Destination XL Group, Inc. (NASDAQ: DXLG) Q1 2025 Earnings Call | 5/29/2025

Destination XL Group’s Q1 2025 earnings call reported a comparable sales decline of 9.4%, better than the anticipated low double-digit drop, with store comps down 6.6% and direct sales down 16.2%. Sales improved monthly, from -13.9% in February to -7.2% in April, driven by lower traffic and pressured average order values due to cautious consumer spending. Net sales were $105.5 million, down from $115.5 million last year. Gross margin fell to 45.1% from 48.2%, due to higher occupancy costs and a slight increase in markdowns, though a shift to private label (57% of sales vs. 55% last year) helped margins. SG&A expenses were 45.0% of sales, up from 41.1%, but flat in dollars. EBITDA was $0.1 million, down from $8.2 million. The company maintained a strong balance sheet with $29.1 million in cash, no debt, and $77.1 million in credit availability, though free cash flow was negative $18.8 million due to lower earnings and inventory timing. Inventory was down 6.4%, with turnover up 30% since post-pandemic, and clearance levels at 9.5%. Strategic initiatives included the Heroes Discount, Fit Exchange (boosting AOV by 39% and frequency by 51%), and a new loyalty program exceeding membership goals by 46%. The WebSoy replatform to Commerce Tools was completed, with enhancements planned for 2025. New brands like Dickies and Hagar performed well, and a Nordstrom marketplace partnership expanded to 2,200 styles. FitMap technology, implemented in 52 stores, scanned 20,000 customers, improving AOV and frequency. Tariff impacts are estimated at under $2 million, with 80% of private label sourced from Vietnam, Bangladesh, and India. The company expects a single-digit negative comp in Q2 and positive comps in H2 2025, with four new stores planned but further openings paused to focus on stabilizing the core business.