First Quarter Financial Highlights
Total sales for the first quarter were $103.3 million, down 2.1% from $105.5 million in the first quarter of fiscal 2025. Comparable sales for the first quarter of fiscal 2026 decreased 3.8% as compared to the first quarter of fiscal 2025.
Net loss for the first quarter was $(5.9) million, or $(0.11) per diluted share, as compared to a net loss of $(1.9) million, or $(0.04) per diluted share, for the first quarter of fiscal 2025.
Adjusted net loss (a non-GAAP measure) for the first quarter was $(0.06) per diluted share as compared to an adjusted net loss of $(0.04) per diluted share for the first quarter of fiscal 2025.
Adjusted EBITDA (a non-GAAP measure) for the first quarter was $(0.7) million as compared to $0.2 million for the first quarter of fiscal 2025.
Total cash and investments were $16.2 million at May 2, 2026, as compared to $29.1 million at May 3, 2025, with no outstanding debt for either period.
Management's Comments
"We are encouraged by our first quarter results, which reflect an improving sales performance and continued progress toward our strategic priorities. While comparable sales declined 3.8%, we saw positive momentum in key areas of the business, including higher conversion rates and increased average order value across both stores and online. We believe these trends reinforce that the adjustments we are making to our merchandise assortment, promotional strategy, and customer experience are aligning better with today's value-conscious consumer. We will continue to navigate the challenging environment, building on the strength of our offering and assortment and the trust our customers place in the DXL brand," said Harvey Kanter, President and Chief Executive Officer.
Strategic Priorities:
We continue to advance several strategic initiatives designed to strengthen our market leadership in the big + tall sector while enhancing the customer experience across channels.
FiTMAP®
We have exclusive rights to our fit technology platform until 2030. FiTMAP® remains one of the Company's most important long-term growth drivers. During the quarter, we completed the rollout of FiTMAP technology in 188 stores to enhance the customer journey. Since launch, over 100,000 customers have engaged with the platform, and early results continue to reinforce its value. Customers who use FiTMAP have demonstrated stronger conversion, higher average order values, greater purchase frequency and lower return rates, underscoring the role personalized fit can play in driving both customer satisfaction and profitable growth.
Leverage AI
We are sharpening our focus on artificial intelligence ("AI") as consumer shopping behavior evolves. As AI-powered search and discovery tools become increasingly important in ecommerce, the Company is investing to ensure that its products and content are more visible, relevant and accessible in these emerging environments. During the quarter, DXL launched new AI initiatives to improve product data quality, enrich item-level attributes and strengthen its ability to connect product, pricing and inventory information across AI-enabled platforms. These efforts are intended to improve discoverability, support future commerce applications and position the Company to compete effectively as digital shopping journeys become more conversational and agent-driven.
GLP-1 Medications and Similar Weight-Loss Medications
We continue to deepen our understanding of how the use of glucagon-like peptide-1 ("GLP-1") medications and similar weight-loss medications may be influencing customer behavior and category demand. Our research indicates that a meaningful portion of our customer base is currently using GLP-1 medications, contributing to more dynamic sizing needs over time. We are responding thoughtfully by broadening select assortments in smaller sizes and using customer insights to inform future merchandising, marketing and re-engagement strategies. Importantly, the Company sees this as both a near-term challenge and a long-term opportunity: while some customers may pause apparel purchases during periods of rapid size change, many express an intention to return once they reach a more stable size profile. By staying closely aligned with these evolving customer needs, we believe we can strengthen retention, reactivation and lifetime value over time.
Merger with FullBeauty Brands
In a separate press release issued today, the Company provided an update on the pending merger with FullBeauty Brands. To access the press release, please visit https://investor.dxl.com.
First Quarter Results
Sales
Total sales for the first quarter of fiscal 2026 were $103.3 million, as compared to $105.5 million for the first quarter of fiscal 2025. The decrease in total sales was primarily attributable to a decrease in comparable sales for the first quarter of 3.8%, partially offset by an increase in non-comparable store sales. Sales improved at the start of fiscal 2026 with comparable sales down 1.3% in February and down 2.7% in March and, in April, sales were down 6.8%. While the performance between March and April was impacted at some level by the earlier Easter holiday, we believe the slowdown in sales in April was primarily the result of a combination of macroeconomic pressures impacting consumer confidence and discretionary spending, including global conflict, rising fuel costs, and inflation. We also believe the impact of GLP-1 medications and similar weight-loss medications are contributing to structural changes in customer demand within the big + tall category.
The comparable sales decrease of 3.8% for the first quarter consisted of a comparable sales decrease of 4.6% from stores and a comparable sales decrease of 1.6% from our direct business. A decrease in traffic continued to be the primary driver, particularly in stores, partially offset by improvements in conversion and dollars per transaction. The direct business showed improvement during the first quarter, with increased demand being generated from our paid search, paid social and program marketing efforts. In addition, improvements to the website and app have helped to improve conversion during the first quarter of fiscal 2026. Contributing to this improvement were strong sales of clearance merchandise on the website.
Gross Margin
For the first quarter of fiscal 2026, our gross margin rate, inclusive of occupancy costs, was 44.3% as compared to a gross margin rate of 45.1% for the first quarter of fiscal 2025.
Our gross margin rate decreased by 80 basis points, driven by a decrease of 100 basis points in merchandise margin, partially offset by a 20-basis point decrease in occupancy costs. The decrease in merchandise margin as compared to the first quarter of fiscal 2025 is primarily due to the impact of tariffs, increased shipping costs as a result of fuel surcharges, and increased markdown activity associated with clearance sales. These increased costs were partially offset by an improvement in merchandise margins as a result of a shift in product mix toward our private brand merchandise and favorable loyalty costs.
The decrease in occupancy costs of 20 basis points, or $0.5 million, was primarily due to $1.4 million received from a landlord as a result of an early lease termination, partially offset by increased rents from lease extensions and new stores.
Tariffs
In April 2026, U.S. Customs and Border Protection ("CBP") launched an online portal through which companies may submit refund requests. During the first quarter of fiscal 2026, the Company submitted a claim seeking a refund of approximately $4.0 million related to tariffs previously paid. The timing and amount of any potential refund and recovery remain uncertain, and the Company expects to recognize any recovery when receipt is considered realizable.
Given the volatility that currently exists around trade discussions, it is difficult to determine the potential impact that tariffs may have on our financial results for fiscal 2026. However, if currently enacted rates remain in effect throughout fiscal 2026, and no additional tariffs, including those under U.S. trade laws, are added, we estimate that the impact of tariffs on pre-tariff gross margin for fiscal 2026, exclusive of any refunds realized, will be approximately 100 basis points, a decrease from the previous estimate of 150 basis points.
Selling, General & Administrative
As a percentage of sales, SG&A (selling, general and administrative) expenses for the first quarter of fiscal 2026 were 45.0% as compared to 44.9% for the first quarter of fiscal 2025.
On a dollar basis, SG&A expenses decreased by $0.9 million as compared to the first quarter of fiscal 2025. The decrease was primarily due to a decrease in supporting payroll costs and incentive-based compensation partially offset by an increase in marketing costs.
Marketing costs were 6.5% of sales for the first quarter of fiscal 2026 as compared to 6.1% of sales for the first quarter of fiscal 2025. For fiscal 2026, marketing costs are expected to be approximately 5.8% of sales.
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 store and direct operating costs, represented 26.1% of sales in the first quarter of fiscal 2026 as compared to 25.2% of sales in the first quarter of fiscal 2025. Corporate Support Costs, which include the distribution center and corporate overhead costs, represented 18.9% of sales in the first quarter of fiscal 2026 as compared to 19.8% of sales in the first quarter of fiscal 2025.
Transaction-Related Costs
Transaction-related costs for the first quarter of fiscal 2026 and fiscal 2025 were $1.2 million and $0.1 million, respectively, and primarily related to fees paid for professional services in connection with costs related to the merger with FullBeauty Brands.
Interest Income, Net
Net interest income for the first quarter of fiscal 2026 was $0.1 million as compared to $0.3 million for the first quarter of fiscal 2025. For both periods, interest income was earned from investments in U.S. government-backed investments and money market accounts. The decrease in interest income was primarily due to the decrease in the average balance of investments during the first three months of fiscal 2026 as compared to the prior year period. Interest costs for both periods were minimal because we had no outstanding debt and no borrowings under our credit facility.
Income Taxes
Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any. Each quarter, we update our estimate of the annual effective tax rate and make a year-to-date adjustment to the provision.
For the first quarter of fiscal 2026, the Company's effective tax rate was (1.1)% as compared to an effective tax rate of 39.7% for the first quarter of fiscal 2025. In the fourth quarter of fiscal 2025, a full valuation allowance was established against the net deferred tax assets. As a result, the effective tax rate for the first quarter of fiscal 2026 primarily reflects a provision for state margin tax, based on gross receipts less certain deductions. The effective tax rate for the first quarter of fiscal 2025 reflected the impact of permanent book-to-tax differences.
Net Loss
For the first quarter of fiscal 2026, net loss was $5.9 million, or $(0.11) per diluted share, as compared to a net loss for the first quarter of fiscal 2025 of $1.9 million, or $(0.04) per diluted share.
The decrease in earnings for the first quarter of fiscal 2026 as compared to first quarter of fiscal 2025 was driven primarily by a decrease in sales, an increase in transaction-related expenses and a decrease in the effective tax rate. We have fully reserved against our deferred tax assets and, therefore, the net loss in the first quarter of fiscal 2026 does not reflect a normal provision or benefit for income taxes for the Company.
On a non-GAAP basis, adjusting for a normal tax rate of 26% and the add back of transaction-related costs, adjusted net loss for the first quarter of fiscal 2026 was $(0.06) per diluted shares as compared to adjusted net loss for the first quarter of fiscal 2025 of $(0.04) per diluted share.
Adjusted EBITDA
Adjusted EBITDA, a non-GAAP measure, for the first quarter of fiscal 2026 was $(0.7) million, as compared to $0.2 million for the first quarter of fiscal 2025.
Cash Flow
Cash flow from operations for the first three months of fiscal 2026 was $(8.8) million as compared to $(12.0) million for the first three months of fiscal 2025. The improvement in cash flow from operations was primarily due to the timing of other working capital partially offset by a decrease in earnings.
Free cash flow, before capital expenditures for store development, a non-GAAP measure, was $(12.3) million for the first three months of fiscal 2026 as compared to $(14.5) million for the first three months of fiscal 2025.
Free cash flow, a non-GAAP measure, was $(12.7) million for the first three months of fiscal 2026 as compared to $(18.8) million for the first three months of fiscal 2025.
For the Three Months Ended
(in millions)
May 2, 2026
May 3, 2025
Cash flow from operating activities (GAAP basis)
$
(8.8
)
$
(12.0
)
Capital expenditures, excluding store development
(3.4
)
(2.4
)
Free Cash Flow before capital expenditures for store development (non-GAAP basis)
$
(12.3
)
$
(14.5
)
Capital expenditures for store development
(0.4
)
(4.3
)
Free Cash Flow (non-GAAP basis)
$
(12.7
)
$
(18.8
)
Non-GAAP Measures
Adjusted EBITDA, adjusted EBITDA margin, adjusted net loss, adjusted net loss per share, free cash flow before capital expenditures for store development and free cash flow are non-GAAP financial measures. Please see "Non-GAAP Measures" below and reconciliations of these non-GAAP measures to the comparable GAAP measures that follow in the tables below.
Balance Sheet & Liquidity
As of May 2, 2026, we had cash and investments of $16.2 million as compared to $29.1 million as of May 3, 2025, with no outstanding debt in either period. The decrease in cash and investments at May 2, 2026 as compared to May 3, 2025 is primarily due to the capital spent over the past 12 months of approximately $17.2 million. We did not have any borrowings under our credit facility during either period and, as of May 2, 2026, the availability under our credit facility was $70.0 million, as compared to $77.1 million as of May 3, 2025. Availability under our credit facility is primarily driven by our available inventory.
As of May 2, 2026, our inventory decreased $4.1 million to $81.4 million, as compared to $85.5 million as of May 3, 2025. We continue to take proactive measures to manage our inventory and adjust our receipt plan given the ongoing macroeconomic factors affecting consumer spending. At the same time, we may accelerate certain receipts to avoid potential delays caused by the recent conflict with Iran. At May 2, 2026, our clearance inventory was 9.9% of our total inventory, as compared to 9.5% at May 3, 2025. Our inventory position is healthy, and our clearance levels are in line with our benchmark of 10%. Our inventory turnover rate has improved by over 30% from fiscal 2019.
Retail Store Information
The following is a summary of our retail square footage since the end of fiscal 2023 through the end of the first quarter of fiscal 2026:
At May 2, 2026
Year End 2025
Year End 2024
Year End 2023
# ofStores
Sq Ft. (000's)
# ofStores
Sq Ft. (000's)
# ofStores
Sq Ft. (000's)
# ofStores
Sq Ft. (000's)
DXL retail
257
1,843
258
1,853
247
1,795
232
1,725
DXL outlets
17
86
17
86
15
76
15
76
CMXL retail
5
15
5
15
8
25
17
55
CMXL outlets
14
41
15
44
18
54
19
57
Total
293
1,985
295
1,998
288
1,950
283
1,913
During the first three months of fiscal 2026, we closed one DXL retail store and one Casual Male XL outlet store. We expect our capital expenditures for fiscal 2026 to range from $8.0 million to $12.0 million, net of tenant incentives. Our store development plans for fiscal 2026 will be limited to conversions of a few remaining Casual Male XL stores to the DXL format, store relocations and other capital projects necessary to maintain our existing store portfolio and distribution center. The remainder of our expected capital spend for fiscal 2026 will primarily be for technology-related projects to support our business initiatives.
Digital Commerce Information
We distribute our national brands and private brand merchandise directly to consumers through our stores, website, app, and third-party marketplaces. Digital commerce sales, which we also refer to as direct sales, are defined as sales that originate online, whether through our website, at the store level or through a third-party marketplace. Our direct business is a critical component of our business and an area of significant growth opportunity for us. For the first quarter of fiscal 2026, our direct sales were $28.7 million, or 27.7% of sales, as compared to $29.1 million, or 27.5% of sales, in the first quarter of fiscal 2025. As a result of our marketing efforts, including paid search and paid social, we have seen an increase in demand and online conversion.
Conference Call
The Company will hold a conference call to review its financial results on Wednesday, June 3, 2026 ...
