Destination XL Group (DXLG) Q1 2026 earnings summary

Executive summary

• Q1 sales were $105.5 million, down 8.6% year-over-year, with comparable sales declining 9.4% and a net loss of $1.9 million versus net income of $3.8 million in Q1 2024.

• Gross margin fell to 45.1% from 48.2% last year, mainly due to higher occupancy costs and increased markdowns.

• Adjusted EBITDA was $0.1 million, down from $8.2 million in the prior year.

• Strategic initiatives include a new loyalty program, FITMAP sizing technology, price match guarantee, and technology investments to drive customer engagement.

• Management cited macroeconomic headwinds, shifting consumer preferences toward value, and ongoing cost controls.

Financial highlights

• Net loss was $1.9 million, or $(0.04) per diluted share, compared to net income of $3.8 million, or $0.06 per share, in Q1 2024.

• Net sales for Q1 were $105.5 million, down from $115.5 million year-over-year, primarily due to a 9.4% decrease in comparable sales.

• SG&A expenses were 45.0% of sales, up from 41.1% year-over-year, with dollar expenses nearly flat.

• Free cash flow was $(18.8) million, compared to $(7.0) million used in Q1 last year.

• Inventory decreased to $85.5 million from $91.2 million year-over-year; clearance inventory remained stable at 9.5%.

Outlook and guidance

• Comparable sales expected to remain single-digit negative in Q2, with a return to positive comps in the second half of 2025.

• Six additional DXL store openings planned for 2025; capital expenditures projected at $19–21 million.

• FITMAP sizing technology to expand to 85 stores by year-end and up to 200 by end of 2027.

• Marketing costs for fiscal 2025 expected to be approximately 5.9% of sales.

• Tariffs could increase costs by less than $2 million (about 40 basis points of sales) if current rates persist.