Destination XL Group, Inc. (DXLG) Q2 2025 Earnings Call Transcript

Net Sales $115.5 million, a decrease from $124.8 million in the second quarter of last year. This was primarily due to a 9.2% decrease in comparable sales, partially offset by an increase in noncomparable sales from new stores. The decline was attributed to customers pulling back on discretionary spending and shifting towards value-driven private brands.

Comparable Sales Declined 9.2% for the second quarter. Stores outperformed direct with comparable store sales down 7.1%, while direct was down 14.4%. The decline was primarily due to reduced store traffic and challenges with the new e-commerce platform.

Gross Margin Rate 45.2%, a decrease from 48.2% in the second quarter of last year. The 300 basis point decrease was due to a 240 basis point increase in occupancy costs from lower sales and increased rents, and a 60 basis point decrease in merchandise margins due to higher markdown rates and increased freight costs.

SG&A Expense 41.2% of sales, a decrease from 43% in the second quarter of 2024. On a dollar basis, SG&A expenses decreased by $6.1 million, primarily due to lower marketing spend and lower performance incentive accruals, partially offset by an increase in employee health care benefits.

EBITDA $4.6 million, a decrease from $6.5 million in the second quarter of last year. The decrease was primarily driven by lower sales, partially offset by reductions in operating expenses.

Inventory Balance $78.9 million, a modest increase of $300,000 from $78.6 million last year. The increase was due to accelerated receipts to mitigate the impact of tariffs.

Cash and Short-term Investments $33.5 million, a decrease from $63.2 million a year ago. The decrease was due to share repurchases and capital spent on new store development.