Destination XL Group (DXLG) Q2 2025 Financial Results Summary

# Destination XL Group, Inc. (DXLG) Q2 2025 Financial Results Summary

CANTON, Mass., August 27, 2025 – Destination XL Group, Inc. (NASDAQ: DXLG) today reported its operating results for the second quarter of fiscal 2025.

### Financial Highlights
– **Total Sales**: $115.5 million
– Down **7.5%** compared to $124.8 million in Q2 2024.
– **Comparable Sales**: Decreased by **9.2%** year-over-year.
– **Net Loss**: $(0.3) million, or $0.00 per diluted share.
– Compared to a net income of $2.4 million, or $0.04 per diluted share in Q2 2024.
– **Adjusted EBITDA**: $4.6 million
– Down **29.2%** from $6.5 million in Q2 2024.
– **Cash and Investments**: $33.5 million at August 2, 2025
– Decrease from $63.2 million at August 3, 2024.
– **Outstanding Debt**: None for either period.

### Quarterly Performance Breakdown
– **Sales Performance**:
– Monthly trends:
– May: down **10.4%**
– June: down **9.6%**
– July: down **7.0%**
– **Comparable sales**:
– Decreased by **7.1%** from stores.
– Decreased by **14.4%** from the direct business (including online sales).
– Initiatives such as the Price Match Guarantee, Fit Exchange program, and Heroes Discounts showed positive traction against negative traffic trends.

### Margin Analysis
– **Gross Margin**: 45.2%
– Down **3.0 percentage points** from 48.2% in Q2 2024.
– Contributing factors:
– Occupancy costs increased by **240 basis points** due to lower sales and increased rents.
– Merchandise margin decreased by **60 basis points**, primarily from freight cost increases related to inventory management amid tariff concerns.

### Operating Expenses
– **Selling, General & Administrative (SG&A)**:
– 41.2% of sales, down from 43.0% in Q2 2024.
– Decrease of $6.1 million in SG&A expenses due to cuts in marketing and incentive-based compensation.

### Other Financial Metrics
– **Interest Income**: $0.2 million, down from $0.6 million in Q2 2024.
– **Income Taxes**: Provision of $1.2 million compared to $1.3 million in Q2 2024.
– **Free Cash Flow**:
– $(14.2) million for the first six months of fiscal 2025, down from $3.2 million in the same period in fiscal 2024.

### Share Repurchases and Capital Expenditures
– **Share Repurchases**:
– The company repurchased $13.6 million in shares in the second half of fiscal 2024.
– **Capital Expenditures**: Total of $14.6 million spent over the past 12 months, focusing on new store development.

### Strategic Initiatives
– **Credit Facility Extension**: Extended to August 13, 2030, with increased borrowing capacity of up to $100 million.
– **Promotional Strategy**:
– Focus on creating greater customer value through targeted promotions.
– Shift in merchandise strategy towards private brands aimed at improving margins and customer loyalty.
– **FiTMAP Technology**: Continuing to roll out proprietary sizing technology for consumers, enhancing the shopping experience.

### Outlook
– Management noted ongoing market volatility due to tariffs affecting inventory costs and consumer spending patterns.
– Company anticipates modest store traffic improvement into Q3 2025 with strategic promotional adjustments to attract consumer spending.
– Plans to grow private brand sales penetration from 56.5% to over 60% by 2026.

### Conclusion
Destination XL Group, Inc.’s second quarter results indicate significant challenges in consumer spending and market conditions. However, the organization is strategically addressing these issues through operational adjustments and an emphasis on private brands, aiming to create long-term growth opportunities.