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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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.

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

As of ~~November 10, 2017,~~August 16, 2023, the registrant had ~~48,686,513~~60,389,665 shares of common stock, $0.01 par value per share, outstanding.


	October 28, 2017			January 28, 2017			July 29, 2023			January 28, 2023
	(Fiscal 2017)			(Fiscal 2016)			(Fiscal 2023)			(Fiscal 2022)

ASSETS
Current assets:
Cash and cash equivalents	$	5,791		$	5,572		$	19,246		$	52,074
Short-term investments								43,536			—
Accounts receivable		4,232			7,114			884			1,720
Inventories		119,878			117,446			87,532			93,004
Prepaid expenses and other current assets		11,747			8,817			6,754			7,214
Total current assets		141,648			138,949			157,952			154,012

Non-current assets:
Property and equipment, net of accumulated depreciation and amortization		116,126			124,347			35,397			39,062

Other assets:
Operating lease right-of-use assets								132,930			124,356
Deferred income taxes, net of valuation allowance								23,966			31,455
Intangible assets		1,923			2,228			1,150			1,150
Other assets		3,955			3,804			565			563
Total assets	$	263,652		$	269,328		$	351,960		$	350,598

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	2,296		$	6,941
Current portion of deferred gain on sale-leaseback		1,465			1,465
Accounts payable		32,750			31,258		$	20,899		$	27,548
Accrued expenses and other current liabilities		24,616			31,938			27,506			36,875
Borrowings under credit facility		68,198			44,097
Operating leases, current								37,727			37,329
Total current liabilities		129,325			115,699			86,132			101,752

Long-term liabilities:
Long-term debt, net of current portion		10,892			12,061
Deferred rent and lease incentives		36,075			35,421
Deferred gain on sale-leaseback, net of current portion		10,624			11,723
Deferred tax liability		222			222
Operating leases, non-current								111,907			106,912
Other long-term liabilities		4,735			5,682			3,821			4,706
Total long-term liabilities		62,548			65,109			115,728			111,618

Commitments and contingencies

Stockholders' equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued		—			—
Common stock, $0.01 par value, 100,000,000 shares authorized, 61,426,351 and 61,637,164 shares issued at October 28, 2017 and January 28, 2017, respectively		614			616
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued								—			—
Common stock, $0.01 par value, 125,000,000 shares authorized, 78,605,837 and 78,229,861 shares issued at July 29, 2023 and January 28, 2023, respectively								786			782
Additional paid-in capital		307,115			304,466			323,512			321,516
Treasury stock at cost, 12,755,873 and 10,877,439 shares at October 28, 2017 and January 28, 2017, respectively		(92,658	)		(87,977	)
Treasury stock at cost, 17,874,322 shares at July 29, 2023 and 15,625,172 shares at January 28, 2023								(116,291	)		(105,386	)
Accumulated deficit		(138,069	)		(122,567	)		(56,156	)		(74,756	)
Accumulated other comprehensive loss		(5,223	)		(6,018	)		(1,751	)		(4,928	)
Total stockholders' equity		71,779			88,520			150,100			137,228
Total liabilities and stockholders' equity	$	263,652		$	269,328		$	351,960		$	350,598

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


	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Six Months Ended
	October 28, 2017			October 29, 2016			October 28, 2017			October 29, 2016			July 29, 2023			July 30, 2022			July 29, 2023			July 30, 2022
	(Fiscal 2017)			(Fiscal 2016)			(Fiscal 2017)			(Fiscal 2016)			(Fiscal 2023)			(Fiscal 2022)			(Fiscal 2023)			(Fiscal 2022)

Sales	$	103,700		$	101,871		$	332,454		$	327,637		$	140,043		$	144,634		$	265,485		$	272,289
Cost of goods sold including occupancy costs		58,887			56,633			183,136			177,790			69,664			69,316			134,190			133,104
Gross profit		44,813			45,238			149,318			149,847			70,379			75,318			131,295			139,185

Expenses:
Selling, general and administrative		41,968			41,383			137,204			129,051			47,446			49,461			95,727			96,058
Impairment (gain) of assets														—			(47	)		—			(398	)
Depreciation and amortization		7,680			7,494			25,055			22,363			3,468			3,992			6,945			7,979
Total expenses		49,648			48,877			162,259			151,414			50,914			53,406			102,672			103,639

Operating loss		(4,835	)		(3,639	)		(12,941	)		(1,567	)
Operating income														19,465			21,912			28,623			35,546

Interest expense, net		(871	)		(779	)		(2,497	)		(2,346	)
Loss on termination of pension plan														(4,174	)		—			(4,174	)		—
Interest income (expense), net														505			(100	)		844			(243	)

Loss before provision for income taxes		(5,706	)		(4,418	)		(15,438	)		(3,913	)
Provision for income taxes		-			34			64			126
Income before provision (benefit) for income taxes														15,796			21,812			25,293			35,303
Provision (benefit) for income taxes														4,163			(35,130	)		6,693			(35,027	)


Net loss	$	(5,706	)	$	(4,452	)	$	(15,502	)	$	(4,039	)
Net income													$	11,633		$	56,942		$	18,600		$	70,330


Net loss per share - basic and diluted	$	(0.12	)	$	(0.09	)	$	(0.32	)	$	(0.08	)
Net income per share - basic													$	0.19		$	0.91		$	0.30		$	1.11
Net income per share - diluted													$	0.18		$	0.85		$	0.28		$	1.04

Weighted-average number of common shares outstanding:
Basic		48,607			49,552			48,966			49,532			61,977			62,688			62,334			63,384
Diluted		48,607			49,552			48,966			49,532			65,449			66,670			65,829			67,519

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

	For the Three Months Ended						For the Nine Months Ended
	October 28, 2017			October 29, 2016			October 28, 2017			October 29, 2016			For the Three Months Ended						For the Six Months Ended
	(Fiscal 2017)			(Fiscal 2016)			(Fiscal 2017)			(Fiscal 2016)			July 29, 2023			July 30, 2022			July 29, 2023			July 30, 2022
Net loss	$	(5,706	)	$	(4,452	)	$	(15,502	)	$	(4,039	)
													(Fiscal 2023)			(Fiscal 2022)			(Fiscal 2023)			(Fiscal 2022)
Net income													$	11,633		$	56,942		$	18,600		$	70,330

Other comprehensive income before taxes:
Foreign currency translation		(52	)		(176	)		164			(319	)		—			(3	)		—			(7	)
Pension plans		210			237			631			711			65			68			131			135
Recognized loss on termination of pension plan														4,174			—			4,174			—
Other comprehensive income before taxes		158			61			795			392			4,239			65			4,305			128
Tax provision related to items of other comprehensive income		—			—			—			—			(1,111	)		—			(1,128	)		—
Other comprehensive income, net of tax		158			61			795			392			3,128			65			3,177			128
Comprehensive loss	$	(5,548	)	$	(4,391	)	$	(14,707	)	$	(3,647	)
Comprehensive income													$	14,761		$	57,007		$	21,777		$	70,458

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

Accumulated

Additional

Other

Common Stock

Paid-in

Treasury Stock

Accumulated

Comprehensive

Shares

Amounts

Capital

Shares

Amounts

Deficit

Income (Loss)

Total

Balance at January 28, 2017

61,637

$
616

$
304,466

(10,877
)

$
(87,977
)

$
(122,567
)

$
(6,018
)

$
88,520

Board of Directors compensation

96

1

420

421

Stock compensation expense

1,306

1,306

Restricted Stock issued, reclass from liability to equity (Note 3)

425

4

916

920

Cancellations of restricted stock, net of issuances

(777
)

(8
)

8

—

Deferred stock vested

45

1

(1
)

—

Repurchase of common stock

(1,878
)

(4,681
)

(4,681
)
Accumulated other comprehensive income (loss):

Pension plan

631

631

Foreign currency

164

164

Net loss

(15,502
)

(15,502
)
Balance at October 28, 2017

61,426

$
614

$
307,115

(12,755
)

$
(92,658
)

$
(138,069
)

$
(5,223
)

$
71,779

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

For the Nine Months Ended

October 28, 2017

October 29, 2016

(Fiscal 2017)

(Fiscal 2016)

Cash flows from operating activities:

Net loss

$
(15,502
)

$
(4,039
)
Adjustments to reconcile net loss to net cash provided by operating activities:

Amortization of deferred gain on sale-leaseback

(1,099
)

(1,099
)
Amortization of deferred debt issuance costs

206

208

Depreciation and amortization

25,055

22,363

Deferred taxes, net of valuation allowance

—

26

Stock compensation expense

1,306

1,076

Board of Directors stock compensation

421

362

Changes in operating assets and liabilities:

Accounts receivable

2,882

(3,642
)
Inventories

(2,432
)

(3,167
)
Prepaid expenses and other current assets

(2,930
)

(705
)
Other assets

(151
)

(376
)
Accounts payable

1,492

(972
)
Deferred rent and lease incentives

654

3,976

Accrued expenses and other liabilities

(4,654
)

(5,959
)
Net cash provided by operating activities

5,248

8,052

Cash flows from investing activities:

Additions to property and equipment, net

(18,429
)

(21,799
)
Net cash used for investing activities

(18,429
)

(21,799
)

Cash flows from financing activities:

Repurchase of common stock

(4,681
)

—

Principal payments on long-term debt

(5,930
)

(5,363
)
Net borrowings under credit facility

24,011

20,284

Net cash provided by financing activities

13,400

14,921

Net increase in cash and cash equivalents

219

1,174

Cash and cash equivalents:

Beginning of period

5,572

5,170

End of period

$
5,791

$
6,344

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

1. Basis of Presentation

In the opinion of management of Destination XL Group, Inc., a Delaware corporation ~~(formerly known as Casual Male Retail Group, Inc. and, collectively~~(collectively with its subsidiaries, referred to as the “Company”), the accompanying unaudited ~~consolidated financial statements~~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~~Consolidated Financial Statements for the fiscal year ended January 28, ~~2017~~2023 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March ~~20, 2017.~~16, 2023.

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 ~~2017~~2023 is a 53-week period ending on February 3, ~~2018~~2024, and fiscal ~~2016~~2022 was a 52-week period ~~ending~~which ended on January 28, ~~2017.~~2023.

Segment Information

The Company ~~reports its operations as one reportable segment, Big & Tall Men’s Apparel, which consists of~~ has two principal operating segments: its ~~retail business~~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 ~~a single reporting~~one reportable segment, retail segment, consistent with its omni-channel business approach. ~~The direct operating segment includes~~

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 ~~operating results~~short period between purchase and ~~assets for LivingXL~~^®maturity.

Concentration of Credit Risk

Cash and ~~ShoesXL~~^®.

~~Intangibles~~

~~At October 28, 2017,~~cash equivalents include amounts due from third party financial institutions, which from time to time, may be in excess of the ~~“Casual Male” trademark had a carrying value of $0.4 million and is considered a definite-lived asset.~~Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company is ~~amortizing~~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 ~~remaining carrying value on an accelerated basis, consistent~~credit risk associated with ~~projected~~these financial instruments to be minimal as cash ~~flows through fiscal 2018,~~and cash equivalents are held by financial institutions with high credit ratings and it has not historically sustained any credit losses associated with its ~~estimated remaining useful life.~~

~~The Company’s “Rochester” trademark is considered an indefinite-lived intangible asset~~cash and ~~has a carrying value of $1.5 million. During~~cash equivalents balances. In addition, the ~~nine months ended October 28, 2017, no event or circumstance occurred which would cause a reduction~~Company's cash and cash equivalents include money market accounts with Citizens Bank, N.A. and investments in ~~the fair value of the Company’s reporting units, requiring interim testing of the Company’s “Rochester” trademark.~~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 fair value of long-term debt is classified within Level 2 of the valuation hierarchy. At October 28, 2017, the fair value approximated the carrying amount based upon terms available to the Company for borrowings with similar arrangements and remaining maturities.

The fair value of indefinite-lived assets, which consists of the Company’s “Rochester” trademark, is measured on a non-recurring basis in connection with the Company’s annual impairment test. The fair value of the trademark is determined using a projected discounted cash flow analysis based on unobservable inputs and is classified within Level 3 of the valuation hierarchy. See ~~Intangibles~~ ~~above.~~

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses ~~and short-term borrowings~~ approximate fair value because of the short maturity of these instruments. See Note 11 - Fair Value Measurement for information regarding the fair value of certain financial assets.

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

Other comprehensive income (loss) includes amounts related to foreign currency and pension plans and is reported in the Consolidated Statements of Comprehensive Income (Loss). Other comprehensive income (loss) and reclassifications from AOCI for the three and ~~nine~~six months ended ~~October 28, 2017~~July 29, 2023 and ~~October 29, 2016, respectively,~~July 30, 2022 were as follows:


	July 29, 2023								July 30, 2022
For the three months ended:	(in thousands)
	Pension Plans			Foreign Currency		Total			Pension Plans			Foreign Currency			Total
Balance at beginning of the quarter	$	(4,879	)	$	—	$	(4,879	)	$	(5,399	)	$	(63	)	$	(5,462	)

Other comprehensive income (loss) before reclassifications, net of taxes		23			—		23			76			(3	)		73

Recognition of loss on pension termination, net of taxes (1)		3,080			—		3,080			—			—			—

Amounts reclassified from accumulated other comprehensive income, net of taxes (2)		25			—		25			(8	)		—			(8	)

Other comprehensive income (loss) for the period		3,128			—		3,128			68			(3	)		65

Balance at end of quarter	$	(1,751	)	$	—	$	(1,751	)	$	(5,331	)	$	(66	)	$	(5,397	)


	July 29, 2023								July 30, 2022
For the six months ended:	(in thousands)
	Pension Plans			Foreign Currency		Total			Pension Plans			Foreign Currency			Total
Balance at beginning of fiscal year	$	(4,928	)	$	—	$	(4,928	)	$	(5,466	)	$	(59	)	$	(5,525	)

Other comprehensive income (loss) before reclassifications, net of taxes		29			—		29			155			(7	)		148

Recognition of loss on pension termination, net of taxes (1)		3,080					3,080			—			—			—

Amounts reclassified from accumulated other comprehensive income, net of taxes (2)		68			—		68			(20	)		—			(20	)

Other comprehensive income (loss) for the period		3,177			—		3,177			135			(7	)		128

Balance at end of quarter	$	(1,751	)	$	—	$	(1,751	)	$	(5,331	)	$	(66	)	$	(5,397	)

October 28, 2017

October 29, 2016

For the three months ended:

(in thousands)

Pension
Plans

Foreign
Currency

Total

Pension
Plans

Foreign
Currency

Total

Balance at beginning of the quarter

$
(4,816
)

$
(565
)

$
(5,381
)

$
(5,639
)

$
(682
)

$
(6,321
)

Other comprehensive income (loss) before
reclassifications, net of taxes

43

(52
)

(9
)

61

(176
)

(115
)

Amounts reclassified from accumulated other
comprehensive income, net of taxes ⁽¹⁾

167

—

167

176

—

176

Other comprehensive income (loss) for the period

210

(52
)

158

237

(176
)

61

Balance at end of quarter

$
(4,606
)

$
(617
)

$
(5,223
)

$
(5,402
)

$
(858
)

$
(6,260
)

(1)

October 28, 2017

October 29, 2016

For the nine months ended:

(in thousands)

Pension
Plans

Foreign
Currency

Total

Pension
Plans

Foreign
Currency

Total

Balance at beginning of fiscal year

$
(5,237
)

$
(781
)

$
(6,018
)

$
(6,113
)

$
(539
)

$
(6,652
)

Other comprehensive income (loss) before
reclassifications, net of taxes

128

164

292

183

(319
)

(136
)

Amounts reclassified from accumulated other
comprehensive income, net of taxes ⁽¹⁾

503

—

503

528

—

528

Other comprehensive income (loss) for the period

631

164

795

711

(319
)

392

Balance at end of quarter

$
(4,606
)

$
(617
)

$
(5,223
)

$
(5,402
)

$
(858
)

$
(6,260
)

~~(1)~~

Includes the amortization of the unrecognized loss on pension plans which was charged to “Selling, General and Administrative” Expense on the Consolidated Statements of Operations for all periods presented. The amortization of the unrecognized loss, before tax, was $167,000 and $503,000 for the three and nine months ended October 28, 2017, respectively, and $176,000 and $528,000 for the three and nine months ended October 29, 2016, respectively. There was no tax benefit for any period.

~~Revenue Recognition~~

~~Revenue from~~In connection with the ~~Company’s retail business is recorded upon purchase~~Company's decision to terminate its pension plan, during the second quarter of ~~merchandise by customers,~~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 ~~an allowance~~taxes.

(2)

Includes the amortization of the unrecognized loss on pension plans, which was charged to “Selling, General and Administrative” Expense on the Consolidated Statements of Operations for ~~sales returns. Revenue from the Company’s direct business is~~all periods presented. The Company recognized ~~at the time a customer order is delivered,~~expense of $34,000, or $25,000 net of ~~an allowance~~taxes, for ~~sales returns. Store sales are defined~~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. For the three and six months ended July 30, 2022, the Company recognized income of $8,000 and $20,000, respectively, as ~~sales that originate~~a result of a change in amortization from average remaining future service to average remaining lifetime. There was no related tax effect for the three and ~~are fulfilled directly at the store level. E-commerce sales are defined as sales that originate online, including those initiated online at the store level.~~

six months ended July 30, 2022.

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 ~~significant~~ judgment. Actual results and future changes in estimates may differ from the Company’s current estimates.

The fair value of each stock option grant is 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 during the first six months of fiscal 2023 and fiscal 2022.


	July 29, 2023		July 30, 2022
Expected volatility	86.3% - 92.1%		109.0% - 123.7%
Risk-free interest rate	3.71%-4.42%		2.52% - 2.87%
Expected term	2.5 yrs.		2.5 - 3.5 yrs.
Dividend rate		—		—
Weighted average fair value of options granted	$	3.24	$	4.98

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 three months and six months ended July 29, 2023. For the three months and six months ended July 30, 2022, the Company recognized non-cash gains of $0.1 million and $0.6 million, respectively. These non-cash gains related to the Company’s decision to close certain retail stores, which resulted in a revaluation of the existing lease liabilities. The portion of the gains that related to previously recorded impairment charges against the operating lease right-of-use asset were included as an offset to previously recorded asset impairment charges. Accordingly, for the three months and six months ended July 30, 2022, $0.1 million and $0.4 million, respectively, were included as an offset to asset impairment charges. The remaining gains for the three months and six months ended July 30, 2022 were included as a reduction of store occupancy costs.

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 and any lease incentives are included in the value of those right-of use 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 July 29, 2023, 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 ~~second~~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 right-of-use 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 right-of-use assets and lease liabilities. Tenant allowances are included as an offset to the right-of-use asset and amortized as reductions to rent expense over the associated lease term.

See Note 4, "Leases" for additional information.

Recently Issued Accounting Pronouncements - Adopted

In September 2022, the FASB issued Accounting Standards Update ("ASU") 2022-04, Liabilities – Supplier Finance Programs, which is intended to enhance the transparency surrounding the use of supplier finance programs in connection with the purchase of goods and services. The guidance requires companies that use supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated rollforward information. The new standard does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations. ASU 2022-04 was adopted in the first quarter of fiscal ~~2017,~~2023, with the exception of the rollforward information, which is not effective until fiscal 2024. The adoption of ASU 2022-04 did not have a material effect on the Company's Consolidated Financial Statements as the Company recorded an impairment charge of $1.7 million for the write-down of property and equipment. The impairment charge related to a store where the carrying value exceeded fair value. The fair value of these assets, based on Level 3 inputs, was determined using estimated discounted cash flows. The impairment charge was includeddoes not participate in Depreciation and Amortization on the Consolidated Statement of Operations for the nine months ended October 28, 2017. There was no material impairment of assets in the third quarter of fiscal 2017 or in the first nine months of fiscal 2016.supplier finance programs.

Recently ~~Adopted~~Issued Accounting Pronouncements - Not Yet Adopted

In July ~~2015,~~2023, the FASB issued ASU ~~2015-11, "Inventory~~2023-03, Presentation of Financial Statements (Topic ~~330)~~205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718): ~~Simplifying the Measurement of Inventory," which applies~~Amendments to ~~inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope~~SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the ~~lower~~March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of ~~cost~~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 ~~net realizable value, which~~guidance issued by the SEC. The ASU does not provide any new guidance, and as such, there is ~~the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This~~no transition effective date. ASU 2023-03is ~~effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted. The Company~~ ~~adopted this pronouncement as of January 29, 2017. The adoption of this standard did~~ not expected to have a material impact on the ~~Company’s~~ ~~Consolidated Financial Statements~~.

~~In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting~~,” which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards, and classification on the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company adopted this standard during the first quarter of fiscal 2017. The adoption of this standard did not have a material impact on the Company’s provision for income taxes or diluted earnings per share. The Company has elected to adopt the guidance related to the presentation of excess tax benefits in its Consolidated Statements of Cash Flows on a prospective transition method. ~~Since there were~~ ~~no excess tax benefits~~ ~~for the nine months ended October 28, 2017 or October 29, 2016, this election did not result in a change in presentation on the Consolidated Statement of Cash Flows.~~ ~~In addition, the Company has elected to continue to estimate forfeitures at each grant.~~

~~Recently Issued Accounting Pronouncements~~

~~In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition,” as well as various other sections of the ASC, such as, but not limited to, ASC 340-20, “Other Assets and Deferred Costs - Capitalized Advertising Costs~~”. The core principle of ASU 2014-09 is that an entity should recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and is to be applied either retrospectively to each prior reporting period presented or with the cumulative effect recognized at the date of initial adoption as an adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets on the balance sheet). Early adoption is

permitted after December 15, 2016. The Company expects to adopt ASU 2014-09 in the first quarter of fiscal 2018, using the modified retrospective approach as a transition method. The Company is continuing to evaluate the impact that ASU 2014-09 will have on its Consolidated Financial Statements and its disclosures, particularly as it relates to the Company’s revenue recognition policies and internal controls for gift card breakage, loyalty award program and estimates for sales returns. Based on these efforts, the Company currently anticipates that the performance obligations underlying its core revenue stream and the timing of recognition therefore, will remain substantially unchanged. The Company expects that ASU 2014-09 will require additional disclosure, but does not expect the adoption to have a material impact on itsCompany's Consolidated Financial Statements.

~~In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)~~,” which will require an entity to recognize lease assets and lease liabilities on its balance sheet and will increase disclosure requirements on its leasing arrangements. The ASU is effective for annual periods beginning after December 15, 2018, and interim periods therein. Early adoption is permitted. In the financial statements in which the ASU is first applied, leases shall be measured and recognized at the beginning of the earliest comparative period presented with an adjustment to equity. While the Company is still ~~evaluating the impact this pronouncement will have on its~~ ~~Consolidated Financial Statements, the~~ ~~Company expects a~~ ~~gross-up of its Consolidated Balance Sheets as a result of recognizing lease liabilities and right of use assets. The extent of such gross-up is under evaluation.~~

In~~March 2016, the FASB issued~~ ~~ASU2016~~-04~~, “Liabilities—Extinguishments of Liabilities: Recognition of Breakage for Certain Prepaid Stored-Value Products,~~” which amends exempting gift cards and other prepaid stored-value products from the guidance on extinguishing financial liabilities. Rather, they will be subject to breakage accounting consistent with the new revenue guidance in Topic 606. However, the exemption only applies to breakage liabilities that are not subject to unclaimed property laws or that are attached to segregated bank accounts (e.g., consumer debit cards). The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of this pronouncement to have a material impact on its ~~Consolidated Financial Statements~~.

~~In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~,” ~~which reduces the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.~~ ~~The Company does not expect the adoption of this pronouncement to have a material impact on its~~ ~~Consolidated Financial Statements~~.

~~In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other Than Inventory,” which~~ ~~reduces the existing diversity in practice in how income tax consequences of an intra-entity transfer of an asset other than inventory should be recognized. The amendments in~~ ~~ASU 2016~~-16 ~~require an entity to recognize such income tax consequences when the intra-entity transfer occurs rather than waiting until such time as the asset has been sold to an outside party. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.~~ ~~The Company does not expect the adoption of this pronouncement to have a material impact on its~~ ~~Consolidated Financial Statements~~.

~~In May 2017, the FASB issued ASU~~ ~~2017-09, “Compensation—Stock Compensation (Topic 718)”~~which provides clarity in order to reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. ~~The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted.~~ ~~The Company does not expect the adoption of this pronouncement to have a material impact on its~~ ~~Consolidated Financial Statements~~.

NoThere were no other new accounting pronouncements, issued or effective during the first ~~nine~~six months of fiscal ~~2017, have~~2023, 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 $2.3 million and $3.4 million at July 29, 2023 and January 28, 2023, respectively.

1011

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 redeem or expire. The cycle of earning and redeeming loyalty points is generally under one year in duration. The loyalty accrual, net of breakage, was $1.6 million at July 29, 2023 and at January 28, 2023.

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. Results for the second quarter and first six months of fiscal 2022 included operating results from the wholesale segment, which was discontinued in the first quarter of fiscal 2022. 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)	July 29, 2023			July 30, 2022			July 29, 2023				July 30, 2022
Store sales	$	97,445	69.6%	$	100,924	69.8%	$	184,742	69.6	%	$	189,203	69.6	%
Direct sales		42,598	30.4%		43,693	30.2%		80,743	30.4	%		82,687	30.4	%
Retail segment	$	140,043		$	144,617		$	265,485			$	271,890
Wholesale segment		—			17			—				399
Total sales	$	140,043		$	144,634		$	265,485			$	272,289

3. Debt

Credit Agreement with Citizens Bank, ~~of America,~~ N.A.

On October ~~30, 2014,~~28, 2021, the Company ~~amended its~~entered into a credit facility with Citizens Bank, ~~of America, N.A, effective October 29, 2014, by executing~~N.A. On April 20, 2023, the ~~Second~~Company entered into the First Amendment to Credit Agreement which provided for the ~~Sixth Amended and Restated Loan and Security Agreement~~replacement of the London Interbank Offering Rate (“LIBOR”) interest rate options with the secured overnight financing rate ("SOFR") based options (as amended, the ~~“Credit Facility”~~"Credit Facility").

The Credit Facility provides for a $125.0 million secured, asset-based credit facility with a maturity date of October 28, 2026. The maximum committed ~~borrowings~~borrowing of ~~$125 million. The Credit Facility includes, pursuant to an accordion feature, the ability to increase the Credit Facility by an additional $50~~$125.0 million ~~upon the request of the Company and the agreement of the lender(s) participating in the increase. The Credit Facility~~ includes a sublimit of ~~$20~~$20.0 million for commercial and standby letters of credit and a sublimit of up to ~~$15~~$15.0 million for ~~swingline~~swing line loans. The Company’s ability to borrow under the Credit Facility is determined using an availability formula based on eligible assets. ~~The maturity date~~

As of April 20, 2023, 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 ~~October 29, 2019.~~ 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, excluding (i) a first priority lien held by~~assets. If the ~~lenders of the Term Loan Facility on certain equipment of the Company described below and (ii) intellectual property.~~

At October 28, 2017, the Company had outstanding borrowings under the Credit Facility of $68.4 million, before unamortized debt issuance costs of $0.2 million. Outstanding standby letters of credit were $3.3 million and outstanding documentary letters of credit were $0.1 million. Unused excess availability at October 28, 2017 was $38.2 million. Average monthly borrowings outstanding under the Credit Facility during the first nine months of fiscal 2017 were $60.4 million, resulting in an average unused excess availability of approximately $43.3 million. The Company’s ability to borrow under the Credit Facility is determined using an availability formula based on eligible assets, with increased advance rates based on seasonality. Pursuant to the terms of the Credit Facility, if the Company’s excess availability under the Credit Facility ~~fails to be equal to or greater~~at any time is less than the greater of (i) ~~10%~~10% of the Revolving Loan Cap ~~(defined in the Credit Facility as the~~(the lesser of the aggregate revolving ~~credit~~ commitments ~~at such time~~ or the borrowing ~~base at the relevant measurement time)~~base) and (ii) ~~$7.5~~$7.5 million, then the Company ~~will be~~is required to maintain a minimum consolidated fixed charge coverage ratio of ~~1.0:~~1.0:1.0 ~~in order to pursue certain transactions, including but not limited to, stock repurchases, payment~~until such time as availability has exceeded the greater of ~~dividends~~(1) 10% of the Revolving Loan Cap and ~~business acquisitions.~~(2) $7.5 million for 30 consecutive days.

~~Borrowings made pursuant to~~At July 29, 2023, the Company had no borrowings outstanding under the Credit Facility will bear interest at a rate equal to the base rate (determined as the highest of (a) Bank of America N.A.’s prime rate, (b) the Federal Funds rate plus 0.50% or (c) the annual ICE-LIBOR rate (“LIBOR”) for the respective interest period) plus a varying percentage, based on the Company’s borrowing base, of 0.50%-0.75% for prime-based borrowings and ~~1.50%-1.75% for LIBOR-based borrowings.~~unused availability was $81.8 million. The Company ~~is also subject to~~had no borrowings during the first six months of fiscal 2023, resulting in an average unused ~~line fee~~excess availability of ~~0.25%.~~approximately $85.6 million. Outstanding standby letters of credit were $4.0 million and outstanding documentary letters were $1.2 million at July 29, 2023. At ~~October 28, 2017,~~July 29, 2023, the Company’s prime-based interest rate was ~~4.75%~~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. ~~At October 28, 2017,~~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 July 29, 2023, 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 July 29, 2023 and July 30, 2022:


	For the three months ended				For the six months ended
	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
(in thousands)
Operating lease cost	$	11,374	$	10,744	$	22,041	$	21,758
Variable lease costs(1)		3,293		3,119		6,458		6,273
Total lease costs	$	14,667	$	13,863	$	28,499	$	28,031

(1)

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

Supplemental cash flow and balance sheet information related to leases for the first six months ended July 29, 2023 and July 30, 2022 was as follows:



(dollars in thousands)	For the six months ended
Cash paid for amounts included in the measurement of lease liabilities:	July 29, 2023		July 30, 2022
Operating cash flows for operating leases (1)	$	24,513	$	28,281
Non-cash operating activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	23,533	$	14,167

Weighted average remaining lease term	4.4 yrs.		4.4 yrs.
Weighted average discount rate	6.41%		6.56%

(1)

The cash paid for the first six months of fiscal 2023 and fiscal 2022 included prepaid rent of $3.7 million and $3.6 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 July 29, 2023:


(in thousands)
2023 (remaining)	$	21,518
2024		47,118
2025		38,081
2026		25,440
2027		17,863
Thereafter		21,902
Total minimum lease payments	$	171,922
Less: amount of lease payments representing interest		22,288
Present value of future minimum lease payments	$	149,634
Less: current obligations under leases		37,727
Long-term lease obligations	$	111,907

As of July 29, 2023, the Company had approximately $64.0 million of its outstanding borrowings in LIBOR-based contracts with an interest rate of 2.70%. The LIBOR-based contracts expired on October 31, 2017. When a LIBOR-based borrowing expires, the borrowings revert back to prime-based borrowings unless the Company enters into a new LIBOR-based borrowing arrangement.

~~The fair value of the amount outstanding under the Credit Facility at October 28, 2017 approximated the carrying value.~~

~~Long-Term Debt~~

~~Components of long-term debt are as follows:~~

(in thousands)

October 28, 2017

January 28, 2017

Equipment financing notes

$
1,409

$
6,589

Term loan, due 2019

12,000

12,750

Less: unamortized debt issuance costs

(221
)

(337
)
Total long-term debt

13,188

19,002

Less: current portion of long-term debt

2,296

6,941

Long-term debt, net of current portion

$
10,892

$
12,061

~~Equipment Financing Loans~~

Pursuant to a Master Loan and Security Agreement with Banc of America Leasing & Capital, LLC, dated July 20, 2007 and amended on September 30, 2013 (the “Master Agreement”), the Company entered into twelve equipment security notes between September 2013 and June 2014 (in aggregate, the “Notes”), whereby the Company borrowed an aggregate of $26.4 million. The Notes are for a term of 48 months and accrue interest at fixed rates ranging from 3.07% to 3.50%. Principal and interest are paid monthly, in arrears.

The Notes are secured by a security interest in all of the Company’s rights, title and interest in and to certain equipment. The Company was subject to prepayment penalties through the second anniversary of each note. The Company is no longer subject to any

prepayment penalties. The Master Agreement includes default provisions that are customary for financings of this type and are similar and no more restrictive than the Company’s existing Credit Facility.

~~Term Loan~~

~~On October 30, 2014, the Company~~ entered into a ~~term loan agreement~~ten-year store lease that has not yet commenced with ~~respect to a new $15~~aggregated estimated future lease payments of approximately $3.0 million, senior secured term loan facility with Wells Fargo Bank, National Association as administrative and collateral agent (the “Term Loan Facility”). The effective date of the Term Loan Facility is October 29, 2014 (the “Effective Date”). The proceeds from the Term Loan Facility were used to repay borrowings under the Credit Facility.

~~The Term Loan Facility bears interest at a rate per annum equal to the greater of (a) 1.00% and (b) the one month LIBOR rate, plus 6.50%. Interest payments~~which are ~~payable on the first business day of each calendar month, and increase by 2% following the occurrence and during the continuance of an “event of default,” as defined~~not included in the ~~Term Loan Facility.~~above table. The ~~Term Loan Facility provides for quarterly principal payments on~~lease is expected to commence in the ~~first business day~~fall of each calendar quarter, which commenced the first business day of January 2015, in an aggregate principal amount equal to $250,000, subject to adjustment, with the balance payable on the termination date.2023.

The Term Loan Facility includes usual and customary mandatory prepayment provisions for transactions of this type that are triggered by the occurrence of certain events. In addition, the amounts advanced under the Term Loan Facility can be optionally prepaid in whole or part without penalty.

The Term Loan Facility matures on October 29, 2019. It is secured by a first priority lien on certain equipment of the Company, and a second priority lien on substantially all of the remaining assets of the Company, excluding intellectual property.

3.5. Long-Term Incentive Plans

The following is a summary of the Company’s ~~long-term incentive plans. Beginning on August 4, 2016, all~~Long-Term Incentive Plan (“LTIP”). All equity awards granted under long-term incentive plans are issued from the Company’s stockholder-approved 2016 Incentive Compensation Plan. ~~All prior awards were issued from the Company’s 2006 Incentive Compensation Plan, which expired on July 31, 2016.~~ See Note 4, 6, Stock-Based ~~Compensation.~~Compensation.

~~2016 Long-Term Incentive Wrap-Around Plan~~

The ~~2016 Long-Term Incentive Wrap-Around Plan (the “Wrap-Around Plan”), which was approved in the fourth quarter of fiscal 2014, was~~LTIPs are granted annually and each LTIP covers a supplemental performance-based incentive plan that was only effective if there was no vesting of the performance-based awards under the 2013-2016 LTIP and, as a result, all performance-based awards under that plan are forfeited. Thethree-year performance ~~targets under the 2013-2016 LTIP were not achieved at the end of fiscal 2016 and accordingly, the Wrap-Around Plan became effective.~~

The performance target under the Wrap-Around Plan consisted of two metrics, Sales and EBITDA, with threshold (50%), target (80%) and maximum (100%) payout levels. Each metric was weighted as 50% of the total performance target. However, in order for there to be any payout under either metric, EBITDA for fiscal 2016 had to be equal to or greater than the minimum threshold.

The Wrap-Around Plan also provided for an opportunity to receive additional shares of restricted stock if the performance targets were achieved and the Company’s closing stock price was $6.75 or higher on the day earnings for fiscal 2016 were publicly released, which was March 20, 2017. The stock did not achieve a minimum of $6.75, therefore, no additional award was earned.

Based on the operating results for fiscal 2016, the Company achieved a 50.6% payout of its EBITDA target. The minimum threshold for the Sales target was not achieved. Accordingly, subsequent to year-end, in the first quarter of fiscal 2017, the Compensation Committee of the Board of Directors approved awards totaling $2.3 million, with a grant date of March 20, 2017. On that date, the Company granted shares of restricted stock, with a fair value of approximately $1.0 million and cash awards totaling approximately $1.3 million. All awards vested on July 28, 2017.

~~On March 20, 2017, in conjunction with the grant of restricted stock awards, the Company reclassified $0.9 million of the liability accrual from “Accrued Expenses and Other Current Liabilities” to “Additional Paid-In Capital.” See the Consolidated Statement of Changes in Stockholders’ Equity.~~

~~New Long-Term Incentive Plan~~

With the 2013-2016 LTIP and Wrap-Around Plan expiring at the end of fiscal 2016, on March 15, 2016, the Compensation Committee approved the Destination XL Group, Inc. Long-Term Incentive Plan, as amended February 1, 2017 (the “new LTIP”).

Under the terms of the new LTIP, each year the Compensation Committee will establish performance targets which will cover a two-year performance period (each a “Performance Period”), thereby creating overlapping Performance Periods.period. Each participant in the ~~plan will be entitled to receive an award~~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 ~~long-term incentive program percentage, which is 100% for the Company’s Chief Executive Officer, 70% for its senior executives and 25% for other participants in the plan. Because~~LTIP percentage. Under each LTIP, 50% of the overlapping two-year Performance Periods, the Target Cash Value for any award is based on one year of annual salary, as opposed to two years, to avoid doubling an award payout in any given fiscal year.

~~For~~ each ~~participant, 50% of the~~participant’s Target Cash Value is subject to time-based vesting and ~~50%~~50% is subject to performance-based vesting. ~~The time-vested portion~~Awards for any achievement of performance targets are not granted until the ~~award will vest in two installments with 50% of the time-vested portion vesting on April 1 following the fiscal year end which marks the end of the applicable Performance Period~~performance targets are achieved and ~~50% vesting on April 1 the succeeding year. The performance-based vesting is~~then are subject to ~~the achievement of the performance target(s) for the applicable Performance Period. Performance awards granted will vest on~~additional vesting through August 31 following the end of the applicable ~~Performance Period.~~ performance period.

2020-2022 LTIP

~~For~~The performance targets for the ~~2016-2017 Performance Period,~~Company’s 2020-2022 LTIP were approved by the Compensation Committee ~~established two~~of the Board of Directors (the "Compensation Committee”) on June 11, 2020, and covered a three-year period performance ~~targets under~~period, which ended on January 28, 2023. The time-vested portion of the 2020-2022 LTIP ~~(the “2016-2017 LTIP”), each weighted 50%. The first target is EBITDA for fiscal 2017, defined as earnings before interest, taxes, depreciation and amortization, and~~vests in four annual installments, with the second target is “DXL Comparable Store Marginal Cash-Over-Cash Return”, defined as the aggregate of each comparable DXL store’s four-wall cash flow for fiscal 2017 divided by the aggregate capital investment, net of any tenant allowance, for each comparable DXL store. remaining installment vesting on April 1, 2024.

~~For the 2017-2018 Performance Period,~~On March 6, 2023, the Compensation Committee ~~established two performance targets under~~approved a grant of awards equal to $2.8 million for the ~~LTIP (the “2017-2018 LTIP”), each weighted 50%. The first target is Total Company Comparable Sales and will be measured based on a two-year stack, which is the sum~~achievement of the ~~Total Company Comparable Sales~~performance target for ~~fiscal 2017~~the 2020-2022 LTIP. The awards were granted on March 23, 2023, following completion of the audited financial statements, in a combination of 50% cash and ~~fiscal 2018. The second target is a Modified ROIC, which is defined as Operating Income divided by Invested Capital (Total Debt plus Stockholders’ Equity).~~

~~All awards granted under both the 2016-2017 LTIP and 2017-2018 LTIP were in~~50% restricted stock units ~~(RSUs)~~("RSUs"). All awards are subject to further vesting through August 31, 2023. In connection with the grant of 267,219 RSUs, the Company reclassified $1.1 million of its liability accrual from “Accrued expenses and other current liabilities” to “Additional paid-in capital”. See the Consolidated Statement of Changes in Stockholders’ Equity.

Active LTIPs

At July 29, 2023, the Company had three active LTIPs: the 2021-2023 LTIP, the 2022-2024 LTIP and the 2023-2025 LTIP. The time-based awards under the 2021-2023 LTIP were granted in a combination of 25% stock options and 75% cash, and the time-based awards under the 2022-2024 LTIP and the 2023-2025 LTIP were granted in a combination of 50% RSUs and 50% cash.

Performance targets for the 2021-2023 LTIP, 2022-2024 LTIP and the 2023-2025 LITP were established and approved by the Compensation Committee on March 8, 2021, April 9, 2022 and May 1, 2023, 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, 2024, August 31, 2025 and August 31, 2026, respectively. The time-based awards under the 2021-2023 LTIP, 2022-2024 LTIP and 2023-2025 LTIP vest in four equal installments through April 1, 2025, April 1, 2026 and April 1, 2027, respectively. Assuming that the Company achieves the performance ~~target~~targets at target levels and all ~~time-vested~~time-based awards vest, the compensation expense associated with the ~~2016-2017~~2021-2023 LTIP, 2022-2024 LTIP and ~~2017-2018~~2023-2025 LTIP is estimated to be approximately ~~$4.0~~$4.1 million, $4.7 million and ~~$4.2~~$4.9 million, respectively. Approximately half of the compensation expense for each ~~plan~~LTIP relates to the ~~time-vested RSUs,~~time-based awards, which are being expensed straight-line over ~~thirty-six~~49 months, based on the respective vesting dates. With respect to the performance-based component, RSUs will be granted at the end of the performance period if the performance targets are achieved. Through the end of the third quarter of fiscal 2017,48 months and 47 months, respectively.

At July 29, 2023, the Company had accrued ~~approximately $0.3~~$2.0 million ~~in compensation expense related to~~under the ~~potential payout of~~2021-2023 LTIP and $1.4 million under the 2022-2024 LTIP for the performance awards. At July 29, 2023, the Company had no accrual for the performance-based awards under the ~~2016-2017~~2023-2025 LTIP. ~~No accrual has been made for performance awards under the 2017-2018 LTIP.~~

4.6. Stock-Based Compensation

~~Through~~The Company has one active stock-based compensation plan: the ~~end of the second quarter of fiscal~~ 2016 ~~the Company’s 2006~~ Incentive Compensation Plan (as amended, ~~and restated effective as of August 1, 2013,~~ the “2006 Plan”) was the only stockholder-approved plan. The 2006 Plan expired on July 31, 2016. In the third quarter of fiscal 2016, at the Company’s 2016 Annual Meeting of Stockholders held August 4, 2016, the Company’s stockholders approved the adoption of the 2016 Incentive Compensation Plan (the “2016 Plan”).

~~2016 Plan~~

The initial share reserve under the 2016 Plan ~~including the rollover of 525,538 available shares under our 2006 Plan~~ was 5,725,538 shares of ~~our~~ common stock. 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. The Company’s shareholders approved amendments to increase the share reserve by 2,800,000 shares on August 8, 2019, an additional 1,740,000 shares on August 12, 2020, and an additional 4,855,000 on August 5, 2021. At July 29, 2023, the Company had 3,374,231 shares available under the 2016 Plan.

In accordance with the terms of the 2016 Plan, any shares outstanding under the previous 2006 Incentive Compensation Plan (the “2006 Plan”) at August 4, 2016 that subsequently terminate, expire or are ~~canceled~~cancelled for any reason without having been exercised or paid are added back and become available for issuance under the 2016 Plan, with ~~options and~~ stock ~~appreciation rights~~options being added back on a one-for-one basis and full-value awards being added back on a 1 to 1.9 basis. At ~~October 28, 2017, the Company had 6,437,283 shares available~~July 29, 2023, 90,487 stock options remained outstanding under the ~~2016~~2006 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%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 ~~Company’s 2006 Plan and 2016 Plan, on a combined basis, for the~~ first ~~nine~~six months of fiscal ~~2017:~~2023:


	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		520,008			435,568		240,000			—			1,195,576		$	2.51
Shares granted		547,294			—		—			11,924			559,218		$	4.79
Shares vested and/or issued		(251,053	)		—		—			(11,924	)		(262,977	)	$	2.76
Shares expired		—			—		(240,000	)		—			(240,000	)	$	1.07
Shares forfeited		(50,612	)		—		—			—			(50,612	)	$	7.35
Outstanding non-vested shares at end of quarter		765,637			435,568		—			—			1,201,205		$	3.60

Restricted shares

Restricted Stock Units ⁽¹⁾

Deferred shares ⁽²⁾

Fully-vested
shares ⁽³⁾

Total number of shares

Weighted-average
grant-date
fair value ⁽⁴⁾

Shares

Outstanding non-vested shares at beginning of year

856,332

369,828

64,876

—

1,291,036

$
5.09

Shares granted

484,558

804,701

74,968

66,325

1,430,552

$
2.68

Shares vested/issued

(430,336
)

(27,697
)

(44,599
)

(66,325
)

(568,957
)

$
2.66

Shares canceled

(857,221
)

(37,649
)

—

—

(894,870
)

$
4.94

Outstanding non-vested shares at end of quarter

53,333

1,109,183

95,245

—

1,257,761

$
3.52

(1)

During the first six months of fiscal 2023, the Company granted RSUs for the achievement of performance metrics under the 2020-2022 LTIP that are subject to additional vesting through August 31, 2023 and time-based RSUs under its 2023-2025 LTIP. See Note 5, Long-Term Incentive Plans. As a result of net share settlements, of the 251,053 RSUs that vested, only 169,825 shares of common stock were issued.

(2)

The outstanding deferred shares will be issued upon the director’s separation from service.

(3)

Represented the remaining performance share units (“PSUs”) granted to Mr. Kanter in February 2019 which expired unvested on April 1, 2023.

(4)

Represented compensation, with a fair value of $60,746, 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

Stock Options

Outstanding options at beginning of year

3,556,434

$
0.83

7.4 years

$
23,238,665

Options granted

1,317

$
5.91

—

—

Options exercised

(165,878
)

$
1.60

567,537

Options expired and canceled

(31,007
)

$
3.95

—

49,037

Outstanding options at end of quarter

3,360,866

$
0.76

6.9 years

$
14,904,397

Options exercisable at end of quarter

2,102,251

$
0.81

6.8 years

$
9,216,556

~~(1)~~

Restricted Stock Units (“RSUs”) were primarily granted in connection with the 2017-2018 LTIP. The RSUs will vest in two tranches with the first 50% vesting on April 1, 2019 and the second 50% vesting on April 1, 2020.

~~(2)~~

The 74,968 shares of deferred stock, with a fair value of $182,852, represent compensation to certain directors in lieu of cash, in accordance with their irrevocable elections. The shares of deferred stock will vest three years from the date of grant or at separation of service, based on the irrevocable election of each director.

~~(3)~~

During the first nine months of fiscal 2017, the Company granted 66,325 shares of stock, with a fair value of approximately $166,139, to certain directors as compensation in lieu of cash, in accordance with their irrevocable elections. Directors are required to elect 50% of their quarterly retainer in equity. Any shares in excess of the minimum required election are issued from the Company’s Third Amendment to the Second Amended and Restated Non-Employee Director Compensation Plan (“Non-Employee Director Compensation Plan”).

~~(4)~~

~~The fair value of a restricted share, deferred share and fully-vested share is equal to the Company’s closing stock price on the day immediately preceding the date of grant.~~

Number of
shares

Weighted-average
exercise price
per option

Weighted-average
remaining
contractual term

Aggregate
intrinsic value

Stock Options

Outstanding options at beginning of year

2,524,546

$
4.98

$
11,286

Options granted

30,000

$
1.85

Options canceled

(1,259,579
)

$
5.05

Options exercised

—

—

Outstanding options at end of quarter

1,294,967

$
4.82

4.8 years

$
3,000

Options exercisable at end of quarter

1,294,967

$
4.82

4.8 years

~~Valuation Assumptions~~

For the first ~~nine~~six months of fiscal ~~2017,~~2023, the Company granted ~~30,000~~ stock options ~~484,558~~to purchase an aggregate of 1,317 shares of common stock, 547,294restricted stock ~~804,701 RSUs~~units and ~~74,968 shares of deferred stock.~~11,924 fully-vested shares. For the first ~~nine~~six months of fiscal ~~2016,~~2022, the Company granted ~~8,522~~ stock options ~~3,834~~to purchase an aggregate of 3,640 shares of common stock, 496,467restricted stock ~~431,270 RSUs~~units and ~~23,570 shares~~17,532 fully-vested shares.

Subsequent to the end of ~~deferred stock.~~

~~Unless otherwise specified by~~ the ~~Compensation Committee, RSUs, restricted stock~~second quarter of fiscal 2023, on August 11, 2023, in connection with the extension of Mr. Kanter's employment agreement, the Company granted 573,000 PSUs to Mr. Kanter. The award consists of nine tranches, with the first tranche vesting if and ~~deferred stock are valued using~~when the30-day volume-weighted closing price of the ~~Company’s~~Company's common stock is equal to or greater than $6.50 per share. Each subsequent tranche will vest in $0.25 increments with the ninth tranche vesting when the 30-day volume-weighted closing price of the Company common stock 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 ~~the day immediately preceding the date of grant.~~August 11, 2026.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The following assumptions were used for grants for the first nine months of fiscal 2017 and fiscal 2016:

October 28, 2017

October 29, 2016

Expected volatility

49.9
%

39.3
%
Risk-free interest rate

1.44
%

0.78%

Expected life

3.0 yrs

2.0 yrs

Dividend rate

—

—

Non-Employee Director Compensation Plan

The Company granted ~~29,425~~28,349 shares of common stock, with a fair value of approximately ~~$71,454,~~$159,357, to certain of its non-employee directors as compensation in lieu of cash in the first ~~nine~~six months of fiscal ~~2017.~~2023. 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 ~~$1.3 million and $1.1~~$0.8 million for the first ~~nine~~six months of both fiscal ~~2017~~2023 and fiscal ~~2016, respectively.~~2022. The total compensation cost related to time-vested stock options ~~restricted stock~~ and RSU awards not yet recognized as of ~~October 28, 2017~~July 29, 2023 was approximately ~~$2.4~~$2.5 million, net of estimated forfeitures, which will be expensed over a weighted average remaining life of 2234 months.

5.7. 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
	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
(in thousands)
Common stock outstanding:
Basic weighted average common shares outstanding		61,977		62,688		62,334		63,384
Common stock equivalents – stock options, restricted stock units and deferred stock		3,472		3,982		3,495		4,135
Diluted weighted average common shares outstanding		65,449		66,670		65,829		67,519

For the three months ended

For the nine months ended

October 28, 2017

October 29, 2016

October 28, 2017

October 29, 2016

(in thousands)

Common Stock Outstanding:

Basic weighted average common shares outstanding

48,607

49,552

48,966

49,532

Common stock equivalents – stock options and restricted stock ⁽¹⁾

—

—

—

—

Diluted weighted average common shares outstanding

48,607

49,552

48,966

49,532

~~(1)~~

Common stock equivalents of 92 shares and 67 shares for the three and nine months ended October 28, 2017, respectively, and 483 shares and 402 shares for the three and nine months ended October 29, 2016, respectively, were excluded due to the net loss in all periods.

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 of the unearned compensation associated with ~~either~~ stock options or restricted stock units ~~restricted or deferred stock~~ had an anti-dilutive effect.

For the three months ended

For the nine months ended

October 28, 2017

October 29, 2016

October 28, 2017

October 29, 2016

(in thousands, except exercise prices)

Stock Options (time-vested)

1,295

1,232

1,295

1,232

Restricted Stock Units (time-vested)

1,106

3

1,109

409

Restricted and Deferred Stock

54

2

78

10

Range of exercise prices of such options

$1.85 - $7.02

$4.49 - $7.52

$1.85- $7.02

$4.49 - $7.52


	For the three months ended				For the six months ended
	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
(in thousands, except exercise prices)
Stock options		100		306		100		306
Restricted stock units		179		490		24		488
Range of exercise prices of such options	$4.48-$6.59		$4.48 - $5.50		$4.48 - $6.59		$4.48 - $5.50

The above options, which were outstanding at ~~October 28, 2017,~~July 29, 2023, expire from ~~June 8, 2018~~January 29, 2024 to ~~August 31, 2027~~ March 20, 2033.

There were no performance-based awards outstanding at October 28, 2017. For the third quarter and first nine months of fiscal 2016, 893,621 shares of unvested performance-based restricted stock and 1,125,317 performance-based stock options were excluded from the Company’s computation of basic and diluted earnings per share. All outstanding performance-based awards expired unvested in March 2017 as a result of the Company’s not achieving performance targets in fiscal 2016.

~~Shares of unvested time-based restricted~~Deferred stock of ~~53,333 at October 28, 2017 and 356,227~~435,568 shares at ~~October~~July 29, ~~2016 were~~2023 and at July 30, 2022 was excluded from the computation of basic earnings per ~~share and will continue to be excluded until such shares vest. See Note 3, Long-Term Incentive Plans, for a discussion~~share. Shares of ~~the Company’s LTIP plans and equity awards.~~

~~All 53,333 shares of restricted~~deferred stock ~~outstanding at October 28, 2017~~ are not considered issued and ~~outstanding. Each share of restricted stock has all~~outstanding until the vesting date of the rights of a holder of the Company’s common stock, including, but not limited to, the right to vote and the right to receive dividends, which rights are forfeited if the restricted stock is forfeited.deferral period.

6.8. Stock Repurchase ~~Plan~~Program

On March ~~17, 2017,~~14, 2023, the ~~Company’s~~Company's Board of Directors approved a stock repurchase ~~plan.~~program, effective March 16, 2023. Under the ~~stock repurchase plan,~~program, the Company ~~may purchase~~is authorized to repurchase up to ~~$12.0~~$15.0 million of its common stock, including excise tax, through open market and privately negotiated ~~transactions during fiscal 2017.~~transactions. The timing and the amount of any repurchases of common stock will be determined based on the Company’s evaluation of market conditions and other factors. The stock repurchase program ~~commenced in the first quarter of fiscal 2017 and~~ will expire on ~~February 3, 2018,~~March 16, 2024, but may be suspended, terminated or modified at any time for any reason. The Company expects to finance the repurchases from ~~operating funds and/or periodic borrowings on its Credit Facility. Any repurchased common stock will be held as treasury stock and will be recorded on a trade-date basis.~~cash generated from operations.

~~Through October 28, 2017,~~During the Company purchased 1,878,434 shares of common stock at an average price of $2.49 per share. Approximately $7.3 million remains available under the stock repurchase plan. There were no stock repurchases during the thirdsecond quarter of fiscal ~~2017.~~2023, the Company repurchased 2.2 million shares at an aggregate cost of $10.8 million, excluding excise taxes. 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. This liability is partially offset by a 1% credit permitted under the rules for the fair value of shares issued by the Company. For the six months ended July 29, 2023, the Company has accrued $0.1 million for the payment of excise taxes.

7.9. Income Taxes

~~At October 28, 2017,~~In the second quarter of fiscal 2022, the Company ~~had total~~determined that it was more likely than not that it would be able to realize the benefits of substantially all of its deferred tax assets ~~of approximately $84.4 million, total deferred tax liabilities of $12.6 million and a corresponding valuation allowance of $72.0 million.~~

Inin the ~~fourth~~United States. Accordingly, in the second quarter of fiscal ~~2013,~~2022, the Company ~~entered into~~released substantially all of its deferred tax valuation allowance. As a ~~three-year cumulative loss position and based on forecasts at that time,~~result of the valuation allowance being released, the Company ~~expected~~returned to a normal tax provision for fiscal 2023.

For the ~~cumulative three-year~~second quarter and first six months of fiscal 2023, the Company’s effective tax rate was 26.4% and 26.5%, respectively.

During the second quarter and first six months of fiscal 2022, the Company recorded an income tax benefit of $35.1 million and $35.0 million, respectively. Excluding the release of $35.5 million in valuation allowance, the Company recorded income tax expense of $408,000 and $511,000, respectively, primarily related to income tax in states where NOL usage was statutorily limited.

The Company made tax payments of $0.3 million for the first six months of fiscal 2023, and no tax payments for the first six months of fiscal 2022.

10. 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.

On May 3, 2023, the Audit Committee approved the termination of the Pension Plan, which was then approved and ratified by the Board of Directors on May 4, 2023 with a final termination approval on June 8, 2023. On July 1, 2023, the Company completed a partial settlement through the purchase of nonparticipating annuities. The Company made a cash contribution during the first six months of fiscal 2023 of $1.6 million. The remaining pension liability, net of plan assets, at July 29, 2023 is approximately $0.2 million. The remaining plan assets are invested in short-term investments and cash equivalents.

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 expects to ~~increase as of~~settle the remaining obligation and terminate the Pension Plan by the end of fiscal ~~2014. Management determined that this represented significant negative evidence~~2023, at February 1, 2014. While the Company has projected it will return to profitability, generate taxable income and ultimately emerge from a three-year cumulative loss, based on a consideration of all positive and negative evidence as of February 1, 2014, the Company established a full allowance against its net deferred tax assets. Based on the Company’s forecast for fiscal 2017, the Company believes that a full allowance remains appropriate at this time.

As of October 28, 2017, the Company had net operating loss carryforwards of $155.9 million for federal income tax purposes and $88.8 million for state income tax purposes that are available to offset future taxable income through fiscal year 2037. Additionally, the Company has alternative minimum tax credit carryforwards of $2.3 million, which are available to further reduce income taxes over an indefinite period. Additionally, the Company has $2.6 million of net operating loss for tax purposes related to the Company’s operations in Canada.

The utilization of net operating loss carryforwards and the realization of tax benefits in future years depends predominantly upon having taxable income. Under the provisions of the Internal Revenue Code, certain substantial changes in the Company’s ownership may result in a limitation on the amount of net operating loss carryforwards and tax credit carryforwards which may be used in future years.

The Company’s tax provision for the first nine months of fiscal 2017 represented current state margin tax. For the first nine months of fiscal 2016 the tax provision primarily represents current state margin tax and foreign income tax.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The charge for taxation is based on the results for the year as adjusted for items that are non-assessable or disallowed. The charge is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Pursuant to Topic 740, “~~Income Taxes~~”,time the Company will recognize the ~~benefit from a tax position only if it~~remaining unrealized loss that is ~~more likely than not that~~part of "Accumulated Other Comprehensive Loss."

Net periodic pension cost for the ~~position would be sustained upon audit based solely on the technical merits of the tax position. The unrecognized tax benefit at October~~three and six months ended July 29, 2023 and July 30, 2022 was as follows:


	For the three months ended						For the six months ended
	July 29, 2023			July 30. 2022			July 29, 2023			July 30. 2022
Net periodic pension cost:	(in thousands)
Interest cost on projected benefit obligation	$	129		$	102		$	261		$	207
Expected return on plan assets		(160	)		(178	)		(300	)		(362	)
Amortization of unrecognized loss		65			68			131			135
Loss on pension plan termination		4,174			—			4,174			—
Net periodic pension cost (income)	$	4,208		$	(8	)	$	4,266		$	(20	)

Assumptions used were as follows:


	For the six months ended
	July 29, 2023			July 30. 2022
Discount rate		5.2	%		3.0	%
Expected return on plan assets		5.1	%		6.5	%

11. Fair Value Measurement

At July 29, 2023 and January 28, 2017 was $3.0 million. This amount is directly associated with a prior year tax position related to exiting the Company’s direct business in Europe. The amount of unrecognized tax benefit has been presented as a reduction in the reported amounts of its federal and state net operating loss carryforwards. It is the Company’s policy to record interest and penalties on unrecognized tax benefits as income taxes; however, no penalties or interest have been accrued on this liability because the carryforwards have not yet been utilized.

The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company has concluded all U.S. federal income tax matters for years through fiscal 2001, with remaining fiscal years subject to income tax examination by federal tax authorities.

~~8. Related Parties~~

~~Oliver Walsh was elected as a director at the Company’s Annual Meeting of Stockholders on August 3, 2017. On August 17, 2017, Mr. Walsh entered into a temporary consulting agreement with~~2023, the Company ~~to serve~~held U.S. treasury bills which were classified as ~~the Company’s Interim Chief Marketing Officer through the Fall~~held-to maturity and ~~Holiday selling seasons, while the Company searches for a new Chief Marketing Officer. Pursuant to the terms of the temporary consulting agreement, Mr. Walsh is entitled to receive compensation~~carried at a rate of $7,000 per week plus reimbursement for all business and travel expenses. Because of the related party relationship, the temporary consulting agreement was approved by the Company’s Audit Committee. Through the end of the third quarter of fiscal 2017, Mr. Walsh received total compensation pursuant to the temporary consulting agreement, excluding reimbursement of expenses, of $70,000.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 July 29, 2023:
Cash equivalents:
U.S. Treasury Bills		5,058		5,061		—		—
Short-term investments:
U.S. Treasury Bills		43,536		43,513		—		—

At January 28, 2023
Cash equivalents:
U.S. Treasury Bills		29,076		29,071		—		—

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

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 ~~cash flows, gross profit margins, merchandise margins, marketing costs, selling, general~~our long-range strategic growth plan and ~~administrative expenses, store counts, inventory levels, capital expenditures, borrowings, interest costs, sales and earnings expectations for fiscal 2017 and beyond,~~our ability to achieve accelerated growth in the future; the expected impact of inventory management improvements on inventory levels and working capital in fiscal 2017, the expected impact of investments in marketing on 2017 sales and longer term impact on customer acquisition andour strategic initiatives, including with respect to raising brand awareness, store development and ~~the anticipated pace~~future alliances and ~~number~~collaborations; expected marketing costs, gross margin rates and expected capital expenditures in 2023; expected timing of stock repurchases under our board-approved stock repurchase program; and expected changes in our store ~~openings~~portfolio and ~~closings in fiscal 2017 and anticipated impact of expanding into Canada~~long-term plans for new or ~~future growth.~~relocated stores. 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~~Consolidated Financial Statements and notes to those statements included elsewhere in this Quarterly Report and our audited ~~consolidated financial statements~~Consolidated Financial Statements for the year ended January 28, ~~2017,~~2023, included in our Annual Report on Form 10-K for the year ended January 28, ~~2017,~~2023, as filed with the Securities and Exchange Commission on March ~~20, 2017~~16, 2023 (our “Fiscal ~~2016~~2022 Annual Report”).

Numerous factors could cause our actual results to differ materially from such forward-looking statements. ~~We encourage readers to refer to the “Risk Factors” section in Part I, Item 1A of our Fiscal 2016 Annual Report, that~~This discussion sets forth certain risks and uncertainties that may have an impact on future results and direction of our Company, including, without ~~limitations,~~limitation, risks ~~relating~~related to inflationary pressures, changes in consumer spending in response to economic factors, increased labor costs and potential labor shortages, the ~~execution~~continuing economic impact of ~~our corporate strategy, and~~the Russian invasion of Ukraine, our ability to ~~grow~~manage appropriate inventory levels, our ~~market share,~~ability to successfully execute on our strategic initiatives, our ability to predict customer tastes and fashion trends, our ability to grow market share, our ability to forecast sales growth trends ~~maintain and build our brand awareness~~ and compete ~~successfully~~ in the market, and the other risks and uncertainties set forth in the “Risk Factors” section in Part I, Item 1A of our ~~market.~~Fiscal 2022 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.

Destination XL Group, Inc., together with our consolidated subsidiaries (the “Company”), is the largest specialty retailer of big &and tall men’s ~~apparel~~clothing with retail and direct operations in the United ~~States, Canada and London, England.~~States. We operate under the trade names of Destination XL®, DXL®, DXL Outlets, Casual Male XL®,and Casual Male XL ~~Outlets, Rochester Clothing, ShoesXL~~^® ~~and LivingXL~~^®.Outlets. At ~~October 28, 2017,~~July 29, 2023, we operated ~~211~~219 Destination XL stores, 1416 DXL outlet stores, 8127 Casual Male XL retail stores, 3319 Casual Male XL outlet stores and ~~5 Rochester Clothing stores. Our~~a digital business, including an e-commerce site ~~DestinationXL.com, supports our stores, brands~~at dxl.com and ~~product extensions.~~ 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 3, ~~2018~~2024, January 28, 2023 and January ~~28, 2017~~29, 2022 as "fiscal 2023", “fiscal ~~2017”~~2022,” and “fiscal ~~2016,”~~2021” respectively. Fiscal ~~2017~~2023 is a 53-week period and fiscal ~~2016 was a~~2022 and fiscal 2021 were 52-week ~~period.~~ periods.

We ~~report~~currently have two principal operating segments: our ~~operations as one reportable segment, Big & Tall Men’s Apparel.~~stores and direct business. We consider our ~~retail~~stores and direct ~~(e-commerce) businesses, especially in our growing omni-channel environment,~~business segments to be similar in terms of economic characteristics, production processes and operations, and have therefore aggregated them into ~~a single reporting segment.~~one reportable segment, retail segment, consistent with our omni-channel business approach.

Total comparable sales include our retail stores that have been open for at least 13 months and our direct business. Stores that have been remodeled or re-located during the period are also included in our determination of comparable sales. Stores that have been expanded by more than 25% are considered non-comparable for the first 13 months. If a store becomes a clearance center, it is also removed from the calculation of comparable sales. 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.

As we disclosed at the end of fiscal 2016, with over 200 DXL stores open, we have transitioned to one comparable sales figure for the Company which includes stores and our e-commerce business. We no longer provide comparable store sales on a discrete basis for our DXL format stores.

~~In addition, our~~Our customer’s shopping experience continues to evolve across multiple channels, and we are continually ~~changing~~adapting to meet ~~his~~the guest’s needs. ~~As part of our omni-channel initiatives, the~~The majority of our ~~retail~~ stores have the capability of fulfilling online orders if merchandise is not available in the warehouse. As a result, we continue to see more transactions that begin online but 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 ~~store. Because this omni-channel approach to retailing is changing the boundaries of where~~ a ~~sale originates~~store and where a sale is ultimately settled, we do not report comparable sales separately for our retail and e-commerce businesses. However, as we invest in building our e-commerce platform, bringing a heightened digital focus to our Company, additional disclosure on our e-commerce growth as it relates to our current initiatives is important. Beginning in the second quarter of fiscal 2017, weat curbside. We define store sales as sales that originate and are fulfilled directly at the store level. ~~E-commerce~~Digital commerce sales, which we also refer to as direct sales, are defined as sales that originate online, ~~including those initiated online~~whether through our website, at the store ~~level. This reclassification on how we define~~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 re-located 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 ~~sale~~is temporarily closed for more than 7 days, it is removed from ~~an e-commerce sale had no effect on~~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 ~~previous disclosure or how we report total Company~~calculation of comparable ~~sales.~~sales is not necessarily comparable to similarly titled measures reported by other retailers.

The following is a summary of results for the third quarter and first nine months of fiscal 2017 as compared to the prior year’s third quarter and first nine months, including EBITDA, which is a non-GAAP measure. Please see “Non-GAAP Financial Measures” below for a reconciliation of Net Loss to EBITDA.

Our comparable sales for the ~~third~~second quarter ~~were below expectations and were negatively impacted by~~of fiscal 2023 decreased 1.4%, our first decrease since the ~~delayed arrival~~fourth quarter of ~~cold weather~~fiscal 2020, as we compared against a strong prior year second quarter. During the second quarter, we saw a decrease in ~~the Northeast and Hurricanes Irma and Harvey. We believe that our customer is~~dollars per transaction, a ~~need-based shopper and the onset of cold weather is typically when he comes to shop. Comparable sales for our DXL stores in the Northeast region trailed our stores in the rest~~reflection of the ~~country by approximately 400 basis points. We estimate that~~continuing economic headwinds. However, traffic improved as the ~~negative impact~~quarter progressed, resulting in a positive comp of 1.0% in July. Despite the pressure on top-line growth, we continue to proactively manage our inventory and operating costs, which has resulted in a strong adjusted EBITDA margin (a non-GAAP measure) for the quarter of 16.4%. While we saw improvement at the end of the ~~comp sales of our Northeast stores on our total comparable sales of (0.1%) for the third~~second quarter, was approximately 90 basis points. Additionally, from a merchandising category perspective, our cold weather categories trended behind the remainder of our merchandise assortment by over 10% for the third quarter and over 20% for the month of October. With the cold weather arriving intraffic has slowed during the first few weeks of the ~~fourth~~third quarter, ~~we are beginning to see an improvement in~~up against a strong prior year, with comparable sales ~~performance.~~ trending down in the mid-single digits.

In ~~addition to~~ the unseasonably warm weather during the quarter, we also had 34 stores that were closed for at least one day, with the majority closed three to four days, as a result of Hurricanes Irma and Harvey. We estimate that the combined impact from both storms on our comparable sales for the third quarter was approximately 50 basis points.

Despite, the warm weather and hurricanes, which contributed to a decrease in store traffic, we are pleased with our sales productivity in our stores, with average dollars per transactions, units per transaction and conversion all increasing over the prior year. We remain committed to driving traffic to our stores and website and building brand awareness as we head into the fourthsecond quarter of fiscal ~~2017. We are pleased~~2023, our Board approved the termination of our frozen, noncontributory pension plan. Given the current high interest rates, we saw this as an opportunistic use of excess cash to ~~have launched~~eliminate this variable liability. In connection with that decision, during the second quarter, we completed a partial settlement of our ~~new Holiday advertising campaign and believe our integrated social, digital and media marketing plan, which we discuss below, will drive traffic to our stores and website.~~

~~During~~pension obligations through the ~~third~~purchase of nonparticipating annuities. As a result, during the second quarter of fiscal ~~2017, as part~~2023, we recognized a loss of ~~our ongoing inventory initiatives, we took an aggressive approach~~$4.2 million, representing a pro-rata portion of the unrealized loss in Accumulated Other Comprehensive Loss. We expect to ~~moving some~~complete the termination of ~~our traditional slower-moving categories, which resulted in increased markdowns for~~ the ~~quarter and decreased merchandise margins from a year ago of approximately 120 basis points. On a comparative basis with~~pension plan by the end of the third quarter of the prior year, we have reduced inventories by approximately $8.3 million, or 6.5% at October 28, 2017, with minimal impact to our merchandise margin which, on a year-to-date basis, has decreased by only 40 basis points compared to the prior year. We expect our merchandise margins to return to a more normalized level in the fourth quarter due to fewer merchandise markdowns. This initiative has enabled us to reduce our inventory thereby improving our working capital and free cash flow.fiscal 2023.

~~Our net loss~~Net income for the ~~third~~second quarter of fiscal ~~2017~~2023 was ~~$(5.7)~~$11.6 million, or ~~$(0.12)~~$0.18 per diluted share, as compared to a net ~~loss~~income of ~~$(4.5)~~$56.9 million, or ~~$(0.09)~~$0.85 per diluted share, for the ~~third~~second quarter of fiscal ~~2016. For~~2022. Net income for the ~~first nine months~~second quarter of fiscal ~~2017,~~2022 included the release of substantially all of the valuation allowance against our deferred tax assets. Assuming a normalized tax rate and adjusting for the loss from the pension plan termination and asset impairments (gains), if any, on a non-GAAP basis, net ~~loss~~income for the second quarter of fiscal 2023 was ~~$(15.5)~~$14.8 million, or ~~$(0.32)~~$0.23 per diluted share, as compared to aadjusted net ~~loss~~income of ~~$(4.0)~~$16.1 million, or ~~$(0.08)~~$0.24 per diluted share, for the ~~prior year~~second quarter of fiscal 2022.

~~period. Included in net loss for~~For the first ~~nine~~six months of fiscal ~~2017~~2023, net income was ~~an impairment charge of approximately $1.7~~$18.6 million, or ~~$0.03~~$0.28 per diluted share, as compared to net income of $70.3 million, or $1.04 per diluted share, for the ~~write-down~~first six months of ~~certain store assets and an increase~~fiscal 2022. Adjusted net income for the first six months of ~~approximately $4.2~~fiscal 2023, was $21.8 million, or ~~$0.09~~$0.33 per diluted share, ~~in advertising costs.~~

Inas compared to net income of $25.8 million, or $0.38 per diluted share, for the first ~~nine~~six months of fiscal ~~2017,~~2022.

As of July 29, 2023, we ~~opened~~had cash and investments of $62.8 million as compared to $22.2 million at July 30, 2022. As of July 29, 2023, we had no debt outstanding, unused excess availability of $81.8 million, and no borrowings during the quarter. Our inventory was in a ~~total~~healthy position at quarter-end, down 9.5% as compared to July 30, 2022. Inventory turnover, as of ~~20 stores, which includes two DXL retail stores in Ontario, Canada. These two stores mark~~July 29, 2023, has improved over 28% from fiscal 2019 levels. With cash on hand, no outstanding debt and full availability under our ~~first Company-operated DXL stores located outside of the United States. We believe that Canada provides a strategic growth opportunity for our DXL brand.~~ In addition, for fiscal 2017 we expect to close approximately 19 Casual Male XL stores and 3 Casual Male XL outlet stores, the majority of which are in connection with the opening of the DXL retail and outlet stores in the same geographic market. Of the 114 Casual Male XL stores in operation, 112 are generating positive free cash flow.

~~As we discussed last quarter,~~credit facility, we are ~~committed~~continuing to ~~improving brand awareness, driving traffic~~pursue our strategic initiatives this year to grow our stores and growing our e-commerce business through a robust investment in both our traditional and digital marketing programs. Our new marketing campaign, “Time to XL,” launched on social media and on our website on November 7, 2017. Our new creative ad will begin to air on television starting November 25, 2017 and will run through the Christmas holiday. In addition to our digital and media advertising, we will also be sponsoring the Frisco Bowl college football game on December 20, 2017. Our new campaign is centered on changing the conversation around Men’s XL apparel and celebrating the style of our customer base. The campaign features prominent brand ambassadors, including 10-time MLB All-Star David Ortiz, producer and artist DJ Khaled, singer and songwriter Sundance, NHL Stanley Cup winner Hal Gill and fashion blogger Kelvin Davis; five celebrities with larger-than-life personalities, each with his own sense of #XLstyle. We want the XL community to know who we are and that we “XL” at service, selection, comfort and fit. We are confident that this campaign will signal a new chapter in the DXL store and we are hopeful that the campaign will drive brand awareness and new customers to our DXL brand. business.

As discussed ~~more fully~~ below, ~~under “Liquidity and Capital Resources,” in March 2017 our Board of Directors approved a stock repurchase plan, pursuant to which we may purchase up to $12.0 million of our outstanding common stock~~ during ~~fiscal 2017. During~~ the ~~first nine months~~second quarter of fiscal ~~2017,~~2023, we repurchased ~~approximately 1.9~~2.2 million shares at a total cost, including fees of ~~approximately $4.7 million. There were no stock repurchases during~~$10.8 million, within the ~~third quarter~~Board's authorized $15.0 million share repurchase.

Our Company is in a fundamentally different position today than it was pre-pandemic. We have achieved a heightened level of operational excellence, recapitalized our balance sheet to provide a greater level of financial flexibility, made investments in our technical capabilities, and upgraded our leadership team. As we look beyond fiscal ~~2017.~~

~~In fiscal 2016,~~2023, we ~~began~~are excited about our ~~inventory optimization project in an effort~~long-term growth plan. Our goal is to ~~improve inventory receipt flow and procurement, tightening controls~~meaningfully accelerate the trajectory of the Company over the ~~number~~next three to five years, by focusing on three specific growth initiatives: brand-building, store development, and alliances/collaborations.

Marketing and Brand-Building: We believe one of ~~weeks~~our greatest opportunities is to address our overall brand awareness levels. Over the past few years, we have transformed our brand position and differentiated ourselves in terms of ~~supply~~experience, fit, and ~~refining~~assortment. However, many of our ~~in-stock positions by sku level.~~target consumers simply do not know DXL. We now have the financial flexibility, informed consumer research, and the right messaging to invest in building our brand. For the past several years, our advertising-to-sales ratio has been between 5.0% to 6.0%. Our plan is to increase our advertising-to-sales ratio over the next few years. We expect ~~these changes~~over the next few years to ~~result~~invest more in brand building and top-of-funnel marketing to grow our customer file.

Store Development: As we have stated before, we believe there are at least 50 net new store opportunities. New store development addresses another factor critical to our growth. While we have stores in every major metro market across the United States, there are voids in certain markets where big & tall consumers are not being serviced by a ~~more optimized inventory structure~~DXL. In our most recent research across 2,500 big + tall men, both customers and non-customers, 49% self-reported that they do not shop with us because a store is not near them, while 37% self-reported that they do not shop with us because a store location is not convenient. This year, we expect to open our ~~inventory at the end~~first three new stores since fiscal 2018, with plans to open another 10 new stores in fiscal 2024 and 15 to 20 new stores in fiscal 2025.

Alliances/Collaborations: We strongly believe that our "fit authority" is one of ~~fiscal 2017~~our biggest assets and that we can develop successful collaborations with other brands, who are interested in finding a cost-effective way to expand their offering to include big & tall men's apparel. In September, we will be launching Untuckit, Fit by DXL in partnership with Untuckit to be ~~$12.0~~sold exclusively by DXL. In addition, we also are adding Hugo Boss and Faherty to ~~$15.0 million less than fiscal 2016. This reduction~~our list of national brands this Fall, each with a level of merchandise exclusivity that cannot be found elsewhere. We believe these examples are only the beginning, and we are working in ~~inventory is expected~~real-time on additional retail brand alliances. Lastly, we also launched our new fit technology and size mapping in two of our stores, with plans to ~~improve our working capital position and partially reduce our debt in fiscal 2017. At~~expand to an additional 10 stores by the end of the ~~third quarter of fiscal 2017, we were ahead of plan having reduced inventory levels~~month.

The following table presents sales by ~~$8.3 million, or a decrease of 6.5%, as compared to~~segment for the ~~end of the third quarter last year. We do not believe these changes have jeopardized~~three and six months ended July 29, 2023 and July 30, 2022:

Total sales ~~from out-of-stock positions in either our retail stores or in our direct business.~~

~~As a result of our sales falling below expectations due in part to the delay of cold weather, we are revising our guidance. In~~for the second quarter of fiscal ~~2017, we increased our marketing expense for fiscal 2017~~2023 were $140.0 million, as compared to ~~$29.0~~$144.6 million ~~to help drive brand awareness, store traffic and our digital presence. This is an increase of approximately $10.8 million from fiscal 2016. While we expect this will benefit sales~~ in the ~~fourth~~second quarter of fiscal 2017, we strongly believe that this investment in marketing and customer acquisition was important for our long-term growth. We currently expect to open 20 DXL retail stores and 1 DXL outlet store in fiscal 2017, while closing 19 Casual Male XL retail stores and 3 Casual Male XL outlet stores, the majority of which are in connection with the opening of the DXL retail and outlet stores in the same geographic markets. All DXL store growth for the year will be funded by cash from operations.

~~For fiscal 2017, our revised outlook, based on a 53-week year, is as follows:~~

~~Total~~2022. Comparable sales for the ~~third~~second quarter decreased 1.4% with comparable sales from our stores down 1.4% and our direct business down 1.3%. The remainder of ~~fiscal 2017 increased 1.8% to $103.7 million from $101.9 million from~~ the ~~third quarter of fiscal 2016. The increase of $1.8 million in total sales~~decrease was due to ~~non-comparable sales of $6.4 million and other revenue of $0.4 million, partially offset by a decrease in~~ sales from closed stores ~~of $4.9 million~~ and a decrease in non-comparable sales.

During the quarter, we saw a decrease in dollars per transaction, which we believe was the result of inflationary pressures impacting customer spending. These decreases were partially offset by an increase in conversion. Despite these headwinds, during the quarter we saw comparable sales ~~decrease~~improve each month, with May down 2.8%, June down 1.7% and July up 1.0%. Both stores and our direct business improved throughout the quarter, driven largely by improvement in traffic to our stores and growth in our mobile app and email marketing.

Sales for the first six months of ~~$0.1~~fiscal 2023 were $265.5 million ~~or (0.1)%. As discussed above,~~as compared to $272.3 million for the first six months of fiscal 2022. Comparable sales for the third quarter were impacted by the unseasonably warm weather and the hurricanes which impacted our Florida and Texas stores. While store traffic was down 5% for the third quarter, we did see increases in sales productivity with increases in average dollars per transactions, units per transaction and conversion.

~~For the~~ first ~~nine~~six months of fiscal ~~2017,~~2023 decreased 0.5%, with comparable sales ~~increased $4.8 million, or 1.5%, as compared~~from our stores flat to the ~~first nine months of fiscal 2016. The increase in sales was primarily due to non-comparable sales of $23.0 million, partially offset by sales from closed stores of $17.5 million~~prior year period and ~~a decrease of 0.5%, or $1.6 million, in comparable sales.~~ direct down 1.5%.

With our transformation of our store base complete, we are focused on growing our e-commerce business and improving store productivity through an integrated strategy. We are implementing several initiatives to enhance our digital presence and provide our customers with improved functionality and increased touchpoints across all of our e-commerce platforms withGross Margin Rate

For the ~~objective of growing and retaining our customer base. On a trailing twelve-month basis, e-commerce sales as a percentage of net sales were 20.8% at the end of the third~~second quarter of fiscal ~~2017 as compared to 19.5% at the end of the third quarter of the prior year.~~

Our end-of-rack customer grew to 45.3% of our bottoms business from 44.8% in the third quarter of fiscal 2016. Our end-of-rack customer, with a waist size of 46 inches or less, shops 52% more often than our customer with a waist size of 48 inches or more and, on an annual basis, spends twice as much.

~~For the third quarter of fiscal 2017,~~2023, our gross margin rate, inclusive of occupancy costs, was ~~43.2%~~50.3% as compared to a gross margin rate of ~~44.4%~~52.1% for the ~~third~~second quarter of fiscal ~~2016.~~2022.

Our gross margin rate decreased by 180-basis points, with a decrease in merchandise margin of 110-basis points and an increase of 70-basis points in occupancy costs primarily due to the deleveraging of sales and increased rents as a result of lease extensions. The

decrease in merchandise margin of 110-basis points was due to continued cost pressures on certain private-label merchandise, much of which we continued to absorb rather than passing on to the customer through price increases. We also experienced increased shipping costs related to direct-to-consumer shipments and costs related to our loyalty program with more sales tendered with loyalty certificates, as compared to the second quarter of fiscal 2022. These cost increases were partially offset by lower inbound freight costs. For the year, we expect gross margin rates to be approximately 100-basis points lower than fiscal 2022.

For the first six months of fiscal 2023, our gross margin rate, inclusive of occupancy costs, was 49.5% as compared to a gross margin rate of 51.1% for the first six months of fiscal 2022. The decrease of ~~120 basis~~160-basis points was due to a decrease in merchandise margins of 120 basis points. The decrease in merchandise margin was related to an increase in promotional markdowns related to our inventory productivity initiatives as compared to the prior year’s third quarter. In addition, during the third quarter we took an aggressive approach to move slow-moving and clearance inventory, which also contributed to an increase in markdowns. As a result, our

~~clearance inventory at October 28, 2017 was 7%, a decrease from 9% at October 29, 2016. Occupancy costs, as a percentage of sales, remained flat.~~

For the first nine months of fiscal 2017, our gross margin rate, inclusive of occupancy costs, was 44.9% as compared to a gross margin rate of 45.7% for the first nine months of fiscal 2016. The decrease of 80 basis110-basis points ~~was due to a 40 basis point decrease in merchandise margins~~ and a ~~40 basis~~50-basis point increase in occupancy costs. ~~The increase in occupancy costs~~Similar to the second quarter merchandise margin, the decrease was ~~primarily~~ due to ~~an increase in DXL total square footage~~cost pressures on certain private-label merchandise, increased direct-to-consumer shipping costs and ~~the comparable sales decline. On a dollar basis, occupancy~~ costs for the first nine months of fiscal 2017 increased approximately 4.2% over the prior year’s first nine months, primarily as a result of an increase of 1.5% in total square footage and the increased percentage of DXL stores.

~~The decrease of 40 basis points in merchandise margins for the first nine months of fiscal 2017 as compared to the prior year was due primarily~~related to our inventory initiatives and increased efforts to reduce slow-moving merchandise categories which resulted in higher promotional markdowns than the prior year. Our inventory initiatives have resulted in a 6.5% decrease in inventory levels from a year ago, improved inventory turn and days on hand, while at the same time managing a strong merchandise margin. loyalty program.

As a percentage of sales, SG&A (selling, general and administrative) expenses for the ~~third~~second quarter of fiscal ~~2017~~2023 were ~~40.5%~~33.9% as compared to ~~40.6%~~34.2% for the ~~third~~second quarter of fiscal ~~2016.~~2022. For the first ~~nine~~six months of fiscal ~~2017~~2023, SG&A expenses, as a percentage of sales, were ~~41.3%~~36.1% as compared to ~~39.4%~~35.3% for the first ~~nine~~six months of fiscal ~~2016.~~ 2022.

On a dollar basis, SG&A ~~increased~~expenses decreased by ~~$0.6~~$2.0 million and ~~$8.2~~$0.3 million for the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2017, respectively. The increase in~~2023, respectively as compared to the ~~third~~second quarter and first six months of fiscal ~~2017 was~~2022. The decreases were primarily due to ~~increases~~a decrease in performance-based incentive accruals and marketing costs, partially offset by an increase in payroll-related costs from new positions added in the past year to support our long-range growth initiatives.

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 ~~supporting~~store and direct operating costs, ~~associated with our DXL store base and e-commerce initiatives.~~

~~For~~represented 20.3% of sales in the first ~~nine~~six months of fiscal ~~2017,~~2023 as compared to 19.8% of sales in the ~~increase was principally due~~first six months of fiscal 2022. Corporate Support Costs, which include the distribution center and corporate overhead costs, represented 15.8% of sales in the first six months of fiscal 2023 as compared to ~~an increase~~15.5% of ~~$4.2~~sales in the first six months of fiscal 2022. Marketing costs for the first six months were 5.3% of sales for both fiscal 2023 and fiscal 2022. For fiscal 2023, marketing costs are expected to be approximately 5.7% of sales.

There were no impairments or non-cash gains recognized in the first six months of fiscal 2023. During the second quarter and first six months of fiscal 2022, we recorded non-cash gains of $0.1 million and $0.6 million related to the reduction of our operating lease liability in ~~advertising expense. As discussed above, we are increasing~~connection with our ~~investment~~decision to close certain retail stores, which resulted in ~~our marketing initiatives to help drive brand awareness, store traffic and our digital presence. The remainder~~a revaluation of the ~~increase~~lease liability. The portion of the gain that related to a previously recorded impairment charge against the operating lease right-of-use asset was ~~due~~included as an offset to ~~increases~~previously recorded asset impairment charge. Accordingly, $0.1 million and $0.4 million were included in ~~store payroll~~the Impairment (Gain) of Assets line of the Consolidated Statement of Operations for the second quarter and ~~other supporting costs associated with~~first six months of fiscal 2022. The remaining gain was recorded as a ~~greater DXL store base and e-commerce initiatives.~~ reduction to occupancy costs.

Depreciation and amortization for the ~~third~~second quarter of fiscal ~~2017 increased $0.2 million~~2023 decreased to ~~$7.7~~$3.5 million as compared to ~~$7.5~~$4.0 million for ~~the third quarter of fiscal 2016.~~

For the first nine months of fiscal 2017, depreciation and amortization was $25.1 million as compared to $22.4 million for the first nine months of fiscal 2016. The increase of $2.7 million includes a $1.7 million impairment charge taken in the second quarter of fiscal ~~2017~~2022. For the first six months of fiscal 2023, depreciation and amortization decreased to ~~write-down certain store assets.~~$6.9 million as compared to $8.0 million for the first six months of fiscal 2022. The ~~remainder of the increase~~decrease was due to a lower depreciable cost base, especially from our store assets, due to our limited capital spending since fiscal 2020.

During the ~~continued store growth associated with our DXL retail~~second quarter of fiscal 2023, we identified an opportunity to eliminate a variable liability by taking advantage of the current high-interest rate environment and ~~outlet stores.~~terminating the frozen pension plan. We completed a partial settlement of the pension obligation in the second quarter through the purchase of nonparticipating annuities. We made a cash contribution to the plan during the first six months of fiscal 2023 of $1.6 million. The remaining pension liability as of July 29, 2023, was approximately $0.2 million. In the second quarter of fiscal 2023, we recognized a charge of $4.2 million, representing a pro-rata portion of the unrealized loss that is part of accumulated other comprehensive loss on the balance sheet. We expect to settle the remaining obligation, recognize the remaining unrealized loss and terminate the plan by the end of fiscal 2023.

Net interest ~~expense~~income for the ~~third~~second quarter of fiscal 2023 was $0.5 million, as compared to net interest expense of $0.1 million for the second quarter of fiscal 2022. For the first six months of fiscal 2023, net interest income was $0.8 million as compared to net interest expense of $0.2 million for the first six months of fiscal 2022. For the second quarter and first ~~nine~~six months of fiscal ~~2017 of $0.9 million~~2023, interest income was earned from investments in U.S. government-backed investments and ~~$2.5 million, respectively, increased slightly from $0.8 million~~money market accounts. Interest costs for both periods were minimal because we had no outstanding debt and ~~$2.3 million, respectively, for the third quarter and first nine months of fiscal 2016.~~ no borrowings under our credit facility during either period.

As a result of ~~our inventory initiatives undertaken to improve liquidity, we expect interest costs for fiscal 2017 will be similar to fiscal 2016 levels.~~

~~At October 28, 2017, we had total deferred tax assets~~releasing substantially all of $84.4 million, total deferred tax liabilities of $12.6 million and a corresponding valuation allowance of $72.0 million. The deferred tax assets included approximately $59.4 million of net operating loss carryforwards and approximately $4.7 million of deferred gain on our sale-leaseback and, to a lesser extent, other book/tax timing differences.

At the ~~end of fiscal 2013, we established a full~~ valuation allowance against our deferred tax ~~assets. Based on our earnings guidance for~~assets during fiscal ~~2017,~~2022, we ~~believe that~~have returned to a ~~full valuation allowance continues to remain appropriate at this time.~~

~~Our~~normal tax provision for fiscal 2023. Accordingly, for the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2017 represented current state margin tax.~~2023, the effective tax rate was 26.4% and 26.5%, respectively. For the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2016,~~2022, we recognized a tax benefit of $35.1 million and $35.0 million, respectively, which reflects the release of approximately $35.5 million, or $0.53 per diluted share, in valuation allowance against our deferred tax ~~provision represented current~~assets, partially offset by income tax expense of $0.4 million and $0.5 million, respectively, in states where our usage of net operating losses ("NOL") is limited.

We are able to utilize our remaining NOL carryforwards to reduce our cash federal and state ~~margin tax and foreign~~ income ~~tax.~~taxes. We began the year with $78.9 million in federal NOL carryforwards.

For the ~~third~~second quarter of fiscal ~~2017,~~2023, we ~~had a~~recorded net ~~loss~~income of ~~$(5.7)~~$11.6 million, or ~~$(0.12)~~$0.18 per diluted share, as compared ~~with a~~to net ~~loss~~income of ~~$(4.5)~~$56.9 million, or ~~$(0.09)~~$0.85 per diluted share, for the ~~third~~second quarter of fiscal ~~2016.~~

~~For~~2022. Net income for the first ~~nine~~six months of fiscal ~~2017, we had a net loss of $(15.5)~~2023 was $18.6 million, or ~~$(0.32)~~$0.28 per diluted share, as compared ~~with a~~to net ~~loss~~income of ~~$(4.0)~~$70.3 million, or ~~$(0.08)~~$1.04 per diluted ~~share. Results~~share for the first ~~nine~~six months of fiscal ~~2017 included an impairment charge of $1.7 million, or $0.03 per diluted share, associated with write-down of store assets, and increased advertising costs of $4.2 million, or $0.09 per diluted share.~~2022.

On a non-GAAP basis, assuming a normalized tax rate of 26% and adjusting for ~~both periods,~~asset impairments (gains), if any, and for the loss on the termination of the pension plan, adjusted net ~~loss per share~~income for the ~~third~~second quarter ~~and first nine months~~ of fiscal ~~2017~~2023 was ~~$(0.07)~~$14.8 million, or $0.23 per diluted share, ~~and $(0.19) per diluted share, respectively,~~ as compared to adjusted net ~~loss~~income of ~~$(0.05)~~$16.1 million, or $0.24 per diluted share ~~and $(0.05)~~for the second quarter of fiscal 2022. For the first six months of fiscal 2023, adjusted net income was $21.8 million, or $0.33 per diluted share, ~~respectively, for the third quarter and first nine months of fiscal 2016.~~

~~At October 28, 2017, total inventory was $119.9 million~~as compared to ~~$117.4~~adjusted net income of $25.8 million, or $0.38 per diluted share.

As of July 29, 2023, our inventory decreased by approximately $9.2 million to $87.5 million, as compared to $96.7 million at ~~January 28, 2017~~July 30, 2022. Managing our inventory remains a primary focus for us given the impact that inflation appears to have had on consumer spending. Based on the sales trends we started to see in March 2023, we took proactive measures and ~~$128.2 million at October~~adjusted our receipt plan. At July 29, 2016. The 6.5% decrease of $8.3 million from October 29, 2016 was due to inventory initiatives that began in fiscal 2016 to improve timing of receipts and reduce weeks of supply on hand. At October 28, 2017,2023, our clearance inventory ~~represented 7.0%~~was 9.3% of our total inventory, as compared to ~~9.0%~~6.9% at ~~October 29, 2016.~~ July 30, 2022 and still below our historical benchmark of approximately 10.0%.

Historically, and consistent with the retail industry, we have experienced seasonal fluctuations as it relates to our operating income, net income, and ~~net income.~~free cash flow. Traditionally, a significant portion of our operating income, ~~and~~ 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 ~~a result of~~we sell-down our inventory through the ~~“Holiday”~~holiday shopping season.

Our primary sources of liquidity are our cash and cash equivalents, short-term investments, cash generated from operations and availability under our credit facility, ~~with Bank~~which is discussed below. At July 29, 2023, we had no outstanding debt, including no borrowings under our credit facility during the first six months of ~~America, N.A., which was most recently amended~~fiscal 2023. Cash that is in ~~October 2014 (“Credit Facility”). Our~~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, including inflation and rising interest costs, may have on consumer spending as well as the continuing geopolitical impact of Russia's invasion of Ukraine on our business and the global economy. We also believe that cash ~~needs are primarily for~~flows from operating activities and cash on hand will be sufficient to satisfy our capital requirements in the longer-term, however, to the extent future capital requirements exceed cash on hand plus cash flows from operating activities, we anticipate that working capital ~~(essentially inventory requirements), capital expenditures, growth initiatives, and,~~will be financed by our credit facility, as discussed ~~further below, our stock repurchase program, which was announced in March 2017.~~below.

~~As discussed below, our capital expenditures for~~For the first six months of fiscal 2017 are expected to be approximately $22.0 million, primarily related to the planned opening of approximately 20 new DXL retail and 1 outlet stores and information technology projects. However, we expect to receive approximately $5.0 million in tenant allowances to offset these capital expenditures. We expect to fund this store growth and stock repurchase program in fiscal 2017 primarily through2023, cash flow from operations with periodic borrowings from our Credit Facility. We currently believe that our existing cash generated by operations together with our Credit Facility will be sufficient within current forecasts for usincreased to ~~meet our foreseeable liquidity requirements.~~

~~For fiscal 2017, we expect cash flow from operating activities of $31.0~~$26.2 million as compared to $35.0 million (including tenant allowances), and positive free cash flow of $9.0 to $13.0 million that will be used to reduce outstanding debt and purchase shares of the Company’s common stock as part of its stock repurchase program.

~~For the first nine months of fiscal 2017, free cash flow improved by $0.5 million to $(13.2) million from $(13.7)~~$23.8 million for the first ~~nine~~six months of fiscal ~~2016.~~2022. Free cash flow, a non-GAAP measure, increased to $21.6 million for the first six months of fiscal 2023 as compared to $19.8 million for the first six months of fiscal 2022. The ~~improvement~~increase in free cash flow was primarily due to a decrease in merchandise purchases as we continue to proactively manage inventory levels.

Cash flow used for investing activities increased by $44.0 million for the ~~lower capital expenditures~~first six months of fiscal 2023 as compared to the first six months of fiscal 2022, primarily due to the purchase of $43.5 million of short-term investments.

Cash flow used for financing activities for the first six months of fiscal 2023 decreased by $2.1 million as compared to the first six months of fiscal 2022, primarily due to a decrease in shares repurchased as compared to the second quarter of fiscal 2022.

In March 2023, the Company’s Board of Directors approved a stock repurchase program. Under the stock repurchase program, the Company may repurchase up to $15.0 million of its common stock through open market and ~~positive working capital changes, partially offset by reduced earnings.~~privately negotiated transactions. During the second quarter of fiscal 2023, we repurchased 2.2 million shares at a total cost, including fees of $10.8 million. Shares of repurchased common stock are held as treasury stock. The timing and the amount of any remaining repurchases will be determined based on the Company’s evaluation of market conditions and other factors. The stock repurchase program will expire on March 16, 2024 and may be suspended, terminated or modified at any time for any reason.

On October 28, ~~2017~~2021, we entered into a $125.0 million revolving credit agreement with Citizens Bank, N.A., with a maturity date of October 28, 2026. On April 20, 2023, the Company entered into the First Amendment to Credit Agreement which provided for the replacement of the London Interbank Offering Rate (“LIBOR”) interest rate options with the ~~associated unamortized debt issuance costs:~~

~~Our credit facility with Bank of America, N.A., effective October 29, 2014 (our “Credit Facility”~~secured overnight financing rate ("SOFR") ~~provides for a maximum committed borrowing of $125.0 million, which, pursuant to an accordion feature, may be increased to $175.0 million upon our request and~~based options (as amended, the ~~agreement of the lender(s) participating in the increase.~~"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. ~~The maturity date of~~April 20, 2023, borrowings under the Credit Facility ~~is October 29, 2019. Our Credit Facility is described~~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 ~~more detail in Note 2 of the Notes to the Consolidated Financial Statements included in this Quarterly Report.~~

~~Borrowings made pursuant to~~ the Credit ~~Facility~~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 (determined as~~Base Rate plus the ~~highest~~Applicable Margin. We are subject to an unused line fee of (a) Bank of America N.A.’s prime rate, (b) the Federal Funds rate plus 0.50% and (c) the annual ICE-LIBOR (“LIBOR”) rate for the respective interest period) plus a varying percentage, based on our borrowing base, of 0.50%-0.75% for prime-based borrowings and 1.50%-1.75% for LIBOR-based borrowings.0.25%.

We had no outstanding borrowings ~~of $68.4 million~~ under the Credit Facility at ~~October 28, 2017.~~July 29, 2023 and no borrowings during the first six months of fiscal 2023. At ~~October 28, 2017,~~July 29, 2023, outstanding standby letters of credit were ~~$3.3~~$4.0 million and outstanding documentary letters of credit were ~~$0.1~~$1.2 million. The ~~average monthly borrowing outstanding under the Credit Facility during the first nine months ended October 28, 2017 was approximately $60.4 million, resulting in an~~ average unused excess availability during the first six months of fiscal 2023 was approximately ~~$43.3 million. Unused~~$85.6 million and the unused excess availability at ~~October 28, 2017~~July 29, 2023 was ~~$38.2~~$81.8 million. ~~Our obligations under the Credit Facility are secured by a lien on substantially all~~

For fiscal 2023, we expect our capital expenditures to range from $19.0 million to $21.0 million, of ~~our assets, excluding (i) a first priority lien held by the lenders of the Term Loan Facility on certain of our equipment described below and (ii) intellectual property.~~

~~We have entered into twelve Equipment Security Notes (the “Notes”), whereby we borrowed an aggregate of $26.4 million. The Notes,~~ which were issued between September 2013 and June 2014, were issued pursuant to a Master Loan and Security Agreement with Banc of America Leasing & Capital, LLC, dated July 20, 2007 and most recently amended on September 30, 2013. The Notes are secured by a security interest in all of our rights, title and interest in and to certain equipment. The Notes areapproximately $7.8 million is discretionary spending for 48 months and accrue interest at fixed rates ranging from 3.07% to 3.50%. Principal and interest, are payable monthly, in arrears. The Company was subject to prepayment penalties through the second anniversary of each note. The Company is no longer subject to any prepayment penalties.

We have a $15.0 million senior secured term loan facility with Wells Fargo Bank, National Association as administrative and collateral agent (the “Term Loan Facility”). The Term Loan Facility bears interest at a rate per annum equal to the greater of (a) 1.00% and (b) the one month LIBOR rate, plus 6.50%. Interest payments are payable on the first business day of each calendar month, and increase by 2% following the occurrence and during the continuance of an “event of default,” as defined in the Term Loan Facility. The Term Loan Facility, which matures on October 29, 2019, provides for quarterly principal payments on the first business day of each calendar quarter, which commenced the first business day of January 2015, in an aggregate principal amount equal to $250,000, subject to adjustment,new or improved stores with the ~~balance payable on the termination date.~~remaining for non-discretionary, infrastructure improvements.

~~The Term Loan Facility is secured by a first priority lien on certain of our equipment, and a second priority lien on substantially all of our remaining assets, excluding intellectual property.~~

The following table sets forth the open stores and related square footage at ~~October 28, 2017~~July 29, 2023 and ~~October 29, 2016,~~July 30, 2022, respectively:

~~Below is a summary~~We have executed lease agreements for three new stores, one in each of the Los Angeles, New York and Cincinnati markets. We expect these stores to open by the end of 2023. During the second quarter, we completed the conversion of one Casual Male store ~~openings and closings from January 28, 2017~~ to ~~October 28, 2017:~~

~~Our capital expenditures for~~ the ~~first nine months~~DXL store format. By the end of fiscal 2017 were $18.4 million as compared to $21.8 million for the first nine months of fiscal 2016. We have opened 19 DXL retail stores and 1 DXL outlet during the first nine months of fiscal 2017 as compared to 22 DXL retail stores and 3 DXL outlets for the first nine months of fiscal 2016.

~~For fiscal 2017, our capital expenditures are expected to be approximately $22.0 million and~~2023, we expect to ~~receive approximately $5.0 million in tenant allowances to offset these expenditures. Our budget includes approximately $13.7 million, excluding any allowance, related to the opening of 20~~open 3 new DXL ~~retail~~ stores and ~~1 DXL outlet~~10 Casual Male-to-DXL conversion stores and ~~approximately $8.3 million for continued information technology projects and general overhead projects. In addition,~~to have begun construction on at least 5 DXL remodels. Over the next three to five years, we ~~expect to close approximately 19 Casual Male XL~~believe we could potentially open 50 net new DXL stores ~~and 3 Casual Male XL outlet stores,~~across the ~~majority of which are in connection with the opening of the DXL retail and outlet stores in the same geographic market.~~ United States.

There have been no material changes to the critical accounting policies and estimates disclosed in our Fiscal ~~2016~~2022 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.

~~Adjusted net loss,~~Free cash flow, adjusted net ~~loss~~income, adjusted net income per diluted share, ~~free cash flow, free cash flow before DXL capital expenditures~~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 ~~loss~~income 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):

~~Adjusted net loss and adjusted net loss per diluted share~~. The above discussion includes an adjusted net loss for the third quarter and first nine months of fiscal 2017 and fiscal 2016 on a non-GAAP basis, which reflected an adjustment assuming a normal tax rate of 40%. We have fully reserved against our deferred tax assets and, therefore, net loss is not reflective of earnings assuming a “normal” tax position. Adjusted net income (loss) provides investors with a useful indication of the financial performance of the business, on a comparative basis, assuming a normalized effective tax rate of 40%.

~~The following is a reconciliation of the net loss to adjusted net loss, assuming a normal tax rate of 40% for the first nine months of fiscal 2017 and fiscal 2016:~~

For the three months ended

For the nine months ended

October 28, 2017

October 29, 2016

October 28, 2017

October 29, 2016

$

Per diluted
share

$

Per diluted
share

$

Per diluted
share

$

Per diluted
share

(in thousands, except per share data)

Net loss (GAAP basis)

$
(5,706
)

$
(0.12
)

$
(4,452
)

$
(0.09
)

$
(15,502
)

$
(0.32
)

$
(4,039
)

$
(0.08
)

Add back: Actual income tax provision

—

34

64

126

Income tax benefit, assuming

a normal tax rate of 40%

2,282

1,767

6,175

1,565

Adjusted net loss (non-GAAP basis)

$
(3,424
)

$
(0.07
)

$
(2,651
)

$
(0.05
)

$
(9,263
)

$
(0.19
)

$
(2,348
)

$
(0.05
)

Weighted average number of common shares

outstanding on a diluted basis

48,607

49,552

48,966

49,532

Free Cash ~~Flow and Free Cash Flow Before DXL Capital Expenditures.~~ Flow. We define free cash flow as cash flow from operating activities less capital expenditures. Free cash flow ~~before DXL capital expenditures is free cash flow with DXL capital expenditures added back. Free cash flow~~ excludes the mandatory and discretionary repayment of debt. Free cash flow ~~and free cash flow before DXL capital expenditures are metrics~~is a metric that management uses to monitor liquidity. ~~We expect to fund our ongoing DXL capital expenditures with cash flow from operations. We believe~~Management believes this metric is important to investors because it demonstrates ~~our~~the Company's ability to strengthen liquidity while ~~also contributing~~supporting its capital projects and new store growth. We expect to ~~the funding of the DXL store growth.~~fund our ongoing capital expenditures with cash flow from operations.

Adjusted Net Income and ~~free cash flow before DXL capital expenditures:~~Adjusted Net Income Per Diluted Share: Adjusted net income and adjusted net income per diluted share is calculated by excluding any asset impairment charge (gain) and the loss from the termination of the pension plan, subtracting the actual income tax provision (benefit) and applying an effective tax rate of 26%. The Company believes that this comparability is useful in comparing the actual results period to period. Adjusted net income per diluted share is then calculated by dividing the adjusted net income by the weighted average shares outstanding for the respective period, on a diluted basis.

Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and ~~amortization.~~amortization and is before any impairment of assets, if any. 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. With the significant capital investment associated with the DXL transformation~~ performance

and ~~therefore, increasing levels of depreciation and interest, management uses EBITDA as a~~are key ~~metric~~metrics to measure profitability and economic productivity.

The following table ~~is a reconciliation of~~reconciles adjusted EBITDA from net income ~~(loss) to EBITDA:~~and calculates adjusted EBITDA margin:

~~The following table is a reconciliation of non-GAAP measures used in our Fiscal 2017 Outlook:~~

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 and foreign currency fluctuations.~~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.

~~We utilize cash from operations and from~~There have not been any material changes to our Credit Facility to fund our working capital needs. Our Credit Facility is not used for trading or speculative purposes. In addition, we have available letters of credit as sources of financing for our working capital requirements. Borrowings under the Credit Facility, which expires October 29, 2019, bear interest at variable rates based on Bank of America’s prime rate or LIBOR. At October 28, 2017, the interest rate ~~on our prime based borrowings was 4.75%. At October 28, 2017, approximately $64.0 million~~previously disclosed in Part II, Item 7A of our outstanding borrowings were in LIBOR contracts with an interest rate of 2.70%. At October 28, 2017, we also had $12.0 million outstanding under a term loan, which bears interest at a variable rate based on one-month LIBOR rates plus 6.5%.Fiscal 2022 Annual Report.

Based upon a sensitivity analysis as of October 28, 2017, assuming average outstanding borrowing during the first nine months of fiscal 2017 of $60.4 million under our Credit Facility and $12.0 million outstanding under our term loan, a 50 basis point increase in interest rates would have resulted in a potential increase in interest expense of approximately $362,000 on an annualized basis.

Our Rochester Clothing store located in London, England conducts business in British pounds and our two DXL stores located in Ontario, Canada conduct business in Canadian dollars. As of October 28, 2017, sales from these stores were immaterial to consolidated sales. As such, we believe that movement in foreign currency exchange rates will not have a material adverse effect on our financial position or results of operations.

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 ~~October 28, 2017.~~July 29, 2023. 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 ~~October 28, 2017,~~July 29, 2023, our disclosure controls and procedures were effective.

~~No change~~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) ~~occurred~~ during the ~~quarter~~three months ended ~~October 28, 2017~~July 29, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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.

There have been no material changes to the risk factors as previously disclosed in Part I, Item 1A of our Fiscal ~~2016~~2022 Annual Report.

On March ~~17, 2017,~~14, 2023, the Company’s Board of Directors approved a stock repurchase ~~plan. Under the stock repurchase plan,~~program pursuant to which the Company may ~~purchase~~repurchase up to ~~$12.0~~$15.0 million of its common stock through open market and privately negotiated ~~transactions~~transactions. The timing and the amount of any repurchases will be determined based on the Company’s evaluation of market conditions and other factors. The stock repurchase program will expire in March 2024 and may be suspended, terminated or modified at any time for any reason.

Stock repurchase activity during ~~fiscal 2017. Through October 28, 2017,~~ the ~~Company~~three months ended July 29, 2023 was as follows:

(1) Average price paid per share and the approximate dollar value of shares that may yet be purchased ~~1,878,434 shares of common stock at an average price of $2.49 per share. Approximately $7.3 million remains available~~ under the ~~stock repurchase plan. There were no stock repurchases during~~plan excludes the ~~third quarter~~accrual of ~~fiscal 2017.~~excise tax of $0.1 million as of July 29, 2023.

Trading Plans

On June 30, 2023, Robert S. Molloy, General Counsel and Secretary, enteredinto a 10b5-1 sales plan (the “10b5-1 Sales Plan”) intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The 10b5-1 Sales Plan provides for the sale of up to 120,000 shares of common stock that are issuable upon exercise of vested stock options. The 10b5-1 Sales Plan will become effective on October 11, 2023 and will terminate on March 18, 2024, subject to earlier termination upon the sale of all shares subject to the 10b5-1 Sales Plan or as otherwise provided in the 10b5-1 Sales Plan.

No other directors or executive officers of the Company adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any non-Rule 10b5 trading arrangement, (as defined in Item 408(c) of Regulation S-K) during the quarterly period covered by this report.

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.


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)


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

	Third Quarter			First Nine Months
	(in millions)
Sales for fiscal 2016	$	101.9		$	327.6
Less 2016 sales for stores that have closed /converted		(4.9	)		(17.5	)
	$	97.0		$	310.1

Decrease in comparable sales		(0.1	)		(1.6	)
Non-comparable sales, primarily DXL stores open less than 13 months		6.4			23.0
Other, net		0.4			1.0
Sales for fiscal 2017	$	103.7		$	332.5

(in thousands)	Gross Debt Outstanding		Less Debt Issuance Costs			Net Debt Outstanding
Credit facility	$	68,444	$	(246	)	$	68,198
Equipment financing notes		1,409		(5	)		1,404
Term loan, due 2019		12,000		(216	)		11,784
Total debt	$	81,853	$	(467	)	$	81,386


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


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

																			Accumulated
							Additional												Other
	Common Stock						Paid-in			Treasury Stock						Accumulated			Comprehensive
	Shares			Amounts			Capital			Shares			Amounts			Deficit			Income (Loss)			Total
Balance at January 28, 2017		61,637		$	616		$	304,466			(10,877	)	$	(87,977	)	$	(122,567	)	$	(6,018	)	$	88,520
Board of Directors compensation		96			1			420															421
Stock compensation expense								1,306															1,306
Restricted Stock issued, reclass from liability to equity (Note 3)		425			4			916															920
Cancellations of restricted stock, net of issuances		(777	)		(8	)		8															—
Deferred stock vested		45			1			(1	)														—
Repurchase of common stock											(1,878	)		(4,681	)								(4,681	)
Accumulated other comprehensive income (loss):
Pension plan																				631			631
Foreign currency																				164			164
Net loss																	(15,502	)					(15,502	)
Balance at October 28, 2017		61,426		$	614		$	307,115			(12,755	)	$	(92,658	)	$	(138,069	)	$	(5,223	)	$	71,779

	October 28, 2017									October 29, 2016
For the nine months ended:	(in thousands)
	Pension Plans			Foreign Currency			Total			Pension Plans			Foreign Currency			Total
Balance at beginning of fiscal year	$	(5,237	)	$	(781	)	$	(6,018	)	$	(6,113	)	$	(539	)	$	(6,652	)

Other comprehensive income (loss) before reclassifications, net of taxes		128			164			292			183			(319	)		(136	)

Amounts reclassified from accumulated other comprehensive income, net of taxes ⁽¹⁾		503			—			503			528			—			528

Other comprehensive income (loss) for the period		631			164			795			711			(319	)		392

Balance at end of quarter	$	(4,606	)	$	(617	)	$	(5,223	)	$	(5,402	)	$	(858	)	$	(6,260	)

	Restricted shares			Restricted Stock Units ⁽¹⁾			Deferred shares ⁽²⁾			Fully-vested shares ⁽³⁾			Total number of shares			Weighted-average grant-date fair value ⁽⁴⁾
Shares
Outstanding non-vested shares at beginning of year		856,332			369,828			64,876			—			1,291,036		$	5.09
Shares granted		484,558			804,701			74,968			66,325			1,430,552		$	2.68
Shares vested/issued		(430,336	)		(27,697	)		(44,599	)		(66,325	)		(568,957	)	$	2.66
Shares canceled		(857,221	)		(37,649	)		—			—			(894,870	)	$	4.94
Outstanding non-vested shares at end of quarter		53,333			1,109,183			95,245			—			1,257,761		$	3.52

	Number of shares			Weighted-average exercise price per option		Weighted-average remaining contractual term	Aggregate intrinsic value
Stock Options
Outstanding options at beginning of year		2,524,546		$	4.98		$	11,286
Options granted		30,000		$	1.85
Options canceled		(1,259,579	)	$	5.05
Options exercised		—			—
Outstanding options at end of quarter		1,294,967		$	4.82	4.8 years	$	3,000
Options exercisable at end of quarter		1,294,967		$	4.82	4.8 years


	July 29, 2023				July 30, 2022
Store Concept	Number of Stores		Square Footage		Number of Stores		Square Footage
(square footage in thousands)
DXL Retail		219		1,666		218		1,664
DXL Outlets		16		80		16		80
Casual Male XL Retail		27		88		31		103
Casual Male Outlets		19		57		19		57
Total Stores		281		1,891		284		1,904

Number of Stores:	DXL		DXL Outlets		Casual Male XL Retail			Casual Male XL Outlets			Rochester Clothing		Total Stores
At January 28, 2017		192		13		97			36			5		343
New stores⁽¹⁾		8		—		—			—			—		8
Replaced stores⁽²⁾		11		1		(13	)		(3	)		—		(4	)
Closed retail stores⁽³⁾		—		—		(3	)		—			—		(3	)
At October 28, 2017		211		14		81			33			5		344

	~~Projected~~
	~~Fiscal 2017~~
~~(in millions, except per share data)~~				~~per diluted share~~
~~Net loss (GAAP basis)~~	~~$(17.0)-$(21.0)~~
~~Add back:~~
~~Provision for income taxes~~		~~0.1~~
~~Interest expense~~		~~3.3~~
~~Depreciation and amortization~~		~~33.6~~
~~EBITDA (non-GAAP basis)~~	~~$16.0-$20.0~~

~~Net loss (GAAP basis)~~	~~$(17.0)-$(21.0)~~			~~$(0.35)-$(0.42)~~
~~Income tax benefit, assuming 40% rate~~	~~$6.8-$8.4~~			~~$0.14-$0.17~~
~~Adjusted net loss (non-GAAP basis)~~	~~$(10.2)-$(12.6)~~			~~$(0.21)-$(0.25)~~
~~Weighted average common shares outstanding - diluted~~		~~48.5~~

~~Cash flow from operating activities (GAAP basis)~~	~~$31.0-$35.0~~
~~Capital expenditures, infrastructure projects~~		~~(8.3~~	)
~~Free Cash Flow, before DXL capital expenditures (non-GAAP basis)~~	~~$22.7-$26.7~~
~~Capital expenditures for DXL stores~~		~~(13.7~~	)
~~Free Cash Flow (non-GAAP basis)~~	~~$9.0-$13.0~~


Period	(a) Total number of shares purchased		(b) Average price paid per share (1)		(c) Total number of shares purchased as part of publicly announced plan		(d) Approximate dollar value of shares that may yet be purchased under the plan (1)

April 30, 2023 to May 27, 2023		—	$	—		—	$	15,000,000
May 28, 2023 to July 1, 2023		1,595,897	$	4.70		1,595,897	$	7,500,001
July 2, 2023 to July 29, 2023		653,253	$	5.07		653,253	$	4,185,921
Total		2,249,150	$	4.81		2,249,150	$	4,185,921


10.1		~~Letter~~Amended and Restated Employment Agreement ~~dated January 29, 2014, by and~~ between the Company and ~~Red Mountain Capital Partners LLC.~~James Reath dated as of May 10, 2023.*
~~31.1~~
31.1		Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of ~~1934.~~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~~101.INS		Inline XBRL Instance Document. The ~~following materials from~~instance document does not appear in the ~~Company’s Quarterly Report on Form 10-Q for~~Interactive Data File because its XBRL tags are embedded within the ~~quarter ended October 28, 2017, formatted~~Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation 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 (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.tags are embedded within the Inline XBRL document.

		* Filed herewith.


	DESTINATION XL GROUP, INC.

Date: ~~November 17, 2017~~August 24, 2023	By:	/S/s/ John F. Cooney
		John F. Cooney
		Senior Vice President, Chief Accounting Officer and Corporate Controller (Duly Authorized Officer and Chief Accounting Officer)

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