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.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 3, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 01-34219

 

DESTINATION XL GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

04-2623104

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

555 Turnpike Street

Canton, MA

02021

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (781) 828-9300

 

Securities registered pursuant to Section 12(b) of the Act.

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

DXLG

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of August 20, 2024, the registrant had 58,257,724 shares of common stock, $0.01 par value per share, outstanding.

 


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

 

DESTINATION XL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

 

 

August 3, 2024

 

 

February 3, 2024

 

 

 

(Fiscal 2024)

 

 

(Fiscal 2023)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

21,475

 

 

$

27,590

 

Short-term investments

 

 

41,732

 

 

 

32,459

 

Accounts receivable

 

 

898

 

 

 

3,920

 

Inventories

 

 

78,612

 

 

 

80,968

 

Prepaid expenses and other current assets

 

 

8,977

 

 

 

8,308

 

Total current assets

 

 

151,694

 

 

 

153,245

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation and amortization

 

 

47,791

 

 

 

43,238

 

Operating lease right-of-use assets

 

 

163,246

 

 

 

138,118

 

Deferred income taxes, net of valuation allowance

 

 

19,403

 

 

 

21,533

 

Intangible assets

 

 

1,150

 

 

 

1,150

 

Other assets

 

 

484

 

 

 

457

 

Total assets

 

$

383,768

 

 

$

357,741

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

22,576

 

 

$

17,353

 

Accrued expenses and other current liabilities

 

 

25,505

 

 

 

35,302

 

Operating leases, current

 

 

35,155

 

 

 

37,221

 

Total current liabilities

 

 

83,236

 

 

 

89,876

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

Operating leases, non-current

 

 

141,479

 

 

 

117,316

 

Other long-term liabilities

 

 

2,099

 

 

 

1,596

 

Total long-term liabilities

 

 

143,578

 

 

 

118,912

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

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

 

 

 

 

 

 

Common stock, $0.01 par value, 125,000,000 shares authorized, 79,329,785 and 79,033,378 shares issued at August 3, 2024 and February 3, 2024, respectively

 

 

793

 

 

 

790

 

Additional paid-in capital

 

 

327,235

 

 

 

325,202

 

Treasury stock at cost, 21,094,463 shares at August 3, 2024 and 21,041,661 shares at February 3, 2024

 

 

(130,348

)

 

 

(130,137

)

Accumulated deficit

 

 

(40,726

)

 

 

(46,902

)

Total stockholders' equity

 

 

156,954

 

 

 

148,953

 

Total liabilities and stockholders' equity

 

$

383,768

 

 

$

357,741

 

 

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

 

2


 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

August 3, 2024

 

 

July 29, 2023

 

 

 

(Fiscal 2024)

 

 

(Fiscal 2023)

 

 

(Fiscal 2024)

 

 

(Fiscal 2023)

 

 

 

 

 

Sales

 

$

124,820

 

 

$

140,043

 

 

$

240,309

 

 

$

265,485

 

Cost of goods sold including occupancy costs

 

 

64,649

 

 

 

69,664

 

 

 

124,456

 

 

 

134,190

 

Gross profit

 

 

60,171

 

 

 

70,379

 

 

 

115,853

 

 

 

131,295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

53,662

 

 

 

47,446

 

 

 

101,185

 

 

 

95,727

 

Depreciation and amortization

 

 

3,385

 

 

 

3,468

 

 

 

6,663

 

 

 

6,945

 

Total expenses

 

 

57,047

 

 

 

50,914

 

 

 

107,848

 

 

 

102,672

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

3,124

 

 

 

19,465

 

 

 

8,005

 

 

 

28,623

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on termination of retirement plans

 

 

 

 

 

(4,174

)

 

 

 

 

 

(4,174

)

Interest income, net

 

 

551

 

 

 

505

 

 

 

1,121

 

 

 

844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

3,675

 

 

 

15,796

 

 

 

9,126

 

 

 

25,293

 

Provision for income taxes

 

 

1,292

 

 

 

4,163

 

 

 

2,950

 

 

 

6,693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

2,383

 

 

$

11,633

 

 

$

6,176

 

 

$

18,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

 

$

0.04

 

 

$

0.19

 

 

$

0.11

 

 

$

0.30

 

Net income per share - diluted

 

$

0.04

 

 

$

0.18

 

 

$

0.10

 

 

$

0.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

58,233

 

 

 

61,977

 

 

 

58,135

 

 

 

62,334

 

Diluted

 

 

61,117

 

 

 

65,449

 

 

 

61,035

 

 

 

65,829

 

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

 

3


 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

August 3, 2024

 

 

July 29, 2023

 

 

 

 

(Fiscal 2024)

 

 

(Fiscal 2023)

 

 

(Fiscal 2024)

 

 

(Fiscal 2023)

 

 

Net income

 

$

2,383

 

 

$

11,633

 

 

$

6,176

 

 

$

18,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income before taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement plans

 

 

 

 

 

65

 

 

 

 

 

 

131

 

 

Recognized loss on termination of retirement plans

 

 

 

 

 

4,174

 

 

 

 

 

 

4,174

 

 

Other comprehensive income before taxes

 

 

 

 

 

4,239

 

 

 

 

 

 

4,305

 

 

Tax effect related to items of other comprehensive income

 

 

 

 

 

(1,111

)

 

 

 

 

 

(1,128

)

 

Other comprehensive income, net of tax

 

 

 

 

 

3,128

 

 

 

 

 

 

3,177

 

 

Comprehensive income

 

$

2,383

 

 

$

14,761

 

 

$

6,176

 

 

$

21,777

 

 

 

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

 

4


 

 

 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Treasury Stock

 

 

Accumulated

 

 

 

 

 

 

Shares

 

 

Amounts

 

 

Capital

 

 

Shares

 

 

Amounts

 

 

Deficit

 

 

Total

 

Balance at February 3, 2024

 

 

79,033

 

 

$

790

 

 

$

325,202

 

 

 

(21,041

)

 

$

(130,137

)

 

$

(46,902

)

 

$

148,953

 

Board of directors' compensation

 

 

18

 

 

 

1

 

 

 

111

 

 

 

 

 

 

 

 

 

 

 

 

112

 

Stock compensation expense

 

 

 

 

 

 

 

 

875

 

 

 

 

 

 

 

 

 

 

 

 

875

 

Issuance of common stock, upon RSUs release

 

 

129

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for taxes related to net share settlement

 

 

(14

)

 

 

 

 

 

(48

)

 

 

 

 

 

 

 

 

 

 

 

(48

)

Exercise of stock options

 

 

132

 

 

 

1

 

 

 

75

 

 

 

 

 

 

 

 

 

 

 

 

76

 

Repurchase of common stock

 

 

 

 

 

 

 

 

 

 

 

(53

)

 

 

(211

)

 

 

 

 

 

(211

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,793

 

 

 

3,793

 

Balance at May 4, 2024

 

 

79,298

 

 

$

793

 

 

$

326,214

 

 

 

(21,094

)

 

$

(130,348

)

 

$

(43,109

)

 

$

153,550

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Board of directors' compensation

 

 

23

 

 

 

 

 

 

112

 

 

 

 

 

 

 

 

 

 

 

 

112

 

Stock compensation expense

 

 

 

 

 

 

 

 

905

 

 

 

 

 

 

 

 

 

 

 

 

905

 

Exercise of stock options

 

 

8

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

4

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,383

 

 

 

2,383

 

Balance at August 3, 2024

 

 

79,329

 

 

$

793

 

 

$

327,235

 

 

 

(21,094

)

 

$

(130,348

)

 

$

(40,726

)

 

$

156,954

 

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

 

5


 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Treasury Stock

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amounts

 

 

Capital

 

 

Shares

 

 

Amounts

 

 

Deficit

 

 

Loss

 

 

Total

 

Balance at January 28, 2023

 

 

78,230

 

 

$

782

 

 

$

321,516

 

 

 

(15,625

)

 

$

(105,386

)

 

$

(74,756

)

 

$

(4,928

)

 

$

137,228

 

Board of directors' compensation

 

 

15

 

 

 

 

 

 

108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

108

 

Stock compensation expense

 

 

 

 

 

 

 

 

404

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

404

 

Restricted stock units (RSUs) granted for achievement of performance-based
compensation, reclassified from liability to equity

 

 

 

 

 

 

 

 

1,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,146

 

Issuance of common stock, upon RSUs release

 

 

251

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for taxes related to net share settlement

 

 

(81

)

 

 

(1

)

 

 

(445

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(446

)

Exercise of stock options

 

 

81

 

 

 

1

 

 

 

215

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

216

 

Other comprehensive income, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49

 

 

 

49

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,967

 

 

 

 

 

 

6,967

 

Balance at April 29, 2023

 

 

78,496

 

 

$

785

 

 

$

322,941

 

 

 

(15,625

)

 

$

(105,386

)

 

$

(67,789

)

 

$

(4,879

)

 

$

145,672

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Board of directors' compensation

 

 

25

 

 

 

 

 

 

112

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

112

 

Stock compensation expense

 

 

 

 

 

 

 

 

411

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

411

 

Exercise of stock options

 

 

85

 

 

 

1

 

 

 

48

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

49

 

Repurchase of common stock, including excise tax

 

 

 

 

 

 

 

 

 

 

 

(2,249

)

 

 

(10,905

)

 

 

 

 

 

 

 

 

(10,905

)

Other comprehensive income, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,128

 

 

 

3,128

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,633

 

 

 

 

 

 

11,633

 

Balance at July 29, 2023

 

 

78,606

 

 

$

786

 

 

$

323,512

 

 

 

(17,874

)

 

$

(116,291

)

 

$

(56,156

)

 

$

(1,751

)

 

$

150,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

6


 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

 

(Fiscal 2024)

 

 

(Fiscal 2023)

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

6,176

 

 

$

18,600

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Amortization of deferred debt issuance costs

 

 

38

 

 

 

38

 

Loss on retirement plan terminations

 

 

 

 

 

4,174

 

Gain from the sale of equipment

 

 

(9

)

 

 

(129

)

Depreciation and amortization

 

 

6,663

 

 

 

6,945

 

Deferred taxes, net of valuation allowance

 

 

2,130

 

 

 

7,489

 

Stock compensation expense

 

 

1,780

 

 

 

815

 

Board of directors' stock compensation

 

 

224

 

 

 

220

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

2,887

 

 

 

836

 

Inventories

 

 

2,356

 

 

 

5,472

 

Prepaid expenses and other current assets

 

 

(669

)

 

 

460

 

Other assets

 

 

(65

)

 

 

(40

)

Accounts payable

 

 

5,223

 

 

 

(6,649

)

Operating leases, net

 

 

(3,031

)

 

 

(3,181

)

Accrued expenses and other liabilities

 

 

(7,731

)

 

 

(8,811

)

Net cash provided by operating activities

 

 

15,972

 

 

 

26,239

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Additions to property and equipment, net

 

 

(12,779

)

 

 

(4,665

)

Proceeds from sale of equipment

 

 

9

 

 

 

129

 

Purchase of short-term investments

 

 

(34,011

)

 

 

(43,536

)

Maturity of short-term investments

 

 

24,873

 

 

 

 

Net cash used for investing activities

 

 

(21,908

)

 

 

(48,072

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Repurchase of common stock

 

 

(211

)

 

 

(10,814

)

Tax withholdings paid related to net share settlements

 

 

(48

)

 

 

(446

)

Proceeds from the exercise of stock options

 

 

80

 

 

 

265

 

Net cash used for financing activities

 

 

(179

)

 

 

(10,995

)

Net decrease in cash and cash equivalents

 

 

(6,115

)

 

 

(32,828

)

Cash and cash equivalents:

 

 

 

 

 

 

Beginning of period

 

 

27,590

 

 

 

52,074

 

End of period

 

$

21,475

 

 

$

19,246

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

Cash paid during the period for income taxes

 

$

811

 

 

$

237

 

Cash paid during the period for interest

 

$

182

 

 

$

159

 

Non-cash activity during the period:

 

 

 

 

 

 

Capital expenditures incurred but not yet paid

 

$

776

 

 

$

505

 

 

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

 

7


 

 

DESTINATION XL GROUP, INC.

Notes to Consolidated Financial Statements

(Unaudited)

 

1. Basis of Presentation

In the opinion of management of Destination XL Group, Inc., a Delaware corporation (collectively with its subsidiaries, referred to as the “Company”), the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary for a fair presentation of the interim financial statements. These financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with the notes to the Company’s audited Consolidated Financial Statements for the fiscal year ended February 3, 2024 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 21, 2024.

The information set forth in these statements may be subject to normal year-end adjustments. The information reflects all adjustments that, in the opinion of management, are necessary to present fairly the Company’s results of operations, financial position and cash flows for the periods indicated. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s business historically has been seasonal in nature, and the results of the interim periods presented are not necessarily indicative of the results to be expected for the full year.

The Company’s fiscal year is a 52- or 53- week period ending on the Saturday closest to January 31. Fiscal 2024 is a 52-week period ending on February 1, 2025 and fiscal 2023 was a 53-week period ending on February 3, 2024.

Segment Information

The Company has two principal operating segments: its stores and its direct business. The Company considers its stores and direct operating segments to be similar in terms of economic characteristics, production processes and operations, and has therefore aggregated them into one reportable segment, retail segment, consistent with its omni-channel business approach.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash in banks and short-term investments, which have a maturity of ninety days or less when acquired. Included in cash equivalents are credit card and debit card receivables from banks, which generally settle within two to four business days.

Short-Term Investments

Short-term investments consist of those investments that have a maturity date, when acquired, that is greater than three months and twelve months or less. These investments are classified as held-to-maturity and are carried at amortized cost, which approximates fair value due to the short period between purchase and maturity.

Concentration of Credit Risk

Cash and cash equivalents include amounts due from third party financial institutions, which from time to time, may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company is potentially exposed to a concentration of credit risk when cash and cash equivalent deposits in these financial institutions are in excess of FDIC limits. The Company considers the credit risk associated with these financial instruments to be minimal as cash and cash equivalents are held by financial institutions with high credit ratings and it has not historically sustained any credit losses associated with its cash and cash equivalents balances. In addition, the Company's cash and cash equivalents include money market accounts with Citizens Bank, N.A. and investments in U.S. government-backed securities held with Fidelity Investments.

Fair Value of Financial Instruments

ASC Topic 825, Financial Instruments, requires disclosure of the fair value of certain financial instruments. ASC Topic 820, “Fair Value Measurements and Disclosures,” defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements.

8


 

The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities.

The Company utilizes observable market inputs (quoted market prices) when measuring fair value whenever possible.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of these instruments. See Note 9 - Fair Value Measurement for information regarding the fair value of certain financial assets.

Accumulated Other Comprehensive Income (Loss) - (“AOCI”)

In the fourth quarter of fiscal 2023, the Company terminated its frozen retirement plans, which was the only AOCI activity. As a result, there was no remaining AOCI as of February 3, 2024.

For the first three and six months of fiscal 2023, other comprehensive income and reclassifications from AOCI was as follows:

 

 

 

 

 

in thousands

 

For the three months ended July 29, 2023

 

 

For the six months ended July 29, 2023

 

Balance at beginning of fiscal year

 

$

(4,879

)

 

$

(4,928

)

 

 

 

 

 

 

 

Other comprehensive income before
   reclassifications, net of taxes

 

 

23

 

 

 

29

 

 

 

 

 

 

 

 

Recognition of loss on retirement plan termination, net of taxes (1)

 

 

3,080

 

 

 

3,080

 

 

 

 

 

 

 

 

Amounts reclassified from accumulated other
   comprehensive income, net of taxes
(2)

 

 

25

 

 

 

68

 

 

 

 

 

 

 

 

Other comprehensive income for the period

 

 

3,128

 

 

 

3,177

 

 

 

 

 

 

 

 

Balance at end of quarter

 

$

(1,751

)

 

$

(1,751

)

 

(1)
In connection with the Company's decision to terminate its pension plan, during the second quarter of fiscal 2023 the Company completed a partial settlement and accordingly recognized a pro-rated portion of AOCI in the amount of $4.2 million, or $3.1 million net of taxes.
(2)
Includes the amortization of the unrecognized loss on retirement plans, which was charged to “Selling, General and Administrative” Expense on the Consolidated Statements of Operations for the three and six months ended July 29, 2023. The Company recognized expense of $34,000, or $25,000 net of taxes, for the three months ended July 29, 2023 and expense of $92,000, or $68,000 net of taxes, for the six months ended July 29, 2023.

Stock-based Compensation

All share-based payments, including grants of employee stock options and restricted stock, are recognized as an expense in the Consolidated Statements of Operations based on their fair values and vesting periods. The fair value of stock options is determined using the Black-Scholes valuation model and requires the input of subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (the “expected term”), the estimated volatility of the Company’s common stock price over the expected term and the number of options that will ultimately not complete their vesting requirements (“forfeitures”). The Company reviews its valuation assumptions at each grant date and, as a result, is likely to change its valuation assumptions used to value employee stock-based awards granted in future periods. The values derived from using the Black-Scholes model are recognized as an expense over the vesting period, net of estimated forfeitures. The estimation of stock-based awards

9


 

that will ultimately vest requires judgment. Actual results and future changes in estimates may differ from the Company’s current estimates.

There were no grants of stock options in the first six months of fiscal 2024. For the first six months of fiscal 2023, the fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model based on the assumptions in the table below as it relates to stock options granted.

 

 

 

July 29, 2023

 

Expected volatility

 

86.3% - 92.1%

 

Risk-free interest rate

 

3.71%-4.42%

 

Expected term

 

2.5 yrs.

 

Dividend rate

 

 

 

Weighted average fair value of options granted

 

$

3.24

 

 

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for events or changes in circumstances that might indicate the carrying amount of the assets may not be recoverable. The Company’s judgment regarding the identification of impairment indicators is based on operational performance at the store level. Factors considered by the Company that could result in an impairment triggering event include significant changes in the use of assets, a current period operating or cash flow loss, underperformance of a store relative to historical or expected operating results, and an accumulation of costs significantly in excess of the amount originally expected for the construction of the long-lived store assets. The Company assesses the recoverability of the assets by determining whether the carrying value of such assets over their respective remaining lives can be recovered through projected undiscounted future cash flows. The model for undiscounted future cash flows includes assumptions, at the individual store level, with respect to expectations for future sales and gross margin rates as well as an estimate for occupancy costs used to estimate the fair value of the respective store’s operating lease right-of-use asset. The amount of impairment, if any, is measured based on projected discounted future cash flows using a discount rate reflecting the Company’s average cost of funds.

There were no impairments or non-cash gains recognized in the first six months of fiscal 2024 and fiscal 2023.

 

Advertising Costs

The Company expenses in-store advertising costs as incurred. Creative production costs, if any, are expensed in the period in which the advertising is first aired, and media costs are expensed as incurred. Direct response advertising costs, if any, are expensed in the period in which the mailing occurs. Advertising expense, which is included in selling, general and administrative expenses, was $11.0 million and $7.1 million for second quarter of fiscal 2024 and fiscal 2023, respectively, and was $18.3 million and $14.0 million for the first six months of fiscal 2024 and fiscal 2023, respectively.

Leases

The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use (“ROU”) assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments, initial direct costs. Lease incentives are included in the value of the ROU assets. As the interest rate implicit in the Company’s leases is not readily determinable, the Company utilizes its incremental borrowing rate, based on information available at the lease measurement date, to determine the present value of future payments. The Company elected the lessee non-lease component separation practical expedient, which permits the Company to not separate non-lease components from the lease components to which they relate. The Company also made an accounting policy election that the recognition requirement of ASC 842 will not be applied to certain, if any, non-store leases, with a term of 12 months or less, recognizing those lease payments on a straight-line basis over the lease term. At August 3, 2024, the Company had no short-term leases.

The Company’s store leases typically contain options that permit renewals for additional periods of up to five years each. In general, for store leases with an initial term of 10 years or more, the options to extend are not considered reasonably certain at lease commencement. For store leases with an initial term of 5 years, the Company evaluates each lease independently and, when the Company considers it reasonably certain that it will exercise an option to extend, the associated payment of that option will be included in the measurement of the ROU asset and lease liability. Renewal options are not included in the lease term for automobile and equipment leases because they are not considered reasonably certain of being exercised at lease commencement. Renewal options were not considered for the Company’s corporate headquarters and distribution center lease, which was entered into in 2006 and was for an initial 20-year term. At the end of the initial term, the Company will have the opportunity to extend this lease for six additional successive periods of five years.

For store leases, the Company accounts for lease components and non-lease components as a single lease component. Certain store leases may require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance

10


 

and insurance, and are expensed as incurred as variable lease costs. Other store leases contain one periodic fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the ROU assets and lease liabilities. Tenant allowances are included as an offset to the ROU asset and amortized as reductions to rent expense over the associated lease term.

See Note 4, "Leases" for additional information.

Recently Issued Accounting Pronouncements - Not Yet Adopted

 

In July 2023, the FASB issued ASU 2023-03, Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X: Income or Loss Applicable to Common Stock, which amends or supersedes various SEC paragraphs within the Accounting Standards Codification to conform to past SEC announcements and guidance issued by the SEC. The ASU does not provide any new guidance, and as such, there is no transition effective date. ASU 2023-03 is not expected to have a material impact on the Company's Consolidated Financial Statements.

 

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendment in Response to the SECs Disclosure Update and Simplification Initiative. ASU-2023-06 incorporates several disclosure and presentation requirements currently residing in the SEC Regulations S-X and S-K. The amendments will be applied prospectively and are effective when the SEC removes the related requirements from Regulations S-X or S-K. Any amendments the SEC does not remove by June 30, 2027 will not be effective. The ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements or related disclosures because the Company is currently subjected to the reporting requirements of Regulations S-X and S-K.

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), which requires all public entities to provide enhanced disclosures about significant segment expenses. The amendments in this ASU are to be applied retrospectively and are effective for our annual financial statements starting in fiscal 2024 and interim periods starting in fiscal 2025, with early adoption permitted. We are currently evaluating the impact of this accounting standard on our financial statements or related disclosures.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which enhances transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid and to improve the effectiveness of income tax disclosures. This ASU will be effective in fiscal 2025, and allows for adoption on a prospective basis, with a retrospective option. Early adoption is permitted. We are currently evaluating the impact of adopting this accounting standard on our financial statements or related disclosures.

There were no other new accounting pronouncements, issued or effective during the first six months of fiscal 2024, which had or are expected to have a significant impact on the Company’s Consolidated Financial Statements.

2. Revenue Recognition

The Company operates as a retailer of big and tall men’s clothing, which includes stores and direct. Revenue is recognized by the operating segment that initiates a customer’s order. Store sales are defined as sales that originate and are fulfilled directly at the store level. Direct sales are defined as sales that originate online, including those initiated online at the store level, on its website or on third-party marketplaces. Generally, all revenues are recognized when control of the promised goods is transferred to customers, in an amount that reflects the consideration in exchange for those goods. Sales tax collected from customers and remitted to taxing authorities is excluded from revenue and is included as part of accrued expenses on the Consolidated Balance Sheets.

Unredeemed Gift Cards, Gift Certificates, and Credit Vouchers. Upon issuance of a gift card, gift certificate, or credit voucher, a liability is established for its cash value. The liability is relieved and net sales are recorded upon redemption by the customer. Based on historical redemption patterns, the Company can reasonably estimate the amount of gift cards, gift certificates, and credit vouchers for which redemption is remote, which is referred to as “breakage.” Breakage is recognized over two years in proportion to historical redemption trends and is recorded as sales in the Consolidated Statements of Operations. The gift card liability, net of breakage, was $2.1 million and $3.2 million at August 3, 2024 and February 3, 2024, respectively.

Unredeemed Loyalty Coupons. The Company offers a free loyalty program to its customers for which points accumulate based on the purchase of merchandise. Under ASC 606, Revenue from Contracts with Customers, these loyalty points provide the customer with a material right and a distinct performance obligation with revenue deferred and recognized when the points are expected to be redeemed or expire. The cycle of earning and redeeming loyalty points is generally under one year in duration. The loyalty accrual, net of breakage, was $1.1 million and $1.7 million at August 3, 2024 and February 3, 2024, respectively.

11


 

Shipping. Shipping and handling costs are accounted for as fulfillment costs and are included in cost of sales for all periods presented. Amounts related to shipping and handling that are billed to customers are recorded in sales, and the related costs are recorded in cost of goods sold, including occupancy costs, in the Consolidated Statements of Operations.

Disaggregation of Revenue

As noted above under Segment Information in Note 1, the Company’s business consists of one reportable segment, its retail segment. Substantially all of the Company’s revenue is generated from its stores and direct businesses. Accordingly, the Company has determined that the following sales channels depict the nature, amount, timing, and uncertainty of how revenue and cash flows are affected by economic factors:

 

 

 

For the Three Months Ended

 

 

 

For the Six Months Ended

 

 

 

(in thousands)

 

August 3, 2024

 

 

July 29, 2023

 

 

 

August 3, 2024

 

 

 

July 29, 2023

 

 

 

Store sales

 

$

87,845

 

70.4%

$

97,445

 

69.6%

 

$

168,693

 

 

70.2

%

$

184,742

 

 

69.6

%

Direct sales

 

 

36,975

 

29.6%

 

42,598

 

30.4%

 

 

71,616

 

 

29.8

%

 

80,743

 

 

30.4

%

Total sales

 

$

124,820

 

 

$

140,043

 

 

 

$

240,309

 

 

 

$

265,485

 

 

 

3. Debt

Credit Agreement with Citizens Bank, N.A.

The Company has a credit facility with Citizens Bank, N.A, which provides for a $125.0 million secured, asset-based credit facility with a maturity date of October 28, 2026 (the "Credit Facility"). The maximum committed borrowing of $125.0 million includes a sublimit of $20.0 million for commercial and standby letters of credit and a sublimit of up to $15.0 million for swing line loans. The Company’s ability to borrow under the Credit Facility is determined using an availability formula based on eligible assets.

Borrowings under the Credit Facility bear interest at either a Base Rate loan or Daily Simple SOFR rate, at the Company's option. Base Rate loans will bear interest at a rate equal to (i) the greater of: (a) the Prime Rate, (b) the Federal Funds effective rate plus 0.50% per annum and (c) the Daily Simple SOFR rate plus 1.00% per annum (provided the Base Rate shall never be less than the Floor (as defined in the Credit Facility)), plus (ii) a varying percentage, based on the Company’s average excess availability, of either 0.25% or 0.50% (the “Applicable Margin”). 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. The Company is subject to an unused line fee of 0.25%.

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

At August 3, 2024, the Company had no borrowings outstanding under the Credit Facility and unused availability was $69.9 million. The Company had no borrowings during the first six months of fiscal 2024, resulting in an average unused excess availability of approximately $73.4 million. Outstanding standby letters of credit were $4.2 million and outstanding documentary letters were $0.9 million at August 3, 2024. At August 3, 2024, the Company’s prime-based interest rate was 8.75%.

 

4. Leases

The Company leases all of its store locations and its corporate headquarters, which also includes its distribution center, under operating leases. The store leases typically have initial terms of 5 years to 10 years, with options that usually permit renewal for additional five-year periods. The initial term of the lease for the corporate headquarters is for 20 years, with the opportunity to extend for six additional consecutive periods of five years, beginning in fiscal 2026. The Company also leases certain equipment and other assets under operating leases, typically with initial terms of 3 to 5 years. The Company is generally obligated for the cost of property taxes, insurance and common area maintenance fees relating to its leases, which are considered variable lease costs and are expensed as incurred.

ASC 842 requires the assessment of any lease modification to determine if the modification should be treated as a separate lease and if not, modification accounting would be applied. Lease modification accounting requires the recalculation of the ROU asset, lease liability and lease expense over the respective lease term. As of August 3, 2024, the Company’s operating leases liabilities represent the present value of the remaining future minimum lease payments updated based on concessions and lease modifications.

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

12


 

The following table is a summary of the Company’s components of net lease cost for the three and six months ended August 3, 2024 and July 29, 2023:

 

 

 

For the three months ended

 

 

For the six months ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

August 3, 2024

 

 

July 29, 2023

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease cost

 

$

12,222

 

 

$

11,374

 

 

$

23,699

 

 

$

22,041

 

Variable lease costs(1)

 

 

3,151

 

 

 

3,293

 

 

 

6,544

 

 

 

6,458

 

Total lease costs

 

$

15,373

 

 

$

14,667

 

 

$

30,243

 

 

$

28,499

 

 

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

Supplemental cash flow and balance sheet information related to leases as of and for the first six months ended August 3, 2024 and July 29, 2023 was as follows:

 

 

 

 

 

 

 

 

(dollars in thousands)

 

For the Six Months Ended

 

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

 

August 3, 2024

 

 

July 29, 2023

 

Operating cash flows for operating leases (1)

 

$

25,750

 

 

$

24,513

 

Non-cash operating activities:

 

 

 

 

 

 

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

 

$

43,087

 

 

$

23,533

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

August 3, 2024

 

 

July 29, 2023

 

Weighted average remaining lease term

 

5.4 yrs.

 

 

4.4 yrs.

 

Weighted average discount rate

 

 

6.38

%

 

 

6.41

%

 

(1)
The cash paid for the first six months of fiscal 2024 and fiscal 2023 included prepaid rent of $4.3 million and $3.7 million, respectively.

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the Consolidated Balance Sheet as of August 3, 2024:

 

(in thousands)

 

 

 

2024 (remaining)

 

$

19,434

 

2025

 

 

50,191

 

2026

 

 

38,544

 

2027

 

 

31,806

 

2028

 

 

24,067

 

Thereafter

 

 

46,230

 

Total minimum lease payments

 

$

210,272

 

Less: amount of lease payments representing interest

 

 

33,638

 

Present value of future minimum lease payments

 

$

176,634

 

Less: current obligations under leases

 

 

35,155

 

Long-term lease obligations

 

$

141,479

 

 

As of August 3, 2024, the Company had entered into three ten-year store leases that have not yet commenced with aggregated estimated future lease payments of approximately $6.2 million, which are not included in the above table. The leases are expected to commence during the second half of fiscal 2024.

 

5. Long-Term Incentive Plans

The following is a summary of the Company’s Long-Term Incentive Plan (“LTIP”). All equity awards granted under long-term incentive plans are issued from the Company’s stockholder-approved 2016 Plan. See Note 6, Stock-Based Compensation.

The LTIPs are granted annually and each LTIP covers a three-year performance period. Each participant in the LTIP participates based on that participant’s “Target Cash Value” which is defined as the participant’s annual base salary (on the participant’s effective date) multiplied by his or her LTIP percentage. Under each LTIP, 50% of each participant’s Target Cash Value is subject to time-based vesting and 50% is subject to performance-based vesting. Awards for any achievement of performance targets are not granted until the

13


 

performance targets are achieved and then are subject to additional vesting through August 31 following the end of the applicable performance period.

2021-2023 LTIP

The performance targets for the Company’s 2021-2023 LTIP were approved by the Compensation Committee of the Board of Directors (the "Compensation Committee”) on March 8, 2021, and covered a three-year period performance period, which ended on February 3, 2024. The time-vested portion of the 2021-2023 LTIP vests in four annual installments, with the remaining installment vesting on April 1, 2025.

On March 29, 2024, the Compensation Committee approved a grant of awards, effective April 1, 2024, equal to $3.0 million for the achievement of the performance target for the 2021-2023 LTIP. In an effort to preserve share availability under the 2016 Plan, all awards, which are subject to further vesting through August 31, 2024, were granted in cash.

 

Active LTIPs

At August 3, 2024, the Company had three active LTIPs: the 2022-2024 LTIP, the 2023-2025 LTIP and the 2024-2026 LTIP. The time-based awards under each LTIP were granted in a combination of 50% RSUs and 50% cash.

Performance targets for the 2022-2024 LTIP, the 2023-2025 LTIP and the 2024-2026 LITP were established and approved by the Compensation Committee on April 9, 2022, May 1, 2023 and April 1, 2024, respectively. The performance period for each LTIP is three years. Awards for any achievement of performance targets will not be granted until the performance targets are achieved and then will be subject to an additional service requirement through August 31, 2025, August 31, 2026 and August 31, 2027, respectively. The time-based awards under the 2022-2024 LTIP, the 2023-2025 LTIP, and the 2024-2026 LTIP vest in four equal installments through April 1, 2026, April 1, 2027 and April 1, 2028, respectively. Assuming that the Company achieves the performance targets at target levels and all time-based awards vest, the compensation expense associated with the 2022-2024 LTIP, 2023-2025 LTIP and 2024-2026 LTIP is estimated to be approximately $4.8 million, $5.1 million and $5.3 million, respectively. Approximately half of the compensation expense for each LTIP relates to the time-based awards, which are being expensed straight-line over 48 months, 47 months and 49 months, respectively.

At August 3, 2024, the Company had accrued $1.6 million under the 2022-2024 LTIP, $0.2 million under the 2023-2025 LTIP and $0.2 million under the 2024-2026 LTIP for the performance awards.

6. Stock-Based Compensation

The Company has one active stock-based compensation plan: the 2016 Incentive Compensation Plan (as amended, the “2016 Plan”). A grant of a stock option award or stock appreciation right will reduce the outstanding reserve on a one-for-one basis, meaning one share for every share granted. A grant of a full-value award, including, but not limited to, restricted stock, restricted stock units and deferred stock, will reduce the outstanding reserve by a fixed ratio of 1.9 shares for every share granted. At August 3, 2024, 15,120,538 shares were authorized under the 2016 Plan, of which 1,425,262 shares remained available for grant. Subsequent to the end of the second quarter of fiscal 2024, at the Company's Annual Meeting of Stockholders, which was held on August 8, 2024, the shareholders approved an increase of 6,150,000 shares authorized for future grant under the 2016 Plan.

The 2016 Plan is administered by the Compensation Committee. The Compensation Committee is authorized to make all determinations with respect to amounts and conditions covering awards. Options are not granted at a price less than fair value on the date of the grant. Except with respect to 5% of the shares available for awards under the 2016 Plan, no award will become exercisable unless such award has been outstanding for a minimum period of one year from its date of grant.

The following tables summarize the share activity and stock option activity for the first six months of fiscal 2024:

 

 

 

RSUs (1)

 

 

Deferred
shares
(2)

 

 

Performance
Share Units
(3)

 

 

Fully-Vested
 Shares
(4)

 

 

Total number
of shares

 

 

Weighted-
average
grant-date
fair value

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding non-vested shares at beginning of year

 

 

536,285

 

 

 

435,568

 

 

 

573,000

 

 

 

 

 

 

1,544,853

 

 

$

3.53

 

Shares granted

 

 

383,007

 

 

 

19,901

 

 

 

 

 

 

22,234

 

 

 

425,142

 

 

$

3.56

 

Shares vested and/or issued

 

 

(129,112

)

 

 

 

 

 

 

 

 

(22,234

)

 

 

(151,346

)

 

$

4.55

 

Shares expired

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Shares forfeited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Outstanding non-vested shares at end of quarter

 

 

790,180

 

 

 

455,469

 

 

 

573,000

 

 

 

 

 

 

1,818,649

 

 

$

3.45

 

 

(1)
During the first six months of fiscal 2024, the Company granted time-based RSUs under its 2024-2026 LTIP. See Note 5, Long-Term Incentive Plans. As a result of net share settlements, of the 129,112 RSUs that vested, 115,292 shares of common stock were issued.

14


 

(2)
The 19,901 shares of deferred stock, with a fair value of $72,495 represent director compensation in lieu of cash, in accordance with the director's irrevocable election. The shares of deferred stock will be issued upon the director's separation from service.
(3)
On August 11, 2023, the Company granted 573,000 performance share units ("PSUs") in connection with the extension of Mr. Kanter's employment agreement. The award consists of nine tranches, with the first tranche vesting if and when the 30-day volume-weighted closing price of the Company's common stock is equal to or greater than $6.50 per share. Each subsequent tranche will vest upon achievement of the 30-day volume-weighted closing price of the Company's common stock in $0.25 increments with the ninth tranche vesting when such price is equal to or greater than $8.50 per share. The PSUs are subject to a one-year minimum vesting period, and any unvested PSUs will expire on August 11, 2026. The $2.4 million fair value is being expensed over the respective derived service periods of each tranche which range from 12 to 13 months. The respective fair value and derived service periods assigned to the PSUs were determined using a Monte Carlo model based on: a weighted historical volatility of 57.8%, a term of 3 years, stock price on the date of grant of $4.98 per share, a risk-free rate of 4.6% and a cost of equity of 11.0%.
(4)
Represented compensation, with a fair value of $80,993, to certain directors, who are required to receive shares, in lieu of cash, in order to satisfy their minimum equity ownership under the Non-Employee Director Compensation Plan. Voluntary shares received, in lieu of cash, are reported below under Non-Employee Director Compensation Plan.

 

 

 

Number of
shares

 

 

Weighted-
average
exercise price
per option

 

 

Weighted-
average
remaining
contractual term

 

 

Aggregate
intrinsic value
(000's)

 

Stock Options

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding options at beginning of year

 

 

3,180,739

 

 

$

0.75

 

 

 

 

 

$

10,962

 

Options granted

 

 

 

 

 

 

 

 

 

 

 

 

Options exercised

 

 

(139,667

)

 

$

0.57

 

 

 

 

 

 

409

 

Options expired

 

 

(53,441

)

 

$

5.29

 

 

 

 

 

 

 

Options forfeited

 

 

(1,715

)

 

$

0.75

 

 

 

 

 

 

5

 

Outstanding options at end of quarter

 

 

2,985,916

 

 

$

0.67

 

 

6.1 years

 

 

$

8,124

 

Options exercisable at end of quarter

 

 

2,745,724

 

 

$

0.66

 

 

6.0 years

 

 

$

7,491

 

 

For the first six months of fiscal 2024, the Company granted 383,007 restricted stock units, 19,901 shares of deferred stock and 22,234 fully-vested shares. For the first six months of fiscal 2023, the Company granted stock options to purchase an aggregate of 1,317 shares of common stock, 547,294 restricted stock units and 11,924 fully-vested shares.

Non-Employee Director Compensation Plan

The Company granted 19,214 shares of common stock, with a fair value of approximately $69,992, to certain of its non-employee directors as compensation in lieu of cash in the first six months of fiscal 2024. These shares are in addition to any shares that may be granted under the 2016 Plan related to the requirement to receive equity if a director has not yet satisfied his or her minimum equity ownership requirement under the Non-Employee Director Compensation Plan.

Stock Compensation Expense

The Company recognized total stock-based compensation expense of $1.8 million and $0.8 million for the first six months of fiscal 2024 and fiscal 2023, respectively. The total compensation cost related to time-vested stock options, RSU awards, and PSU awards not yet recognized as of August 3, 2024 was approximately $3.0 million, net of estimated forfeitures, which will be expensed over a weighted average remaining life of 32 months.

 

7. Equity and Earnings per Share

The following table provides a reconciliation of the number of shares outstanding for basic and diluted earnings per share:

 

 

For the three months ended

 

 

For the six months ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

August 3, 2024

 

 

July 29, 2023

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

58,233

 

 

 

61,977

 

 

 

58,135

 

 

 

62,334

 

Common stock equivalents – stock options, restricted stock units and deferred stock

 

 

2,884

 

 

 

3,472

 

 

 

2,900

 

 

 

3,495

 

Diluted weighted average common shares outstanding

 

 

61,117

 

 

 

65,449

 

 

 

61,035

 

 

 

65,829

 

 

15


 

 

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

 

 

 

For the three months ended

 

 

For the six months ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

August 3, 2024

 

 

July 29, 2023

 

(in thousands, except exercise prices)

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

36

 

 

 

100

 

 

 

36

 

 

 

100

 

Restricted stock units and deferred stock

 

 

350

 

 

 

179

 

 

 

363

 

 

 

24

 

Range of exercise prices of such options

 

$4.48-$6.59

 

 

$4.48 - $6.59

 

 

$4.48 - $6.59

 

 

$4.48 - $6.59

 

 

The above options, which were outstanding at August 3, 2024, expire from November 10, 2024 to March 20, 2033.

Excluded from the computation of basic and diluted earnings per share were 573,000 shares for the first three and six months of fiscal 2024. These performance-based awards will be included in the computation of basic and diluted earnings per share if, and when, the respective performance targets are achieved. In addition, 455,469 shares and 435,568 shares of deferred stock at August 3, 2024 and July 29, 2023, respectively, were excluded from the computation of basic earnings per share. Shares of deferred stock are not considered issued and outstanding until the vesting date of the deferral period.

 

8. Income Taxes

The Company's tax provision for income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any. Each quarter, the Company updates its estimate of the annual effective tax rate and makes a year-to-date adjustment to the provision.

For the first six months of fiscal 2024 and 2023, the Company’s effective tax rate was 32.3% and 26.5%, respectively. The increase in the effective tax rate was primarily due to permanent book to tax differences combined with a lower pretax income as compared to the first six months of fiscal 2023.

 

9. Fair Value Measurement

At August 3, 2024 and February 3, 2024, the Company held U.S. treasury bills which were classified as held-to maturity and carried at amortized cost.
 

 

 

 

 

Fair Value

 

(in thousands)

Carrying value

 

 

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

 

 

Significant
Observable
Inputs
(Level 2)

 

 

Significant Unobservable
Inputs (Level 3)

 

At August 3, 2024:

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

4,031

 

 

 

4,032

 

 

 

 

 

 

 

Short-term investments

 

41,732

 

 

 

41,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At February 3, 2024:

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

6,047

 

 

 

6,052

 

 

 

 

 

 

 

Short-term investments

 

32,459

 

 

 

32,479

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10. Stock Repurchase Program

On March 14, 2023, the Company's Board of Directors (“Board”) approved a stock repurchase program, effective March 16, 2023, which was subsequently amended in November 2023. Under the amended program, the Company was authorized to repurchase up to $25.0 million of its common stock, including excise tax, through open market and privately negotiated transactions.

During the first quarter of fiscal 2024, the Company repurchased 52,802 shares at a total cost, including fees, of $211,182, completing its stock repurchase program.

The Inflation Reduction Act of 2022 imposed a nondeductible 1% excise tax on the net value of certain share repurchases made after December 31, 2022. Beginning in fiscal year 2023, the applicable excise tax is being charged to additional paid-in capital in the Company's Consolidated Balance Sheet as part of the cost basis of the shares repurchased, with the corresponding liability for the excise tax payable recorded in accrued expenses and other current liabilities until paid. This liability is partially offset by a 1% credit permitted

16


 

under the rules for the fair value of shares issued by the Company. At August 3, 2024, the Company had accrued $0.2 million for the payment of excise taxes.

11. Termination of Noncontributory Pension Plan

In connection with the acquisition of Casual Male Corp. in May 2002, the Company assumed the assets and liabilities of the Casual Male Noncontributory Pension Plan “Casual Male Corp. Retirement Plan,” which was previously known as the J. Baker, Inc. Qualified Plan (the “Pension Plan”). Casual Male Corp. froze all future benefits under this plan on May 1, 1997.

 

In the second quarter of fiscal 2023, the Board of Directors approved the termination of the Pension Plan, and on July 1, 2023, the Company completed a partial settlement through the purchase of nonparticipating annuities. In connection with the partial settlement, in the second quarter of fiscal 2023, the Company recognized a charge of $4.2 million, representing a pro-rata portion of the unrealized loss in "Accumulated Other Comprehensive Loss" on the Consolidated Balance Sheet. The Company settled the remaining obligation and terminated the Pension Plan in the fourth quarter of fiscal 2023.

17


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q 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 our long-range strategic plan and the expected impact of our strategic initiatives on future growth, including with respect to our marketing efforts and raising brand awareness, store development, website replatform and future alliances and collaborations; expected marketing costs, gross margin rates and expected capital expenditures in 2024; expected store openings and store conversions for the remainder of fiscal 2024 and fiscal 2025; expected long-term plans for new stores; the expected completion and impact of our rollout of our improved eCommerce platform; and our expectations regarding liquidity needs for the next 12 months.These forward-looking statements generally relate to plans and objectives for future operations and are based upon 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 February 3, 2024, included in our Annual Report on Form 10-K for the year ended February 3, 2024, as filed with the Securities and Exchange Commission on March 21, 2024 (our “Fiscal 2023 Annual Report”).

Numerous factors could cause our actual results to differ materially from such forward-looking statements. The Company encourages readers to refer to its filings with the SEC that set forth certain risks and uncertainties that may have an impact on future results and direction of our Company, including risks related to changes in consumer spending in response to economic factors; the impact of inflation with rising costs and high interest rates; the impact of ongoing worldwide conflicts, including the Israel-Hamas conflict and the ongoing Russian invasion of Ukraine, on the global economy; potential labor shortages; and the Company’s ability to execute on its marketing, digital, store and collaboration strategies, ability to grow its market share, predict customer tastes and fashion trends, forecast sales growth trends and compete successfully in the United States men’s big and 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 2023 Annual Report.

All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing. These forward-looking statements speak only as of the date of the document in which they are made. We disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances in which the forward-looking statement is based.

BUSINESS SUMMARY

Destination XL Group, Inc., together with our consolidated subsidiaries (the “Company”), is the largest specialty retailer of big and 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 August 3, 2024, we operated 233 Destination XL stores, 15 DXL outlet stores, 17 Casual Male XL retail stores, 19 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 February 1, 2025, February 3, 2024 and January 28, 2023 as "fiscal 2024", “fiscal 2023,” and “fiscal 2022” respectively. Fiscal 2024 is a 52-week period, fiscal 2023 was a 53-week period and fiscal 2022 was a 52-week period.

SEGMENT REPORTING

We currently have two principal operating segments: our stores and direct business. We consider our stores and direct business segments to be similar in terms of economic characteristics, production processes and operations, and have therefore aggregated them into one reportable segment, retail segment, consistent with our omni-channel business approach.

COMPARABLE SALES

Our customer’s shopping experience continues to evolve across multiple channels, and we are continually adapting to meet the guest’s needs. The majority of our stores have the capability of fulfilling online orders if merchandise is not available in the warehouse. As a

18


 

result, certain transactions that begin online 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 and at curbside. We define store sales as sales that originate and are fulfilled directly at the store level. Digital 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 or through a third-party marketplace.

Stores that have been open for at least 13 months are included in comparable sales. Stores that have been remodeled or relocated during the period are also included in our determination of comparable stores sales. Stores that have been expanded by more than 25% are considered non-comparable for the first 13 months. If a store is temporarily closed for more than 7 days, it is removed from the calculation of comparable sales until it reopens and upon its anniversary is once again removed from the calculation until the reopen date. The method of calculating comparable sales varies across the retail industry and, as a result, our calculation of comparable sales is not necessarily comparable to similarly titled measures reported by other retailers.

 

EXECUTIVE SUMMARY

 

 

 

For the three months ended

 

For the six months ended

 

 

August 3, 2024

 

 

July 29, 2023

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

124.8

 

 

$

140.0

 

 

 

$

240.3

 

 

$

265.5

 

 

Net income

 

$

2.4

 

 

$

11.6

 

 

 

$

6.2

 

 

$

18.6

 

 

Adjusted EBITDA (Non-GAAP basis)

 

$

6.5

 

 

$

22.9

 

 

 

$

14.7

 

 

$

35.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin, as a percentage of sales

 

 

48.2

%

 

 

50.3

%

 

 

 

48.2

%

 

 

49.5

%

 

SG&A expenses, as a percentage of sales

 

 

43.0

%

 

 

33.9

%

 

 

 

42.1

%

 

 

36.1

%

 

Adjusted EBITDA margin (Non-GAAP basis)

 

 

5.2

%

 

 

16.4

%

 

 

 

6.1

%

 

 

13.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per diluted share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

0.04

 

 

$

0.18

 

 

 

$

0.10

 

 

$

0.28

 

 

 

Our second quarter results reflect a challenging men's apparel market that was punctuated by a lack of foot traffic to our stores and lower conversion rates in our direct business. Customers gravitated towards promotions and lower price point goods, which signals a consumer who is carefully choosing where and how he spends his money. This was evident with the double-digit decrease we saw in store traffic and the lower conversion rates in our direct business, both of which were the primary contributors to our comparable sales decrease for the second quarter of 10.9%. Comparable sales for our stores were down 10.0% and our direct business was down 12.8%. Despite a disappointing sales performance, we maintained a flat merchandise margin, with meaningfully less inventory, and a strong balance sheet. Our occupancy costs and selling, general and administrative (SG&A) expenses for the second quarter of fiscal 2024 were in line with our expectations and included an increase in marketing costs, specifically related to our brand awareness campaign that launched mid-May. While we continued to diligently manage our operating expenses, given the pressure on sales, some of our cost structure was negatively deleveraged by the sales shortfall.

As of August 3, 2024, we had cash and investments of $63.2 million as compared to $62.8 million at July 29, 2023 with no debt outstanding and unused excess availability of $69.9 million. We continued to maintain our strong financial position, successfully managing our liquidity and our inventory levels, which were down 10.2% to last year's second quarter.

Progress on Our Long-Range Plan and Future Growth Strategy

We have made substantial progress on our long-term strategic growth initiatives and continue to believe that these initiatives will lead to greater brand awareness, enabling us to take a greater share of the addressable market, and grow our top line. However, given the current environment and the concern that this continued pressure on sales will continue, our near-term priority is to focus on our balance sheet, achieving profitable sales, and generating free cash flow. For this reason, we have made the difficult decision to pivot from the next wave of our planned brand campaign in the Fall, in favor of other advertising spend that we believe will stimulate traffic in the short term. We have also decided to slow our store roll out to lower our capital expenditure burden. It is important to emphasize, we remain very enthusiastic about the brand campaign and store development, and we are not abandoning our growth ambitions. We will stay focused on executing our fundamentals and controlling what we can control as we cycle through the current environment.

Marketing & Brand Building: We launched our new brand advertising campaign on May 13th to build awareness of our brand. The campaign ran in a three-matched-market test in Boston, Detroit, and St. Louis and the results were positive in all three markets, with increased traffic, sessions, and customer acquisition. Our initial plan was to run a second similar campaign in the second half of the year, however, given current market conditions, we believe pivoting the brand marketing dollars back into our traditional marketing channels will be more productive.

Store Development: While we have stores in every major metropolitan market across the United States, there are geographic voids in certain markets where big + tall consumers are not being served by a DXL store. Our consumer research has indicated that 44% of big

19


 

+ tall men self-reported they do not shop with us because a store is not near them, while 35% self-reported that they do not shop with us because a store location is not convenient. During the first six months of fiscal 2024, we opened two new stores and subsequent to the end of the quarter, on August 17th, we opened our third store, with five more expected later this year. We are evaluating our current rollout schedule and will likely reduce the number of expected stores, opening in fiscal 2025, from 15 to 10.

New Website Platform: We are transitioning to a new and improved eCommerce platform. The platform addresses friction online and will drive a richer and simpler consumer experience, as well as drive measurably greater speed and agility. We completed our first phase of this project in the first quarter, our second phase is expected to be released by the end of September, and the last phase is on schedule to be completed in January 2025. We believe this upgrade will provide immediate performance improvements and customer experience benefits by eliminating friction points, optimizing search capability, and enhancing speed and response times. We expect this new platform, engineered by a leading eCommerce technology provider, will position us to respond faster and more effectively to make changes in the future.

Alliances & Collaborations: Last quarter we announced our alliance with Nordstrom to launch DXL's Big & Tall assortment on their digital marketplace platform. Our merchandise offering launched on the marketplace on May 28th. To date, we have been pleased with the results and we are currently looking to expand our current product offering. We believe this collaboration will allow us to bring the DXL experience beyond our four walls and directly to the Nordstrom customer, thereby further extending DXL’s relationship with the female consumer. We are currently in discovery mode for collaborative offers with several other brands and we are optimistic that some of these brands could play a role in our assortment, similar to the collaboration with UNTUCKIT.

RESULTS OF OPERATIONS

Sales

The following table presents sales by segment for the three and six months ended August 3, 2024 and July 29, 2023:

 

 

For the Three Months Ended

 

 

 

For the Six Months Ended

 

 

 

(in thousands)

 

August 3, 2024

 

 

July 29, 2023

 

 

 

August 3, 2024

 

 

 

July 29, 2023

 

 

 

Store sales

 

$

87,845

 

70.4%

$

97,445

 

69.6%

 

$

168,693

 

 

70.2

%

$

184,742

 

 

69.6

%

Direct sales

 

 

36,975

 

29.6%

 

42,598

 

30.4%

 

 

71,616

 

 

29.8

%

 

80,743

 

 

30.4

%

Total sales

 

$

124,820

 

 

$

140,043

 

 

 

$

240,309

 

 

 

$

265,485

 

 

 

Total sales for the second quarter of fiscal 2024 were $124.8 million, as compared to $140.0 million in the second quarter of fiscal 2023. The decrease in total sales was primarily attributable to a decrease in comparable sales for the second quarter of 10.9%. The remainder of the decrease was due to a $1.9 million decrease due to the shift in calendar weeks due to the 53rd week in fiscal 2023 which was partially offset by an increase in non-comparable sales of $1.7 million.

The comparable sales decrease of 10.9% consisted of comparable sales from our stores down 10.0% and our direct business down 12.8%. Similar to our first quarter results, the decrease in comparable sales during the second quarter of fiscal 2024 was principally driven by a decrease in traffic in our stores and decreased conversion in our direct business.

For the first six months of fiscal 2024, total sales of $240.3 million decreased 9.5% as compared to $265.5 million for the first six months of fiscal 2023. The decrease was primarily driven by a decrease in comparable sales of 11.1%, with stores down 10.7% and our direct business down 12.0%. This decrease in comparable sales was slightly offset by an increase in non-comparable sales of $3.4 million and a $1.0 million shift in calendar weeks due to the 53rd week in fiscal 2023.

Gross Margin Rate

For the second quarter of fiscal 2024, our gross margin rate, inclusive of occupancy costs, was 48.2% as compared to a gross margin rate of 50.3% for the second quarter of fiscal 2023.

Our gross margin rate decreased by 210-basis points, which was driven by an increase in occupancy costs, as a percentage of sales, primarily due to the deleveraging of sales and increased rents as a result of lease extensions. Our merchandise margin, which was flat to the second quarter of fiscal 2023, was achieved despite an increase in markdowns associated with selected price matching for some of our national brands, as well as markdowns on seasonal merchandise to ensure inventory levels remain healthy as we head into the fall season. These increases were offset by favorable shipping costs and a reduction in loyalty expense.

For the first six months of fiscal 2024, our gross margin rate, inclusive of occupancy costs, was 48.2% as compared to a gross margin rate of 49.5% for the first six months of fiscal 2023. The decrease of 130-basis points was due to an increase of 190-basis points in occupancy costs due to the deleveraging of sales and increased rents. This increased cost was partially offset by an increase in merchandise margin of 60-basis points, driven by favorable shipping costs and a reduction in loyalty expense and marketplace commissions.

20


 

For 2024, we expect gross margin rates to be approximately 60 to 110-basis points lower than fiscal 2023 and reflect some occupancy deleveraging due to lower sales expectations.

Selling, General and Administrative Expenses

As a percentage of sales, SG&A (selling, general and administrative) expenses for the second quarter of fiscal 2024 were 43.0% as compared to 33.9% for the second quarter of fiscal 2023. For the first six months of fiscal 2024, SG&A expenses, as a percentage of sales, were 42.1% as compared to 36.1% for the first six months of fiscal 2023.

On a dollar basis, SG&A expenses increased by $6.2 million and $5.5 million for the second quarter and first six months of fiscal 2024 as compared to the second quarter and first six months of fiscal 2023. The increase was principally due to an increase in marketing costs, which included our brand campaign that launched in the second quarter, of $3.9 million and $4.3 million for the second quarter and first six months of fiscal 2024, as compared to the respective prior year periods. The remainder of the increase was due to an increase in operating costs to support our long-range growth initiatives and increased healthcare costs.

Marketing costs were 8.8% of sales for the second quarter of fiscal 2024 as compared to 5.0% of sales for the second quarter of fiscal 2023. For the first six months of fiscal 2024, marketing costs were 7.6% as compared to 5.3% for the first six months of fiscal 2023. For fiscal 2024, marketing costs are expected to be approximately 7.0% 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 24.2% of sales in the first six months of fiscal 2024 as compared to 20.3% of sales in the first six months of fiscal 2023. Corporate Support Costs, which include the distribution center and corporate overhead costs, represented 17.9% of sales in the first six months of fiscal 2024 as compared to 15.8% of sales in the first six months of fiscal 2023.

Depreciation and Amortization

Depreciation and amortization for the second quarter of fiscal 2024 decreased to $3.4 million as compared to $3.5 million for the second quarter of fiscal 2023. For the first six months of fiscal 2024 depreciation and amortization was $6.7 million as compared to $6.9 million for the first six months of fiscal 2023. The decrease was due to a lower depreciable cost base, especially from our store assets, due to our limited capital spending since fiscal 2020. Our capital expenditures have increased in fiscal 2024 as we have started to open new store locations and are investing in certain other infrastructure and technology projects.

Loss from Termination of Retirement Plan

Results for the second quarter and first six months of fiscal 2023 included a charge of $4.2 million related to a partial settlement of our pension obligation. The termination and final settlement of the remaining pension obligation was completed in the fourth quarter of fiscal 2023.

Interest Income, Net

Net interest income for the second quarter of fiscal 2024 was $0.6 million, as compared to $0.5 million for the second quarter of fiscal 2023. Net interest income for the first six months of fiscal 2024 was $1.1 million, as compared to $0.8 million for the first six months of fiscal 2023. Interest income was earned from investments in U.S. government-backed investments and money market accounts. Interest costs for all periods were immaterial because we had no outstanding debt and no borrowings under our credit facility.

Income Taxes

Our provision for income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any. Each quarter, we update our estimate of the annual effective tax rate and make a year-to-date adjustment to the provision.

For the second quarter of fiscal 2024 and fiscal 2023, our effective tax rate was 35.2% and 26.4%, respectively, and for the first six months of fiscal 2024 and fiscal 2023, our effective tax rate was 32.3% and 26.5%, respectively. The increase in the effective tax rate was primarily due to permanent book to tax differences combined with a lower pretax income as compared to the second quarter and first six months of fiscal 2023.

Net Income

For the second quarter of fiscal 2024, we recorded net income of $2.4 million, or $0.04 per diluted share, as compared to net income of $11.6 million, or $0.18 per diluted share, for the second quarter of fiscal 2023. For the first six months of fiscal 2024, net income was $6.2 million, or $0.10 per diluted share, as compared to $18.6 million, or $0.28 per diluted share, for the first six months of fiscal 2023. The decrease in earnings was driven primarily by a decrease in sales and to a lesser extent an increase in marketing costs associated with our brand campaign.

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Results for the second quarter and first six months of fiscal 2023 included a charge of $4.2 million related to the partial settlement of the pension plan.

Inventory

As of August 3, 2024, our inventory decreased by approximately $8.9 million to $78.6 million, as compared to $87.5 million at July 29, 2023. We continue to take proactive measures to manage our inventory and adjust our receipt plan given the ongoing macroeconomic factors affecting consumer spending. At August 3, 2024, our clearance inventory was 10.4% of our total inventory, as compared to 9.3% at July 29, 2023. Our inventory position is very strong and our clearance levels, while slightly above our benchmark of 10%, are in line with expectations given our 10% decrease in total inventory. Our inventory turnover rate has improved by almost 30% from fiscal 2019.

SEASONALITY

Historically, and consistent with the retail industry, we have experienced seasonal fluctuations as it relates to our operating income, net income, and free cash flow. Traditionally, a significant portion of our operating income, net income, and free cash flow is generated in the second and fourth quarters. Our inventory is typically at peak levels by the end of the third quarter, which represents a significant use of cash, which is then relieved in the fourth quarter as we sell-down our inventory through the holiday shopping season.

LIQUIDITY AND CAPITAL RESOURCES

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 August 3, 2024, we had no outstanding debt, including no borrowings under our credit facility during the first six months of fiscal 2024. Cash that is in excess of our forecasted needs may be invested in money market accounts and U.S. government-backed securities.

We believe 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. However, we remain cautious regarding the effect that the current macroeconomic conditions may have on consumer spending, including inflation, high interest costs, and other geopolitical conflicts around the world. We also believe that cash flows from operating activities and cash on hand will be sufficient to satisfy our current capital requirements. In the longer term, to the extent future capital requirements exceed cash on hand plus cash flows from operating activities, we anticipate that working capital will be financed by our credit facility.

For the first six months of fiscal 2024, cash flow from operations was $16.0 million as compared to $26.2 million for the first six months of fiscal 2023. Free cash flow, a non-GAAP measure, was $3.2 million for the first six months of fiscal 2024 as compared to $21.6 million for the first six months of fiscal 2023. The decrease in free cash flow was primarily due to a decrease in operating income, driven by our sales decrease, and increases in capital expenditures of $4.4 million for store development and $3.7 million for other capital projects.

Cash flow used for investing activities was $21.9 million for the first six months of fiscal 2024 as compared to $48.1 million for the first six months of fiscal 2023. This decrease of $26.2 million was primarily due to a decrease in net purchases of short-term investments, partially offset by an increase in capital expenditures.

Stock Repurchase Program

In March 2023, the Company’s Board of Directors approved a stock repurchase program, which was subsequently amended in November 2023. Under the stock repurchase program, as amended, the Company was authorized to repurchase up to $25.0 million of its common stock through open market and privately negotiated transactions.

The stock repurchase program was completed in the first quarter of fiscal 2024, with the repurchase of 52,802 shares at a total cost, including fees, of $211,182.

22


 

Credit Facility

The Company has a $125.0 million revolving credit agreement with Citizens Bank, N.A., with a maturity date of October 28, 2026 (the "Credit Facility"). The Credit Facility includes a sublimit of $20.0 million for commercial and standby letters of credit and a sublimit of up to $15.0 million for swingline loans. Borrowings under the Credit Facility bear interest at either a Base Rate loan or Daily Simple SOFR rate, at the Company's option. Base Rate loans will bear interest at a rate equal to (i) the greater of: (a) the Prime Rate, (b) the Federal Funds effective rate plus 0.50% per annum and (c) the Daily Simple SOFR rate plus 1.00% per annum (provided the Base Rate shall never be less than the Floor (as defined in the Credit Facility)), plus (ii) a varying percentage, based on the Company’s average excess availability, of either 0.25% or 0.50% (the “Applicable Margin”). 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 August 3, 2024 and no borrowings during the first six months of fiscal 2024. At August 3, 2024, outstanding standby letters of credit were $4.2 million and outstanding documentary letters of credit were $0.9 million. The average unused excess availability during the first six months of fiscal 2024 was approximately $73.4 million and the unused excess availability at August 3, 2024 was $69.9 million.

Capital Expenditures

The following table sets forth the open stores and related square footage at August 3, 2024 and July 29, 2023, respectively:

 

 

August 3, 2024

 

 

July 29, 2023

 

 

Store Concept

 

Number of
Stores

 

 

Square
Footage

 

 

Number of
Stores

 

 

Square
Footage

 

 

(square footage in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

DXL Retail

 

 

233

 

 

 

1,729

 

 

 

219

 

 

 

1,666

 

 

DXL Outlets

 

 

15

 

 

 

76

 

 

 

16

 

 

 

80

 

 

Casual Male XL Retail

 

 

17

 

 

 

55

 

 

 

27

 

 

 

88

 

 

Casual Male Outlets

 

 

19

 

 

 

57

 

 

 

19

 

 

 

57

 

 

Total Stores

 

 

284

 

 

 

1,917

 

 

 

281

 

 

 

1,891

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

During the first six months of fiscal 2024, we opened two new DXL stores, located in Coon Rapids, Minnesota and Thousand Oaks, California, completed a DXL remodel and closed one of our DXL stores. During the second half of fiscal 2024, we expect to open six additional DXL stores, convert five Casual Male stores to the DXL store format and remodel four more of our existing DXL stores. We expect our capital expenditures to range from $22.0 million to $25.0 million, net of tenant incentives, in fiscal 2024. Over the next five years, we believe we could potentially open approximately 50 net new DXL stores across the country, which could average 6,000 square feet or 300,000 sq. ft. in total, a 15% increase over our current square footage. In an effort to better manage our capital expenditures, we expect to open 10 stores in 2025 which is down from our previous estimate of 15 new stores in 2025.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes to the critical accounting policies and estimates disclosed in our Fiscal 2023 Annual Report. See Note 1 to the Consolidated Financial Statements included in this report for information on recent accounting pronouncements and changes in accounting principles.

Non-GAAP Financial Measures

Free cash flow, free cash flow before capital expenditures for store development, 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, net income 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.

Reconciliations of these non-GAAP measures are presented in the following tables (certain columns may not foot due to rounding):

23


 

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 activities 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 flow from operations.

The following table reconciles free cash flow:

 

 

For the six months ended

(in millions)

 

August 3, 2024

 

 

July 29, 2023

 

 

Cash flow from operating activities (GAAP basis)

 

$

16.0

 

 

$

26.2

 

 

Capital expenditures, excluding store development

 

 

(7.6

)

 

 

(3.9

)

 

Free Cash Flow before capital expenditures for store development (non-GAAP basis)

 

$

8.4

 

 

$

22.4

 

 

Capital expenditures for store development

 

 

(5.2

)

 

 

(0.8

)

 

   Free Cash Flow (non-GAAP basis)

 

$

3.2

 

 

$

21.6

 

 

Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization and adding back impairment (gain) of assets, if any, and loss on termination of retirement plans. 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 and calculates adjusted EBITDA margin:

 

 

For the three months ended

 

 

 

For the six months ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

 

August 3, 2024

 

 

July 29, 2023

 

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP basis)

 

$

2.4

 

 

$

11.6

 

 

 

$

6.2

 

 

$

18.6

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on termination of retirement plans

 

 

 

 

 

4.2

 

 

 

 

 

 

 

4.2

 

Provision for income taxes

 

 

1.3

 

 

 

4.2

 

 

 

 

3.0

 

 

 

6.7

 

Interest income, net

 

 

(0.6

)

 

 

(0.5

)

 

 

 

(1.1

)

 

 

(0.8

)

Depreciation and amortization

 

 

3.4

 

 

 

3.5

 

 

 

 

6.7

 

 

 

6.9

 

Adjusted EBITDA (non-GAAP basis)

 

$

6.5

 

 

$

22.9

 

 

 

$

14.7

 

 

$

35.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

124.8

 

 

$

140.0

 

 

 

$

240.3

 

 

$

265.5

 

Adjusted EBITDA margin (non-GAAP), as a percentage of sales

 

 

5.2

%

 

 

16.4

%

 

 

 

6.1

%

 

 

13.4

%

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

In the normal course of business, our financial position and results of operations are routinely subject to a variety of risks, including market risk associated with interest rate movements on borrowings. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of these and other potential exposures.

There have not been any material changes to our interest rate previously disclosed in Part II, Item 7A of our Fiscal 2023 Annual Report.

 

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of August 3, 2024. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of August 3, 2024, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

24


 

We have not experienced any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended August 3, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

25


 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings.

We are subject to various legal proceedings and claims that arise in the ordinary course of business. Management currently believes that the resolution of these matters will not have a material adverse impact on our future results of operations or financial position.

 

Item 1A. Risk Factors.

There have been no material changes to the risk factors as previously disclosed in Part I, Item 1A of our Fiscal 2023 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

Not applicable.

 

Item 5. Other Information.

 

During the three months ended August 3, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933, as amended).

 

Item 6. Exhibits.

 

 

 

31.1

Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934*.

 

 

 

31.2

 

Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.*

 

 

 

32.1

 

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

 

 

 

32.2

 

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

 

 

 

101.INS

 

Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

 

 

 

101.SCH

 

Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Document.

 

 

 

104

 

Cover Page Interactive Data File – The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

 

 

 

 

 

* Filed herewith.

 

 

26


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DESTINATION XL GROUP, INC.

Date: August 29, 2024

By:

/s/ John F. Cooney

John F. Cooney

Senior Vice President, Chief Accounting Officer and Corporate Controller (Duly Authorized Officer and Chief Accounting Officer)

 

 

27


 

Exhibit 31.1

CERTIFICATION

I, Harvey S. Kanter, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Destination XL Group, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:

 August 29, 2024

By:

/s/ Harvey S. Kanter

 

 

 

Harvey S. Kanter

 

 

 

Chief Executive Officer

 

 


 

Exhibit 31.2

CERTIFICATION

I, Peter H. Stratton, Jr., certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Destination XL Group, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:

 August 29, 2024

By:

/s/ Peter H. Stratton, Jr.

 

 

 

Peter H. Stratton, Jr.

 

 

 

Chief Financial Officer

 

 


 

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Destination XL Group, Inc. (the “Company”) for the period ended August 3, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Harvey S. Kanter, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This certification is being furnished as an exhibit to the Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. This certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except to the extent that the Company specifically incorporates this certification by reference.

 

Date:

 August 29, 2024

By:

/s/ Harvey S. Kanter

 

 

 

Harvey S. Kanter

 

 

 

Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 


 

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Destination XL Group, Inc. (the “Company”) for the period ended August 3, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter H. Stratton, Jr., Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This certification is being furnished as an exhibit to the Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. This certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except to the extent that the Company specifically incorporates this certification by reference.

 

Date:

August 29, 2024

By:

/s/ Peter H. Stratton, Jr.

 

 

 

Peter H. Stratton, Jr.

 

 

 

Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 


v3.24.2.u1
Document and Entity Information - shares
6 Months Ended
Aug. 03, 2024
Aug. 20, 2024
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Aug. 03, 2024  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q2  
Trading Symbol DXLG  
Entity Registrant Name DESTINATION XL GROUP, INC.  
Entity Central Index Key 0000813298  
Current Fiscal Year End Date --02-01  
Entity Current Reporting Status Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   58,257,724
Entity File Number 01-34219  
Entity Tax Identification Number 04-2623104  
Entity Address, Address Line One 555 Turnpike Street  
Entity Address, City or Town Canton  
Entity Address, State or Province MA  
Entity Address, Postal Zip Code 02021  
City Area Code 781  
Local Phone Number 828-9300  
Document Quarterly Report true  
Document Transition Report false  
Entity Interactive Data Current Yes  
Title of 12(b) Security Common Stock, $0.01 par value  
Security Exchange Name NASDAQ  
Entity Incorporation, State or Country Code DE  
v3.24.2.u1
Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Aug. 03, 2024
Feb. 03, 2024
Current assets:    
Cash and cash equivalents $ 21,475 $ 27,590
Short-term investments 41,732 32,459
Accounts receivable 898 3,920
Inventories 78,612 80,968
Prepaid expenses and other current assets 8,977 8,308
Total current assets 151,694 153,245
Non-current assets:    
Property and equipment, net of accumulated depreciation and amortization 47,791 43,238
Operating lease right-of-use assets 163,246 138,118
Deferred income taxes, net of valuation allowance 19,403 21,533
Intangible assets 1,150 1,150
Other assets 484 457
Total assets 383,768 357,741
Current liabilities:    
Accounts payable 22,576 17,353
Accrued expenses and other current liabilities 25,505 35,302
Operating leases, current 35,155 37,221
Total current liabilities 83,236 89,876
Long-term liabilities:    
Operating leases, non-current 141,479 117,316
Other long-term liabilities 2,099 1,596
Total long-term liabilities 143,578 118,912
Commitments and contingencies
Stockholders' equity:    
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued
Common stock, $0.01 par value, 125,000,000 shares authorized, 79,329,785 and 79,033,378 shares issued at August 3, 2024 and February 3, 2024, respectively 793 790
Additional paid-in capital 327,235 325,202
Treasury stock at cost, 21,094,463 shares at August 3, 2024 and 21,041,661 shares at February 3, 2024 (130,348) (130,137)
Accumulated deficit (40,726) (46,902)
Total stockholders' equity 156,954 148,953
Total liabilities and stockholders' equity $ 383,768 $ 357,741
v3.24.2.u1
Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares
Aug. 03, 2024
Feb. 03, 2024
Statement of Financial Position [Abstract]    
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 1,000,000 1,000,000
Preferred stock, issued 0 0
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 125,000,000 125,000,000
Common stock, shares issued 79,329,785 79,033,378
Treasury stock, shares 21,094,463 21,041,661
v3.24.2.u1
Consolidated Statements of Operations (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Aug. 03, 2024
Jul. 29, 2023
Aug. 03, 2024
Jul. 29, 2023
Income Statement [Abstract]        
Sales $ 124,820 $ 140,043 $ 240,309 $ 265,485
Cost of goods sold including occupancy costs 64,649 69,664 124,456 134,190
Gross profit 60,171 70,379 115,853 131,295
Expenses:        
Selling, general and administrative 53,662 47,446 101,185 95,727
Depreciation and amortization 3,385 3,468 6,663 6,945
Total expenses 57,047 50,914 107,848 102,672
Operating income 3,124 19,465 8,005 28,623
Loss on termination of retirement plans   (4,174) 0 (4,174)
Interest income (expense), net 551 505 1,121 844
Income before provision (benefit) for income taxes 3,675 15,796 9,126 25,293
Provision (benefit) for income taxes 1,292 4,163 2,950 6,693
Net income $ 2,383 $ 11,633 $ 6,176 $ 18,600
Net income per share - basic $ 0.04 $ 0.19 $ 0.11 $ 0.3
Net income per share - diluted $ 0.04 $ 0.18 $ 0.1 $ 0.28
Weighted-average number of common shares outstanding:        
Basic 58,233 61,977 58,135 62,334
Diluted 61,117 65,449 61,035 65,829
v3.24.2.u1
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Aug. 03, 2024
Jul. 29, 2023
Aug. 03, 2024
Jul. 29, 2023
Statement of Comprehensive Income [Abstract]        
Net income $ 2,383 $ 11,633 $ 6,176 $ 18,600
Other comprehensive income before taxes:        
Retirement plans 0 65 0 131
Recognized loss on termination of retirement plans 0 4,174 0 4,174
Other comprehensive income before taxes 0 4,239 0 4,305
Tax effect related to items of other comprehensive income 0 (1,111) 0 (1,128)
Other comprehensive income (loss), net of tax 0 3,128 0 3,177
Comprehensive income $ 2,383 $ 14,761 $ 6,176 $ 21,777
v3.24.2.u1
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Additional Paid-in Capital
Treasury Stock
Accumulated Deficit
Accumulated Other Comprehensive Loss
Beginning Balance at Jan. 28, 2023 $ 137,228 $ 782 $ 321,516 $ (105,386) $ (74,756) $ (4,928)
Beginning Balance (in shares) at Jan. 28, 2023   78,230   (15,625)    
Board of directors' compensation 108   108      
Board of directors' compensation (in shares)   15        
Stock compensation expense 404   404      
Restricted stock units (RSUs) granted for achievement of performance-based compensation, reclassified from liability to equity 1,146   1,146      
Issuance of common stock, upon RSUs release   $ 3 (3)      
Issuance of common stock, upon RSUs release (in shares)   251        
Shares withheld for taxes related to net share settlement (446) $ (1) (445)      
Shares withheld for taxes related to net share settlement (in shares)   (81)        
Exercise of stock options 216 $ 1 215      
Exercise of stock options (in shares)   81        
Other comprehensive income, net of taxes 49         49
Net income 6,967       6,967  
Ending Balance at Apr. 29, 2023 145,672 $ 785 322,941 $ (105,386) (67,789) (4,879)
Ending Balance (in shares) at Apr. 29, 2023   78,496   (15,625)    
Beginning Balance at Jan. 28, 2023 137,228 $ 782 321,516 $ (105,386) (74,756) (4,928)
Beginning Balance (in shares) at Jan. 28, 2023   78,230   (15,625)    
Other comprehensive income, net of taxes 3,177          
Net income 18,600          
Ending Balance at Jul. 29, 2023 150,100 $ 786 323,512 $ (116,291) (56,156) (1,751)
Ending Balance (in shares) at Jul. 29, 2023   78,606   (17,874)    
Beginning Balance at Apr. 29, 2023 145,672 $ 785 322,941 $ (105,386) (67,789) (4,879)
Beginning Balance (in shares) at Apr. 29, 2023   78,496   (15,625)    
Board of directors' compensation 112   112      
Board of directors' compensation (in shares)   25        
Stock compensation expense 411   411      
Exercise of stock options 49 $ 1 48      
Exercise of stock options (in shares)   85        
Repurchase of common stock (10,905)     $ (10,905)    
Repurchase of common stock (in shares)       (2,249)    
Other comprehensive income, net of taxes 3,128         3,128
Net income 11,633       11,633  
Ending Balance at Jul. 29, 2023 150,100 $ 786 323,512 $ (116,291) (56,156) $ (1,751)
Ending Balance (in shares) at Jul. 29, 2023   78,606   (17,874)    
Beginning Balance at Feb. 03, 2024 148,953 $ 790 325,202 $ (130,137) (46,902)  
Beginning Balance (in shares) at Feb. 03, 2024   79,033   (21,041)    
Board of directors' compensation 112 $ 1 111      
Board of directors' compensation (in shares)   18        
Stock compensation expense 875   875      
Issuance of common stock, upon RSUs release   $ 1 (1)      
Issuance of common stock, upon RSUs release (in shares)   129        
Shares withheld for taxes related to net share settlement (48)   (48)      
Shares withheld for taxes related to net share settlement (in shares)   (14)        
Exercise of stock options 76 $ 1 75      
Exercise of stock options (in shares)   132        
Repurchase of common stock (211)     $ (211)    
Repurchase of common stock (in shares)       (53)    
Net income 3,793       3,793  
Ending Balance at May. 04, 2024 153,550 $ 793 326,214 $ (130,348) (43,109)  
Ending Balance (in shares) at May. 04, 2024   79,298   (21,094)    
Beginning Balance at Feb. 03, 2024 148,953 $ 790 325,202 $ (130,137) (46,902)  
Beginning Balance (in shares) at Feb. 03, 2024   79,033   (21,041)    
Other comprehensive income, net of taxes 0          
Net income 6,176          
Ending Balance at Aug. 03, 2024 156,954 $ 793 327,235 $ (130,348) (40,726)  
Ending Balance (in shares) at Aug. 03, 2024   79,329   (21,094)    
Beginning Balance at May. 04, 2024 153,550 $ 793 326,214 $ (130,348) (43,109)  
Beginning Balance (in shares) at May. 04, 2024   79,298   (21,094)    
Board of directors' compensation 112   112      
Board of directors' compensation (in shares)   23        
Stock compensation expense 905   905      
Exercise of stock options 4   4      
Exercise of stock options (in shares)   8        
Other comprehensive income, net of taxes 0          
Net income 2,383       2,383  
Ending Balance at Aug. 03, 2024 $ 156,954 $ 793 $ 327,235 $ (130,348) $ (40,726)  
Ending Balance (in shares) at Aug. 03, 2024   79,329   (21,094)    
v3.24.2.u1
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Aug. 03, 2024
Jul. 29, 2023
Cash flows from operating activities:    
Net income $ 6,176 $ 18,600
Adjustments to reconcile net income to net cash provided by operating activities:    
Amortization of deferred debt issuance costs 38 38
Loss on retirement plan terminations 0 4,174
Gain from the sale of equipment (9) (129)
Depreciation and amortization 6,663 6,945
Deferred taxes, net of valuation allowance 2,130 7,489
Stock compensation expense 1,780 815
Board of directors' stock compensation 224 220
Changes in operating assets and liabilities:    
Accounts receivable 2,887 836
Inventories 2,356 5,472
Prepaid expenses and other current assets (669) 460
Other assets (65) (40)
Accounts payable 5,223 (6,649)
Operating leases, net (3,031) (3,181)
Accrued expenses and other liabilities (7,731) (8,811)
Net cash provided by operating activities 15,972 26,239
Cash flows from investing activities:    
Additions to property and equipment, net (12,779) (4,665)
Proceeds from sale of equipment 9 129
Purchase of short-term investments (34,011) (43,536)
Maturity of short-term investments 24,873 0
Net cash used for investing activities (21,908) (48,072)
Cash flows from financing activities:    
Repurchase of common stock (211) (10,814)
Tax withholdings paid related to net share settlements (48) (446)
Proceeds from the exercise of stock options 80 265
Net cash used for financing activities (179) (10,995)
Net decrease in cash and cash equivalents (6,115) (32,828)
Cash and cash equivalents:    
Beginning of period 27,590 52,074
End of period 21,475 19,246
Supplemental Disclosures of Cash Flow Information:    
Cash paid during the period for income taxes 811 237
Cash paid during the period for interest 182 159
Non-cash activity during the period:    
Capital expenditures incurred but not yet paid $ 776 $ 505
v3.24.2.u1
Pay vs Performance Disclosure - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Aug. 03, 2024
May 04, 2024
Jul. 29, 2023
Apr. 29, 2023
Aug. 03, 2024
Jul. 29, 2023
Pay vs Performance Disclosure            
Net Income (Loss) $ 2,383 $ 3,793 $ 11,633 $ 6,967 $ 6,176 $ 18,600
v3.24.2.u1
Insider Trading Arrangements
3 Months Ended
Aug. 03, 2024
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.24.2.u1
Basis of Presentation
6 Months Ended
Aug. 03, 2024
Accounting Policies [Abstract]  
Basis of Presentation

1. Basis of Presentation

In the opinion of management of Destination XL Group, Inc., a Delaware corporation (collectively with its subsidiaries, referred to as the “Company”), the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary for a fair presentation of the interim financial statements. These financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with the notes to the Company’s audited Consolidated Financial Statements for the fiscal year ended February 3, 2024 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 21, 2024.

The information set forth in these statements may be subject to normal year-end adjustments. The information reflects all adjustments that, in the opinion of management, are necessary to present fairly the Company’s results of operations, financial position and cash flows for the periods indicated. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s business historically has been seasonal in nature, and the results of the interim periods presented are not necessarily indicative of the results to be expected for the full year.

The Company’s fiscal year is a 52- or 53- week period ending on the Saturday closest to January 31. Fiscal 2024 is a 52-week period ending on February 1, 2025 and fiscal 2023 was a 53-week period ending on February 3, 2024.

Segment Information

The Company has two principal operating segments: its stores and its direct business. The Company considers its stores and direct operating segments to be similar in terms of economic characteristics, production processes and operations, and has therefore aggregated them into one reportable segment, retail segment, consistent with its omni-channel business approach.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash in banks and short-term investments, which have a maturity of ninety days or less when acquired. Included in cash equivalents are credit card and debit card receivables from banks, which generally settle within two to four business days.

Short-Term Investments

Short-term investments consist of those investments that have a maturity date, when acquired, that is greater than three months and twelve months or less. These investments are classified as held-to-maturity and are carried at amortized cost, which approximates fair value due to the short period between purchase and maturity.

Concentration of Credit Risk

Cash and cash equivalents include amounts due from third party financial institutions, which from time to time, may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company is potentially exposed to a concentration of credit risk when cash and cash equivalent deposits in these financial institutions are in excess of FDIC limits. The Company considers the credit risk associated with these financial instruments to be minimal as cash and cash equivalents are held by financial institutions with high credit ratings and it has not historically sustained any credit losses associated with its cash and cash equivalents balances. In addition, the Company's cash and cash equivalents include money market accounts with Citizens Bank, N.A. and investments in U.S. government-backed securities held with Fidelity Investments.

Fair Value of Financial Instruments

ASC Topic 825, Financial Instruments, requires disclosure of the fair value of certain financial instruments. ASC Topic 820, “Fair Value Measurements and Disclosures,” defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements.

The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities.

The Company utilizes observable market inputs (quoted market prices) when measuring fair value whenever possible.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of these instruments. See Note 9 - Fair Value Measurement for information regarding the fair value of certain financial assets.

Accumulated Other Comprehensive Income (Loss) - (“AOCI”)

In the fourth quarter of fiscal 2023, the Company terminated its frozen retirement plans, which was the only AOCI activity. As a result, there was no remaining AOCI as of February 3, 2024.

For the first three and six months of fiscal 2023, other comprehensive income and reclassifications from AOCI was as follows:

 

 

 

 

 

in thousands

 

For the three months ended July 29, 2023

 

 

For the six months ended July 29, 2023

 

Balance at beginning of fiscal year

 

$

(4,879

)

 

$

(4,928

)

 

 

 

 

 

 

 

Other comprehensive income before
   reclassifications, net of taxes

 

 

23

 

 

 

29

 

 

 

 

 

 

 

 

Recognition of loss on retirement plan termination, net of taxes (1)

 

 

3,080

 

 

 

3,080

 

 

 

 

 

 

 

 

Amounts reclassified from accumulated other
   comprehensive income, net of taxes
(2)

 

 

25

 

 

 

68

 

 

 

 

 

 

 

 

Other comprehensive income for the period

 

 

3,128

 

 

 

3,177

 

 

 

 

 

 

 

 

Balance at end of quarter

 

$

(1,751

)

 

$

(1,751

)

 

(1)
In connection with the Company's decision to terminate its pension plan, during the second quarter of fiscal 2023 the Company completed a partial settlement and accordingly recognized a pro-rated portion of AOCI in the amount of $4.2 million, or $3.1 million net of taxes.
(2)
Includes the amortization of the unrecognized loss on retirement plans, which was charged to “Selling, General and Administrative” Expense on the Consolidated Statements of Operations for the three and six months ended July 29, 2023. The Company recognized expense of $34,000, or $25,000 net of taxes, for the three months ended July 29, 2023 and expense of $92,000, or $68,000 net of taxes, for the six months ended July 29, 2023.

Stock-based Compensation

All share-based payments, including grants of employee stock options and restricted stock, are recognized as an expense in the Consolidated Statements of Operations based on their fair values and vesting periods. The fair value of stock options is determined using the Black-Scholes valuation model and requires the input of subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (the “expected term”), the estimated volatility of the Company’s common stock price over the expected term and the number of options that will ultimately not complete their vesting requirements (“forfeitures”). The Company reviews its valuation assumptions at each grant date and, as a result, is likely to change its valuation assumptions used to value employee stock-based awards granted in future periods. The values derived from using the Black-Scholes model are recognized as an expense over the vesting period, net of estimated forfeitures. The estimation of stock-based awards

that will ultimately vest requires judgment. Actual results and future changes in estimates may differ from the Company’s current estimates.

There were no grants of stock options in the first six months of fiscal 2024. For the first six months of fiscal 2023, the fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model based on the assumptions in the table below as it relates to stock options granted.

 

 

 

July 29, 2023

 

Expected volatility

 

86.3% - 92.1%

 

Risk-free interest rate

 

3.71%-4.42%

 

Expected term

 

2.5 yrs.

 

Dividend rate

 

 

 

Weighted average fair value of options granted

 

$

3.24

 

 

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for events or changes in circumstances that might indicate the carrying amount of the assets may not be recoverable. The Company’s judgment regarding the identification of impairment indicators is based on operational performance at the store level. Factors considered by the Company that could result in an impairment triggering event include significant changes in the use of assets, a current period operating or cash flow loss, underperformance of a store relative to historical or expected operating results, and an accumulation of costs significantly in excess of the amount originally expected for the construction of the long-lived store assets. The Company assesses the recoverability of the assets by determining whether the carrying value of such assets over their respective remaining lives can be recovered through projected undiscounted future cash flows. The model for undiscounted future cash flows includes assumptions, at the individual store level, with respect to expectations for future sales and gross margin rates as well as an estimate for occupancy costs used to estimate the fair value of the respective store’s operating lease right-of-use asset. The amount of impairment, if any, is measured based on projected discounted future cash flows using a discount rate reflecting the Company’s average cost of funds.

There were no impairments or non-cash gains recognized in the first six months of fiscal 2024 and fiscal 2023.

 

Advertising Costs

The Company expenses in-store advertising costs as incurred. Creative production costs, if any, are expensed in the period in which the advertising is first aired, and media costs are expensed as incurred. Direct response advertising costs, if any, are expensed in the period in which the mailing occurs. Advertising expense, which is included in selling, general and administrative expenses, was $11.0 million and $7.1 million for second quarter of fiscal 2024 and fiscal 2023, respectively, and was $18.3 million and $14.0 million for the first six months of fiscal 2024 and fiscal 2023, respectively.

Leases

The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use (“ROU”) assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments, initial direct costs. Lease incentives are included in the value of the ROU assets. As the interest rate implicit in the Company’s leases is not readily determinable, the Company utilizes its incremental borrowing rate, based on information available at the lease measurement date, to determine the present value of future payments. The Company elected the lessee non-lease component separation practical expedient, which permits the Company to not separate non-lease components from the lease components to which they relate. The Company also made an accounting policy election that the recognition requirement of ASC 842 will not be applied to certain, if any, non-store leases, with a term of 12 months or less, recognizing those lease payments on a straight-line basis over the lease term. At August 3, 2024, the Company had no short-term leases.

The Company’s store leases typically contain options that permit renewals for additional periods of up to five years each. In general, for store leases with an initial term of 10 years or more, the options to extend are not considered reasonably certain at lease commencement. For store leases with an initial term of 5 years, the Company evaluates each lease independently and, when the Company considers it reasonably certain that it will exercise an option to extend, the associated payment of that option will be included in the measurement of the ROU asset and lease liability. Renewal options are not included in the lease term for automobile and equipment leases because they are not considered reasonably certain of being exercised at lease commencement. Renewal options were not considered for the Company’s corporate headquarters and distribution center lease, which was entered into in 2006 and was for an initial 20-year term. At the end of the initial term, the Company will have the opportunity to extend this lease for six additional successive periods of five years.

For store leases, the Company accounts for lease components and non-lease components as a single lease component. Certain store leases may require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance

and insurance, and are expensed as incurred as variable lease costs. Other store leases contain one periodic fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the ROU assets and lease liabilities. Tenant allowances are included as an offset to the ROU asset and amortized as reductions to rent expense over the associated lease term.

See Note 4, "Leases" for additional information.

Recently Issued Accounting Pronouncements - Not Yet Adopted

 

In July 2023, the FASB issued ASU 2023-03, Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X: Income or Loss Applicable to Common Stock, which amends or supersedes various SEC paragraphs within the Accounting Standards Codification to conform to past SEC announcements and guidance issued by the SEC. The ASU does not provide any new guidance, and as such, there is no transition effective date. ASU 2023-03 is not expected to have a material impact on the Company's Consolidated Financial Statements.

 

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendment in Response to the SECs Disclosure Update and Simplification Initiative. ASU-2023-06 incorporates several disclosure and presentation requirements currently residing in the SEC Regulations S-X and S-K. The amendments will be applied prospectively and are effective when the SEC removes the related requirements from Regulations S-X or S-K. Any amendments the SEC does not remove by June 30, 2027 will not be effective. The ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements or related disclosures because the Company is currently subjected to the reporting requirements of Regulations S-X and S-K.

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), which requires all public entities to provide enhanced disclosures about significant segment expenses. The amendments in this ASU are to be applied retrospectively and are effective for our annual financial statements starting in fiscal 2024 and interim periods starting in fiscal 2025, with early adoption permitted. We are currently evaluating the impact of this accounting standard on our financial statements or related disclosures.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which enhances transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid and to improve the effectiveness of income tax disclosures. This ASU will be effective in fiscal 2025, and allows for adoption on a prospective basis, with a retrospective option. Early adoption is permitted. We are currently evaluating the impact of adopting this accounting standard on our financial statements or related disclosures.

There were no other new accounting pronouncements, issued or effective during the first six months of fiscal 2024, which had or are expected to have a significant impact on the Company’s Consolidated Financial Statements.

v3.24.2.u1
Revenue Recognition
6 Months Ended
Aug. 03, 2024
Revenue from Contract with Customer [Abstract]  
Revenue Recognition

2. Revenue Recognition

The Company operates as a retailer of big and tall men’s clothing, which includes stores and direct. Revenue is recognized by the operating segment that initiates a customer’s order. Store sales are defined as sales that originate and are fulfilled directly at the store level. Direct sales are defined as sales that originate online, including those initiated online at the store level, on its website or on third-party marketplaces. Generally, all revenues are recognized when control of the promised goods is transferred to customers, in an amount that reflects the consideration in exchange for those goods. Sales tax collected from customers and remitted to taxing authorities is excluded from revenue and is included as part of accrued expenses on the Consolidated Balance Sheets.

Unredeemed Gift Cards, Gift Certificates, and Credit Vouchers. Upon issuance of a gift card, gift certificate, or credit voucher, a liability is established for its cash value. The liability is relieved and net sales are recorded upon redemption by the customer. Based on historical redemption patterns, the Company can reasonably estimate the amount of gift cards, gift certificates, and credit vouchers for which redemption is remote, which is referred to as “breakage.” Breakage is recognized over two years in proportion to historical redemption trends and is recorded as sales in the Consolidated Statements of Operations. The gift card liability, net of breakage, was $2.1 million and $3.2 million at August 3, 2024 and February 3, 2024, respectively.

Unredeemed Loyalty Coupons. The Company offers a free loyalty program to its customers for which points accumulate based on the purchase of merchandise. Under ASC 606, Revenue from Contracts with Customers, these loyalty points provide the customer with a material right and a distinct performance obligation with revenue deferred and recognized when the points are expected to be redeemed or expire. The cycle of earning and redeeming loyalty points is generally under one year in duration. The loyalty accrual, net of breakage, was $1.1 million and $1.7 million at August 3, 2024 and February 3, 2024, respectively.

Shipping. Shipping and handling costs are accounted for as fulfillment costs and are included in cost of sales for all periods presented. Amounts related to shipping and handling that are billed to customers are recorded in sales, and the related costs are recorded in cost of goods sold, including occupancy costs, in the Consolidated Statements of Operations.

Disaggregation of Revenue

As noted above under Segment Information in Note 1, the Company’s business consists of one reportable segment, its retail segment. Substantially all of the Company’s revenue is generated from its stores and direct businesses. Accordingly, the Company has determined that the following sales channels depict the nature, amount, timing, and uncertainty of how revenue and cash flows are affected by economic factors:

 

 

 

For the Three Months Ended

 

 

 

For the Six Months Ended

 

 

 

(in thousands)

 

August 3, 2024

 

 

July 29, 2023

 

 

 

August 3, 2024

 

 

 

July 29, 2023

 

 

 

Store sales

 

$

87,845

 

70.4%

$

97,445

 

69.6%

 

$

168,693

 

 

70.2

%

$

184,742

 

 

69.6

%

Direct sales

 

 

36,975

 

29.6%

 

42,598

 

30.4%

 

 

71,616

 

 

29.8

%

 

80,743

 

 

30.4

%

Total sales

 

$

124,820

 

 

$

140,043

 

 

 

$

240,309

 

 

 

$

265,485

 

 

 

v3.24.2.u1
Debt
6 Months Ended
Aug. 03, 2024
Debt Disclosure [Abstract]  
Debt

3. Debt

Credit Agreement with Citizens Bank, N.A.

The Company has a credit facility with Citizens Bank, N.A, which provides for a $125.0 million secured, asset-based credit facility with a maturity date of October 28, 2026 (the "Credit Facility"). The maximum committed borrowing of $125.0 million includes a sublimit of $20.0 million for commercial and standby letters of credit and a sublimit of up to $15.0 million for swing line loans. The Company’s ability to borrow under the Credit Facility is determined using an availability formula based on eligible assets.

Borrowings under the Credit Facility bear interest at either a Base Rate loan or Daily Simple SOFR rate, at the Company's option. Base Rate loans will bear interest at a rate equal to (i) the greater of: (a) the Prime Rate, (b) the Federal Funds effective rate plus 0.50% per annum and (c) the Daily Simple SOFR rate plus 1.00% per annum (provided the Base Rate shall never be less than the Floor (as defined in the Credit Facility)), plus (ii) a varying percentage, based on the Company’s average excess availability, of either 0.25% or 0.50% (the “Applicable Margin”). 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. The Company is subject to an unused line fee of 0.25%.

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

At August 3, 2024, the Company had no borrowings outstanding under the Credit Facility and unused availability was $69.9 million. The Company had no borrowings during the first six months of fiscal 2024, resulting in an average unused excess availability of approximately $73.4 million. Outstanding standby letters of credit were $4.2 million and outstanding documentary letters were $0.9 million at August 3, 2024. At August 3, 2024, the Company’s prime-based interest rate was 8.75%.

v3.24.2.u1
Leases
6 Months Ended
Aug. 03, 2024
Leases [Abstract]  
Leases

4. Leases

The Company leases all of its store locations and its corporate headquarters, which also includes its distribution center, under operating leases. The store leases typically have initial terms of 5 years to 10 years, with options that usually permit renewal for additional five-year periods. The initial term of the lease for the corporate headquarters is for 20 years, with the opportunity to extend for six additional consecutive periods of five years, beginning in fiscal 2026. The Company also leases certain equipment and other assets under operating leases, typically with initial terms of 3 to 5 years. The Company is generally obligated for the cost of property taxes, insurance and common area maintenance fees relating to its leases, which are considered variable lease costs and are expensed as incurred.

ASC 842 requires the assessment of any lease modification to determine if the modification should be treated as a separate lease and if not, modification accounting would be applied. Lease modification accounting requires the recalculation of the ROU asset, lease liability and lease expense over the respective lease term. As of August 3, 2024, the Company’s operating leases liabilities represent the present value of the remaining future minimum lease payments updated based on concessions and lease modifications.

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

The following table is a summary of the Company’s components of net lease cost for the three and six months ended August 3, 2024 and July 29, 2023:

 

 

 

For the three months ended

 

 

For the six months ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

August 3, 2024

 

 

July 29, 2023

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease cost

 

$

12,222

 

 

$

11,374

 

 

$

23,699

 

 

$

22,041

 

Variable lease costs(1)

 

 

3,151

 

 

 

3,293

 

 

 

6,544

 

 

 

6,458

 

Total lease costs

 

$

15,373

 

 

$

14,667

 

 

$

30,243

 

 

$

28,499

 

 

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

Supplemental cash flow and balance sheet information related to leases as of and for the first six months ended August 3, 2024 and July 29, 2023 was as follows:

 

 

 

 

 

 

 

 

(dollars in thousands)

 

For the Six Months Ended

 

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

 

August 3, 2024

 

 

July 29, 2023

 

Operating cash flows for operating leases (1)

 

$

25,750

 

 

$

24,513

 

Non-cash operating activities:

 

 

 

 

 

 

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

 

$

43,087

 

 

$

23,533

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

August 3, 2024

 

 

July 29, 2023

 

Weighted average remaining lease term

 

5.4 yrs.

 

 

4.4 yrs.

 

Weighted average discount rate

 

 

6.38

%

 

 

6.41

%

 

(1)
The cash paid for the first six months of fiscal 2024 and fiscal 2023 included prepaid rent of $4.3 million and $3.7 million, respectively.

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the Consolidated Balance Sheet as of August 3, 2024:

 

(in thousands)

 

 

 

2024 (remaining)

 

$

19,434

 

2025

 

 

50,191

 

2026

 

 

38,544

 

2027

 

 

31,806

 

2028

 

 

24,067

 

Thereafter

 

 

46,230

 

Total minimum lease payments

 

$

210,272

 

Less: amount of lease payments representing interest

 

 

33,638

 

Present value of future minimum lease payments

 

$

176,634

 

Less: current obligations under leases

 

 

35,155

 

Long-term lease obligations

 

$

141,479

 

 

As of August 3, 2024, the Company had entered into three ten-year store leases that have not yet commenced with aggregated estimated future lease payments of approximately $6.2 million, which are not included in the above table. The leases are expected to commence during the second half of fiscal 2024.

v3.24.2.u1
Long-Term Incentive Plans
6 Months Ended
Aug. 03, 2024
Share-Based Payment Arrangement [Abstract]  
Long-Term Incentive Plans

5. Long-Term Incentive Plans

The following is a summary of the Company’s Long-Term Incentive Plan (“LTIP”). All equity awards granted under long-term incentive plans are issued from the Company’s stockholder-approved 2016 Plan. See Note 6, Stock-Based Compensation.

The LTIPs are granted annually and each LTIP covers a three-year performance period. Each participant in the LTIP participates based on that participant’s “Target Cash Value” which is defined as the participant’s annual base salary (on the participant’s effective date) multiplied by his or her LTIP percentage. Under each LTIP, 50% of each participant’s Target Cash Value is subject to time-based vesting and 50% is subject to performance-based vesting. Awards for any achievement of performance targets are not granted until the

performance targets are achieved and then are subject to additional vesting through August 31 following the end of the applicable performance period.

2021-2023 LTIP

The performance targets for the Company’s 2021-2023 LTIP were approved by the Compensation Committee of the Board of Directors (the "Compensation Committee”) on March 8, 2021, and covered a three-year period performance period, which ended on February 3, 2024. The time-vested portion of the 2021-2023 LTIP vests in four annual installments, with the remaining installment vesting on April 1, 2025.

On March 29, 2024, the Compensation Committee approved a grant of awards, effective April 1, 2024, equal to $3.0 million for the achievement of the performance target for the 2021-2023 LTIP. In an effort to preserve share availability under the 2016 Plan, all awards, which are subject to further vesting through August 31, 2024, were granted in cash.

 

Active LTIPs

At August 3, 2024, the Company had three active LTIPs: the 2022-2024 LTIP, the 2023-2025 LTIP and the 2024-2026 LTIP. The time-based awards under each LTIP were granted in a combination of 50% RSUs and 50% cash.

Performance targets for the 2022-2024 LTIP, the 2023-2025 LTIP and the 2024-2026 LITP were established and approved by the Compensation Committee on April 9, 2022, May 1, 2023 and April 1, 2024, respectively. The performance period for each LTIP is three years. Awards for any achievement of performance targets will not be granted until the performance targets are achieved and then will be subject to an additional service requirement through August 31, 2025, August 31, 2026 and August 31, 2027, respectively. The time-based awards under the 2022-2024 LTIP, the 2023-2025 LTIP, and the 2024-2026 LTIP vest in four equal installments through April 1, 2026, April 1, 2027 and April 1, 2028, respectively. Assuming that the Company achieves the performance targets at target levels and all time-based awards vest, the compensation expense associated with the 2022-2024 LTIP, 2023-2025 LTIP and 2024-2026 LTIP is estimated to be approximately $4.8 million, $5.1 million and $5.3 million, respectively. Approximately half of the compensation expense for each LTIP relates to the time-based awards, which are being expensed straight-line over 48 months, 47 months and 49 months, respectively.

At August 3, 2024, the Company had accrued $1.6 million under the 2022-2024 LTIP, $0.2 million under the 2023-2025 LTIP and $0.2 million under the 2024-2026 LTIP for the performance awards.

v3.24.2.u1
Stock-Based Compensation
6 Months Ended
Aug. 03, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation

6. Stock-Based Compensation

The Company has one active stock-based compensation plan: the 2016 Incentive Compensation Plan (as amended, the “2016 Plan”). A grant of a stock option award or stock appreciation right will reduce the outstanding reserve on a one-for-one basis, meaning one share for every share granted. A grant of a full-value award, including, but not limited to, restricted stock, restricted stock units and deferred stock, will reduce the outstanding reserve by a fixed ratio of 1.9 shares for every share granted. At August 3, 2024, 15,120,538 shares were authorized under the 2016 Plan, of which 1,425,262 shares remained available for grant. Subsequent to the end of the second quarter of fiscal 2024, at the Company's Annual Meeting of Stockholders, which was held on August 8, 2024, the shareholders approved an increase of 6,150,000 shares authorized for future grant under the 2016 Plan.

The 2016 Plan is administered by the Compensation Committee. The Compensation Committee is authorized to make all determinations with respect to amounts and conditions covering awards. Options are not granted at a price less than fair value on the date of the grant. Except with respect to 5% of the shares available for awards under the 2016 Plan, no award will become exercisable unless such award has been outstanding for a minimum period of one year from its date of grant.

The following tables summarize the share activity and stock option activity for the first six months of fiscal 2024:

 

 

 

RSUs (1)

 

 

Deferred
shares
(2)

 

 

Performance
Share Units
(3)

 

 

Fully-Vested
 Shares
(4)

 

 

Total number
of shares

 

 

Weighted-
average
grant-date
fair value

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding non-vested shares at beginning of year

 

 

536,285

 

 

 

435,568

 

 

 

573,000

 

 

 

 

 

 

1,544,853

 

 

$

3.53

 

Shares granted

 

 

383,007

 

 

 

19,901

 

 

 

 

 

 

22,234

 

 

 

425,142

 

 

$

3.56

 

Shares vested and/or issued

 

 

(129,112

)

 

 

 

 

 

 

 

 

(22,234

)

 

 

(151,346

)

 

$

4.55

 

Shares expired

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Shares forfeited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Outstanding non-vested shares at end of quarter

 

 

790,180

 

 

 

455,469

 

 

 

573,000

 

 

 

 

 

 

1,818,649

 

 

$

3.45

 

 

(1)
During the first six months of fiscal 2024, the Company granted time-based RSUs under its 2024-2026 LTIP. See Note 5, Long-Term Incentive Plans. As a result of net share settlements, of the 129,112 RSUs that vested, 115,292 shares of common stock were issued.
(2)
The 19,901 shares of deferred stock, with a fair value of $72,495 represent director compensation in lieu of cash, in accordance with the director's irrevocable election. The shares of deferred stock will be issued upon the director's separation from service.
(3)
On August 11, 2023, the Company granted 573,000 performance share units ("PSUs") in connection with the extension of Mr. Kanter's employment agreement. The award consists of nine tranches, with the first tranche vesting if and when the 30-day volume-weighted closing price of the Company's common stock is equal to or greater than $6.50 per share. Each subsequent tranche will vest upon achievement of the 30-day volume-weighted closing price of the Company's common stock in $0.25 increments with the ninth tranche vesting when such price is equal to or greater than $8.50 per share. The PSUs are subject to a one-year minimum vesting period, and any unvested PSUs will expire on August 11, 2026. The $2.4 million fair value is being expensed over the respective derived service periods of each tranche which range from 12 to 13 months. The respective fair value and derived service periods assigned to the PSUs were determined using a Monte Carlo model based on: a weighted historical volatility of 57.8%, a term of 3 years, stock price on the date of grant of $4.98 per share, a risk-free rate of 4.6% and a cost of equity of 11.0%.
(4)
Represented compensation, with a fair value of $80,993, to certain directors, who are required to receive shares, in lieu of cash, in order to satisfy their minimum equity ownership under the Non-Employee Director Compensation Plan. Voluntary shares received, in lieu of cash, are reported below under Non-Employee Director Compensation Plan.

 

 

 

Number of
shares

 

 

Weighted-
average
exercise price
per option

 

 

Weighted-
average
remaining
contractual term

 

 

Aggregate
intrinsic value
(000's)

 

Stock Options

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding options at beginning of year

 

 

3,180,739

 

 

$

0.75

 

 

 

 

 

$

10,962

 

Options granted

 

 

 

 

 

 

 

 

 

 

 

 

Options exercised

 

 

(139,667

)

 

$

0.57

 

 

 

 

 

 

409

 

Options expired

 

 

(53,441

)

 

$

5.29

 

 

 

 

 

 

 

Options forfeited

 

 

(1,715

)

 

$

0.75

 

 

 

 

 

 

5

 

Outstanding options at end of quarter

 

 

2,985,916

 

 

$

0.67

 

 

6.1 years

 

 

$

8,124

 

Options exercisable at end of quarter

 

 

2,745,724

 

 

$

0.66

 

 

6.0 years

 

 

$

7,491

 

 

For the first six months of fiscal 2024, the Company granted 383,007 restricted stock units, 19,901 shares of deferred stock and 22,234 fully-vested shares. For the first six months of fiscal 2023, the Company granted stock options to purchase an aggregate of 1,317 shares of common stock, 547,294 restricted stock units and 11,924 fully-vested shares.

Non-Employee Director Compensation Plan

The Company granted 19,214 shares of common stock, with a fair value of approximately $69,992, to certain of its non-employee directors as compensation in lieu of cash in the first six months of fiscal 2024. These shares are in addition to any shares that may be granted under the 2016 Plan related to the requirement to receive equity if a director has not yet satisfied his or her minimum equity ownership requirement under the Non-Employee Director Compensation Plan.

Stock Compensation Expense

The Company recognized total stock-based compensation expense of $1.8 million and $0.8 million for the first six months of fiscal 2024 and fiscal 2023, respectively. The total compensation cost related to time-vested stock options, RSU awards, and PSU awards not yet recognized as of August 3, 2024 was approximately $3.0 million, net of estimated forfeitures, which will be expensed over a weighted average remaining life of 32 months.

v3.24.2.u1
Equity and Earnings per Share
6 Months Ended
Aug. 03, 2024
Earnings Per Share [Abstract]  
Equity and Earnings per Share

7. Equity and Earnings per Share

The following table provides a reconciliation of the number of shares outstanding for basic and diluted earnings per share:

 

 

For the three months ended

 

 

For the six months ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

August 3, 2024

 

 

July 29, 2023

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

58,233

 

 

 

61,977

 

 

 

58,135

 

 

 

62,334

 

Common stock equivalents – stock options, restricted stock units and deferred stock

 

 

2,884

 

 

 

3,472

 

 

 

2,900

 

 

 

3,495

 

Diluted weighted average common shares outstanding

 

 

61,117

 

 

 

65,449

 

 

 

61,035

 

 

 

65,829

 

 

 

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

 

 

 

For the three months ended

 

 

For the six months ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

August 3, 2024

 

 

July 29, 2023

 

(in thousands, except exercise prices)

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

36

 

 

 

100

 

 

 

36

 

 

 

100

 

Restricted stock units and deferred stock

 

 

350

 

 

 

179

 

 

 

363

 

 

 

24

 

Range of exercise prices of such options

 

$4.48-$6.59

 

 

$4.48 - $6.59

 

 

$4.48 - $6.59

 

 

$4.48 - $6.59

 

 

The above options, which were outstanding at August 3, 2024, expire from November 10, 2024 to March 20, 2033.

Excluded from the computation of basic and diluted earnings per share were 573,000 shares for the first three and six months of fiscal 2024. These performance-based awards will be included in the computation of basic and diluted earnings per share if, and when, the respective performance targets are achieved. In addition, 455,469 shares and 435,568 shares of deferred stock at August 3, 2024 and July 29, 2023, respectively, were excluded from the computation of basic earnings per share. Shares of deferred stock are not considered issued and outstanding until the vesting date of the deferral period.

v3.24.2.u1
Income Taxes
6 Months Ended
Aug. 03, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

8. Income Taxes

The Company's tax provision for income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any. Each quarter, the Company updates its estimate of the annual effective tax rate and makes a year-to-date adjustment to the provision.

For the first six months of fiscal 2024 and 2023, the Company’s effective tax rate was 32.3% and 26.5%, respectively. The increase in the effective tax rate was primarily due to permanent book to tax differences combined with a lower pretax income as compared to the first six months of fiscal 2023.

v3.24.2.u1
Fair Value Measurement
6 Months Ended
Aug. 03, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurement

9. Fair Value Measurement

At August 3, 2024 and February 3, 2024, the Company held U.S. treasury bills which were classified as held-to maturity and carried at amortized cost.
 

 

 

 

 

Fair Value

 

(in thousands)

Carrying value

 

 

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

 

 

Significant
Observable
Inputs
(Level 2)

 

 

Significant Unobservable
Inputs (Level 3)

 

At August 3, 2024:

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

4,031

 

 

 

4,032

 

 

 

 

 

 

 

Short-term investments

 

41,732

 

 

 

41,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At February 3, 2024:

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

6,047

 

 

 

6,052

 

 

 

 

 

 

 

Short-term investments

 

32,459

 

 

 

32,479

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

v3.24.2.u1
Stock Repurchase Program
6 Months Ended
Aug. 03, 2024
Stock Repurchase Program [Abstract]  
Stock Repurchase Program

10. Stock Repurchase Program

On March 14, 2023, the Company's Board of Directors (“Board”) approved a stock repurchase program, effective March 16, 2023, which was subsequently amended in November 2023. Under the amended program, the Company was authorized to repurchase up to $25.0 million of its common stock, including excise tax, through open market and privately negotiated transactions.

During the first quarter of fiscal 2024, the Company repurchased 52,802 shares at a total cost, including fees, of $211,182, completing its stock repurchase program.

The Inflation Reduction Act of 2022 imposed a nondeductible 1% excise tax on the net value of certain share repurchases made after December 31, 2022. Beginning in fiscal year 2023, the applicable excise tax is being charged to additional paid-in capital in the Company's Consolidated Balance Sheet as part of the cost basis of the shares repurchased, with the corresponding liability for the excise tax payable recorded in accrued expenses and other current liabilities until paid. This liability is partially offset by a 1% credit permitted

under the rules for the fair value of shares issued by the Company. At August 3, 2024, the Company had accrued $0.2 million for the payment of excise taxes.

v3.24.2.u1
Termination of Noncontributory Pension Plan
6 Months Ended
Aug. 03, 2024
Retirement Benefits [Abstract]  
Termination of Noncontributory Pension Plan

11. Termination of Noncontributory Pension Plan

In connection with the acquisition of Casual Male Corp. in May 2002, the Company assumed the assets and liabilities of the Casual Male Noncontributory Pension Plan “Casual Male Corp. Retirement Plan,” which was previously known as the J. Baker, Inc. Qualified Plan (the “Pension Plan”). Casual Male Corp. froze all future benefits under this plan on May 1, 1997.

 

In the second quarter of fiscal 2023, the Board of Directors approved the termination of the Pension Plan, and on July 1, 2023, the Company completed a partial settlement through the purchase of nonparticipating annuities. In connection with the partial settlement, in the second quarter of fiscal 2023, the Company recognized a charge of $4.2 million, representing a pro-rata portion of the unrealized loss in "Accumulated Other Comprehensive Loss" on the Consolidated Balance Sheet. The Company settled the remaining obligation and terminated the Pension Plan in the fourth quarter of fiscal 2023.

v3.24.2.u1
Basis of Presentation (Policies)
6 Months Ended
Aug. 03, 2024
Accounting Policies [Abstract]  
Segment Information

Segment Information

The Company has two principal operating segments: its stores and its direct business. The Company considers its stores and direct operating segments to be similar in terms of economic characteristics, production processes and operations, and has therefore aggregated them into one reportable segment, retail segment, consistent with its omni-channel business approach.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents consist of cash in banks and short-term investments, which have a maturity of ninety days or less when acquired. Included in cash equivalents are credit card and debit card receivables from banks, which generally settle within two to four business days.

Short-Term Investments

Short-Term Investments

Short-term investments consist of those investments that have a maturity date, when acquired, that is greater than three months and twelve months or less. These investments are classified as held-to-maturity and are carried at amortized cost, which approximates fair value due to the short period between purchase and maturity.

Concentration of Credit Risk

Concentration of Credit Risk

Cash and cash equivalents include amounts due from third party financial institutions, which from time to time, may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company is potentially exposed to a concentration of credit risk when cash and cash equivalent deposits in these financial institutions are in excess of FDIC limits. The Company considers the credit risk associated with these financial instruments to be minimal as cash and cash equivalents are held by financial institutions with high credit ratings and it has not historically sustained any credit losses associated with its cash and cash equivalents balances. In addition, the Company's cash and cash equivalents include money market accounts with Citizens Bank, N.A. and investments in U.S. government-backed securities held with Fidelity Investments.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

ASC Topic 825, Financial Instruments, requires disclosure of the fair value of certain financial instruments. ASC Topic 820, “Fair Value Measurements and Disclosures,” defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements.

The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities.

The Company utilizes observable market inputs (quoted market prices) when measuring fair value whenever possible.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of these instruments. See Note 9 - Fair Value Measurement for information regarding the fair value of certain financial assets.

Accumulated Other Comprehensive Income (Loss) - ("AOCI")

Accumulated Other Comprehensive Income (Loss) - (“AOCI”)

In the fourth quarter of fiscal 2023, the Company terminated its frozen retirement plans, which was the only AOCI activity. As a result, there was no remaining AOCI as of February 3, 2024.

For the first three and six months of fiscal 2023, other comprehensive income and reclassifications from AOCI was as follows:

 

 

 

 

 

in thousands

 

For the three months ended July 29, 2023

 

 

For the six months ended July 29, 2023

 

Balance at beginning of fiscal year

 

$

(4,879

)

 

$

(4,928

)

 

 

 

 

 

 

 

Other comprehensive income before
   reclassifications, net of taxes

 

 

23

 

 

 

29

 

 

 

 

 

 

 

 

Recognition of loss on retirement plan termination, net of taxes (1)

 

 

3,080

 

 

 

3,080

 

 

 

 

 

 

 

 

Amounts reclassified from accumulated other
   comprehensive income, net of taxes
(2)

 

 

25

 

 

 

68

 

 

 

 

 

 

 

 

Other comprehensive income for the period

 

 

3,128

 

 

 

3,177

 

 

 

 

 

 

 

 

Balance at end of quarter

 

$

(1,751

)

 

$

(1,751

)

 

(1)
In connection with the Company's decision to terminate its pension plan, during the second quarter of fiscal 2023 the Company completed a partial settlement and accordingly recognized a pro-rated portion of AOCI in the amount of $4.2 million, or $3.1 million net of taxes.
(2)
Includes the amortization of the unrecognized loss on retirement plans, which was charged to “Selling, General and Administrative” Expense on the Consolidated Statements of Operations for the three and six months ended July 29, 2023. The Company recognized expense of $34,000, or $25,000 net of taxes, for the three months ended July 29, 2023 and expense of $92,000, or $68,000 net of taxes, for the six months ended July 29, 2023.
Stock-based Compensation

Stock-based Compensation

All share-based payments, including grants of employee stock options and restricted stock, are recognized as an expense in the Consolidated Statements of Operations based on their fair values and vesting periods. The fair value of stock options is determined using the Black-Scholes valuation model and requires the input of subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (the “expected term”), the estimated volatility of the Company’s common stock price over the expected term and the number of options that will ultimately not complete their vesting requirements (“forfeitures”). The Company reviews its valuation assumptions at each grant date and, as a result, is likely to change its valuation assumptions used to value employee stock-based awards granted in future periods. The values derived from using the Black-Scholes model are recognized as an expense over the vesting period, net of estimated forfeitures. The estimation of stock-based awards

that will ultimately vest requires judgment. Actual results and future changes in estimates may differ from the Company’s current estimates.

There were no grants of stock options in the first six months of fiscal 2024. For the first six months of fiscal 2023, the fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model based on the assumptions in the table below as it relates to stock options granted.

 

 

 

July 29, 2023

 

Expected volatility

 

86.3% - 92.1%

 

Risk-free interest rate

 

3.71%-4.42%

 

Expected term

 

2.5 yrs.

 

Dividend rate

 

 

 

Weighted average fair value of options granted

 

$

3.24

 

 

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for events or changes in circumstances that might indicate the carrying amount of the assets may not be recoverable. The Company’s judgment regarding the identification of impairment indicators is based on operational performance at the store level. Factors considered by the Company that could result in an impairment triggering event include significant changes in the use of assets, a current period operating or cash flow loss, underperformance of a store relative to historical or expected operating results, and an accumulation of costs significantly in excess of the amount originally expected for the construction of the long-lived store assets. The Company assesses the recoverability of the assets by determining whether the carrying value of such assets over their respective remaining lives can be recovered through projected undiscounted future cash flows. The model for undiscounted future cash flows includes assumptions, at the individual store level, with respect to expectations for future sales and gross margin rates as well as an estimate for occupancy costs used to estimate the fair value of the respective store’s operating lease right-of-use asset. The amount of impairment, if any, is measured based on projected discounted future cash flows using a discount rate reflecting the Company’s average cost of funds.

There were no impairments or non-cash gains recognized in the first six months of fiscal 2024 and fiscal 2023.
Advertising Costs

Advertising Costs

The Company expenses in-store advertising costs as incurred. Creative production costs, if any, are expensed in the period in which the advertising is first aired, and media costs are expensed as incurred. Direct response advertising costs, if any, are expensed in the period in which the mailing occurs. Advertising expense, which is included in selling, general and administrative expenses, was $11.0 million and $7.1 million for second quarter of fiscal 2024 and fiscal 2023, respectively, and was $18.3 million and $14.0 million for the first six months of fiscal 2024 and fiscal 2023, respectively.

Leases

Leases

The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use (“ROU”) assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments, initial direct costs. Lease incentives are included in the value of the ROU assets. As the interest rate implicit in the Company’s leases is not readily determinable, the Company utilizes its incremental borrowing rate, based on information available at the lease measurement date, to determine the present value of future payments. The Company elected the lessee non-lease component separation practical expedient, which permits the Company to not separate non-lease components from the lease components to which they relate. The Company also made an accounting policy election that the recognition requirement of ASC 842 will not be applied to certain, if any, non-store leases, with a term of 12 months or less, recognizing those lease payments on a straight-line basis over the lease term. At August 3, 2024, the Company had no short-term leases.

The Company’s store leases typically contain options that permit renewals for additional periods of up to five years each. In general, for store leases with an initial term of 10 years or more, the options to extend are not considered reasonably certain at lease commencement. For store leases with an initial term of 5 years, the Company evaluates each lease independently and, when the Company considers it reasonably certain that it will exercise an option to extend, the associated payment of that option will be included in the measurement of the ROU asset and lease liability. Renewal options are not included in the lease term for automobile and equipment leases because they are not considered reasonably certain of being exercised at lease commencement. Renewal options were not considered for the Company’s corporate headquarters and distribution center lease, which was entered into in 2006 and was for an initial 20-year term. At the end of the initial term, the Company will have the opportunity to extend this lease for six additional successive periods of five years.

For store leases, the Company accounts for lease components and non-lease components as a single lease component. Certain store leases may require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance

and insurance, and are expensed as incurred as variable lease costs. Other store leases contain one periodic fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the ROU assets and lease liabilities. Tenant allowances are included as an offset to the ROU asset and amortized as reductions to rent expense over the associated lease term.

See Note 4, "Leases" for additional information.

Recently Issued Accounting Pronouncements - Not Yet Adopted

Recently Issued Accounting Pronouncements - Not Yet Adopted

 

In July 2023, the FASB issued ASU 2023-03, Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X: Income or Loss Applicable to Common Stock, which amends or supersedes various SEC paragraphs within the Accounting Standards Codification to conform to past SEC announcements and guidance issued by the SEC. The ASU does not provide any new guidance, and as such, there is no transition effective date. ASU 2023-03 is not expected to have a material impact on the Company's Consolidated Financial Statements.

 

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendment in Response to the SECs Disclosure Update and Simplification Initiative. ASU-2023-06 incorporates several disclosure and presentation requirements currently residing in the SEC Regulations S-X and S-K. The amendments will be applied prospectively and are effective when the SEC removes the related requirements from Regulations S-X or S-K. Any amendments the SEC does not remove by June 30, 2027 will not be effective. The ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements or related disclosures because the Company is currently subjected to the reporting requirements of Regulations S-X and S-K.

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), which requires all public entities to provide enhanced disclosures about significant segment expenses. The amendments in this ASU are to be applied retrospectively and are effective for our annual financial statements starting in fiscal 2024 and interim periods starting in fiscal 2025, with early adoption permitted. We are currently evaluating the impact of this accounting standard on our financial statements or related disclosures.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which enhances transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid and to improve the effectiveness of income tax disclosures. This ASU will be effective in fiscal 2025, and allows for adoption on a prospective basis, with a retrospective option. Early adoption is permitted. We are currently evaluating the impact of adopting this accounting standard on our financial statements or related disclosures.

There were no other new accounting pronouncements, issued or effective during the first six months of fiscal 2024, which had or are expected to have a significant impact on the Company’s Consolidated Financial Statements.

v3.24.2.u1
Basis of Presentation (Tables)
6 Months Ended
Aug. 03, 2024
Accounting Policies [Abstract]  
Other Comprehensive Income (Loss) and Reclassifications from AOCI

For the first three and six months of fiscal 2023, other comprehensive income and reclassifications from AOCI was as follows:

 

 

 

 

 

in thousands

 

For the three months ended July 29, 2023

 

 

For the six months ended July 29, 2023

 

Balance at beginning of fiscal year

 

$

(4,879

)

 

$

(4,928

)

 

 

 

 

 

 

 

Other comprehensive income before
   reclassifications, net of taxes

 

 

23

 

 

 

29

 

 

 

 

 

 

 

 

Recognition of loss on retirement plan termination, net of taxes (1)

 

 

3,080

 

 

 

3,080

 

 

 

 

 

 

 

 

Amounts reclassified from accumulated other
   comprehensive income, net of taxes
(2)

 

 

25

 

 

 

68

 

 

 

 

 

 

 

 

Other comprehensive income for the period

 

 

3,128

 

 

 

3,177

 

 

 

 

 

 

 

 

Balance at end of quarter

 

$

(1,751

)

 

$

(1,751

)

 

(1)
In connection with the Company's decision to terminate its pension plan, during the second quarter of fiscal 2023 the Company completed a partial settlement and accordingly recognized a pro-rated portion of AOCI in the amount of $4.2 million, or $3.1 million net of taxes.
(2)
Includes the amortization of the unrecognized loss on retirement plans, which was charged to “Selling, General and Administrative” Expense on the Consolidated Statements of Operations for the three and six months ended July 29, 2023. The Company recognized expense of $34,000, or $25,000 net of taxes, for the three months ended July 29, 2023 and expense of $92,000, or $68,000 net of taxes, for the six months ended July 29, 2023.
Valuation Assumptions for Stock Options For the first six months of fiscal 2023, the fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model based on the assumptions in the table below as it relates to stock options granted.

 

 

 

July 29, 2023

 

Expected volatility

 

86.3% - 92.1%

 

Risk-free interest rate

 

3.71%-4.42%

 

Expected term

 

2.5 yrs.

 

Dividend rate

 

 

 

Weighted average fair value of options granted

 

$

3.24

 

v3.24.2.u1
Revenue Recognition (Tables)
6 Months Ended
Aug. 03, 2024
Revenue from Contract with Customer [Abstract]  
Schedule of Disaggregation of Revenue

As noted above under Segment Information in Note 1, the Company’s business consists of one reportable segment, its retail segment. Substantially all of the Company’s revenue is generated from its stores and direct businesses. Accordingly, the Company has determined that the following sales channels depict the nature, amount, timing, and uncertainty of how revenue and cash flows are affected by economic factors:

 

 

 

For the Three Months Ended

 

 

 

For the Six Months Ended

 

 

 

(in thousands)

 

August 3, 2024

 

 

July 29, 2023

 

 

 

August 3, 2024

 

 

 

July 29, 2023

 

 

 

Store sales

 

$

87,845

 

70.4%

$

97,445

 

69.6%

 

$

168,693

 

 

70.2

%

$

184,742

 

 

69.6

%

Direct sales

 

 

36,975

 

29.6%

 

42,598

 

30.4%

 

 

71,616

 

 

29.8

%

 

80,743

 

 

30.4

%

Total sales

 

$

124,820

 

 

$

140,043

 

 

 

$

240,309

 

 

 

$

265,485

 

 

 

v3.24.2.u1
Leases (Tables)
6 Months Ended
Aug. 03, 2024
Leases [Abstract]  
Summary of Components of Net Lease Cost

The following table is a summary of the Company’s components of net lease cost for the three and six months ended August 3, 2024 and July 29, 2023:

 

 

 

For the three months ended

 

 

For the six months ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

August 3, 2024

 

 

July 29, 2023

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease cost

 

$

12,222

 

 

$

11,374

 

 

$

23,699

 

 

$

22,041

 

Variable lease costs(1)

 

 

3,151

 

 

 

3,293

 

 

 

6,544

 

 

 

6,458

 

Total lease costs

 

$

15,373

 

 

$

14,667

 

 

$

30,243

 

 

$

28,499

 

 

(1)
Variable lease costs include the cost of property taxes, insurance and common area maintenance fees related to leases.
Supplemental Cash Flow Information Related to Leases

Supplemental cash flow and balance sheet information related to leases as of and for the first six months ended August 3, 2024 and July 29, 2023 was as follows:

 

 

 

 

 

 

 

 

(dollars in thousands)

 

For the Six Months Ended

 

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

 

August 3, 2024

 

 

July 29, 2023

 

Operating cash flows for operating leases (1)

 

$

25,750

 

 

$

24,513

 

Non-cash operating activities:

 

 

 

 

 

 

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

 

$

43,087

 

 

$

23,533

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

August 3, 2024

 

 

July 29, 2023

 

Weighted average remaining lease term

 

5.4 yrs.

 

 

4.4 yrs.

 

Weighted average discount rate

 

 

6.38

%

 

 

6.41

%

 

(1)
The cash paid for the first six months of fiscal 2024 and fiscal 2023 included prepaid rent of $4.3 million and $3.7 million, respectively.
Schedule of Reconciliation of Undiscounted Cash Flows Related to Operating Lease Liabilities

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the Consolidated Balance Sheet as of August 3, 2024:

 

(in thousands)

 

 

 

2024 (remaining)

 

$

19,434

 

2025

 

 

50,191

 

2026

 

 

38,544

 

2027

 

 

31,806

 

2028

 

 

24,067

 

Thereafter

 

 

46,230

 

Total minimum lease payments

 

$

210,272

 

Less: amount of lease payments representing interest

 

 

33,638

 

Present value of future minimum lease payments

 

$

176,634

 

Less: current obligations under leases

 

 

35,155

 

Long-term lease obligations

 

$

141,479

 

v3.24.2.u1
Stock-Based Compensation (Tables)
6 Months Ended
Aug. 03, 2024
Share-Based Payment Arrangement [Abstract]  
Summary of Restricted Stock Activity

The following tables summarize the share activity and stock option activity for the first six months of fiscal 2024:

 

 

 

RSUs (1)

 

 

Deferred
shares
(2)

 

 

Performance
Share Units
(3)

 

 

Fully-Vested
 Shares
(4)

 

 

Total number
of shares

 

 

Weighted-
average
grant-date
fair value

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding non-vested shares at beginning of year

 

 

536,285

 

 

 

435,568

 

 

 

573,000

 

 

 

 

 

 

1,544,853

 

 

$

3.53

 

Shares granted

 

 

383,007

 

 

 

19,901

 

 

 

 

 

 

22,234

 

 

 

425,142

 

 

$

3.56

 

Shares vested and/or issued

 

 

(129,112

)

 

 

 

 

 

 

 

 

(22,234

)

 

 

(151,346

)

 

$

4.55

 

Shares expired

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Shares forfeited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

Outstanding non-vested shares at end of quarter

 

 

790,180

 

 

 

455,469

 

 

 

573,000

 

 

 

 

 

 

1,818,649

 

 

$

3.45

 

 

(1)
During the first six months of fiscal 2024, the Company granted time-based RSUs under its 2024-2026 LTIP. See Note 5, Long-Term Incentive Plans. As a result of net share settlements, of the 129,112 RSUs that vested, 115,292 shares of common stock were issued.
(2)
The 19,901 shares of deferred stock, with a fair value of $72,495 represent director compensation in lieu of cash, in accordance with the director's irrevocable election. The shares of deferred stock will be issued upon the director's separation from service.
(3)
On August 11, 2023, the Company granted 573,000 performance share units ("PSUs") in connection with the extension of Mr. Kanter's employment agreement. The award consists of nine tranches, with the first tranche vesting if and when the 30-day volume-weighted closing price of the Company's common stock is equal to or greater than $6.50 per share. Each subsequent tranche will vest upon achievement of the 30-day volume-weighted closing price of the Company's common stock in $0.25 increments with the ninth tranche vesting when such price is equal to or greater than $8.50 per share. The PSUs are subject to a one-year minimum vesting period, and any unvested PSUs will expire on August 11, 2026. The $2.4 million fair value is being expensed over the respective derived service periods of each tranche which range from 12 to 13 months. The respective fair value and derived service periods assigned to the PSUs were determined using a Monte Carlo model based on: a weighted historical volatility of 57.8%, a term of 3 years, stock price on the date of grant of $4.98 per share, a risk-free rate of 4.6% and a cost of equity of 11.0%.
(4)
Represented compensation, with a fair value of $80,993, to certain directors, who are required to receive shares, in lieu of cash, in order to satisfy their minimum equity ownership under the Non-Employee Director Compensation Plan. Voluntary shares received, in lieu of cash, are reported below under Non-Employee Director Compensation Plan.
Stock Option Activity

 

 

Number of
shares

 

 

Weighted-
average
exercise price
per option

 

 

Weighted-
average
remaining
contractual term

 

 

Aggregate
intrinsic value
(000's)

 

Stock Options

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding options at beginning of year

 

 

3,180,739

 

 

$

0.75

 

 

 

 

 

$

10,962

 

Options granted

 

 

 

 

 

 

 

 

 

 

 

 

Options exercised

 

 

(139,667

)

 

$

0.57

 

 

 

 

 

 

409

 

Options expired

 

 

(53,441

)

 

$

5.29

 

 

 

 

 

 

 

Options forfeited

 

 

(1,715

)

 

$

0.75

 

 

 

 

 

 

5

 

Outstanding options at end of quarter

 

 

2,985,916

 

 

$

0.67

 

 

6.1 years

 

 

$

8,124

 

Options exercisable at end of quarter

 

 

2,745,724

 

 

$

0.66

 

 

6.0 years

 

 

$

7,491

 

 

v3.24.2.u1
Equity and Earnings per Share (Tables)
6 Months Ended
Aug. 03, 2024
Earnings Per Share [Abstract]  
Reconciliation of Number of Shares Outstanding for Basic and Diluted Earnings Per Share

The following table provides a reconciliation of the number of shares outstanding for basic and diluted earnings per share:

 

 

For the three months ended

 

 

For the six months ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

August 3, 2024

 

 

July 29, 2023

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

58,233

 

 

 

61,977

 

 

 

58,135

 

 

 

62,334

 

Common stock equivalents – stock options, restricted stock units and deferred stock

 

 

2,884

 

 

 

3,472

 

 

 

2,900

 

 

 

3,495

 

Diluted weighted average common shares outstanding

 

 

61,117

 

 

 

65,449

 

 

 

61,035

 

 

 

65,829

 

 

Potential Common Stock Equivalents Excluded from Computation of Diluted Earnings Per Share

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

 

 

 

For the three months ended

 

 

For the six months ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

August 3, 2024

 

 

July 29, 2023

 

(in thousands, except exercise prices)

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

36

 

 

 

100

 

 

 

36

 

 

 

100

 

Restricted stock units and deferred stock

 

 

350

 

 

 

179

 

 

 

363

 

 

 

24

 

Range of exercise prices of such options

 

$4.48-$6.59

 

 

$4.48 - $6.59

 

 

$4.48 - $6.59

 

 

$4.48 - $6.59

 

v3.24.2.u1
Fair Value Measurement (Tables)
6 Months Ended
Aug. 03, 2024
Fair Value Disclosures [Abstract]  
Schedule of Fair Value Measured at Recurring Basis

At August 3, 2024 and February 3, 2024, the Company held U.S. treasury bills which were classified as held-to maturity and carried at amortized cost.
 

 

 

 

 

Fair Value

 

(in thousands)

Carrying value

 

 

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

 

 

Significant
Observable
Inputs
(Level 2)

 

 

Significant Unobservable
Inputs (Level 3)

 

At August 3, 2024:

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

4,031

 

 

 

4,032

 

 

 

 

 

 

 

Short-term investments

 

41,732

 

 

 

41,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At February 3, 2024:

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

6,047

 

 

 

6,052

 

 

 

 

 

 

 

Short-term investments

 

32,459

 

 

 

32,479

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

v3.24.2.u1
Basis of Presentation - Additional Information (Details)
3 Months Ended 6 Months Ended
Aug. 03, 2024
USD ($)
RenewalOption
Jul. 29, 2023
USD ($)
Aug. 03, 2024
USD ($)
Segment
RenewalOption
shares
Jul. 29, 2023
USD ($)
Feb. 03, 2024
USD ($)
Accounting Policies [Line Items]          
Number of reportable segments | Segment     1    
Number of operating segments | Segment     2    
Accumulated other comprehensive income (loss)         $ 0
Options granted | shares     0    
Impairments or non-cash gains recognized     $ 0 $ 0  
Short term leases $ 0        
Operating lease, option to extend     Renewal options are not included in the lease term for automobile and equipment leases because they are not considered reasonably certain of being exercised at lease commencement. Renewal options were not considered for the Company’s corporate headquarters and distribution center lease, which was entered into in 2006 and was for an initial 20-year term    
Selling, General and Administrative Expense          
Accounting Policies [Line Items]          
Advertising expense $ 11,000,000 $ 7,100,000 $ 18,300,000 $ 14,000,000  
Corporate Headquarter          
Accounting Policies [Line Items]          
Operating lease renewal term 5 years   5 years    
Operating lease initial term 20 years   20 years    
Number of renewal options | RenewalOption 6   6    
Store          
Accounting Policies [Line Items]          
Operating lease, option to extend     The Company’s store leases typically contain options that permit renewals for additional periods of up to five years each. In general, for store leases with an initial term of 10 years or more, the options to extend are not considered reasonably certain at lease commencement. For store leases with an initial term of 5 years, the Company evaluates each lease independently and, when the Company considers it reasonably certain that it will exercise an option to extend, the associated payment of that option will be included in the measurement of the ROU asset and lease liability.    
Operating lease renewal term 5 years   5 years    
Minimum          
Accounting Policies [Line Items]          
Credit card and debit card receivables from banks settlement period     2 days    
Minimum | Store          
Accounting Policies [Line Items]          
Operating lease renewal term 5 years   5 years    
Operating lease initial term 5 years   5 years    
Maximum          
Accounting Policies [Line Items]          
Credit card and debit card receivables from banks settlement period     4 days    
Maximum | Store          
Accounting Policies [Line Items]          
Operating lease renewal term 5 years   5 years    
Operating lease initial term 10 years   10 years    
v3.24.2.u1
Basis of Presentation - Other Comprehensive Income (Loss) and Reclassifications from AOCI (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Aug. 03, 2024
Jul. 29, 2023
Apr. 29, 2023
Aug. 03, 2024
Jul. 29, 2023
Accumulated Other Comprehensive Income (Loss) [Line Items]          
Beginning Balance $ 153,550 $ 145,672 $ 137,228 $ 148,953 $ 137,228
Other comprehensive income (loss), net of tax 0 3,128 49 0 3,177
Ending Balance $ 156,954 150,100 145,672 $ 156,954 150,100
Retirement Plans          
Accumulated Other Comprehensive Income (Loss) [Line Items]          
Beginning Balance   (4,879) (4,928)   (4,928)
Other comprehensive income before reclassifications, net of taxes   23     29
Recognition of loss on retirement plan termination, net of taxes [1]   3,080     3,080
Amounts reclassified from accumulated other comprehensive income, net of taxes [2]   25     68
Other comprehensive income (loss), net of tax   3,128     3,177
Ending Balance   $ (1,751) $ (4,879)   $ (1,751)
[1] In connection with the Company's decision to terminate its pension plan, during the second quarter of fiscal 2023 the Company completed a partial settlement and accordingly recognized a pro-rated portion of AOCI in the amount of $4.2 million, or $3.1 million net of taxes.
[2] Includes the amortization of the unrecognized loss on retirement plans, which was charged to “Selling, General and Administrative” Expense on the Consolidated Statements of Operations for the three and six months ended July 29, 2023. The Company recognized expense of $34,000, or $25,000 net of taxes, for the three months ended July 29, 2023 and expense of $92,000, or $68,000 net of taxes, for the six months ended July 29, 2023.
v3.24.2.u1
Basis of Presentation - Other Comprehensive Income (Loss) and Reclassifications from AOCI (Parenthetical) (Details) - USD ($)
3 Months Ended 6 Months Ended
Aug. 03, 2024
Jul. 29, 2023
Aug. 03, 2024
Jul. 29, 2023
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Income tax expense (benefit) $ 1,292,000 $ 4,163,000 $ 2,950,000 $ 6,693,000
Retirement Plans        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Recognition of loss on retirement plan termination, net of taxes [1]   3,080,000   3,080,000
Expenses recognized [2]   (25,000)   (68,000)
Retirement Plans | Selling, General and Administrative Expense        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Expenses recognized before tax   34,000   92,000
Expenses recognized   25,000   $ 68,000
Retirement Plans | Pro Rated Portion        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Recognition of loss on retirement plan termination, before taxes   4,200,000    
Recognition of loss on retirement plan termination, net of taxes   $ 3,100,000    
[1] In connection with the Company's decision to terminate its pension plan, during the second quarter of fiscal 2023 the Company completed a partial settlement and accordingly recognized a pro-rated portion of AOCI in the amount of $4.2 million, or $3.1 million net of taxes.
[2] Includes the amortization of the unrecognized loss on retirement plans, which was charged to “Selling, General and Administrative” Expense on the Consolidated Statements of Operations for the three and six months ended July 29, 2023. The Company recognized expense of $34,000, or $25,000 net of taxes, for the three months ended July 29, 2023 and expense of $92,000, or $68,000 net of taxes, for the six months ended July 29, 2023.
v3.24.2.u1
Basis of Presentation - Valuation Assumptions for Stock Options (Details)
6 Months Ended
Jul. 29, 2023
$ / shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Expected volatility, minimum 86.30%
Expected volatility, maximum 92.10%
Risk-free interest rate, minimum 3.71%
Risk-free interest rate, maximum 4.42%
Expected term 2 years 6 months
Weighted average fair value of options granted $ 3.24
v3.24.2.u1
Revenue Recognition - Additional Information (Details)
$ in Millions
6 Months Ended
Aug. 03, 2024
USD ($)
Segment
Feb. 03, 2024
USD ($)
Revenue from Contract with Customer [Abstract]    
Gift card liability, net of breakage $ 2.1 $ 3.2
Loyalty accrual, net of breakage $ 1.1 $ 1.7
Number of reportable segments | Segment 1  
v3.24.2.u1
Revenue Recognition - Additional Information (Details1)
Aug. 03, 2024
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-05-05  
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]  
Cycle of earning and redeeming loyalty points period 1 year
v3.24.2.u1
Revenue Recognition - Schedule of Disaggregation of Revenue (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Aug. 03, 2024
Jul. 29, 2023
Aug. 03, 2024
Jul. 29, 2023
Disaggregation Of Revenue [Line Items]        
Total sales $ 124,820 $ 140,043 $ 240,309 $ 265,485
Retail Segment | Store Sales        
Disaggregation Of Revenue [Line Items]        
Total sales $ 87,845 $ 97,445 $ 168,693 $ 184,742
Retail Segment | Store Sales | Sales Revenue Net | Product Concentration Risk        
Disaggregation Of Revenue [Line Items]        
Total sales, percentage 70.40% 69.60% 70.20% 69.60%
Retail Segment | Direct Sales        
Disaggregation Of Revenue [Line Items]        
Total sales $ 36,975 $ 42,598 $ 71,616 $ 80,743
Retail Segment | Direct Sales | Sales Revenue Net | Product Concentration Risk        
Disaggregation Of Revenue [Line Items]        
Total sales, percentage 29.60% 30.40% 29.80% 30.40%
v3.24.2.u1
Debt - Additional Information (Details)
6 Months Ended
Oct. 28, 2021
USD ($)
d
Aug. 03, 2024
USD ($)
Jul. 29, 2023
USD ($)
Debt Instrument [Line Items]      
Interest and fees paid   $ 182,000 $ 159,000
Revolver Facility      
Debt Instrument [Line Items]      
Line of credit facility, amount outstanding   $ 0  
Credit Facility      
Debt Instrument [Line Items]      
Line of credit facility, maximum borrowing capacity $ 125,000,000    
Debt instrument, interest rate terms   Borrowings under the Credit Facility bear interest at either a Base Rate loan or Daily Simple SOFR rate, at the Company's option. Base Rate loans will bear interest at a rate equal to (i) the greater of: (a) the Prime Rate, (b) the Federal Funds effective rate plus 0.50% per annum and (c) the Daily Simple SOFR rate plus 1.00% per annum (provided the Base Rate shall never be less than the Floor (as defined in the Credit Facility)), plus (ii) a varying percentage, based on the Company’s average excess availability, of either 0.25% or 0.50% (the “Applicable Margin”). 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. The Company is subject to an unused line fee of 0.25%.  
Debt instrument, covenant description   (i) 10% of the Revolving Loan Cap (the lesser of the aggregate revolving commitments or the borrowing base) and (ii) $7.5 million, then the Company is required to maintain a minimum consolidated fixed charge coverage ratio of 1.0:1.0 until such time as availability has exceeded the greater of (1) 10% of the Revolving Loan Cap and (2) $7.5 million for 30 consecutive days.  
Minimum loan cap percentage 10.00%    
Line of credit facility $ 7,500,000    
Minimum consolidated fixed charge coverage ratio 1    
Number of consecutive days | d 30    
Line of credit facility, maturity date Oct. 28, 2026    
Line of credit facility, remaining borrowing capacity   $ 69,900,000  
Line of credit facility, average unused excess availability   $ 73,400,000  
Unused line fee 0.25%    
Credit Facility | Federal Funds Rate      
Debt Instrument [Line Items]      
Line of credit facility, basis spread on variable rate 0.50%    
Credit Facility | SOFR-based Borrowings      
Debt Instrument [Line Items]      
Line of credit facility, basis spread on variable rate 1.00%    
Credit Facility | Prime-based Borrowings      
Debt Instrument [Line Items]      
Line of credit facility interest rate   8.75%  
Credit Facility | Minimum | SOFR-based Borrowings      
Debt Instrument [Line Items]      
Line of credit facility, basis spread on variable rate 0.25%    
Credit Facility | Maximum | SOFR-based Borrowings      
Debt Instrument [Line Items]      
Line of credit facility, basis spread on variable rate 0.50%    
Credit Facility | Commercial And Standby Letter Of Credits      
Debt Instrument [Line Items]      
Line of credit facility, maximum borrowing capacity $ 20,000,000    
Credit Facility | Swing Line Loans      
Debt Instrument [Line Items]      
Line of credit facility, maximum borrowing capacity $ 15,000,000    
Credit Facility | SOFR loans | SOFR-based Borrowings      
Debt Instrument [Line Items]      
Line of credit facility, basis spread on variable rate 0.10%    
Credit Facility | Standby Letters of Credit      
Debt Instrument [Line Items]      
Letters of credit outstanding, amount   $ 4,200,000  
Credit Facility | Documentary Letters of Credit      
Debt Instrument [Line Items]      
Letters of credit outstanding, amount   $ 900,000  
v3.24.2.u1
Leases - Additional Information (Details)
$ in Millions
6 Months Ended
Aug. 03, 2024
USD ($)
RenewalOption
Lease
Lessee Lease Description [Line Items]  
Operating lease renewal option beginning year 2026
Leases, expected to commence period 2024
Store  
Lessee Lease Description [Line Items]  
Operating lease option to extend 5 years
Number of leases not yet commenced | Lease 3
Operating lease team, not yet commenced 10 years
Aggregated estimated future lease payments | $ $ 6.2
Store | Minimum  
Lessee Lease Description [Line Items]  
Operating lease initial term 5 years
Operating lease option to extend 5 years
Store | Maximum  
Lessee Lease Description [Line Items]  
Operating lease initial term 10 years
Operating lease option to extend 5 years
Corporate Headquarter  
Lessee Lease Description [Line Items]  
Operating lease initial term 20 years
Operating lease option to extend 5 years
Number of renewal options | RenewalOption 6
Equipment and Other Assets | Minimum  
Lessee Lease Description [Line Items]  
Operating lease initial term 3 years
Equipment and Other Assets | Maximum  
Lessee Lease Description [Line Items]  
Operating lease initial term 5 years
v3.24.2.u1
Leases - Summary of Components of Net Lease Cost (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Aug. 03, 2024
Jul. 29, 2023
Aug. 03, 2024
Jul. 29, 2023
Leases [Abstract]        
Operating lease cost $ 12,222 $ 11,374 $ 23,699 $ 22,041
Variable lease costs [1] 3,151 3,293 6,544 6,458
Total lease costs $ 15,373 $ 14,667 $ 30,243 $ 28,499
[1] Variable lease costs include the cost of property taxes, insurance and common area maintenance fees related to leases.
v3.24.2.u1
Leases - Supplemental Cash Flow Information Related to Leases (Details) - USD ($)
$ in Thousands
6 Months Ended
Aug. 03, 2024
Jul. 29, 2023
Cash paid for amounts included in the measurement of lease liabilities:    
Operating cash flows for operating leases [1] $ 25,750 $ 24,513
Non-cash operating activities:    
Right-of-use assets obtained in exchange for operating lease liabilities $ 43,087 $ 23,533
Weighted average remaining lease term 5 years 4 months 24 days 4 years 4 months 24 days
Weighted average discount rate 6.38% 6.41%
[1] The cash paid for the first six months of fiscal 2024 and fiscal 2023 included prepaid rent of $4.3 million and $3.7 million, respectively.
v3.24.2.u1
Leases - Supplemental Cash Flow Information Related to Leases (Parenthetical) (Details) - USD ($)
$ in Millions
Aug. 03, 2024
Jul. 29, 2023
Leases [Abstract]    
Prepaid rent $ 4.3 $ 3.7
v3.24.2.u1
Leases - Schedule of Reconciliation of Undiscounted Cash Flows Related to Operating Lease Liabilities (Details) - USD ($)
$ in Thousands
Aug. 03, 2024
Feb. 03, 2024
Leases [Abstract]    
2024 (remaining) $ 19,434  
2025 50,191  
2026 38,544  
2027 31,806  
2028 24,067  
Thereafter 46,230  
Total minimum lease payments 210,272  
Less: amount of lease payments representing interest 33,638  
Present value of future minimum lease payments 176,634  
Less: current obligations under leases 35,155 $ 37,221
Long-term lease obligations $ 141,479 $ 117,316
v3.24.2.u1
Long-Term Incentive Plans - Additional Information (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Apr. 29, 2023
Aug. 03, 2024
Mar. 06, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Incentive plan performance targets covering period   3 years  
Vesting terms   The performance period for each LTIP is three years. Awards for any achievement of performance targets will not be granted until the performance targets are achieved and then will be subject to an additional service requirement through August 31, 2025, August 31, 2026 and August 31, 2027, respectively. The time-based awards under the 2022-2024 LTIP, the 2023-2025 LTIP, and the 2024-2026 LTIP vest in four equal installments through April 1, 2026, April 1, 2027 and April 1, 2028, respectively.  
Restricted stock units (RSUs) granted for achievement of performance-based compensation, reclassified from liability to equity $ 1,146    
2021-2023 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Incentive plan performance targets covering period   3 years  
Time Based Vesting Schedule      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Vesting percentage   50.00%  
Time Based Vesting Schedule | 2022-2024 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Total expected compensation cost of long term incentive plans   $ 4,800  
Total amortization period   48 months  
Time Based Vesting Schedule | 2023-2025 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Total expected compensation cost of long term incentive plans   $ 5,100  
Total amortization period   47 months  
Time Based Vesting Schedule | 2024-2026 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Total expected compensation cost of long term incentive plans   $ 5,300  
Total amortization period   49 months  
Performance Based Vesting Schedule      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Vesting percentage   50.00%  
Performance Based Vesting Schedule | 2021-2023 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Total award approved for grant     $ 3,000
Performance Based Vesting Schedule | 2022-2024 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Incentive accrual during period   $ 1,600  
Performance Based Vesting Schedule | 2023-2025 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Incentive accrual during period   200  
Performance Based Vesting Schedule | 2024-2026 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Incentive accrual during period   $ 200  
RSUs | 2022-2024 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Vesting percentage   50.00%  
RSUs | 2023-2025 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Vesting percentage   50.00%  
RSUs | 2024-2026 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Vesting percentage   50.00%  
Cash | 2022-2024 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Vesting percentage   50.00%  
Cash | 2023-2025 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Vesting percentage   50.00%  
Cash | 2024-2026 LTIP      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Vesting percentage   50.00%  
v3.24.2.u1
Stock-Based Compensation - Additional Information (Details) - USD ($)
6 Months Ended
Aug. 11, 2023
Aug. 04, 2016
Aug. 03, 2024
Jul. 29, 2023
Aug. 08, 2024
Feb. 03, 2024
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Options granted     0      
Stock compensation expense     $ 1,780,000 $ 815,000    
Non Employee Directors            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Number of shares of common stock issued     19,214      
Fair value of common stock issued     $ 69,992      
RSUs            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Fully-vested shares     129,112      
PSUs | Mr. Kanter            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Volume-weighted closing price of the Company's common stock, number of days 30 days          
Shares granted 573,000          
Vesting description The award consists of nine tranches, with the first tranche vesting if and when the 30-day volume-weighted closing price of the Company's common stock is equal to or greater than $6.50 per share. Each subsequent tranche will vest upon achievement of the 30-day volume-weighted closing price of the Company's common stock in $0.25 increments with the ninth tranche vesting when such price is equal to or greater than $8.50 per share. The PSUs are subject to a one-year minimum vesting period, and any unvested PSUs will expire on August 11, 2026.          
Time Vested Stock Options, RSU and PSU Awards            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Unrecognized stock compensation cost     $ 3,000,000      
Unrecognized stock compensation cost weighted average recognition period     32 months      
2016 Plan            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Reduction in outstanding reserve for share granted   1.00%        
Reduction in outstanding reserve for share granted, full-value award   1.90%        
Shares authorised     15,120,538      
Shares available for grant     1,425,262      
Stock option outstanding     2,985,916     3,180,739
Percent of shares available for awards   5.00%        
Share-based compensation description     Except with respect to 5% of the shares available for awards under the 2016 Plan, no award will become exercisable unless such award has been outstanding for a minimum period of one year from its date of grant.      
Options granted       1,317    
Shares granted     425,142      
Fully-vested shares     151,346      
2016 Plan | Subsequent Event            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Shares available for grant         6,150,000  
2016 Plan | RSUs            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Shares granted     383,007      
Fully-vested shares     129,112      
2016 Plan | Fully-vested shares            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Shares granted     22,234      
Fully-vested shares     22,234      
2016 Plan | Deferred stock            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Shares granted     19,901      
v3.24.2.u1
Stock-Based Compensation - Summary of Share Activity and Stock Option Activity (Details)
6 Months Ended
Aug. 03, 2024
$ / shares
shares
RSUs  
Total number of shares  
Shares vested and/or issued (129,112)
2016 Plan  
Total number of shares  
Outstanding non-vested shares at beginning of year 1,544,853
Shares granted 425,142
Shares vested and/or issued (151,346)
Outstanding non-vested shares at end of quarter 1,818,649
Weighted-average Grant-Date Fair value  
Outstanding non-vested shares at beginning of year | $ / shares $ 3.53
Shares granted | $ / shares 3.56
Shares vested and/or issued | $ / shares 4.55
Outstanding non-vested shares at end of quarter | $ / shares $ 3.45
2016 Plan | RSUs  
Total number of shares  
Outstanding non-vested shares at beginning of year 536,285
Shares granted 383,007
Shares vested and/or issued (129,112)
Outstanding non-vested shares at end of quarter 790,180
2016 Plan | Deferred stock  
Total number of shares  
Outstanding non-vested shares at beginning of year 435,568
Shares granted 19,901
Outstanding non-vested shares at end of quarter 455,469
2016 Plan | Performance Share Units  
Total number of shares  
Outstanding non-vested shares at beginning of year 573,000
Outstanding non-vested shares at end of quarter 573,000
2016 Plan | Fully-vested shares  
Total number of shares  
Shares granted 22,234
Shares vested and/or issued (22,234)
v3.24.2.u1
Stock-Based Compensation - Summary of Share Activity and Stock Option Activity (Parenthetical) (Details) - USD ($)
3 Months Ended 6 Months Ended
Aug. 11, 2023
May 04, 2024
Apr. 29, 2023
Aug. 03, 2024
Jul. 29, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Options granted       0  
Expected term         2 years 6 months
Common Stock          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Shares granted during the period, fair value   $ 1,000 $ 3,000    
Director          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Shares granted during the period, fair value       $ 80,993  
2024-2026 LTIP | Common Stock          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of shares sold       115,292  
2016 Plan          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of shares vested       151,346  
Shares granted       425,142  
Options granted         1,317
Restricted stock units          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of shares vested       129,112  
Restricted stock units | 2016 Plan          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of shares vested       129,112  
Shares granted       383,007  
Performance Stock Units          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Shares granted during the period, fair value $ 2,400,000        
Stock price on date of grant $ 4.98        
Weighted historical volatility rate 57.80%        
Expected term 3 years        
Risk-free rate 4.60%        
Share based compensation fair value assumptions cost of equity 11.00%        
Performance Stock Units | Minimum          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Derived service period 12 months        
Performance Stock Units | Maximum          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Derived service period 13 months        
Performance Stock Units | Mr. Kanter          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Shares granted 573,000        
Vesting description The award consists of nine tranches, with the first tranche vesting if and when the 30-day volume-weighted closing price of the Company's common stock is equal to or greater than $6.50 per share. Each subsequent tranche will vest upon achievement of the 30-day volume-weighted closing price of the Company's common stock in $0.25 increments with the ninth tranche vesting when such price is equal to or greater than $8.50 per share. The PSUs are subject to a one-year minimum vesting period, and any unvested PSUs will expire on August 11, 2026.        
Volume-weighted closing price of the Company's common stock, number of days 30 days        
Performance Stock Units | Mr. Kanter | Minimum | First Tranche          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Closing price $ 6.5        
Performance Stock Units | Mr. Kanter | Minimum | Ninth Tranche Vesting          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Closing price $ 8.5        
Deferred stock | Director          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Shares granted during the period, fair value       $ 72,495  
Deferred stock | 2016 Plan          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Shares granted       19,901  
v3.24.2.u1
Stock-Based Compensation - Stock Option Activity (Details) - USD ($)
$ / shares in Units, $ in Thousands
6 Months Ended
Aug. 03, 2024
2016 Plan  
Number of shares  
Outstanding options at beginning of year 3,180,739
Options exercised (139,667)
Options expired (53,441)
Options forfeited (1,715)
Outstanding options at end of quarter 2,985,916
Options exercisable at end of quarter 2,745,724
2006 Plan  
Weighted-average exercise price per option  
Outstanding options at beginning of year $ 0.75
Options exercised 0.57
Options expired and canceled 5.29
Options forfeited 0.75
Outstanding options at end of quarter 0.67
Options exercisable at end of quarter $ 0.66
Weighted-average remaining contractual term  
Outstanding options 6 years 1 month 6 days
Options exercisable at end of quarter 6 years
Aggregate Intrinsic Value  
Outstanding options at beginning of year $ 10,962
Options exercised 409
Options forfeited 5
Outstanding options at end of quarter 8,124
Options exercisable at end of quarter $ 7,491
v3.24.2.u1
Equity and Earnings per Share - Additional Information (Details) - shares
3 Months Ended 6 Months Ended
Aug. 03, 2024
Jul. 29, 2023
Aug. 03, 2024
Jul. 29, 2023
Deferred Stock        
Earnings Per Share [Line Items]        
Shares excluded from computation of basic and diluted earnings per share     455,469 435,568
Stock Options        
Earnings Per Share [Line Items]        
Shares excluded from computation of basic and diluted earnings per share 36,000 100,000 36,000 100,000
Stock Options | Minimum        
Earnings Per Share [Line Items]        
Share-based compensation arrangement, expiration date     Nov. 10, 2024  
Stock Options | Maximum        
Earnings Per Share [Line Items]        
Share-based compensation arrangement, expiration date     Mar. 20, 2033  
Performance Stock Units        
Earnings Per Share [Line Items]        
Shares excluded from computation of basic and diluted earnings per share 573,000   573,000  
v3.24.2.u1
Equity and Earnings per Share - Reconciliation of Number of Shares Outstanding for Basic and Diluted Earning Per Share (Details) - shares
shares in Thousands
3 Months Ended 6 Months Ended
Aug. 03, 2024
Jul. 29, 2023
Aug. 03, 2024
Jul. 29, 2023
Common stock outstanding:        
Basic weighted average common shares outstanding 58,233 61,977 58,135 62,334
Common stock equivalents - stock options, restricted stock units and deferred stock 2,884 3,472 2,900 3,495
Diluted weighted average common shares outstanding 61,117 65,449 61,035 65,829
v3.24.2.u1
Equity and Earnings per Share - Potential Common Stock Equivalents Excluded from Computation of Diluted Earning Per Share (Details) - $ / shares
shares in Thousands
3 Months Ended 6 Months Ended
Aug. 03, 2024
Jul. 29, 2023
Aug. 03, 2024
Jul. 29, 2023
Stock Options        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Anti dilutive shares 36 100 36 100
Range of exercise prices of such options, minimum $ 4.48 $ 4.48 $ 4.48 $ 4.48
Range of exercise prices of such options, maximum $ 6.59 $ 6.59 $ 6.59 $ 6.59
Restricted Stock Units and Deferred Stock        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Anti dilutive shares 350 179 363 24
v3.24.2.u1
Income Taxes - Additional Information (Details)
6 Months Ended
Aug. 03, 2024
Jul. 29, 2023
Income Tax Disclosure [Abstract]    
Effective tax rate 32.30% 26.50%
v3.24.2.u1
Fair Value Measurement - Fair Value Measured at Recurring Basis (Details) - USD ($)
$ in Thousands
Aug. 03, 2024
Feb. 03, 2024
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Short-term investments, fair value $ 41,732 $ 32,459
Recurring | Carrying Value | U.S. Treasury Bills    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash equivalents, fair value 4,031 6,047
Short-term investments, fair value 41,732 32,459
Level 1 | Recurring | Fair Value | U.S. Treasury Bills    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash equivalents, fair value 4,032 6,052
Short-term investments, fair value $ 41,757 $ 32,479
v3.24.2.u1
Stock Repurchase Program - Additional Information (Details) - USD ($)
3 Months Ended 6 Months Ended
May 04, 2024
Aug. 03, 2024
Mar. 16, 2023
Equity, Class of Treasury Stock [Line Items]      
Accrued payment of excise taxes   $ 200,000  
Number of shares repurchased 52,802    
Percent of excise tax on repurchase of shares   1.00%  
Percentage of credit permitted to offset liability   1.00%  
Aggregate cost of repurchased shares $ 211,182    
Common Stock | Maximum      
Equity, Class of Treasury Stock [Line Items]      
Stock repurchase program, repurchase amount     $ 25,000,000
v3.24.2.u1
Termination of Noncontributory Pension Plan - Additional Information (Details)
$ in Millions
3 Months Ended
Jul. 29, 2023
USD ($)
Casual Male Corp. Retirement Plan  
Defined Benefit Plan Disclosure [Line Items]  
Charge recognized, pro-rata portion of the unrealized loss in AOCI $ 4.2

Grafico Azioni Destination XL (NASDAQ:DXLG)
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