Destination XL Group Reports Q1 Sales Decline, Plans Expansion and Technology Upgrades

Destination XL Group reported an 8.6% decline in Q1 2025 sales to $105.5 million and a net loss of $(0.04) per share. Cash reserves fell to $29.1 million due to share repurchases and challenging market conditions. The company plans to open 6 new stores and expand its FiTMAP sizing technology to enhance customer experience. Despite ongoing challenges, DXLG remains focused on leveraging innovative technologies and value-enhancing programs to drive customer engagement and sales.

Destination XL Group (DXLG), a specialty retailer of Big + Tall men's clothing, reported mixed Q1 2025 financial results, with total sales declining by 8.6% to $105.5 million. Comparable sales fell by 9.4%, resulting in a net loss of $(0.04) per share, compared to last year's net income of $0.06 per share [1].

The company's cash position decreased significantly, dropping to $29.1 million from $53.2 million year-over-year, largely due to $13.6 million in share repurchases. This reduction reflects operational cash burn, with first-quarter operating cash flow being negative $12 million, a substantial decline from last year's $1.1 million outflow [1].

DXLG's gross margin compression, declining by 310 basis points to 45.1%, is particularly concerning. Occupancy cost deleverage contributed to 280 basis points of this decline. Additionally, SG&A as a percentage of sales increased to 45.0% from 41.1%, despite absolute dollars remaining flat [1].

Management attributes the performance to broader macroeconomic challenges affecting discretionary spending, with customers shifting toward lower-priced private label merchandise. While store traffic improved sequentially through the quarter, the digital business remained weak, declining by 16.2% [1].

Despite these challenges, DXLG is focused on expanding its store network with 6 additional DXL locations and enhancing its FiTMAP sizing technology to improve customer experience. The company expects sales improvement in H2 2025 and projects continued comparable sales improvement, though remaining negative in Q2 before potentially turning positive in the second half. Potential tariff impacts are estimated at $2 million or 40 basis points on margins [1].

References:
[1] https://www.stocktitan.net/news/DXLG/destination-xl-group-inc-reports-first-quarter-financial-gros27hzlg7r.html