; ourmerchandisebeliefassortment,thatpromotionalpersonalizedstrategy,fit solutions can drive both customer satisfaction andcustomerprofitableexperience to align better with today’s value-conscious consumergrowth; our belief that AI-powered search and discovery toolsaremaybecomingbecome increasingly important in ecommerce; our belief that the new AI initiatives that were launched will improve product data quality, enrich item-level attributes and strengthen our ability to connect product, pricing and inventory information across AI-enabled platforms; our intention that our AI initiatives will improve discoverability, support future commerce applications and position us to compete effectively as digital shopping journeys become more conversational and agent-driven; our belief that GLP-1 medications and similar weight-loss medications may be influencing customer behavior and category demand; our belief, based on our research, that a meaningful portion of our customer base is currently using GLP-1 medications; our belief that GLP-1 medications provide both a near-term challenge and a long-term opportunity: our belief that the impact of GLP-1 medications and similar weight-loss medications are contributing to structural changes in customer demand within the big + tall category; our belief based on our research that while some customers may pause apparel purchases during periods of rapid size change, we expectthemmanytowill return once they reach a more stable size profile; our belief that we can strengthen retention, reactivation and lifetime value over time by staying closely aligned with evolving customer needs; our belief that theslowdowncomparable sales for May reflected lower traffic as consumers remained cautious amid pressure on discretionary spending from inflation, higher energy costs, global conflict and broader economic uncertainty; our belief that the comparable sales for June and July reflected Father’s Day and other promotional activities that helped offset the continued decline inApriltraffic;reflectsourabeliefcombinationthat the scope, duration, and rates ofmacroeconomic pressures impacting consumer confidenceexisting anddiscretionaryproposedspending,tariffincludingmeasures,globalasconflict,wellrisingasfuelthecosts,potential for modifications, suspensions, or retaliatory trade actions, could impact our operations, supply chain, andinflationcost structure; our belief that it is difficult to determine the potential impact that continuing tariffs may have on our financial results for fiscal 2026; our expectation that the impact of the current administration’s tariffs on grossmargin,margin for fiscal 2026, exclusive ofanyrefunds realized, will be approximately 100basis points, a decrease from the previous estimate of 150basis points; our expectation that for fiscal2026,2026 marketing costs will be approximately 5.8% of sales; our belief that our cash and cash equivalent balances, short-term investments, cash generated from operations, and borrowings available to us under our credit facility will be adequate to meet our liquidity needs and capital expenditure requirements for at least the next 12 months; our belief that cash flows from operating activities and cash on hand will be sufficient to satisfy our current capitalrequirements.requirementsInin the short-term; our belief that 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; our belief that our inventory position is healthy, and our clearance levels are in line with our benchmark of 10%; our expectation that capital expenditures for fiscal 2026 will range from $8.0 million to$12.0$10.0 million, net of tenantincentivesincentives, which is a decrease from our previous estimate of $9.0 million to $12.0 million; ourbeliefexpectation thatstorecapitaldevelopment plansspend for fiscal 2026willto belimitedprimarily for technology-related projects toconversionssupportofourabusinessfew remaining Casual Male XL stores to the DXL format, store relocationsinitiatives andother capitalprojectswill benecessary to maintain our existing store portfolio and distribution center; our expectation that the remainder of our capital spend for fiscal 2026 will primarily be for technology-related projects to support our business initiatives; our belief that inclusion of the non-GAAP measures helps investors gain a better understanding of our performance, especially when comparing such results to previous periods and that they are useful as an additional means for investors to evaluate our operating results, when reviewed in conjunction with our GAAP financial statements; our belief that the comparability of adjusted net income (loss) is useful in comparing the actual results period to period; our belief that free cash flow is important to investors because it demonstrates our ability to strengthen liquidity while supporting our capital projects and new store development; our belief that providing adjusted EBITDA and adjusted EBITDA margin is useful to investors in evaluating our performance and are key metrics to measure profitability and economic productivity; our belief that the resolution of legal proceedings and claims that may arise in the ordinary course of business will not have a material adverse impact on our future results of operations or financial position; our expectation that we will be able to take proactive measures to manage our inventory and adjust our receipt plan given the ongoing macroeconomic factors affecting consumerspending, while at the same time, accelerating certain receipts to avoid potential delays caused by the recent conflict with Iran.spending. These forward-looking statements generally relate to plans and objectives for future operations and are baseduponon management’s reasonable estimates of future results or trends. The forward-looking statements in this Quarterly Report should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited Consolidated Financial Statements and notes to those statements included elsewhere in this Quarterly Report and our audited Consolidated Financial Statements for the year ended January 31, 2026, included in our Annual Report on Form 10-K for the year ended January 31, 2026, as filed with the Securities and Exchange Commission ("“SEC"”) on March 19, 2026 (our “Fiscal 2025 Annual Report”).
“We continued to maintain a solid financial position, successfully managing our liquidity. As of August 1, 2026, we had cash and investments of $20.1 million as compared to $33.5 million as of August 2, 2025, with no outstanding debt in either period. The decrease in cash and investments at August 1, 2026 as compared to August 2, 2025 is primarily due to the capital spent over the past 12 months of approximately $13.9 million. We did not have any borrowings under our credit facility and, as of August 1, 2026, the availability under our credit facility was $61.7 million. Our inventory is down 4. …”see in full comparison
“For the first six months of fiscal 2026, our gross margin rate, inclusive of occupancy costs, was 46.1% as compared to a gross margin rate of 45.1% for the first six months of fiscal 2025. The increase of 100 basis points was driven by an increase of 130 basis points in merchandise margin, partially offset by a 30 basis point increase in occupancy costs. The increase in merchandise margin as compared to the first six months of fiscal 2025 was primarily due to the refund for tariffs of $4.6 million, or 210 basis points. …”see in full comparison
“The net loss for the first six months of fiscal 2026 was $(3.9) million, or $(0.07) per diluted share, as compared to a net loss for the first six months of fiscal 2025 of $(2.2) million, or $(0.04) per diluted share. The decrease in earnings for the first six months of fiscal 2026 as compared to the first six months of fiscal 2025, was primarily due to the decrease in sales and an increase in transaction-related costs of $2.8 million, partially offset by the tariff refund and the lower incentive-based accruals.”see in full comparison
Our gross margin ratesee in full comparisondecreasedfor the second quarter increased by80270 basis points, driven byaandecreaseincrease of100340 basis points in merchandise margin, partially offset by a20-basis70 basis pointdecreaseincrease in occupancy costs. Thedecreaseincrease in merchandise margin as compared to thefirstsecond quarter of fiscal 2025 is primarily due totheaimpactrefund oftariffs,$4.6 million, or 410 basis points, received in the second quarter of fiscal 2026 for tariffs previously paid. This benefit was partially offset by increased shipping costs as a result of fuel surcharges and increased markdown activity associated with clearance sales.These increased costs were partially offset by an improvement in merchandise margins as a result of a shift in product mix toward our private brand merchandise and favorable loyalty costs.
“In April 2026, U.S. Customs and Border Protection ("CBP") launched an online portal through which companies may submit refund requests. During the first quarter of fiscal 2026, the Company submitted a claim seeking a refund of approximately $4.0 million related to tariffs previously paid. The timing and amount of any potential refund and recovery remain uncertain, and the Company expects to recognize any recovery when receipt is considered realizable.”see in full comparison
Full comparison: every changed paragraph (55)
Certain statements contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”) constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. 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 engagementthe proposed Merger with FullBeautyFullBeauty, Brands in constructive discussions to determineincluding the bestfiling pathof forward;a definitive proxy statement, the Board’sBoard's beliefcontinued in the industrial logicevaluation of the combination;proposed transaction, the Board’sfactors considered by the Board in changing its recommendation with respect to the Issuance Proposal, stockholder voting matters, and the potential consummation of the proposed Merger and related transactions; our belief that givenour business historically has been seasonal in nature, and that the increasingly challenging consumer environment since the executionresults of the Mergerinterim Agreementperiods inpresented Decemberare 2025not andnecessarily FullBeauty Brands’ indebtedness, the existing termsindicative of the Mergerresults Agreementto be expected for the full year; our expectation that ASU-2023-06 will not have a material impact on our Consolidated Financial Statements or related disclosures because we are notcurrently insubject to the bestreporting interestsrequirements of theRegulation Company'sS-X stockholdersand Regulation S-K; our belief that profitability wouldwill return over the long term, while forecasting operating losses in the near term; our continued conclusion that the negative evidence outweighs available positive evidence regarding realizability of itsour deferred tax assets and that the full valuation allowance should remain against itsour net deferred tax assets; our belief that the macro and sector headwinds are influencing the core DXL big + tall consumer and are materially affecting traffic, which remains very challenged, particularly in storestraffic; despiteour the shortfall in absolute traffic, guestsbelief that doour visitdisciplined DXLoperating are buying, with conversionapproach and averagefocus orderon valueexecution upwill inposition bothus storesto anddrive online,improved whichperformance weas believefiscal reinforces2026 progresses; our belief that our customer is responding positively to the adjustments we are making to our assortment, promotional strategy, and customer experience are aligning better with today’s value-conscious consumer; our advancementbelief ofin several strategic initiatives designed to strengthen our market leadership in the big + tall sector while enhancing the customer experience across channels; our belief that FiTMAP remains one of the adjustmentsCompany’s wemost areimportant makinglong-term growth drivers; our belief that early results for FiTMAP technology continue to reinforce its value; our merchandisebelief assortment,that promotionalpersonalized strategy,fit solutions can drive both customer satisfaction and customerprofitable experience to align better with today’s value-conscious consumergrowth; our belief that AI-powered search and discovery tools aremay becomingbecome increasingly important in ecommerce; our belief that the new AI initiatives that were launched will improve product data quality, enrich item-level attributes and strengthen our ability to connect product, pricing and inventory information across AI-enabled platforms; our intention that our AI initiatives will improve discoverability, support future commerce applications and position us to compete effectively as digital shopping journeys become more conversational and agent-driven; our belief that GLP-1 medications and similar weight-loss medications may be influencing customer behavior and category demand; our belief, based on our research, that a meaningful portion of our customer base is currently using GLP-1 medications; our belief that GLP-1 medications provide both a near-term challenge and a long-term opportunity: our belief that the impact of GLP-1 medications and similar weight-loss medications are contributing to structural changes in customer demand within the big + tall category; our belief based on our research that while some customers may pause apparel purchases during periods of rapid size change, we expect themmany towill return once they reach a more stable size profile; our belief that we can strengthen retention, reactivation and lifetime value over time by staying closely aligned with evolving customer needs; our belief that the slowdowncomparable sales for May reflected lower traffic as consumers remained cautious amid pressure on discretionary spending from inflation, higher energy costs, global conflict and broader economic uncertainty; our belief that the comparable sales for June and July reflected Father’s Day and other promotional activities that helped offset the continued decline in Apriltraffic; reflectsour abelief combinationthat the scope, duration, and rates of macroeconomic pressures impacting consumer confidenceexisting and discretionaryproposed spending,tariff includingmeasures, globalas conflict,well risingas fuelthe costs,potential for modifications, suspensions, or retaliatory trade actions, could impact our operations, supply chain, and inflationcost structure; our belief that it is difficult to determine the potential impact that continuing tariffs may have on our financial results for fiscal 2026; our expectation that the impact of the current administration’s tariffs on gross margin,margin for fiscal 2026, exclusive of any refunds realized, will be approximately 100 basis points, a decrease from the previous estimate of 150 basis points; our expectation that for fiscal 2026,2026 marketing costs will be approximately 5.8% of sales; our belief that our cash and cash equivalent balances, short-term investments, cash generated from operations, and borrowings available to us under our credit facility will be adequate to meet our liquidity needs and capital expenditure requirements for at least the next 12 months; our belief that cash flows from operating activities and cash on hand will be sufficient to satisfy our current capital requirements.requirements Inin the short-term; our belief that 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; our belief that our inventory position is healthy, and our clearance levels are in line with our benchmark of 10%; our expectation that capital expenditures for fiscal 2026 will range from $8.0 million to $12.0$10.0 million, net of tenant incentivesincentives, which is a decrease from our previous estimate of $9.0 million to $12.0 million; our beliefexpectation that storecapital development plansspend for fiscal 2026 willto be limitedprimarily for technology-related projects to conversionssupport ofour abusiness few remaining Casual Male XL stores to the DXL format, store relocationsinitiatives and other capital projects will be necessary to maintain our existing store portfolio and distribution center; our expectation that the remainder of our capital spend for fiscal 2026 will primarily be for technology-related projects to support our business initiatives; our belief that inclusion of the non-GAAP measures helps investors gain a better understanding of our performance, especially when comparing such results to previous periods and that they are useful as an additional means for investors to evaluate our operating results, when reviewed in conjunction with our GAAP financial statements; our belief that the comparability of adjusted net income (loss) is useful in comparing the actual results period to period; our belief that free cash flow is important to investors because it demonstrates our ability to strengthen liquidity while supporting our capital projects and new store development; our belief that providing adjusted EBITDA and adjusted EBITDA margin is useful to investors in evaluating our performance and are key metrics to measure profitability and economic productivity; our belief that the resolution of legal proceedings and claims that may arise in the ordinary course of business will not have a material adverse impact on our future results of operations or financial position; our expectation that we will be able 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 potential delays caused by the recent conflict with Iran.spending. These forward-looking statements generally relate to plans and objectives for future operations and are based uponon management’s reasonable estimates of future results or trends. The forward-looking statements in this Quarterly Report should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited Consolidated Financial Statements and notes to those statements included elsewhere in this Quarterly Report and our audited Consolidated Financial Statements for the year ended January 31, 2026, included in our Annual Report on Form 10-K for the year ended January 31, 2026, as filed with the Securities and Exchange Commission ("“SEC"”) on March 19, 2026 (our “Fiscal 2025 Annual Report”).
Numerous factors could cause our actual results to differ materially from such forward-looking statements. We encourage readers to refer to our filings with the SECSEC, including Amendment No. 1 to Preliminary Proxy Statement filed on September 2, 2026, that set forth certain risks and uncertainties that may have an impact on future results and direction of our Company, including risks related to the Merger and combining our business with FullBeautyFullBeauty, Brands,risks if a Merger is not approved, 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; rising fuel costs, high interest rates; the impact of ongoing worldwide conflicts on the global economy; 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 2025 Annual Report.
Destination XL Group, Inc., together with our consolidated subsidiaries (the “Company”), is the largest specialty retailer of big + tall men’s clothing with retail and direct operations in the United States. We operate under the trade names of Destination XL®, DXL®, DXL Outlets, Casual Male XL® and Casual Male XL Outlets. At MayAugust 2,1, 2026, we operated 257 Destination XL stores, 17 DXL outlet stores, 5 Casual Male XL retail stores, 14 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. and our consolidated subsidiaries. We refer to our fiscal years, which end on January 30, 2027 and January 31, 2026 and February 1, 2025 as "“fiscal 2026"” and “fiscal 2025,” respectively. Both fiscal years are 52-week periods.
Update on Merger with FullBeauty Brands
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”), entered into an Agreement and Plan of Merger (as subsequently amended, the “Merger Agreement”). The Merger Agreement provides that, on the terms and subject to the conditions set forth therein, Merger Sub would merge with and into FullBeauty, with FullBeauty being the surviving corporation as a wholly owned subsidiary of the Company (the “Merger”). On August 19, 2026, the Company, Merger Sub and FullBeauty amended the Merger Agreement to extend the end date from September 11, 2026 to October 30, 2026.
In connection with this Merger, the Company filed the Preliminary Proxy Statement with the SEC on September 2, 2026. Upon clearance from the SEC, the Company intends to file a definitive proxy statement, which will be distributed to its stockholders in connection with their vote on the Issuance Proposal. As described more fully in the Preliminary Proxy Statement, the Board has continued to evaluate the Merger, including in light of developments since the execution of the Merger Agreement. As part of that evaluation, the Board has considered, among other things, (i) the increasingly challenging consumer environment since the execution of the Merger Agreement in December 2025, (ii) FullBeauty’s continuing decline in operating performance and financial results, including lower-than-expected net sales, net income (loss), adjusted EBITDA and cash flow from operations as compared to both prior-year performance and prior projections (and the corresponding heightened risk that FullBeauty will not achieve its projections for the current fiscal year), (iii) FullBeauty’s increased level of indebtedness, (iv) concerns regarding FullBeauty’s potential negative equity value, and (v) the substantial economic dilution that DXL stockholders would experience if the Merger were consummated on its current terms. Based on this evaluation, including these considerations, the Board has determined that the Merger and the transactions contemplated by the Merger Agreement, including the Issuance Proposal, are no longer advisable and are not in the best interests of the Company and its stockholders. Accordingly, the Board recommends that its stockholders vote “against” the Issuance Proposal that will be included in the definitive proxy statement, when it becomes available.
In December 2025, DXL and FullBeauty Brands announced a Merger of equals to create a scaled, category-defining retailer for size-inclusive apparel.
On June 3, 2026, subsequent to the end of the first quarter of fiscal 2026, the Company issued a press release to provide an update on the status of its Merger with FullBeauty Brands. The Board has reevaluated the previously announced Merger and is engaging with FullBeauty Brands in constructive discussions to determine the best path forward. As part of its ongoing fiduciary duties to the Company's stockholders, the Board, with the assistance of external financial and legal advisors, has conducted a comprehensive reevaluation of the Merger. The Board continues to believe in the industrial logic of the combination. However, given the increasingly challenging consumer environment since the execution of the Merger Agreement on December 11, 2025 and FullBeauty Brands' indebtedness, the Board believes that the existing terms of the Merger Agreement are not in the best interests of the Company's stockholders.
(1) The amounts and percentages for the threesecond quarter and first six months ended MayAugust 3,2, 2025 reflect the reclassification of certain costs from SG&A expenses to Transaction-related costs for comparability with the amounts and percentages for the threesecond quarter and first six months ended MayAugust 2,1, 2026.
Our results for the second quarter reflect our continued progress against our strategic priorities. While traffic to both stores and digital remains under pressure, we were encouraged by the sequential improvement in comparable sales during the second quarter. Comparable sales were down 5.7% in May, down 2.8% in June and improved to down 1.9% in July. We believe macro and sector headwinds are influencing the core DXL big + tall consumer and are materially affecting traffic, but we believe our customer is responding positively to the adjustments we are making to our merchandise assortment, promotional strategy, and customer experience. We remain confident that our disciplined operating approach and focus on execution will position us to drive improved performance as the year progresses.
We continued to maintain a solid financial position, successfully managing our liquidity. As of August 1, 2026, we had cash and investments of $20.1 million as compared to $33.5 million as of August 2, 2025, with no outstanding debt in either period. The decrease in cash and investments at August 1, 2026 as compared to August 2, 2025 is primarily due to the capital spent over the past 12 months of approximately $13.9 million. We did not have any borrowings under our credit facility and, as of August 1, 2026, the availability under our credit facility was $61.7 million. Our inventory is down 4.3% at August 1, 2026 as compared to August 2, 2025 and our clearance inventory is below our benchmark of 10%.
We were encouraged by our first quarter results which reflected sales performance improving and continued progress against our strategic priorities. Although comparable sales were down (3.8)% for the first quarter of fiscal 2026, this represents our best quarterly comparable sales result since the second quarter of fiscal 2023. We believe macro and sector headwinds are influencing the core DXL big + tall consumer and are materially affecting traffic, which remains very challenged, particularly in stores. Despite the shortfall in absolute traffic, guests that do visit DXL are buying, with improvements in conversion and average order value in both stores and online. These trends reinforce that the adjustments we are making to our assortment, promotional strategy and customer experience are aligning better with today’s value-conscious consumer.
We have exclusive rights to our fit technology platform until 2030. FiTMAP® remains one of the Company’s most important long-term growth drivers. During the quarter, we completed the rollout ofThis FiTMAP technology is currently available in 188 stores to enhance the customer journey.stores. Since launch, over 100,000150,000 customers have engaged with the platform, and early results continue to reinforce its value. Customers who use FiTMAP have demonstrated stronger conversion, higher average order values, greater purchase frequency and lower return rates, underscoring the role personalized fit can play in driving both customer satisfaction and profitable growth.
We are sharpening our focus on artificial intelligence ("“AI"”) as consumer shopping behavior evolves. As the Company believes AI-powered search and discovery tools may become increasingly important in ecommerce, the Company is investing to ensure that its products and content are more visible, relevant and accessible in these emerging environments. DuringWe the quarter, DXLhave launched new AI initiatives to improve product data quality, enrich item-level attributes and strengthen itsour ability to connect product, pricing and inventory information across AI-enabled platforms. These efforts are intended to improve discoverability, support future commerce applications and position the Company to compete effectively as digital shopping journeys become more conversational and agent-driven.
GLP-1sGLP-1 Medications and Similar Weight-Loss Medications
The following table presents sales by segment for the three months ended MayAugust 2,1, 2026 and MayAugust 3,2, 2025:
Total sales for the firstsecond quarter of fiscal 2026 were $103.3$111.6 million, as compared to $105.5$115.5 million in the firstsecond quarter of fiscal 2025. The decrease in total sales was primarily attributable to a decrease in comparable sales for the firstsecond quarter of 3.8%,3.5%, partially offset by an increase in non-comparable store sales. SalesComparable sales decreased 5.7% in May, reflecting lower traffic as consumers remained cautious amid pressure on discretionary spending from inflation, higher energy costs, global conflict and broader economic uncertainty. Comparable sales improved atsequentially to a decrease of 2.8% in June and a decrease of 1.9% in July, supported by Father's Day and other promotional activity that helped offset the startcontinued of fiscal 2026 with comparable sales down 1.3%decline in Februarytraffic, and down 2.7% in March and, in April, sales were down 6.8%. While the performance between March and April was impacted at some level by the earlier Easter holiday, we believe the slowdown in sales in April was primarily the result of a combination of macroeconomic pressures impactingwhile consumer confidence andstill discretionaryremains spending, including global conflict, rising fuel costs, and inflation.pressured. We also continue to believe the impact of GLP-1 medications and similar weight-loss medications are contributing to structural changes in customer demand within the big + tall category.
The comparable sales decrease of 3.8%3.5% for the firstsecond quarter consisted of a comparable sales decrease of 4.6%4.3% from stores and a comparable sales decrease of 1.6% from our direct business. A decrease in traffic continued to be the primary driver, particularly in stores, partially offset by improvements in conversion and dollars per transaction. The direct business showedperformed improvementstronger duringthan thestores firstas quarter,we withhave increasedseen demandpositive being generatedresults from our paid search, paid social and program marketing efforts. In addition, improvements to the website and app have helped to improve conversion during the first quarter of fiscal 2026. Contributing to this improvement were strong sales of clearance and promotional merchandise on the website.
For the first six months of fiscal 2026, total sales of $214.9 million decreased 2.8% as compared to total sales of $221.0 million for the first six months of fiscal 2025. The decrease was primarily driven by a decrease in comparable sales of 3.6%, with stores down 4.4% and our direct business down 1.6%.
For the firstsecond quarter of fiscal 2026, our gross margin rate, inclusive of occupancy costs, was 44.3%47.9% as compared to a gross margin rate of 45.1%45.2% for the firstsecond quarter of fiscal 2025.
Our gross margin rate decreasedfor the second quarter increased by 80270 basis points, driven by aan decreaseincrease of 100340 basis points in merchandise margin, partially offset by a 20-basis70 basis point decreaseincrease in occupancy costs. The decreaseincrease in merchandise margin as compared to the firstsecond quarter of fiscal 2025 is primarily due to thea impactrefund of tariffs,$4.6 million, or 410 basis points, received in the second quarter of fiscal 2026 for tariffs previously paid. This benefit was partially offset by increased shipping costs as a result of fuel surcharges and increased markdown activity associated with clearance sales. These increased costs were partially offset by an improvement in merchandise margins as a result of a shift in product mix toward our private brand merchandise and favorable loyalty costs.
The 70 basis point increase in occupancy costs for the second quarter, as a percent of sales, was primarily due to the deleveraging of sales. On a dollar basis, occupancy costs increased $0.1 million as compared to the second quarter of fiscal 2025.
For the first six months of fiscal 2026, our gross margin rate, inclusive of occupancy costs, was 46.1% as compared to a gross margin rate of 45.1% for the first six months of fiscal 2025. The increase of 100 basis points was driven by an increase of 130 basis points in merchandise margin, partially offset by a 30 basis point increase in occupancy costs. The increase in merchandise margin as compared to the first six months of fiscal 2025 was primarily due to the refund for tariffs of $4.6 million, or 210 basis points. Similar to the second quarter, this benefit was partially offset by increased shipping costs and increased markdown activity.
The decreaseincrease in occupancy costs of 2030 basis points,points orfor $0.5the first six months of fiscal 2026, as a percentage of sales, was primarily due to the deleveraging of sales. On a dollar basis, occupancy costs decreased $0.4 million, was primarily due to $1.4 million received from a landlord as a result of an early lease termination, partially offset by increased rents from lease extensions and new stores.
Tariffs
In April 2026, U.S. Customs and Border Protection ("CBP") launched an online portal through which companies may submit refund requests. During the first quarter of fiscal 2026, the Company submitted a claim seeking a refund of approximately $4.0 million related to tariffs previously paid. The timing and amount of any potential refund and recovery remain uncertain, and the Company expects to recognize any recovery when receipt is considered realizable.
Given the volatility that currently exists around trade discussions, it is difficult to determine the potential impact that continuing tariffs may have on our financial results for fiscal 2026. However, if currently enacted rates remain in effect throughout fiscal 2026, and no additional tariffs, including those under U.S. trade laws, are added, we estimate that the impact of the current administration’s tariffs on pre-tariff gross margin,margin infor fiscal 2026, exclusive of any refunds realized, will be approximately 100 basis points, a decrease from the previous estimate of 150 basis points.
As a percentage of sales, selling, general and administrative ("“SG&A"”) expenses for the firstsecond quarter of fiscal 2026 were 45.0%41.0% as compared to 44.9%41.1% for the firstsecond quarter of fiscal 2025. For the first six months of fiscal 2026, SG&A expenses, as a percentage of sales, were 42.9% as compared to 42.9% for the first six months of fiscal 2025.
On a dollar basis, SG&A expenses decreased by $0.9$1.8 million for the firstsecond quarter of fiscal 2026 as compared to the second quarter of fiscal 2025. For the first quartersix months of fiscal 2026, SG&A expenses decreased $2.7 million as compared to the first six months of fiscal 2025. The decrease for both periods was primarily due to a decrease in supportingincentive-based payrollcompensation, costsincluding the reversal of expense associated with forfeited awards, and incentive-basedfavorable compensation partially offset by an increase in marketinghealthcare costs.
Marketing costs were 6.5%6.1% of sales for the firstsecond quarter of fiscal 2026 and fiscal 2025. For the first six months of fiscal 2026, marketing costs were 6.3% of sales as compared to 6.1% of sales for the first quartersix months of fiscal 2025. For fiscal 2026, marketing costs are expected to be approximately 5.8% 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 26.1%25.5% of sales for the first quartersix months of fiscal 2026 as compared to 25.2%24.6% of sales for the first quartersix months of fiscal 2025. Corporate Support Costs, which include the distribution center and corporate overhead costs, represented 18.9%17.4% of sales for the first quartersix months of fiscal 2026 as compared to 19.7%18.3% of sales for the first quartersix months of fiscal 2025.
Transaction-related costs for the second quarter and first quartersix months of fiscal 2026 and fiscal 2025 were $1.2$1.8 million and $0.1$3.0 million, respectively, as compared to $0.1 million and $0.2 million for the second quarter and first six months of fiscal 2025, respectively. Transaction-related costs primarily related to fees paid for professional services in connection with costs related to the Merger.
Depreciation and amortization for the firstsecond quarter of fiscal 2026 increased to $4.0 million as compared to $3.6$3.9 million for the second quarter of fiscal 2025. For the first six months of fiscal 2026, depreciation and amortization was $7.9 million as compared to $7.5 million for the first quartersix months of fiscal 2025. The increase in depreciation and amortization in fiscal 2026 is due to capital projects, including new stores, completed in fiscal 2025.
Net interest income for the firstsecond quarter of fiscal 2026 was $0.1 millionmillion, as compared to $0.3$0.2 million for the second quarter of fiscal 2025. For the first six months of fiscal 2026, net interest income was $0.1 million, as compared to $0.5 million for the first quartersix months of fiscal 2025. The decrease in interest income for the second quarter and first quartersix months of fiscal 2026 was primarily due to the decrease in the average balance of investments as compared to the second quarter and first quartersix months of fiscal 2025.
For bothall periods, interest income was earned from investments in U.S. government-backed investments and money market accounts. Interest costs for bothall periods were minimal because we had no outstanding debt and no borrowings under our credit facility.
For the first quarter of fiscal 2026 and 2025, theThe Company’s effective tax rate was (1.11.6)% and 39.7%,129.3%, respectively.respectively, for the second quarter of fiscal 2026 and fiscal 2025, and (0.8)% and 4.6%, respectively, for the first six months of fiscal 2026 and fiscal 2025. In the fourth quarter of fiscal 2025, a full valuation allowance was established against the net deferred tax assets. As a result, the effective tax rate for the second quarter and first quartersix months of fiscal 2026 primarily reflectsreflected a provision for state margin tax, based on gross receipts less certain deductions. The effective tax rate for the second quarter and first quartersix months of fiscal 2025 reflected the impact of permanent book-to-tax differences.differences and discrete items.
Net Income (Loss)
For the firstsecond quarter of fiscal 2026, we recorded a net lossincome of $(5.9)$2.0 million, or $(0.11)$0.04 per diluted share, as compared to a net loss of $(1.90.3) million, or $(0.04)$0.00 per diluted share, for the firstsecond quarter of fiscal 2025. The increase in earnings for the second quarter of fiscal 2026 as compared to the second quarter of fiscal 2025 was driven primarily by the tariff refund and lower incentive-based accruals, partially offset by a decrease in sales and an increase in transaction-related expenses.
The net loss for the first six months of fiscal 2026 was $(3.9) million, or $(0.07) per diluted share, as compared to a net loss for the first six months of fiscal 2025 of $(2.2) million, or $(0.04) per diluted share. The decrease in earnings for the first six months of fiscal 2026 as compared to the first six months of fiscal 2025, was primarily due to the decrease in sales and an increase in transaction-related costs of $2.8 million, partially offset by the tariff refund and the lower incentive-based accruals.
The decrease in earnings for the first quarter of fiscal 2026 as compared to first quarter of fiscal 2025 was driven primarily by a decrease in sales, an increase in transaction-related expenses and a decrease in the effective tax rate. We have fully reserved against our deferred tax assets and, therefore, the net loss in the first quarter of fiscal 2026 is not reflective of earnings assuming a normal tax position for the Company.
We have fully reserved against our deferred tax assets and, therefore, the results for the second quarter and the first six months of fiscal 2026 are not reflective of earnings assuming a normal tax position for the Company. On a non-GAAP basis, adjusting for a normal tax rate of 26% and the add back of transaction-related costs, adjusted net lossincome for the firstsecond quarter of fiscal 2026 was $(0.06)$0.05 per diluted share as compared to adjusted net lossincome for the firstsecond quarter of fiscal 2025 of $0.01 per diluted share. For the first six months of fiscal 2026, adjusted net loss was $(0.040.01) per diluted share.share, as compared to an adjusted net loss of $(0.03) per diluted share, for the first six months of fiscal 2025.
As of MayAugust 2,1, 2026, our inventory decreased by $4.1$3.4 million to $81.4$75.5 million, as compared to $85.5$78.9 million at MayAugust 3,2, 2025. We continue to take proactive measures to manage our inventory and adjust our receipt plan given the ongoing macroeconomic factors affecting consumer spending. At theAugust same time, we may accelerate certain receipts to avoid potential delays caused by the recent conflict with Iran. At May 2,1, 2026, our clearance inventory was 9.9%9.8% of our total inventory, as compared to 9.5%10.2% at MayAugust 3,2, 2025. OurWe believe that our inventory position is very stronghealthy and our clearance levels are in line with our benchmark of 10%. Our inventory turnover rate has improved by over 30% from fiscal 2019.
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 MayAugust 2,1, 2026, we had no outstanding debt, including no borrowings under our credit facility during the first quartersix months of fiscal 2026. Cash that is in excess of our forecasted needs may be invested in money market accounts and U.S. government-backed securities.
For the first threesix months of fiscal 2026, cash flow from operations was $(8.82.8) million as compared to $(12.02.1) million for the first threesix months of fiscal 2025. The improvementslight decrease in cash flow from operations was primarily due to the decrease in earnings partially offset by the timing of other working capital partially offset by a decrease in earnings.capital.
Free cash flow, before capital expenditures for store development, a non-GAAP measure, was $(12.38.3) million for the first threesix months of fiscal 2026 as compared to $(14.57.6) million for the first threesix months of fiscal 2025. Free cash flow, a non-GAAP measure, was $(12.78.7) million for the first threesix months of fiscal 2026 as compared to $(18.814.2) million for the first threesix months of fiscal 2025. This improvement reflects a decrease in capital expenditures for new store openings of $6.2 million.
Cash flow used for investing activities was $(3.84.0) million as compared to cash flow provided by investing activities of $8.3$4.4 million for the first threesix months of fiscal 2025. The decrease in cash flow from investing activities of $(12.18.4) million was primarily due to a decrease in proceeds from short-term investments partially offset by a decrease in capital expenditures in fiscal 2026 as compared to fiscal 2025.
We had no outstanding borrowings under the Credit Facility at MayAugust 2,1, 2026 and no borrowings during the first threesix months of fiscal 2026. At MayAugust 2,1, 2026, outstanding standby letters of credit were $3.6$3.7 million. The average unused excess availability during the first threesix months of fiscal 2026 was approximately $73.6$64.7 million and the unused excess availability at MayAugust 2,1, 2026 was $70.0$61.7 million.million, as compared to $70.1 million as of August 2, 2025.
The following table sets forth the open stores and related square footage at MayAugust 2,1, 2026 and MayAugust 3,2, 2025, respectively:
During the first threesix months of fiscal 2026, we closed one DXL retail store and one Casual Male XL outlet store. We expect our capital expenditures for fiscal 2026 to range from $8.0 million to $12.0$10.0 million, net of tenant incentives.incentives, Oura storedecrease developmentfrom plansour previous estimate of $9.0 million to $12.0 million. We expect that our capital spend for fiscal 2026 willto be limitedprimarily for technology-related projects to conversionssupport ofour abusiness few remaining Casual Male XL stores to the DXL format, store relocationsinitiatives and other capital projects necessary to maintain our existing store portfolio and distribution center. The remainder of our expected capital spend for fiscal 2026 will primarily be for technology-related projects to support our business initiatives.
FreeAdjusted net income (loss), adjusted net income (loss) per diluted share, free cash flow, free cash flow before capital expenditures for store development, adjusted net loss, adjusted net loss per diluted share, adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures. These non-GAAP measures are not presented in accordance with GAAP and should not be considered superior to or as a substitute for net income (loss), net income (loss) per diluted share or cash flows from operating activities or any other measure of performance derived in accordance with GAAP. In addition, all companies do not calculate non-GAAP financial measures in the same manner and, accordingly, the non-GAAP measures presented in this Quarterly Report may not be comparable to similar measures used by other companies. We believe that inclusion of these non-GAAP measures helps investors gain a better understanding of our performance, especially when comparing such results to previous periods and that they are useful as an additional means for investors to evaluate our operating results, when reviewed in conjunction with our GAAP financial statements.
Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Diluted Share
Adjusted net income (loss) and adjusted net income (loss) per diluted share reflect an adjustment assuming a normal tax rate of 26% and the add back of transaction-related costs. We have fully reserved against our net deferred tax assets and, therefore, the net income (loss) infor the second quarter and first quartersix months of fiscal 2026 is not reflective of earnings assuming a “normal” tax position. Adjusted net income (loss) provides investors with a useful indication of the financial performance of the business, on a comparative basis, assuming a normalized tax rate of 26%. The estimated normal tax rate of 26% includes a blended state income tax rate. The Company believes that this comparability is useful in comparing the actual results period to period. Adjusted net income (loss) per diluted share is then calculated by dividing the adjusted net income (loss) by the weighted average shares outstanding for the respective period, on a diluted basis. The following table is a reconciliation of net income (loss) on a GAAP basis to adjusted net loss,income (loss), on a non-GAAP basis, for each period:
Free Cash Flow. 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 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. Capital expenditures related to store relocations and maintenance are not included in store development. Free cash flow excludes the mandatory and discretionary repayment of debt. Free cash flow is a metric that management uses to monitor liquidity. Management believes this metric is important to investors because it demonstrates the Company's ability to strengthen liquidity while supporting its capital projects and new store development. We expect to fund our ongoing capital expenditures with cash on hand and cash flow from operations.
Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization and adding back transaction-related expenses. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Sales. We believe that providing adjusted EBITDA and adjusted EBITDA margin is useful to investors in evaluating our performance and are key metrics to measure profitability and economic productivity. The following table reconciles adjusted EBITDA from net income (loss) and calculates adjusted EBITDA margin:
DXLG insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-12 | Conacher Lionel F. |
Grant/award | 23,437 | $0.64 | $15.0K |
| 2026-08-12 | Conacher Lionel F. |
Grant/award | 25,720 | $0.58 | $14.9K |
| 2026-08-03 | Rubin Elaine |
Grant/award | 35,923 | $0.56 | $20.1K |
| 2026-08-03 | Ross Ivy |
Grant/award | 35,923 | $0.56 | $20.1K |
| 2026-08-03 | Conacher Lionel F. |
Grant/award | 3,951 | $0.56 | $2.2K |
| 2026-08-03 | Boyle Jack |
Grant/award | 43,018 | $0.56 | $24.1K |
| 2026-08-03 | Bauza Carmen |
Grant/award | 35,923 | $0.56 | $20.1K |
| 2026-05-04 | Rubin Elaine |
Grant/award | 32,608 | $0.62 | $20.2K |
| 2026-05-04 | Ross Ivy |
Grant/award | 32,608 | $0.62 | $20.2K |
| 2026-05-04 | Conacher Lionel F. |
Grant/award | 32,608 | $0.62 | $20.2K |
| 2026-05-04 | Boyle Jack |
Grant/award | 39,049 | $0.62 | $24.2K |
| 2026-05-04 | Bauza Carmen |
Grant/award | 32,608 | $0.62 | $20.2K |
Well-known investors holding DXLG (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 237,272 | $159.0K | 0.0% | Reduced 18% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 33,022 | $22.1K | 0.0% | New position |
| Two Sigma Investments | 2026-06-30 | 11,612 | $7.8K | 0.0% | Reduced 3% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 12,575 | $6.4K | — | Sold out |