For the ~~Quarterly Period Ended~~quarterly period ended April ~~30, 2016~~29, 2017

(Exact ~~name~~Name of ~~registrant~~Registrant as ~~specified~~Specified in its ~~charter)~~Charter)

Indicate by check mark whether the ~~registrant:~~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 x☒ 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 x☒ No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, ~~or a~~ smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“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 x☒

~~The number~~As of May 15, 2017, the registrant had 49,543,425 shares of ~~the registrant’s~~ common stock, ~~outstanding as of May 13, 2016 was 50,843,797.~~$0.01 par value per share, outstanding.

	April 30, 2016			January 30, 2016			April 29, 2017			January 28, 2017
	(Fiscal 2016)			(Fiscal 2015)			(Fiscal 2017)			(Fiscal 2016)

ASSETS
Current assets:
Cash and cash equivalents	$	5,853		$	5,170		$	7,928		$	5,572
Accounts receivable		4,328			4,721			5,860			7,114
Inventories		125,788			125,014			121,424			117,446
Prepaid expenses and other current assets		9,440			8,254			10,764			8,817
Total current assets		145,409			143,159			145,976			138,949

Property and equipment, net of accumulated depreciation and amortization		124,070			124,962			124,652			124,347

Other assets:
Intangible assets		2,552			2,669			2,123			2,228
Other assets		3,718			3,557			3,843			3,804
Total assets	$	275,749		$	274,347		$	276,594		$	269,328

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	7,592		$	7,155		$	5,246		$	6,941
Current portion of deferred gain on sale-leaseback		1,465			1,465			1,465			1,465
Accounts payable		28,456			30,684			30,254			31,258
Accrued expenses and other current liabilities		24,602			33,778			29,776			31,938
Borrowings under credit facility		55,741			41,984			62,095			44,097
Total current liabilities		117,856			115,066			128,836			115,699

Long-term liabilities:
Long-term debt, net of current portion		16,655			19,003			11,409			12,061
Deferred rent and lease incentives		31,509			30,934			36,859			35,421
Deferred gain on sale-leaseback, net of current portion		12,823			13,189			11,357			11,723
Deferred tax liability		222			196			222			222
Other long-term liabilities		7,374			7,555			5,669			5,682
Total long-term liabilities		68,583			70,877			65,516			65,109

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, 61,709,568 and 61,692,285 shares issued at April 30, 2016 and January 30, 2016, respectively		617			617
Common stock, $0.01 par value, 100,000,000 shares authorized, 61,294,630 and 61,637,164 shares issued at April 29, 2017 and January 28, 2017, respectively								613			616
Additional paid-in capital		303,161			302,727			305,827			304,466
Treasury stock at cost, 10,877,439 shares at April 30, 2016 and January 30, 2016		(87,977	)		(87,977	)
Treasury stock at cost, 11,546,786 and 10,877,439 shares at April 29, 2017 and January 28, 2017								(89,802	)		(87,977	)
Accumulated deficit		(120,097	)		(120,311	)		(128,632	)		(122,567	)
Accumulated other comprehensive loss		(6,394	)		(6,652	)		(5,764	)		(6,018	)
Total stockholders' equity		89,310			88,404			82,242			88,520
Total liabilities and stockholders' equity	$	275,749		$	274,347		$	276,594		$	269,328

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

	For the Three Months Ended						For the Three Months Ended
	April 30, 2016			May 2, 2015			April 29, 2017			April 30, 2016
	(Fiscal 2016)			(Fiscal 2015)			(Fiscal 2017)			(Fiscal 2016)

Sales	$	107,891		$	104,405		$	107,629		$	107,891
Cost of goods sold including occupancy costs		58,125			56,166			58,941			58,125
Gross profit		49,766			48,239			48,688			49,766

Expenses:
Selling, general and administrative		41,369			41,469			46,168			41,369
Depreciation and amortization		7,342			6,522			7,754			7,342
Total expenses		48,711			47,991			53,922			48,711

Operating income		1,055			248
Operating income (loss)								(5,234	)		1,055

Interest expense, net		(784	)		(761	)		(802	)		(784	)

Income (loss) before provision for income taxes		271			(513	)		(6,036	)		271
Provision for income taxes		57			61			29			57


Net income (loss)	$	214		$	(574	)	$	(6,065	)	$	214

Net income (loss) per share - basic and diluted:
Net income (loss) per share - basic	$	0.00		$	(0.01	)
Net income (loss) per share - diluted	$	0.00		$	(0.01	)

Net income (loss) per share - basic and diluted							$	(0.12	)	$	0.00

Weighted-average number of common shares outstanding:
Basic		49,513			49,019			49,735			49,513
Diluted		49,880			49,019			49,735			49,880

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

	For the Three Months Ended					For the Three Months Ended
	April 30, 2016		May 2, 2015			April 29, 2017			April 30, 2016
	(Fiscal 2016)		(Fiscal 2015)			(Fiscal 2017)			(Fiscal 2016)
Net income (loss)	$	214	$	(574	)	$	(6,065	)	$	214

Other comprehensive income (loss) before taxes:
Other comprehensive income before taxes:
Foreign currency translation		45		23			39			45
Pension plans		213		236			215			213
Other comprehensive income (loss) before taxes		258		259
Tax (provision) benefit related to items of other comprehensive income (loss)		—		—
Other comprehensive income (loss), net of tax		258		259
Other comprehensive income before taxes							254			258
Tax provision related to items of other comprehensive income							—			—
Other comprehensive income, net of tax							254			258
Comprehensive income (loss)	$	472	$	(315	)	$	(5,811	)	$	472

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

																Accumulated																						Accumulated
					Additional											Other											Additional											Other
	Common Stock				Paid-in		Treasury Stock						Accumulated			Comprehensive					Common Stock						Paid-in		Treasury Stock						Accumulated			Comprehensive
	Shares		Amounts		Capital		Shares			Amounts			Deficit			Income (Loss)			Total		Shares			Amounts			Capital		Shares			Amounts			Deficit			Income (Loss)			Total
Balance at January 30, 2016		61,692	$	617	$	302,727		(10,877	)	$	(87,977	)	$	(120,311	)	$	(6,652	)	$	88,404

Balance at January 28, 2017																						61,637		$	616		$	304,466		(10,877	)	$	(87,977	)	$	(122,567	)	$	(6,018	)	$	88,520
Board of Directors compensation																						28			1			149														150
Stock compensation expense						315														315								288														288
Board of Directors compensation		18				119														119
Restricted Stock issued, reclass from liability to equity (Note 3)																						425			4			916														920
Cancellations of restricted stock, net of issuances																						(798	)		(8	)		8														—
Deferred stock vested																						3			—			—														—
Repurchase of common stock																														(669	)		(1,825	)								(1,825	)
Accumulated other comprehensive income (loss):
Unrecognized gain associated with pension plan																	213			213
Pension plan																																							215			215
Foreign currency																	45			45																			39			39
Net income														214						214
Balance at April 30, 2016		61,710	$	617	$	303,161		(10,877	)	$	(87,977	)	$	(120,097	)	$	(6,394	)	$	89,310
Net loss																																				(6,065	)					(6,065	)
Balance at April 29, 2017																						61,295		$	613		$	305,827		(11,546	)	$	(89,802	)	$	(128,632	)	$	(5,764	)	$	82,242

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

	For the Three Months Ended
	April 30, 2016			May 2, 2015			April 29, 2017			April 30, 2016
	(Fiscal 2016)			(Fiscal 2015)			(Fiscal 2017)			(Fiscal 2016)
Cash flows from operating activities:
Net income (loss)	$	214		$	(574	)	$	(6,065	)	$	214
Adjustments to reconcile net income (loss) to net cash used for operating activities:
Amortization of deferred gain on sale-leaseback		(366	)		(366	)		(366	)		(366	)
Amortization of deferred debt issuance costs		68			70			69			68
Depreciation and amortization		7,342			6,522			7,754			7,342
Deferred taxes, net of valuation allowance		26			27			—			26
Stock compensation expense		315			598			288			315
Board of Directors stock compensation		119			130			150			119

Changes in operating assets and liabilities:
Accounts receivable		393			(2,040	)		1,254			393
Inventories		(774	)		(8,552	)		(3,978	)		(774	)
Prepaid expenses and other current assets		(1,186	)		(1,602	)		(1,947	)		(1,186	)
Other assets		(161	)		59			(39	)		(161	)
Accounts payable		(2,228	)		4,865			(1,004	)		(2,228	)
Deferred rent and lease incentives		575			763			1,438			575
Accrued expenses and other liabilities		(9,300	)		(7,851	)		(2,111	)		(9,300	)
Net cash used for operating activities		(4,963	)		(7,951	)		(4,557	)		(4,963	)

Cash flows from investing activities:
Additions to property and equipment, net		(6,132	)		(9,568	)		(6,934	)		(6,132	)
Net cash used for investing activities		(6,132	)		(9,568	)		(6,934	)		(6,132	)

Cash flows from financing activities:
Proceeds from the exercise of stock options		—			61
Repurchase of common stock								(1,735	)		—
Principal payments on long-term debt		(1,949	)		(1,862	)		(2,386	)		(1,949	)
Costs associated with debt issuances		—			(8	)
Net borrowings under credit facility		13,727			21,295			17,968			13,727
Net cash provided by financing activities		11,778			19,486			13,847			11,778
Net increase in cash and cash equivalents		683			1,967			2,356			683
Cash and cash equivalents:
Beginning of period		5,170			4,586			5,572			5,170
End of period	$	5,853		$	6,553		$	7,928		$	5,853

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

In the opinion of management of Destination XL Group, Inc., a Delaware corporation (formerly known as Casual Male Retail Group, Inc. and, collectively with its subsidiaries, referred to as the “Company”), the accompanying unaudited 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 for the fiscal year ended January ~~30, 2016~~28, 2017 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March ~~18, 2016.~~20, 2017.

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 ~~2016~~2017 is a 53-week period ending on February 3, 2018 and fiscal ~~2015 are~~2016 was a 52-week ~~periods~~period ending on January 28, ~~2017 and January 30, 2016, respectively.~~2017.

The Company reports its operations as one reportable segment, Big & Tall Men’s Apparel, which consists of two principal operating segments: its retail business and its direct business. The Company considers its operating segments to be similar in terms of economic characteristics, production processes and operations, and have therefore aggregated them into a single reporting segment, consistent with its omni-channel business approach. The direct operating segment includes the operating results and assets for LivingXL^® and ShoesXL^®.

At April ~~30, 2016,~~29, 2017, the “Casual Male” trademark had a carrying value of ~~$0.8~~$0.5 million and is considered a definite-lived asset. The Company is amortizing the remaining carrying value on an accelerated basis, consistent with projected cash flows through fiscal 2018, its estimated remaining useful life.

The Company’s “Rochester” trademark is considered an indefinite-lived intangible asset and has a carrying value of $1.5 million. During the first three months ended April ~~30, 2016,~~29, 2017, no event or circumstance occurred which would cause a reduction in the fair value of the Company’s reporting units, requiring interim testing of the Company’s “Rochester” trademark.

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 April ~~30, 2016,~~29, 2017, the fair value approximates 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 are classified within Level 3 of the valuation hierarchy. See Intangibles above.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and short-term borrowings approximate fair value because of the short maturity of these instruments.

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 and reclassifications from AOCI for the three months ended April 29, 2017 and April 30, 2016, ~~and May 2, 2015,~~ respectively, were as follows:

	April 30, 2016									May 2, 2015									April 29, 2017									April 30, 2016
For the three months ended:	(in thousands)																		(in thousands)
	Pension Plans			Foreign Currency			Total			Pension Plans			Foreign Currency			Total			Pension Plans			Foreign Currency			Total			Pension Plans			Foreign Currency			Total
Balance at beginning of the quarter	$	(6,113	)	$	(539	)	$	(6,652	)	$	(7,795	)	$	(443	)	$	(8,238	)	$	(5,237	)	$	(781	)	$	(6,018	)	$	(6,113	)	$	(539	)	$	(6,652	)

Other comprehensive income before reclassifications, net of taxes		61			45			106			97			23			120
Other comprehensive income (loss) before reclassifications, net of taxes																				60			39			99			61			45			106

Amounts reclassified from accumulated other comprehensive income, net of taxes ⁽¹⁾		152			—			152			139			—			139			155			—			155			152			—			152

Other comprehensive income for the period		213			45			258			236			23			259
Other comprehensive income (loss) for the period																				215			39			254			213			45			258

Balance at end of quarter	$	(5,900	)	$	(494	)	$	(6,394	)	$	(7,559	)	$	(420	)	$	(7,979	)	$	(5,022	)	$	(742	)	$	(5,764	)	$	(5,900	)	$	(494	)	$	(6,394	)

Revenue from the Company’s retail ~~store operation~~business is recorded upon purchase of merchandise by customers, net of an allowance for sales returns. Revenue from the Company’s ~~e-commerce operations~~direct business is recognized at the time a customer order is delivered, net of an allowance for sales returns. Revenue is recognized by the operating segment that fulfills a customer’s order.

All share-based payments, including grants of employee stock options and restricted stock, are recognized as an expense in the Consolidated ~~Statement~~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.

In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which applies 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 at the lower of cost and net realizable value, which is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This ASU is 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 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 three months ended April 29, 2017 or April 30, 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.

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 ~~is currently analyzing~~expects to adopt ASU 2014-09 in the ~~impact~~first quarter of fiscal 2018 and will not adopt early. The Company has not yet selected a transition method or completed its assessment of the ~~adoption of~~effect that ASU ~~No.~~ 2014-09 will have on its Consolidated Financial Statements.

~~In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory,~~" which applies 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 at the lower of cost and net realizable value, which is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact this pronouncement will have on ~~its Consolidated Financial Statements~~ ~~but does not expect that there will be any material impact on its 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. ~~The~~While the Company is ~~currently~~ still evaluating the impact this pronouncement will have on its Consolidated Financial Statements, the Company expects a gross-up of its Consolidated ~~Financial Statements.~~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 ASU 2016-04, “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 ~~March~~August 2016, the FASB issued ASU ~~2016-09,~~2016-15, “~~Compensation - Stock Compensation~~Statement of Cash Flows (Topic ~~718) - Improvements to Employee Share-Based Payment Accounting,~~230): Classification of Certain Cash Receipts and Cash Payments,” which ~~simplifies several aspects of~~reduces the ~~accounting for share-based payment transactions, including the income tax consequences, classification of awards,~~existing diversity in practice in how certain cash receipts and ~~classification on~~cash payments are presented and classified in the statement of cash ~~flows.~~flows under Topic 230. The ~~standard~~ASU is effective for fiscal years beginning after December 15, ~~2016, including~~2017, and interim periods within those fiscal years. The Company does not expect ~~that~~ the adoption of this pronouncement ~~will~~ 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.

No other new accounting pronouncements, issued or effective during the first three months of fiscal ~~2016,~~2017, have had or are expected to have a significant impact on the Company’s Consolidated Financial Statements.

On October 30, 2014, the Company amended its credit facility with Bank of America, N.A, effective October 29, 2014, by executing the Second Amendment to the Sixth Amended and Restated Loan and Security Agreement (as amended, the “Credit Facility”).

The Credit Facility provides for maximum committed borrowings of $125 million. The Credit Facility includes, pursuant to an accordion feature, the ability to increase the Credit Facility by an additional $50 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 million for commercial and standby ~~letter~~letters of ~~credits~~credit and a sublimit of up to $15 million for swingline loans. The Company’s ability to borrow under the Credit Facility is determined using an availability formula based on eligible assets. The maturity date of the Credit Facility is October 29, 2019. 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 the lenders of the Term Loan Facility on certain equipment of the Company described below and (ii) intellectual property.

At April ~~30, 2016,~~29, 2017, the Company had outstanding borrowings under the Credit Facility of ~~$56.2~~$62.4 million, before unamortized debt issuance costs of ~~$0.4~~$0.3 million. Outstanding standby letters of credit were ~~$2.5~~$3.3 million and outstanding documentary letters of credit were ~~$0.5~~$0.1 million. Unused excess availability at April ~~30, 2016~~29, 2017 was ~~$55.0~~$45.7 million. Average monthly borrowings outstanding under the Credit Facility during the first three months of fiscal ~~2016~~2017 were ~~$50.6~~$56.9 million, resulting in an average unused excess availability of approximately ~~$61.0~~$49.8 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 than the greater of (i) 10% of the Loan Cap (defined in the Credit Facility as the lesser of the revolving credit commitments at such time or the borrowing base at the relevant measurement time) and (ii) $7.5 million, the Company will be required to maintain a minimum consolidated fixed charge coverage ratio of 1.0:1.0 in order to pursue certain transactions, including but not limited to, stock repurchases, payment of dividends and business acquisitions.

Borrowings made pursuant to 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. The Company is also subject to an unused line fee of 0.25%. At April ~~30, 2016,~~29, 2017, the Company’s prime-based interest rate was ~~4.0%~~4.5%. At April ~~30, 2016,~~29, 2017, the Company had approximately ~~$49.0~~$55.0 million of its outstanding borrowings in LIBOR-based contracts with an interest rate of ~~1.9%~~2.45%. The LIBOR-based contracts expired ~~between~~on May 2, ~~2016 and May 4, 2016.~~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 April ~~30, 2016~~29, 2017 approximated the carrying value.

(in thousands)	April 30, 2016			January 30, 2016			April 29, 2017			January 28, 2017
Equipment financing notes	$	11,202		$	12,901		$	4,452		$	6,589
Term loan, due 2019		13,500			13,750			12,500			12,750
Less: unamortized debt issuance costs		(455	)		(493	)		(297	)		(337	)
Total long-term debt		24,247			26,158			16,655			19,002
Less: current portion of long-term debt		7,592			7,155			5,246			6,941
Long-term debt, net of current portion	$	16,655		$	19,003		$	11,409		$	12,061

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% ~~and~~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 iswas subject to a prepayment ~~penalty equal to 1% of~~penalties through the ~~prepaid principal of the Notes until the first~~second anniversary of each ~~Note, 0.5% of the prepaid principal from the first anniversary until the second anniversary and~~note. The Company is no longer subject to any prepayment ~~penalty thereafter.~~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.

On October 30, 2014, the Company entered into a term loan agreement with respect to a new $15 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 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 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, with the balance payable on the termination date.

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. All prepayments are subject to an early termination fee in the amount ~~of: (a) 4%~~ of the amount prepaid if the prepayment is prior to the first anniversary of the Effective Date; (b) 2% of the amount prepaid if the prepayment is after the first anniversary, but prior to the second anniversary, of the Effective Date; and (c) 1% of the amount prepaid ~~if the prepayment is after the second anniversary, but prior to the third anniversary, of the Effective Date. There is no prepayment penalty after the third anniversary of the Effective Date.~~through October 29, 2017.

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.

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

The 2013-2016 Long-Term Incentive Plan (“2013-2016 LTIP”) was approved in the second quarter of fiscal 2013. Pursuant to the terms of the 2013-2016 LTIP, on the date of grant, each participant was granted an unearned and unvested award equal in value to four times his/her annual salary multiplied by the applicable long-term incentive program percentage, which is 100% for the Company’s Chief Executive Officer, 70% for its senior executives and 50% for other participants in the plan, which the Company refers to as the “Projected Benefit Amount.” Each participant was granted 50% of the Projected Benefit Amount in shares of restricted stock, 25% in stock options and the remaining 25% in cash.

Of the total Projected Benefit Amount, 50% is subject to time-based vesting and 50% is subject to performance-based vesting. The time-vested portion of the award (half of the shares of restricted stock, options and cash) vests in three installments with 20% of the time-vested portion having vested at the end of fiscal 2014, 40% having vested at the end of fiscal 2015 and the remaining 40% vesting at the end of fiscal 2016.

In fiscal 2016, the Company must achieve revenue of at least $600 million and an operating margin of not less than 8.0% for participants to receive 100% vesting of the performance-based portion of the Projected Benefit Amount. If the Company does not meet the performance target at the end of fiscal 2016, but the Company is able to achieve revenue equal to or greater than $510 million at the end of fiscal 2016 and the operating margin is not less than 8.0%, then the participants will receive a pro-rata portion of the performance-based award based on minimum sales of $510 million (50% payout) and $600 million (100% payout).

Assuming the Company achieves the performance target and 100% of the Projected Benefit Amount vests, excluding estimated forfeitures, the total potential value of all awards over this four-year period, as of April 30, 2016, would be approximately $19.6 million. Approximately half of the compensation expense relates to the time-vested awards, which is being expensed over forty-four months, based on the respective vesting dates. As the performance targets were not deemed probable at April 30, 2016, no expense for the performance-based awards has been recognized through April 30, 2016.

The 2016 Long-Term Incentive Wrap-Around Plan (the “Wrap-Around Plan”), which was approved in the fourth quarter of fiscal 2014, iswas a supplemental performance-based incentive plan that iswas only effective if there iswas 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. ~~Under~~The performance targets under the 2013-2016 LTIP were not achieved at the end of fiscal 2016 and accordingly, the Wrap-Around Plan if the target level performance metrics for fiscal 2016 are met, participants will be eligible to receive a payout equal to 80% of the dollar value of the performance-based compensation they were eligible to receive under the 2013-2016 LTIP. If the target level performance metrics for fiscal 2016 under the Wrap-Around Plan are exceeded, the greatest payout that participants will be eligible to receive is 100% of the dollar value of the performance-based compensation they were eligible to receive under the 2013-2016 LTIP. Any award earned will be paid 50% in cash and 50% in shares of restricted stock.became effective.

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

The Wrap-Around Plan also ~~provides~~provided for an opportunity to receive additional shares of restricted stock if the performance targets ~~are~~were achieved and the Company’s closing stock price iswas $6.75 or higher on the day earnings for fiscal 2016 ~~are~~were publicly ~~released. If~~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 ~~Company’s stock price is $6.75,~~operating results for fiscal 2016, the ~~payout~~Company achieved 50.6% of its EBITDA target. The minimum threshold for the Sales target was not achieved. Accordingly, subsequent to year-end, in ~~restricted shares will be increased by 20% and if~~ the ~~stock price is $7.25 or higher,~~first quarter of fiscal 2017, the ~~payout in restricted shares will be increased by 30%,~~Compensation Committee of the Board of Directors approved awards totaling $2.3 million, with a ~~pro-rata payout between $6.75~~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 ~~$7.25. The portion of the award payable in~~ cash ~~is not affected by the stock price.~~awards totaling approximately $1.3 million. All awards ~~granted pursuant to the Wrap-Around Plan~~ will ~~not~~ vest ~~until~~on the last day of the second quarter of fiscal 2017. On March 20, 2017,.

~~Assuming that~~ in conjunction with the grant of restricted stock awards, the Company achieves the performance target at target levels under the Wrap-Around Plan, and further assuming that the Company’s stock price is greater than $7.25, at the time the Company’s earnings are publicly released, the compensation expense associated with this Wrap-Around Plan is estimated to be approximately $8.8 million. Through the endreclassified $0.9 million of the ~~first quarter~~liability accrual from “Accrued Expenses and Other Current Liabilities” to “Additional Paid-In Capital.” See the Consolidated Statement of ~~fiscal 2016, the Company has accrued approximately $1.6 million~~Changes in ~~compensation expense related to the potential payout of performance awards under the Wrap-Around Plan.~~Stockholders’ Equity.

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. Each participant in the plan will be entitled to receive an award 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 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 Target Cash Value is subject to time-based vesting and 50% is subject to performance-based vesting. The time-vested portion of 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 and 50% vesting on April 1 the succeeding year. The performance-based vesting is subject to the achievement of the performance target(s) for the applicable Performance Period. Any performance award granted will vest on August 31 following the end of the applicable Performance Period.

~~The~~For the 2016-2017 Performance Period, the Compensation Committee established two performance targets ~~for the 2016-2017 Performance Period~~ under the ~~new~~ 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 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.

For the 2017-2018 Performance Period, the Compensation Committee established two performance targets under 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 of the Total Company Comparable Sales for fiscal 2017 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 ~~will be~~and 2017-2018 LTIP were in restricted stock units (RSUs). Assuming that the Company achieves the performance target at target levels and all time-vested awards vest, the compensation expense associated with the 2016-2017 LTIP and 2017-2018 LTIP is estimated to be approximately ~~$4.4 million.~~$3.8 million and $4.1 million, respectively. Approximately half of the compensation expense ~~or $2.2 million,~~for each plan relates to the time-vested RSUs, which are being expensed over thirty-six 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 first quarter of fiscal ~~2016,~~2017, the Company ~~has~~had accrued approximately $0.3 million and $0.1 million in compensation expense related to the potential payout of performance awards under the 2016-2017 ~~LTIP.~~

~~The Company has one active stock-based compensation plan:~~Through 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”). ~~Pursuant~~

The share reserve under the 2016 Plan is 5,200,000 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.

In addition to the initial share reserve of 5,200,000 shares, the 525,538 shares that remained available under our 2006 Plan were added and became available for issuance under the 2016 Plan on August 4, 2016. In accordance with the terms of the 2016 Plan, any shares outstanding under the 2006 Plan ~~the Company has 7,250,000 shares authorized~~at August 4, 2016 that subsequently terminate, expire or are canceled for any reason without having been exercised or paid are added back and become available for issuance ~~of which 4,250,000 shares may be subject to~~under the ~~granting of awards other than stock~~2016 Plan, with options and stock appreciation ~~rights.~~

rights being added back on a one-for-one basis and full-value awards being added back on a 1 to 1.9 basis. At April 29, 2017, the Company had 6,645,815 shares available under the 2016 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% of the shares available for awards under the 2016 Plan, no award will become exercisable or otherwise forfeitable unless such award has been outstanding for a minimum period of one year from its date of grant.

The following tables summarize the stock option activity and share activity ~~under~~for the Company’s 2006 Plan and 2016 Plan, on a combined basis, for the first three months of fiscal ~~2016:~~2017:

	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			734,268			19,143				19,660			1,257,629		$	2.72
Shares vested/issued		(1,667	)		—			(2,571	)			(19,660	)		(23,898	)	$	3.65
Shares canceled		(857,221	)		(17,733	)		—				—			(874,954	)	$	4.99
Outstanding non-vested shares at end of quarter		482,002			1,086,363			81,448				—			1,649,813		$	3.33

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

1,320,143

—

31,587

—

1,351,730

$
5.09

Shares granted

—

423,230

8,434

13,800

445,464

$
5.14

Shares vested/issued

(1,666
)

—

—

(13,800
)

(15,466
)

$
4.76

Shares canceled

—

—

—

—

—

—

Outstanding non-vested shares at end of quarter

1,318,477

423,230

40,021

—

1,781,728

$
5.11

At April 30, 2016, the Company had 569,221 shares available for future grant under the 2006 Plan, of which 464,815 remain available under the sublimit for awards other than options and stock appreciation rights.

~~The Company granted 3,483 shares of common stock, with a fair value of approximately $16,271, to certain of its non-employee directors as compensation in lieu of cash in~~For the first three months of fiscal ~~2016.~~

2017, the Company granted 484,558 shares of restricted stock, 734,268 RSUs and 19,143 shares of deferred stock. For the first three months of fiscal 2016, the Company granted 8,434 shares of deferred stock and 423,230 RSUs. There were no grants of stock options during the first three months of fiscal ~~2016~~2017 and fiscal ~~2015. For the first three months of fiscal 2016, the Company granted 423,230 RSUs and 8,434 shares of deferred stock. For the first three months of fiscal 2015, the Company~~2016.

~~granted 4,962 shares of deferred stock.~~ Unless otherwise specified by the Compensation Committee, RSUs, restricted stock and deferred stock are valued using the closing price of the Company’s common stock on the day immediately preceding the date of grant.

~~For~~The Company granted 7,898 shares of common stock, with a fair value of approximately $24,525, to certain of its non-employee directors as compensation in lieu of cash in the first three months of fiscal ~~2016 and fiscal 2015, the~~2017.

The Company recognized total stock-based compensation expense of $0.3 million for both the first quarter of fiscal 2017 and ~~$0.6 million, respectively.~~fiscal 2016. The total compensation cost related to time-vested stock options, restricted stock and RSU awards not yet recognized as of April ~~30, 2016 is~~29, 2017 was approximately ~~$2.8~~$3.3 million, net of estimated forfeitures, which will be expensed over a weighted average remaining life of ~~24.5~~26 months. At April 30, 2016, the Company had $7.2 million of unrecognized stock-based compensation expense, net of estimated forfeitures, related to its performance-based stock options and restricted stock under its 2013-2016 LTIP. As discussed above, the Company will begin recognizing compensation if, and when, achievement of the performance targets under the 2013-2016 LTIP becomes probable.

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 three months ended
	April 30, 2016		May 2, 2015		April 29, 2017		April 30, 2016
(in thousands)
Common Stock Outstanding:
Basic weighted average common shares outstanding		49,513		49,019		49,735		49,513
Common stock equivalents – stock options and restricted stock ⁽¹⁾		367		—		—		367
Diluted weighted average common shares outstanding		49,880		49,019		49,735		49,880

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 ~~the~~ stock options, or restricted stock units, restricted or deferred stock had an anti-dilutive effect.

	For the three months ended				For the three months ended
	April 30, 2016		May 2, 2015		April 29, 2017		April 30, 2016
(in thousands, except exercise prices)
Stock Options (time-vested)		1,244		1,467		1,377		1,244
Restricted Stock Units (time-vested)		423		—		1,086		423
Restricted and Deferred Stock						477		—
Range of exercise prices of such options	$4.91 - $7.52		$4.91 - $7.52		$3.20 - $7.52		$4.91 - $7.52

The above options, which were outstanding at April ~~30, 2016,~~29, 2017, expire from October 22, 2017 to ~~November 2, 2025.~~January 18, 2027.

~~Excluded from~~There were no performance-based awards outstanding at April 29, 2017. For the ~~Company’s computation of basic and diluted earnings per share for~~ first ~~three months~~quarter of fiscal 2016, ~~were~~ 941,082 shares of unvested performance-based restricted stock and 1,181,168 ~~performance-based stock options. For the first three months of fiscal 2015, 933,486 shares of unvested performance-based restricted stock and 1,162,047~~ performance-based stock options were excluded from the Company’s computation of basic and diluted earnings per ~~share for both periods. Performance-based~~share. All outstanding performance-based awards ~~will be included~~expired unvested in March 2017 as a result of the ~~computation of basic and diluted earnings per share if, and when, the respective~~Company not achieving performance targets ~~are achieved. In addition, shares~~in fiscal 2016.

Shares of unvested time-based restricted stock of 482,002 for the first three months of fiscal 2017 and 377,395 ~~and 766,837~~shares for the first three months of fiscal 2016 were excluded from the computation of basic earnings per share ~~for the first three months of fiscal 2016 and fiscal 2015, respectively,~~ and will continue to be excluded until such shares vest. See Note 3, Long-Term Incentive Plans, for a discussion of the Company’s ~~2013-2016~~ LTIP plans and ~~the respective performance targets.~~equity awards.

Although the shares of performance-based and time-based restricted stock issued in connection with the 2013-2016 LTIP are not considered outstanding or common stock equivalents for earnings per share purposes until certain vesting and performance thresholds are achieved, all 1,318,477All 482,002 shares of restricted stock outstanding at April ~~30, 2016~~29, 2017 are considered issued and outstanding. Each share of restricted stock has all 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.

On March 17, 2017, the Company’s Board of Directors approved a stock repurchase plan. Under the stock repurchase plan, the Company may purchase up to $12.0 million of its common stock through open market and privately negotiated transactions during fiscal 2017. 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, 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.

Through April 29, 2017, the Company purchased 669,347 shares of common stock at an average price of $2.73 per share. Approximately $10.2 million remains available under the stock repurchase plan.

At April ~~30, 2016,~~29, 2017, the Company had total deferred tax assets of approximately ~~$82.3~~$83.5 million, total deferred tax liabilities of ~~$19.5~~$14.4 million and a corresponding valuation allowance of ~~$63.0~~$69.3 million.

In the fourth quarter of fiscal 2013, the Company entered into a three-year cumulative loss position and based on forecasts at that time, the Company expected the cumulative three-year loss to increase as of the end of fiscal 2014. Management determined that this represented significant negative evidence 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 ~~2016,~~2017, the Company believes that a full allowance remains appropriate at this time.

As of April ~~30, 2016,~~29, 2017, the Company had net operating loss carryforwards of ~~$145.6~~$146.9 million for federal income tax purposes and ~~$81.5~~$87.6 million for state income tax purposes that are available to offset future taxable income through fiscal year ~~2036.~~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 ~~$0.1 million and $2.5~~$2.4 million of net operating loss for tax purposes related to the Company’s operations in ~~Hong Kong and~~ Canada, ~~respectively, though both are~~which is expected to expire largely unutilized. Included in the net operating loss carryforwards for both federal and state income tax is approximately $12.5 million relating to stock compensation deductions, the tax benefit from which, if realized, will be credited to additional paid-in capital.

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 three months of fiscal ~~2016~~2017 and fiscal ~~2015~~2016 primarily represents ~~an increase in our deferred tax liability for indefinite-lived intangibles as well as~~ 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”, the Company will recognize the benefit from a tax position only if it is more likely than not that the position would be sustained upon audit based solely on the technical merits of the tax position. The unrecognized tax benefit at April ~~30, 2016~~29, 2017 was $3.0 million. This amount is directly associated with a prior year tax position related to exiting the ~~European~~Company’s direct ~~business.~~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.

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, marketing costs, selling, general and administrative expenses, store counts, capital expenditures, borrowings, sales and earnings expectations for fiscal ~~2016~~2017 and beyond, the expected impact of inventory management improvements on inventory levels and working capital in fiscal ~~2016~~2017, the expected impact of investments in marketing on future sales, and the anticipated pace and number of store openings and closings in fiscal ~~2016.~~2017. 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 and notes to those statements included elsewhere in this Quarterly Report and our audited consolidated financial statements for the year ended January ~~30, 2016,~~28, 2017, included in our Annual Report on Form 10-K for the year ended January ~~30, 2016,~~28, 2017, as filed with the Securities and Exchange Commission on March ~~18, 2016~~20, 2017 (our “Fiscal ~~2015~~2016 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 ~~2015~~2016 Annual Report, that sets forth certain risks and uncertainties that may have an impact on future results and direction of our Company, including, without limitations, risks relating to the execution of our corporate strategy, and our ability to grow our market ~~share.~~share, predict customer tastes and fashion trends, forecast sales growth trends and compete successfully in our market.

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 & tall men’s apparel with retail and direct operations in the United States and London, England. We operate under the trade names of Destination XL^®, DXL^®, DXL Outlets, Casual Male XL^®, Casual Male XL Outlets, Rochester Clothing, ShoesXL^® and LivingXL^®. At April ~~30, 2016,~~29, 2017, we operated ~~170~~202 Destination XL stores, ~~121~~14 DXL outlet stores, 90 Casual Male XL retail stores, ~~10 DXL outlet stores, 39~~33 Casual Male XL outlet stores and 5 Rochester Clothing stores. Our ~~direct business includes our~~e-commerce site, DestinationXL.com, ~~and bigandtall.com e-commerce sites which support~~supports our stores, brands and product extensions.

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 and January 28, 2017 ~~and January 30, 2016~~ as “fiscal ~~2016”~~2017” and “fiscal ~~2015,~~2016,” respectively. ~~Both~~Fiscal 2017 is a 53-week period and fiscal ~~years are~~2016 was a 52-week ~~periods.~~period.

We report our operations as one reportable segment, Big & Tall Men’s Apparel. We consider our retail and direct ~~business,~~businesses, especially in our growing omni-channel environment, to be similar in terms of economic characteristics, production processes and operations, and have, therefore, aggregated them into a single reporting segment.

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.

Our customer’s shopping experience continues to evolve across multiple channels and we are continually changing to meet his needs. As part of our omni-channel initiatives, ~~beginning in fiscal 2014~~ 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 and where a sale is ultimately settled, we ~~no longer~~do not report comparable sales separately for our retail and direct businesses. ~~We anticipate that we will continue to provide specific information on our DXL comparable store sales in the near-term, but~~

In addition, as we ~~near completion~~disclosed at the end of ~~our roll-out~~fiscal 2016, with over 200 DXL stores open, we ~~expect to transition~~have transitioned to one comparable sales figure for the ~~Company.~~Company which includes stores and our direct business. We will no longer provide comparable store sales on a discrete basis for our DXL format stores.

The following is a summary of results for the first quarter of fiscal ~~2016,~~2017 as compared to the prior year’s first quarter, including EBITDA, which is a non-GAAP measure. Please see “Non-GAAP Financial Measures” below for a reconciliation of Net Income (Loss) to EBITDA.~~(Certain columns may not foot~~

We were pleased with the improvements we began to see in the first quarter of fiscal 2017. At the end of fiscal 2016, with the overall weakness that we were seeing across the retail environment, we shifted our focus for fiscal 2017 to improving traffic to our stores and growing our e-commerce business, with an emphasis on customer acquisition and retention. As such, we have reinvested in our marketing program, starting with an expanded spring advertising campaign, which launched on April 2, 2017. While sales in February and March were challenging, we began to see an increase in store traffic following the start of our advertising campaign, resulting in a 6.4% comparable sales increase for the month of April. Overall, for the first quarter, we had a comparable sales decrease of 2.1%, which was in line with our expectations. Furthermore, we were able to maintain a strong merchandise margin during the first quarter, which increased approximately 10 basis points over the first quarter of fiscal 2016. Our gross margin decreased 90 basis points over the first quarter of fiscal 2016 due to ~~rounding)~~

~~Executive Summary~~sales deleveraging and pre-opening rents on 11 new DXL stores.

Our ~~DXL~~net loss was $(6.1) million for the first quarter of fiscal 2017, as compared to net income of $0.2 million for the first quarter of fiscal 2016. More than half of this decrease in earnings was due to the increase in advertising expense of approximately $3.5 million, but we believe that this investment will benefit us in the second quarter and in the long-term as we work to strengthen our customer base and build brand awareness.

From a liquidity perspective, our cash flow from operations improved slightly by $0.4 million to $(4.6) million. Free cash flow for the first quarter of fiscal 2017 decreased by approximately $0.4 million, as compared to the first quarter of fiscal 2016, due to the fact that capital expenditures for the quarter were higher by $0.8 million. We opened a total of 11 stores ~~performed well~~ during the first quarter of fiscal ~~2016, delivering~~2017 as compared to 5 stores during the same period in fiscal 2016. For the year, we expect to generate positive free cash flow of $15.0 to $20.0 million, which we plan to use to reduce our outstanding debt while also making opportunistic repurchases of our common stock, pursuant to our stock repurchase program discussed below. See “Non-GAAP Financial Measures” below for a ~~5.8% comparable sales increase. Sales for the quarter started out strong, but business began to weaken towards the end~~reconciliation of ~~March and continued through April. Sales from our spring/summer categories, such as shorts and activewear, were below expectations for the first quarter.~~ free cash flow.

We ~~believe our sales were impacted by the delayed arrival of warm weather, particularly~~also opened two DXL retail stores in Ontario, Canada. These two stores, which are included in the ~~northeast and midwest. However, we saw consistent, strong store sales results throughout the quarter in warm climate regions such as southern California, Arizona and Florida.~~

~~Our total revenues increased 3.3%, our merchandise margin remained flat to last year and our inventory at the end of first quarter increased less than 2.0% from~~eleven opened during the first quarter, ~~of fiscal 2015. EBITDA for the~~mark our first quarter of fiscal 2016 increased to $8.4 million as compared to $6.8 million for the prior year first quarter. On a diluted per share basis, net income for the first quarter of fiscal 2016 was breakeven as compared to a net loss of $(0.01) for the first quarter of fiscal 2015.

~~Growth in our~~Company-operated DXL stores ~~continues to be~~located outside of the primary contributor to our earnings improvement. The DXL comparable sales increase of 5.8% was the result of an increase in the total number of transactions for the quarter of 3.4% as well as an increase in the units per transaction of 3.5% and toUnited States. We believe that Canada provides a ~~lesser extent an increase in dollars per transaction of 2.3%. Sales per square foot~~strategic growth opportunity for our DXL ~~retail stores, on~~brand.

As discussed more fully below under “Liquidity and Capital Resources,” in March 2017 our Board of Directors approved a ~~rolling 12-month basis, were $179 at the end~~stock repurchase plan, pursuant to which we may purchase up to $12.0 million of ~~the first quarter as compared with $168 per square foot for the rolling 12-month period at the end of the first quarter last year. These metrics show that~~ our ~~merchandise mix is strong. We expect that the arrival of warmer weather in the second quarter will drive comparable sales in our DXL stores, and our sales and earnings outlook for~~outstanding common stock during fiscal ~~2016 remain unchanged.~~

2017. During the first quarter of fiscal ~~2016,~~2017, we opened 4 DXL retail stores and 1 DXL outlet store, while closing 4 Casual Male XL retail stores and 1 Casual Male XL outlet. For fiscal 2016, we plan to open 28 DXL retail stores and 3 DXL outlet stores. In addition, we currently expect to close 26 Casual Male XL retail stores and 3 Casual Male XL outlet stores.repurchased approximately 670,000 shares at a total cost of approximately $1.8 million.

In fiscal 2016, we ~~initiated a review of~~began our inventory ~~levels~~optimization project in ~~our distribution center. We also launched a review of our~~an effort to improve inventory receipt flow and procurement, ~~and management functions. This review process has generated several changes that we are implementing to streamline operations at our distribution center, including tighter~~tightening controls over the number of ~~merchandise~~ weeks of ~~supply and improvements in inventory receipt flow and procurement.~~supply. We expect these changes to result in a more optimized inventory structure ~~that will~~and expect our inventory at the end of fiscal 2017 to be $8.0 to $12.0 million less than fiscal 2016. This reduction in inventory is expected to improve our working capital position ~~by at least $5.0 million~~ in fiscal ~~2016.~~2017. We do not believe these changes will jeopardize sales from out-of-stock positions in either our retail stores or in our direct business.

Our ~~spring advertising campaign launched at~~primary objective in fiscal 2017 is to grow our customer base through a revitalized marketing program and to maintain a strong liquidity position by continuing to improve cash flow. We are reinvesting in our marketing initiatives to help drive brand awareness, store traffic and our digital presence by increasing our marketing plan for fiscal 2017 by approximately $6.8 million to $25.0 million. Our DXL store growth for the year will be funded by cash from operations. We expect to open 19 DXL retail stores and 1 DXL outlet store in fiscal 2017, while closing 16 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.

Total sales for the first quarter of fiscal 2017 declined slightly to $107.7 million from $107.9 million from the first quarter of fiscal 2016. The decrease of $0.2 million in total sales was due to a comparable sales decrease of $2.1 million, or 2.1%, partially offset by an increase in non-comparable sales. At the beginning of the first quarter, the lack of ~~2016 during~~store traffic continued to negatively impact our sales. However, with the ~~NFL draft~~launch of spring advertising campaign on April 2nd, we saw significant increases in store traffic and number of transactions, resulting in a comparable sales increase of 6.4% in April. Our spring advertising campaign will continue to run through Father’s Day. ~~The campaign includes both television~~In addition to focusing our efforts on improving traffic to our stores, we are also growing our e-commerce business with emphasis on increasing brand awareness and radio commercials. Our marketing costs for fiscal 2016 are expected to decrease by approximately $2.6 million from fiscal 2015. By gaining improved efficiencies in media buying and creative development, we believe this reduction will not have an adverse effect on our ~~sales, awareness, or~~ customer ~~acquisition goals.~~base.

~~For fiscal 2016, our earnings guidance remains within original guidance previously provided as follows:~~

~~As a result~~Our end-of-rack customer grew to 44.8% of our ~~inventory management improvement efforts, including tighter controls over weeks of supply and improvement~~bottoms business from 43.8% in the ~~timing~~first quarter of ~~inventory receipts, we have updated~~fiscal 2016. Our end-of-rack customer, with a waist size of 46 inches or less, shops 52% more often than our ~~cash flow guidance:~~

~~Financial Summary~~customer with a waist size of 48 inches or more and, on an annual basis, spends twice as much.

For the first quarter of fiscal 2016, total sales were $107.9 million as compared to $104.4 million for the first quarter of fiscal 2015. The increase of $3.5 million in total sales was primarily due to a 2.0% increase in comparable sales of $1.9 million, an increase in non-comparable store sales of $8.4 million and an increase of $0.3 million of other revenue, partially offset by $7.1 million in lost sales from closed and converted stores.

Our comparable sales increase for the first quarter of $1.9 million, was driven by our 144 comparable DXL retail stores which increased 5.8%, or $2.9 million, against a comparable increase of 8.7% for the first quarter of fiscal 2015. Even with the late arrival of warm weather, comparable sales for the first quarter increased as a result of a 3.4% increase in the number of transactions and a 3.5% increase in units per transaction.

~~For the first quarter of fiscal 2016,~~2017, our gross margin rate, inclusive of occupancy costs, was ~~46.1%~~45.2% as compared to a gross margin rate of ~~46.2%~~46.1% for the first quarter of fiscal ~~2015. The~~2016. Our merchandise margins improved 10 basis ~~point decrease was~~points over the first quarter of last year primarily due to anfewer promotional markdowns, but we also had a 100 basis point increase in occupancy costs as a percentage of ~~10 basis points.~~

total sales. The Company opened 11 new DXL stores in the first quarter of fiscal 2017, compared to 5 store openings in the first quarter of fiscal 2016. The increase in occupancy expense as a percent of sales was due to higher rent expense on new DXL stores, plus pre-opening rent expense on the elevated number of new store openings. On a dollar basis, occupancy costs for the first quarter of fiscal ~~2016~~2017 increased ~~4.1%~~approximately 6.3% over the prior year’s first quarter, ~~driven~~ primarily ~~by the overall increase in square footage~~ as a result of ~~our DXL store openings. Merchandise margin for the first quarter of fiscal 2016 remained flat with the prior year’s first quarter.~~ an increase in total square footage.

As a percentage of sales, SG&A expenses for the first quarter of fiscal ~~2016~~2017 were ~~38.3%~~42.9% as compared to ~~39.7%~~38.3% for the first quarter of fiscal ~~2015.~~2016. On a dollar basis, SG&A ~~decreased slightly~~increased by $0.1 million as a result of decreases in store opening costs and advertising costs partially offset by an increase in store payroll costs. Pre-opening payroll, training and other incremental costs to support our DXL store openings were $0.6$4.8 million for the first quarter of fiscal ~~2016~~2017. The increase was principally due to an increase of $3.5 million, or 320 basis points, in advertising expense. As discussed above, we are reinvesting in our marketing initiatives to help drive brand awareness, store traffic and our digital presence by increasing our marketing plan. We launched our spring advertising campaign at the beginning of April as opposed to the end of the month as we had done in fiscal 2016. In total, our spring campaign will run for 10 weeks as compared to ~~$1.1 million for~~6 weeks in fiscal 2016. The remainder of the ~~first quarter of fiscal 2015.~~increase was due to increases in store payroll and other supporting costs associated with a greater DXL store base.

Depreciation and amortization for the first quarter of fiscal ~~2016~~2017 increased ~~$0.8~~$0.4 million to ~~$7.3~~$7.7 million as compared to ~~$6.5~~$7.3 million for the first quarter of fiscal ~~2015.~~2016. The increase in depreciation and amortization ~~for the first quarter of fiscal 2016 is~~was due to the continued store growth associated with our ~~rollout of the~~ DXL ~~store concept.~~retail and outlet stores.

Net interest expense ~~of $0.8 million~~ for the first quarter of fiscal ~~2016~~2017 of $0.8 million was relatively flat as compared to the ~~first quarter~~comparable period of ~~fiscal 2015. With our continued planned store growth in fiscal 2016, interest costs are expected to increase slightly from fiscal 2015 as~~the prior year. As a result of ~~higher average borrowings. By the end of~~our inventory initiatives undertaken to improve liquidity, we expect interest costs for fiscal 2017 will be similar to fiscal 2016 however, we expect that our total debt outstanding will be $59.0-$64.0 million, a decrease from $68.1 million at the end of fiscal 2015. See “Liquidity and Capital Resources” for more discussion regarding our current credit facility, long-term debt and future liquidity needs.levels.

At April ~~30, 2016,~~29, 2017, we had total deferred tax assets of ~~$82.3~~$83.5 million, total deferred tax liabilities of ~~$19.5~~$14.4 million and a corresponding valuation allowance of ~~$63.0~~$69.3 million. The deferred tax assets ~~include~~included approximately ~~$52.1~~$56.0 million of net operating loss carryforwards and approximately ~~$5.6~~$5.0 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 fiscal ~~2016,~~2017, we believe that a full valuation allowance ~~remains~~continues to remain appropriate at this time.

Our tax ~~provision,~~provisions for the first quarter of fiscal ~~2016~~2017 and fiscal ~~2015, represents an increase in our deferred tax liability for indefinite-lived intangibles as well as~~2016 primarily represent current state margin tax and foreign income tax.

For the first quarter of fiscal ~~2016,~~2017, we had a net loss of $(6.1) million, or $(0.12) per diluted share, compared with net income of $0.2 million, or $0.00 per diluted share, ~~compared with a net loss of $(0.6) million, or $(0.01) per diluted share,~~ for the first quarter of fiscal ~~2015.~~ 2016.

On a non-GAAP basis, assuming a normalized tax rate for both periods, adjusted net ~~income (loss)~~loss per share for the first quarter of fiscal 2017 was ~~the same~~$(0.07) per diluted share as ~~GAAP, with~~compared to adjusted net income of $0.00 per diluted share for the first quarter of fiscal ~~2016 and $(0.01) per diluted share for the first quarter of fiscal 2015.~~2016.

At April ~~30, 2016,~~29, 2017, total inventory was ~~$125.8~~$121.4 million compared to ~~$125.0~~$117.4 million at January ~~30, 2016~~28, 2017 and ~~$123.8~~$125.8 million at ~~May 2, 2015.~~April 30, 2016. The ~~1.6% increase~~3.8% decrease of ~~$2.0~~$4.4 million from ~~May 2, 2015 is~~April 30, 3016 was due to inventory initiatives implemented in fiscal 2016 to improve timing of receipts and reduce weeks of supply on hand. As a ~~slight increase in~~result of these initiatives, the average inventory per total built-out square footage ~~as well as a greater mix~~ of ~~higher-cost branded apparel. Clearance merchandise represented 8.7% of inventory~~stores at ~~the end of the first quarter of fiscal 2016~~April 29, 2017 decreased 7.9% to $56.58 per square foot as compared to $61.46 per square foot at April 30, 2016. At April 29, 2017, our clearance inventory represented 8.2% of our total inventory, as compared to 8.7% at ~~the end of the first quarter of fiscal 2015.~~April 30, 2016.

Historically, and consistent with the retail industry, we have experienced seasonal fluctuations as it relates to our operating income and net income. Traditionally, a significant portion of our operating income and net income is generated in the fourth quarter, as a result of the “Holiday” season.

Our primary sources of liquidity are cash generated from operations and availability under our credit ~~facility.~~facility with Bank of America, N.A., which was most recently amended in October 2014 (“Credit Facility”). Our current cash needs are primarily for working capital (essentially inventory requirements), capital expenditures, growth initiatives, and, ~~growth initiatives.~~ as discussed further below, our stock repurchase program, which was announced in March 2017.

As discussed below, our capital expenditures for fiscal ~~2016~~2017 are expected to be ~~$30.0~~approximately $22.0 million, primarily related to the planned opening of approximately 2820 new DXL retail ~~stores~~ and ~~3 DXL~~ outlet stores and information technology projects. However, we expect to receive approximately ~~$7.0-$8.0~~$5.0 million in tenant allowances to offset these capital expenditures.

We expect to fund ~~our~~this store growth and stock repurchase program in fiscal ~~2016~~2017 primarily through ~~earnings and~~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 us to meet our foreseeable liquidity requirements.

Over the past several months, we have been working on improving our inventory turnover, strengthening our control over the timing of merchandise receipts and tightening the weeks of merchandise on hand. As a result, we have revised our liquidity and expected debt guidance for fiscal 2016 to reflect the working capital benefits of these improvements. For fiscal ~~2016,~~2017, we expect ~~to generate free~~ cash flow ~~before DXL capital expenditures~~from operating activities of ~~$25.6~~$37.0 million to $30.6 million. We will reinvest that cash to fund our DXL store growth in fiscal 2016, which we believe provides the best opportunity for return on capital. After DXL capital expenditures, we expect$42.0 million (including tenant allowances), and positive free cash flow of ~~$5.0-$10.0 million. While we expect~~$15.0 to $20.0 million that ~~our average borrowings for fiscal 2016~~ will be ~~greater than fiscal 2015, we expect that our total~~used to reduce outstanding debt atand purchase shares of the ~~end~~Company’s common stock as part of ~~fiscal 2016 will be approximately $59.0-$64.0 million, a decrease from $68.1 million at the end of fiscal 2015.~~its stock repurchase program.

For the first three months of fiscal ~~2016,~~2017, free cash flow ~~which we define as cash flow from operating activities, less capital expenditures, improved~~decreased by ~~$6.4~~$(0.4) million to ~~$(11.1)~~$(11.5) million from ~~$(17.5)~~$(11.1) million for the first three months of fiscal ~~2015.~~2016. This ~~improvement~~decrease in free cash flow was ~~primarily~~ due to ~~the improvement~~an increase in ~~operating results and lower~~ capital expenditures of $0.8 million related to the opening of 11 stores in the first quarter of fiscal 2017 as compared to ~~fiscal 2015. See “Non-GAAP Financial Measures” below regarding non-GAAP free cash flow.~~5 stores in the prior year.

The following is a summary of our total debt outstanding at April ~~30, 2016~~29, 2017 with the associated unamortized debt issuance costs:

(in thousands)	Gross Debt Outstanding		Less Debt Issuance Costs			Net Debt Outstanding		Gross Debt Outstanding		Less Debt Issuance Costs			Net Debt Outstanding
Credit facility	$	56,172	$	(431	)	$	55,741	$	62,403	$	(308	)	$	62,095
Equipment financing notes		11,202		(78	)		11,124		4,452		(28	)		4,424
Term loan, due 2019		13,500		(377	)		13,123		12,500		(269	)		12,231
Total debt	$	80,874	$	(886	)	$	79,988	$	79,355	$	(605	)	$	78,750

Our ~~Credit Facility~~credit facility with Bank of America, N.A., effective October 29, 2014 (our “Credit Facility”) 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 the agreement of the lender(s) participating in the increase. 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 the Credit Facility is October 29, 2019. Our Credit Facility is described in more detail in Note 2 toof the Notes to the Consolidated Financial Statements included in this Quarterly Report.

Borrowings made pursuant to the Credit Facility 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% 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.

We had outstanding borrowings of ~~$56.2~~$62.4 million under the Credit Facility at April ~~30, 2016.~~29, 2017. At April ~~30, 2016,~~29, 2017, outstanding standby letters of credit were ~~$2.5~~$3.3 million and outstanding documentary letters of credit were ~~$0.5~~$0.1 million. The average monthly borrowing outstanding under the Credit Facility during the first three months ended April ~~30, 2016~~29, 2017 was approximately ~~$50.6~~$56.9 million, resulting in an average unused excess availability of approximately ~~$61.0~~$49.8 million. Unused excess availability at April ~~30, 2016~~29, 2017 was ~~$55.0~~$45.7 million. Our obligations under the Credit Facility are secured by a lien on substantially all 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 are for 48 months and

accrue interest at fixed rates ranging from 3.07% to 3.50%. Principal and interest, are payable monthly, in arrears. ~~We are~~The Company was subject to a prepayment ~~penalty equal to 1% of~~penalties through the ~~prepaid principal of the Notes until the first~~second anniversary of each ~~Note, 0.5% of the prepaid principal from the first anniversary until the second anniversary and~~note. The Company is no longer subject to any prepayment ~~penalty thereafter.~~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, with the balance payable on the termination date.

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. All prepayments are subject to an early termination fee in the amount ~~of: (a) 4%~~ of ~~the amount prepaid if the prepayment was prior to October 29, 2015; (b) 2% of the amount prepaid if the prepayment is after October 29, 2015, but prior to October 29, 2016; and (c)~~ 1% of the amount prepaid ~~if the prepayment is after October 29, 2016, but prior to October 29, 2017. There is no prepayment penalty after~~through October 29, 2017.

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 April 29, 2017 and April 30, 2016, ~~and May 2, 2015,~~ respectively:

	April 30, 2016				May 2, 2015				April 29, 2017				April 30, 2016
Store Concept	Number of Stores		Square Footage		Number of Stores		Square Footage		Number of Stores		Square Footage		Number of Stores		Square Footage
(square footage in thousands)
DXL Retail		170		1,392		149		1,258		202		1,606		170		1,392
DXL Outlets		10		50		4		23		14		72		10		50
Casual Male XL Retail		121		431		152		538		90		314		121		431
Casual Male Outlets		39		123		44		140		33		103		39		123
Rochester Clothing		5		51		8		74		5		51		5		51
Total Stores		345		2,047		357		2,033		344		2,146		345		2,047

Below is a summary of store openings and closings from January ~~30, 2016~~28, 2017 to April ~~30, 2016:~~29, 2017:

Number of Stores:	DXL		DXL Outlets		Casual Male XL Retail			Casual Male XL Outlets			Rochester Clothing		Total Stores			DXL		DXL Outlets		Casual Male XL Retail			Casual Male XL Outlets			Rochester Clothing		Total Stores
At January 30, 2016		166		9		125			40			5		345
At January 28, 2017																	192		13		97			36			5		343
New stores⁽¹⁾		—		—		—			—			—		—			5		—		—			—			—		5
Replaced stores⁽²⁾		4		1		(3	)		(1	)		—		1			5		1		(5	)		(3	)		—		(2	)
Closed retail stores⁽³⁾		—		—		(1	)		—			—		(1	)		—		—		(2	)		—			—		(2	)
At April 30, 2016		170		10		121			39			5		345
At April 29, 2017																	202		14		90			33			5		344

Our capital expenditures for the first three months of fiscal ~~2016~~2017 were ~~$6.1~~$6.9 million as compared to ~~$9.6~~$6.1 million for the first three months of fiscal ~~2015.~~2016. The ~~$3.5~~$0.8 million ~~decrease is~~increase was primarily related to ~~the timing and decrease in average square footage~~a greater number of ~~the new~~ DXL stores ~~opening in fiscal 2016 as compared to the prior year. The Company~~ opened ~~5 DXL stores in~~during the first quarter of fiscal ~~2016~~2017 as compared to 13fiscal 2016. The Company opened 10 DXL retail stores and 1 DXL outlet stores in the first ~~quarter~~three months of fiscal ~~2015.~~2017 as compared to 4 DXL retail stores and 1 DXL outlet store in the first three months of fiscal 2016.

For fiscal ~~2016,~~2017, our capital expenditures are expected to be approximately ~~$30.0~~$22.0 million and we expect to receive approximately ~~$7.0-$8.0~~$5.0 million in tenant allowances to offset these expenditures. Our budget includes approximately ~~$20.6~~$13.7 million, excluding any

allowance, related to the opening of 2819 DXL retail stores and 31 DXL outlet stores, and approximately ~~$5.9~~$8.3 million for continued information technology projects and ~~other infrastructure~~general overhead projects. In addition, we expect to close approximately 2616 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.

There have been no material changes to the critical accounting policies and estimates disclosed in our Fiscal ~~2015~~2016 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 income (loss), adjusted net income (loss) per diluted share, free cash flow, free cash flow before DXL capital expenditures and EBITDA 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~~ income (loss) 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 ~~cash flow~~ performance, especially when comparing such results to previous ~~periods.~~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:~~tables (certain columns may not foot due to rounding):

Adjusted net income (loss) and adjusted net income (loss) per diluted share. The above discussion includes an adjusted net income (loss) for the first quarter of fiscal ~~2016~~2017 and fiscal ~~2015~~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 net income (loss) to adjusted net income (loss), assuming a normal tax ~~benefit~~rate of 40% for the first quarter of fiscal ~~2016~~2017 and fiscal ~~2015:~~2016:

	For the three months ended											For the three months ended
	April 30, 2016					May 2, 2015						April 29, 2017						April 30, 2016
	$			Per diluted share		$			Per diluted share			$			Per diluted share			$			Per diluted share
(in thousands, except per share data)
Net income (loss) (GAAP basis)	$	214		$	0.00	$	(574	)	$	(0.01	)	$	(6,065	)	$	(0.12	)	$	214		$	0.00

Add back: Actual income tax provision		57					61						29						57
Income tax benefit, assuming normal tax rate of 40%		(108	)				205
Income tax (provision) benefit, assuming
a normal tax rate of 40%													2,414						(108	)

Adjusted net income (loss) (non-GAAP basis)	$	163		$	0.00	$	(308	)	$	(0.01	)	$	(3,622	)	$	(0.07	)	$	163		$	0.00

Weighted average number of common shares outstanding on a diluted basis					49,880					49,019
Weighted average number of common shares
outstanding on a diluted basis																49,735						49,880

Free Cash Flow and Free Cash Flow Before DXL Capital ~~Expenditures~~Expenditures. .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 that management uses to monitor liquidity. We expect to fund our ongoing DXL capital expenditures with cash flow from operations. We believe this metric is important to investors because it demonstrates our ability to strengthen liquidity while also contributing to the funding of the DXL store growth.

The following table reconciles free cash flow and free cash flow before DXL capital ~~expenditures (certain columns may not foot due to rounding~~):expenditures:

EBITDA. EBITDA is calculated as earnings before interest, taxes, depreciation and amortization. We believe that EBITDA is useful to investors in evaluating our performance. With the significant capital investment associated with the DXL transformation and, therefore, increasing levels of depreciation and interest, management uses EBITDA as a key metric to measure profitability and economic productivity.

	For the three months ended					For the three months ended
	April 30, 2016		May 2, 2015			April 29, 2017			April 30, 2016
(in millions)
Net income (loss) (GAAP basis)	$	0.2	$	(0.6	)	$	(6.1	)	$	0.2
Add back:
Provision for income taxes		0.1		0.1			0.0			0.1
Interest expense		0.8		0.8			0.8			0.8
Depreciation and amortization		7.3		6.5			7.8			7.3
EBITDA (non-GAAP basis)	$	8.4	$	6.8		$	2.5		$	8.4

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. 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 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 April ~~30, 2016,~~29, 2017, the interest rate on our prime based borrowings was ~~4.0%~~4.5%. ~~Approximately $49.0~~At April 29, 2017, approximately $55.0 million of our outstanding borrowings were in LIBOR contracts with an interest rate of ~~1.9%~~2.45%. WeAt April 29, 2017, we also ~~have $13.5~~had $12.5 million outstanding under a term loan, which bears interest at a variable rate based on one-month LIBOR rates plus 6.5%.

Based upon a sensitivity analysis as of April ~~30, 2016,~~29, 2017, assuming average outstanding borrowing during the first three months of fiscal ~~2016~~2017 of ~~$50.6~~$56.9 million under our Credit Facility and ~~$13.5~~$12.5 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 ~~$321,000~~$350,000 on an annualized basis.

Our Rochester Clothing store located in London, England conducts business in British ~~pounds. If the value of the British pound against the U.S. dollar weakens, the revenues~~pounds and ~~earnings of this store will be reduced when they are translated or re-measured to U.S.~~our two DXL Men’s Apparel stores located in Ontario, Canada conduct business in Canadian dollars. ~~Also, the value of any assets to U.S. dollars may decline.~~ As of April ~~30, 2016,~~29, 2017, sales from ~~our London Rochester Clothing store~~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 April ~~30, 2016.~~29, 2017. 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 April ~~30, 2016,~~29, 2017, our disclosure controls and procedures were effective.

No change 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 ended April ~~30, 2016~~29, 2017 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 ~~2015~~2016 Annual Report.

~~None.~~Share repurchase activity during the three months ended April 29, 2017 was as follows:

All shares purchased during the first quarter of fiscal 2017 were open market transactions.

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)		(~~IRS~~I.R.S. Employer Identification No.)

555 Turnpike Street Canton, MA		02021
(Address of principal executive offices)		(Zip Code)

	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		2,728,621	$	5.00
Options granted		—		—
Options canceled		—		—
Options exercised		—		—
Outstanding options at end of quarter		2,728,621	$	5.00	6.7 years	$	1,157,774
Options exercisable at end of quarter		1,040,417	$	4.88	6.0 years	$	615,408

	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		—			—
Options canceled		(1,147,398	)	$	4.96
Options exercised		—			—
Outstanding options at end of quarter		1,377,148		$	4.97	5.3 years	$	-
Options exercisable at end of quarter		1,377,148		$	4.97	5.3 years

	First Quarter
	(in millions)
Sales for the first quarter of fiscal 2016	$	107.9
Less 2016 sales for stores that have closed /converted		(6.0	)
	$	101.9

Decrease in comparable sales		(2.1	)
Non-comparable sales, primarily DXL stores open less than 13 months		7.7
Other, net		0.1
Sales for the first quarter of fiscal 2017	$	107.6

	For the three months ended						Projected
(in millions)	April 30, 2016			May 2, 2015			Fiscal 2016
Cash flow from operating activities (GAAP basis)⁽¹⁾	$	(5.0	)	$	(8.0	)	$35.0-$40.0
Capital expenditures, infrastructure projects		(1.5	)		(2.3	)	(9.4)
Free Cash Flow, before DXL capital expenditures	$	(6.5	)	$	(10.2	)	$25.6-$30.6
Capital expenditures for DXL stores		(4.6	)		(7.3	)	(20.6)
Free Cash Flow (non-GAAP basis)	$	(11.1	)	$	(17.5	)	$5.0-$10.0

	Projected
	Fiscal 2017
(in millions, except per share data)				per diluted share
Net loss (GAAP basis)	$(5.7)-$(11.7)
Add back:
Provision for income taxes		0.2
Interest expense		3.0
Depreciation and amortization		32.5
EBITDA (non-GAAP basis)	$24.0-$30.0

Net loss ( GAAP basis)	$(5.7)-$(11.7)			$(0.11)-$(0.23)
Income tax benefit, assuming 40% rate	$2.3-$4.7			$0.05-0.09
Adjusted net loss (non-GAAP basis)	$(3.4)-$(7.0)			$(0.06)-(0.14)
Weighted average common shares outstanding - diluted		49.5

Cash flow from operating activities (GAAP basis)	$37.0-$42.0
Capital expenditures, infrastructure projects		(8.3	)
Free Cash Flow, before DXL capital expenditures (non-GAAP basis)	$28.7-$33.7
Capital expenditures for DXL stores		(13.7	)
Free Cash Flow (non-GAAP basis)	$15.0-$20.0

Period	(a) Total number of shares purchased		(b) Average price paid per share		(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⁾

January 29, 2017 to February 25, 2017		—		—		—
February 26, 2017 to April 1, 2017		367,715	$	2.67		367,715	$	11,019,936
April 2, 2017 to April 29, 2017		301,632	$	2.81		301,632	$	10,173,796
Total		669,347	$	2.73		669,347	$	10,173,796


10.1		~~Destination XL Group, Inc. Long-Term Incentive Plan~~Employment Agreement between the Company and Sahal S. Laher effective as of January 29, 2017 (included as Exhibit ~~10.1~~10.44 to the Company’s ~~Current~~Annual Report on Form ~~8-K~~10-K filed on March ~~21, 2016,~~20, 2017, and incorporated herein by reference).

31.1		Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 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		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended April ~~30, 2016,~~29, 2017, formatted in 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.

	DESTINATION XL GROUP, INC.

Date: May ~~20, 2016~~19, 2017	By:	/S/ John F. Cooney
		John F. Cooney
		Vice President, Chief Accounting Officer and Corporate Controller (Duly Authorized Officer and Chief Accounting Officer)

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