Destination XL Group Reports Decline in Sales and Profitability for Q2 Fiscal 2025

Destination XL Group, Inc. reported its financial results for the second quarter of fiscal 2025, revealing a decline in both sales and profitability compared to the same period last year. Total sales for the three months ended August 2, 2025, were $115.5 million, down from $124.8 million in the prior year. The company experienced a net loss of $0.3 million, or $0.00 per diluted share, compared to a net income of $2.4 million, or $0.04 per diluted share, in the second quarter of fiscal 2024. For the first six months of fiscal 2025, total sales decreased to $221.0 million from $240.3 million, with a net loss of $2.2 million compared to a net income of $6.2 million in the same period last year.

The decline in sales was attributed to a 9.2% decrease in comparable sales, primarily driven by reduced customer traffic. The company noted that while sales trends improved month over month, the overall performance was impacted by a shift in consumer behavior towards lower-priced goods and select promotions. Store sales accounted for 72.5% of total sales, while direct sales made up 27.5%. The gross margin rate for the second quarter was 45.2%, down from 48.2% in the previous year, largely due to increased occupancy costs and freight expenses associated with inventory management.

In terms of operational developments, Destination XL Group has been focusing on enhancing its private brand offerings, which currently represent 56.5% of sales. The company aims to increase this penetration to over 60% by 2026 and over 65% by 2027. Additionally, the company has been implementing a new promotional strategy to improve customer engagement and drive sales. The proprietary FiTMAP® sizing technology, which offers custom clothing options, has been rolled out to 62 retail locations, with plans to expand to 200 stores by the end of fiscal 2027.

The company also reported a cash and investment balance of $33.5 million as of August 2, 2025, down from $63.2 million a year earlier. Despite the decrease, Destination XL Group maintained a strong liquidity position with no outstanding debt and unused availability of $70.1 million under its credit facility. The company amended its credit agreement to extend the maturity date to August 13, 2030, while reducing the borrowing commitment from $125 million to $100 million to align with lower inventory levels.

Looking ahead, Destination XL Group anticipates continued challenges in the retail environment, particularly due to macroeconomic factors and evolving consumer preferences. The company is focused on managing its inventory levels and mitigating the impact of tariffs on its operations. Management believes that the strategic initiatives being implemented will help address these challenges and improve financial performance in the future.