Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of November ~~16, 2018,~~15, 2019, the registrant had ~~49,478,819~~50,348,577 shares of common stock, $0.01 par value per share, outstanding.

	November 3, 2018			February 3, 2018			November 2, 2019			February 2, 2019
	(Fiscal 2018)			(Fiscal 2017)			(Fiscal 2019)			(Fiscal 2018)

ASSETS
Current assets:
Cash and cash equivalents	$	6,376		$	5,362		$	5,462		$	4,868
Accounts receivable		1,438			3,046			3,876			4,420
Inventories		116,371			103,332			120,211			106,837
Prepaid expenses and other current assets		11,275			9,927			11,635			11,535
Total current assets		135,460			121,667			141,184			127,660

Non-current assets:
Property and equipment, net of accumulated depreciation and amortization		98,286			111,032			83,371			92,525

Other assets:
Operating lease right-of-use assets								195,971			—
Intangible assets		1,573			1,821			1,150			1,150
Other assets		5,716			5,885			3,364			4,741
Total assets	$	241,035		$	240,405		$	425,040		$	226,076

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	-		$	1,392
Current portion of deferred gain on sale-leaseback		1,465			1,465			—			1,465
Accounts payable		29,717			33,987			27,038			34,418
Accrued expenses and other current liabilities		26,854			25,585			21,236			30,140
Operating leases, current								41,063			—
Borrowings under credit facility		57,290			47,385			68,185			41,908
Total current liabilities		115,326			109,814			157,522			107,931

Long-term liabilities:
Long-term debt, net of current portion		14,743			10,669			14,799			14,757
Operating leases, non-current								192,311			—
Deferred rent and lease incentives		32,938			35,718			—			31,839
Deferred gain on sale-leaseback, net of current portion		9,159			10,258			—			8,793
Other long-term liabilities		3,238			3,960			3,669			4,116
Total long-term liabilities		60,078			60,605			210,779			59,505

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, 62,209,305 and 61,485,882 shares issued at November 3, 2018 and February 3, 2018, respectively		622			615
Common stock, $0.01 par value, 100,000,000 shares authorized, 63,044,554 and 62,241,834 shares issued at November 2, 2019 and February 2, 2019, respectively								630			622
Additional paid-in capital		309,338			307,557			312,293			310,393
Treasury stock at cost, 12,755,873 shares at November 3, 2018 and February 3, 2018		(92,658	)		(92,658	)
Treasury stock at cost, 12,755,873 shares at November 2, 2019 and February 2, 2019								(92,658	)		(92,658	)
Accumulated deficit		(145,585	)		(139,285	)		(158,491	)		(153,534	)
Accumulated other comprehensive loss		(6,086	)		(6,243	)		(5,035	)		(6,183	)
Total stockholders' equity		65,631			69,986			56,739			58,640
Total liabilities and stockholders' equity	$	241,035		$	240,405		$	425,040		$	226,076

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

	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Nine Months Ended
	November 3, 2018			October 28, 2017			November 3, 2018			October 28, 2017			November 2, 2019			November 3, 2018			November 2, 2019			November 3, 2018
	(Fiscal 2018)			(Fiscal 2017)			(Fiscal 2018)			(Fiscal 2017)			(Fiscal 2019)			(Fiscal 2018)			(Fiscal 2019)			(Fiscal 2018)

Sales	$	107,069		$	103,700		$	342,606		$	332,454		$	106,581		$	107,069		$	342,799		$	342,606
Cost of goods sold including occupancy costs		60,009			58,887			188,333			183,136			62,776			60,009			195,012			188,333
Gross profit		47,060			44,813			154,273			149,318			43,805			47,060			147,787			154,273

Expenses:
Selling, general and administrative		40,436			41,968			133,631			137,204			42,108			40,436			134,197			133,631
Corporate restructuring and CEO transition costs		692			—			2,452			—
Impairment of assets		—			—			—			1,718
CEO transition costs														—			430			702			560
Corporate restructuring														—			262			—			1,892
Exit costs associated with London operations														1,737			—			1,737			—
Depreciation and amortization		7,161			7,680			21,867			23,337			6,329			7,161			18,877			21,867
Total expenses		48,289			49,648			157,950			162,259			50,174			48,289			155,513			157,950

Operating loss		(1,229	)		(4,835	)		(3,677	)		(12,941	)		(6,369	)		(1,229	)		(7,726	)		(3,677	)

Interest expense, net		(798	)		(871	)		(2,642	)		(2,497	)		(870	)		(798	)		(2,585	)		(2,642	)

Loss before provision (benefit) for income taxes		(2,027	)		(5,706	)		(6,319	)		(15,438	)
Provision (benefit) for income taxes		(22	)		-			(19	)		64
Loss before benefit for income taxes														(7,239	)		(2,027	)		(10,311	)		(6,319	)
Benefit for income taxes														(49	)		(22	)		(78	)		(19	)


Net loss	$	(2,005	)	$	(5,706	)	$	(6,300	)	$	(15,502	)	$	(7,190	)	$	(2,005	)	$	(10,233	)	$	(6,300	)


Net loss per share - basic and diluted	$	(0.04	)	$	(0.12	)	$	(0.13	)	$	(0.32	)	$	(0.14	)	$	(0.04	)	$	(0.21	)	$	(0.13	)

Weighted-average number of common shares outstanding:
Basic		49,352			48,607			49,068			48,966			50,089			49,352			49,853			49,068
Diluted		49,352			48,607			49,068			48,966			50,089			49,352			49,853			49,068

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

	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Nine Months Ended
	November 3, 2018			October 28, 2017			November 3, 2018			October 28, 2017			November 2, 2019			November 3, 2018			November 2, 2019			November 3, 2018
	(Fiscal 2018)			(Fiscal 2017)			(Fiscal 2018)			(Fiscal 2017)			(Fiscal 2019)			(Fiscal 2018)			(Fiscal 2019)			(Fiscal 2018)
Net loss	$	(2,005	)	$	(5,706	)	$	(6,300	)	$	(15,502	)	$	(7,190	)	$	(2,005	)	$	(10,233	)	$	(6,300	)

Other comprehensive income before taxes:
Recognition of accumulated foreign currency translation adjustment														792			—			792			—
Foreign currency translation		(7	)		(52	)		(246	)		164			2			(7	)		(81	)		(246	)
Pension plans		165			210			495			631			196			165			588			495
Other comprehensive income before taxes		158			158			249			795			990			158			1,299			249
Tax provision related to items of other comprehensive income		(45	)		—			(92	)		—			(70	)		(45	)		(151	)		(92	)
Other comprehensive income, net of tax		113			158			157			795			920			113			1,148			157
Comprehensive loss	$	(1,892	)	$	(5,548	)	$	(6,143	)	$	(14,707	)	$	(6,270	)	$	(1,892	)	$	(9,085	)	$	(6,143	)

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 February 3, 2018		61,486		$	615	$	307,557			(12,755	)	$	(92,658	)	$	(139,285	)	$	(6,243	)	$	69,986
Board of Directors compensation		146			1		448															449
Balance at February 2, 2019																									62,242		$	622	$	310,393			(12,755	)	$	(92,658	)	$	(153,534	)	$	(6,183	)	$	58,640
Board of directors compensation																									36					142															142
Stock compensation expense							1,094															1,094								414															414
Restricted stock units (RSUs) granted for achievement of performance-based compensation, reclassified from liability to equity (Note 4)							381															381
Issuance of common stock upon RSUs release		627			6		(6	)														—
RSUs granted for achievement of performance-based compensation, reclassified from liability to equity (Note 5)																														304															304
Issuance of common stock, upon RSUs release																									374			4		(4	)														—
Shares withheld for taxes related to net share settlement of RSUs		(54	)		—		(136	)														(136	)		(78	)		—		(192	)														(192	)
Cancellation of restricted stock, net of issuances		(3	)		—		—															—
Deferred stock vested																									2			—		—															—
Change in accounting principle due to adoption of ASC 842																																							5,276						5,276
Accumulated other comprehensive income (loss):
Pension plan, net of taxes																																										150			150
Foreign currency, net of taxes																																										(24	)		(24	)
Net loss																																							(3,081	)					(3,081	)
Balance at May 4, 2019																									62,576		$	626	$	311,057			(12,755	)	$	(92,658	)	$	(151,339	)	$	(6,057	)	$	61,629
Board of directors compensation																									45			—		142															142
Stock compensation expense																														514															514
Issuance of common stock, upon RSUs release																									67			1		(1	)														—
Shares withheld for taxes related to net share settlement of RSUs																									(3	)		—		(6	)														(6	)
Cancellation of restricted stock																									(20	)		—		—															—
Deferred stock vested		7			—		—															—			3			—		—															—
Accumulated other comprehensive income (loss):
Pension plan, net of taxes																			367			367																				142			142
Foreign currency, net of taxes																			(210	)		(210	)																			(40	)		(40	)
Net income																																							38						38
Balance at August 3, 2019																									62,668		$	627	$	311,706			(12,755	)	$	(92,658	)	$	(151,301	)	$	(5,955	)	$	62,419
Board of directors compensation																									55					142															142
Stock compensation expense																														494															494
Issuance of common stock, upon RSUs release																									348			3		(3	)														—
Shares withheld for taxes related to net share settlement of RSUs																									(30	)	-			(46	)														(46	)
Deferred stock vested																									3																				—
Accumulated other comprehensive income (loss):
Pension plan, net of taxes																																										145			145
Foreign currency, net of taxes																																										(17	)		(17	)
Recognition of accumulated foreign currency translation adjustment																																										792			792
Net loss																(6,300	)					(6,300	)																(7,190	)					(7,190	)
Balance at November 3, 2018		62,209		$	622	$	309,338			(12,755	)	$	(92,658	)	$	(145,585	)	$	(6,086	)	$	65,631
Balance at November 2, 2019																									63,044		$	630	$	312,293			(12,755	)	$	(92,658	)	$	(158,491	)	$	(5,035	)	$	56,739

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

CONSOLIDATED ~~STATEMENTS~~STATEMENT OF ~~CASH FLOWS~~CHANGES IN STOCKHOLDERS’ EQUITY

For the Nine Months Ended

November 3, 2018

October 28, 2017

(Fiscal 2018)

(Fiscal 2017)

Cash flows from operating activities:

Net loss

$
(6,300
)

$
(15,502
)
Adjustments to reconcile net loss to net cash (used for) provided by operating activities:

Amortization of deferred gain on sale-leaseback

(1,099
)

(1,099
)
Amortization of deferred debt issuance costs

136

206

Write-off of deferred debt issuance costs

186

—

Depreciation and amortization

21,867

23,337

Impairment of assets

—

1,718

Stock compensation expense

1,094

1,306

Board of Directors stock compensation

449

421

Changes in operating assets and liabilities:

Accounts receivable

1,608

2,882

Inventories

(13,039
)

(2,432
)
Prepaid expenses and other current assets

(1,348
)

(2,930
)
Other assets

169

(151
)
Accounts payable

(4,270
)

1,492

Deferred rent and lease incentives

(2,780
)

654

Accrued expenses and other liabilities

2,054

(4,654
)
Net cash (used for) provided by operating activities

(1,273
)

5,248

Cash flows from investing activities:

Additions to property and equipment, net

(9,842
)

(18,429
)
Net cash used for investing activities

(9,842
)

(18,429
)

Cash flows from financing activities:

Repurchase of common stock

—

(4,681
)
Costs associated with new credit facility

(553
)

—

Proceeds from the issuance of long-term debt

15,000

—

Principal payments on long-term debt

(12,251
)

(5,930
)
Net borrowings under credit facility

10,069

24,011

Tax withholdings paid related to net share settlements of RSUs

(136
)

-

Net cash provided by financing activities

12,129

13,400

Net increase in cash and cash equivalents

1,014

219

Cash and cash equivalents:

Beginning of period

5,362

5,572

End of period

$
6,376

$
5,791

																		Accumulated
						Additional												Other
	Common Stock					Paid-in			Treasury Stock						Accumulated			Comprehensive
	Shares			Amounts		Capital			Shares			Amounts			Deficit			Income (Loss)			Total
Balance at February 3, 2018		61,486		$	615	$	307,557			(12,755	)	$	(92,658	)	$	(139,285	)	$	(6,243	)	$	69,986
Board of directors compensation		37			—		140															140
Stock compensation expense							407															407
Restricted stock units (RSUs) granted for achievement of performance-based compensation, reclassified from liability to equity							381															381
Issuance of common stock, upon RSUs release		165			2		(2	)														—
Issuance of restricted stock		30			—		—															—
Deferred stock vested		3			—		—															—
Accumulated other comprehensive income (loss):
Pension plan, net of taxes																			129			129
Foreign currency, net of taxes																			(126	)		(126	)
Net loss																(3,110	)					(3,110	)
Balance at May 5, 2018		61,721		$	617	$	308,483			(12,755	)	$	(92,658	)	$	(142,395	)	$	(6,240	)	$	67,807
Board of directors compensation		58			1		143															144
Stock compensation expense							382															382
Issuance of common stock, upon RSUs release		157			1		(1	)														—
Cancellation of restricted stock		(33	)		—		—															—
Deferred stock vested		2			—		—															—
Accumulated other comprehensive income (loss):
Pension plan, net of taxes																			116			116
Foreign currency, net of taxes																			(75	)		(75	)
Net loss																(1,185	)					(1,185	)
Balance at August 4, 2018		61,905		$	619	$	309,007			(12,755	)	$	(92,658	)	$	(143,580	)	$	(6,199	)	$	67,189
Board of directors compensation		51			—		165															165
Stock compensation expense							305															305
Issuance of common stock, upon RSUs release		305			3		(3	)														—
Shares withheld for taxes related to net share settlement of RSUs		(54	)		—		(136	)														(136	)
Deferred stock vested		2			—		—															—
Accumulated other comprehensive income (loss):
Pension plan, net of taxes																			122			122
Foreign currency, net of taxes																			(9	)		(9	)
Net loss																(2,005	)					(2,005	)
Balance at November 3, 2018		62,209		$	622	$	309,338			(12,755	)	$	(92,658	)	$	(145,585	)	$	(6,086	)	$	65,631

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

	For the Nine Months Ended
	November 2, 2019			November 3, 2018
	(Fiscal 2019)			(Fiscal 2018)
Cash flows from operating activities:
Net loss	$	(10,233	)	$	(6,300	)
Adjustments to reconcile net loss to net cash used for operating activities:
Recognition of accumulated foreign currency translation adjustment		792			—
Amortization of deferred gain on sale-leaseback		—			(1,099	)
Amortization of deferred debt issuance costs		104			136
Write-off of deferred debt issuance costs		—			186
Depreciation and amortization		18,877			21,867
Stock compensation expense		1,422			1,094
Board of directors stock compensation		426			449

Changes in operating assets and liabilities:
Accounts receivable		544			1,608
Inventories		(13,374	)		(13,039	)
Prepaid expenses and other current assets		(100	)		(1,348	)
Other assets		(352	)		169
Accounts payable		(7,380	)		(4,270	)
Operating leases, net		(2,992	)		—
Deferred rent and lease incentives		—			(2,780	)
Accrued expenses and other liabilities		(2,138	)		2,054
Net cash used for operating activities		(14,404	)		(1,273	)

Cash flows from investing activities:
Additions to property and equipment, net		(10,973	)		(9,842	)
Net cash used for investing activities		(10,973	)		(9,842	)

Cash flows from financing activities:
Costs associated with new credit facility		—			(553	)
Proceeds from the issuance of long-term debt		—			15,000
Principal payments on long-term debt		—			(12,251	)
Net borrowings under credit facility		26,215			10,069
Tax withholdings paid related to net share settlements of RSUs		(244	)		(136	)
Net cash provided by financing activities		25,971			12,129
Net increase in cash and cash equivalents		594			1,014
Cash and cash equivalents:
Beginning of period		4,868			5,362
End of period	$	5,462		$	6,376

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 February ~~3, 2018~~2, 2019 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March ~~23, 2018.~~22, 2019.

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 2019 and fiscal 2018 ~~is a~~are 52-week ~~period~~periods ending on February 1, 2020 and February 2, 2019, ~~and fiscal 2017 was a 53-week period ended on February 3, 2018.~~respectively.

The Company ~~reports its operations as one reportable segment, Big & Tall Men’s Apparel, which consists of~~has historically had two principal operating segments: its ~~retail business~~stores and ~~its~~ direct ~~business.~~businesses. The Company considers ~~its~~these two operating segments to be similar in terms of economic characteristics, production processes and operations, and has therefore aggregated them into ~~a single reporting~~one reportable segment, retail segment, consistent with its omni-channel business approach. In fiscal 2018, the Company launched a wholesale segment, which the Company considers a third operating segment. However, due to the immateriality of the wholesale segment’s revenues, profits and assets at November 2, 2019, its operating results are aggregated with the retail segment for all periods.

In the ~~second~~fourth quarter of fiscal 2017, the Company incurred an impairment charge of $1.7 million for the write-off of certain store assets. This amount was previously included in “Depreciation and Amortization” in the Consolidated Statements of Operations for the first nine months of fiscal 2017 but was reclassified to “Impairment of Assets” in the Consolidated Statement of Operations for the fiscal year ended February 3, 2018. The prior year comparison in the Consolidated Statements of Operations for the first nine months of fiscal 2018 reflect this reclassification.

~~For the first nine months~~ of fiscal 2018, the Company ~~has reclassified $190,228 in costs, incurred in~~purchased the ~~first quarter of fiscal 2018,~~rights to ~~“Corporate Restructuring and CEO Transition Costs.~~the domain name “dxl.com.” ~~These costs were initially reported in “Selling, General and Administrative” expenses for the first quarter and first six months of fiscal 2018.~~

~~At November 3, 2018, the “Casual Male” trademark had a carrying value of $0.1 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~~domain name has a carrying value of ~~$1.5 million.~~$1.2 million and is considered an indefinite-lived asset. During the first nine months ended November ~~3, 2018,~~2, 2019, 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 November ~~3, 2018,~~2, 2019, the fair value approximated the carrying amount based upon terms available to the Company for borrowings with similar arrangements and remaining maturities.

The fair value of the “dxl.com” domain name, an indefinite-lived ~~assets, which consists of the Company’s “Rochester” trademark,~~asset, is measured on a non-recurring basis in connection with the Company’s annual impairment test. The fair value of the ~~trademark is~~domain name was determined ~~using a projected discounted cash flow analysis based on unobservable inputs~~to approximate carrying value, due to its recent acquisition in the fourth quarter of fiscal 2018, and is classified within Level 3 of the valuation hierarchy. See Intangibles above.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, 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 ~~(loss)~~ and reclassifications from AOCI for the three and nine months ended November 2, 2019 and November 3, 2018, ~~and October 28, 2017,~~ respectively, were as follows:

	November 3, 2018									October 28, 2017									November 2, 2019									November 3, 2018
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	$	(5,595	)	$	(604	)	$	(6,199	)	$	(4,816	)	$	(565	)	$	(5,381	)	$	(5,229	)	$	(726	)	$	(5,955	)	$	(5,595	)	$	(604	)	$	(6,199	)

Other comprehensive income (loss) before reclassifications, net of taxes		58			(9	)		49			43			(52	)		(9	)		27			(17	)		10			58			(9	)		49

Amounts reclassified from accumulated other comprehensive income, net of taxes ⁽¹⁾		64			—			64			167			—			167
Recognition of accumulated foreign currency translation adjustment ⁽¹⁾																				—			792			792			—			—			—

Amounts reclassified from accumulated other comprehensive income, net of taxes ⁽²⁾																				118			—			118			64			—			64

Other comprehensive income (loss) for the period		122			(9	)		113			210			(52	)		158			145			775			920			122			(9	)		113

Balance at end of quarter	$	(5,473	)	$	(613	)	$	(6,086	)	$	(4,606	)	$	(617	)	$	(5,223	)	$	(5,084	)	$	49		$	(5,035	)	$	(5,473	)	$	(613	)	$	(6,086	)

	November 3, 2018									October 28, 2017									November 2, 2019									November 3, 2018
For the nine 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 fiscal year	$	(5,840	)	$	(403	)	$	(6,243	)	$	(5,237	)	$	(781	)	$	(6,018	)	$	(5,521	)	$	(662	)	$	(6,183	)	$	(5,840	)	$	(403	)	$	(6,243	)

Other comprehensive income (loss) before reclassifications, net of taxes		173			(210	)		(37	)		128			164			292			82			(81	)		1			173			(210	)		(37	)

Amounts reclassified from accumulated other comprehensive income, net of taxes ⁽¹⁾		194			—			194			503			—			503
Recognition of accumulated foreign currency translation adjustment ⁽¹⁾																				—			792			792			—			—			—

Amounts reclassified from accumulated other comprehensive income, net of taxes ⁽²⁾																				355			—			355			194			—			194

Other comprehensive income (loss) for the period		367			(210	)		157			631			164			795			437			711			1,148			367			(210	)		157

Balance at end of quarter	$	(5,473	)	$	(613	)	$	(6,086	)	$	(4,606	)	$	(617	)	$	(5,223	)	$	(5,084	)	$	49		$	(5,035	)	$	(5,473	)	$	(613	)	$	(6,086	)

All share-based payments, including grants of employee stock options and restricted stock, are recognized as an expense in the Consolidated Statements of Operations based on their fair values and vesting periods. The fair value of stock options is determined using the Black-Scholes valuation model and requires the input of subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (the “expected term”), the estimated volatility of the Company’s common stock price over the expected term and the number of options that will ultimately not complete their vesting requirements (“forfeitures”). The Company reviews its valuation assumptions at each grant date and, as a result, is likely to change its valuation assumptions used to value employee stock-based awards granted in future periods. The values derived from using the Black-Scholes model are recognized as an expense over the vesting period, net of estimated forfeitures. The estimation of stock-based awards that will ultimately vest requires significant judgment. Actual results and future changes in estimates may differ from the Company’s current estimates. In the first quarter of fiscal 2019, the Company granted performance stock units with a market condition. See Note 6 for disclosure concerning the assumptions and valuation method used to determine the fair value of the award and the associated derived service period over which the associated stock compensation will be recognized.

The Company reviews its long-lived assets for events or changes in circumstances that might indicate the carrying amount of the assets may not be recoverable. The Company assesses the recoverability of the assets by determining whether the carrying value of such assets over their respective remaining lives can be recovered through projected undiscounted future cash flows. The amount of impairment, if any, is measured based on projected discounted future cash flows using a discount rate reflecting the Company’s average cost of funds.

There was no material impairment of long-lived assets in the ~~third quarter and~~ first nine months of fiscal ~~2018. In the second quarter of~~2019 or fiscal ~~2017, the Company recorded an impairment charge of $1.7 million related to the write-down of property and equipment, which is included in the results for the first nine months of fiscal 2017.~~2018.

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~ (~~Topic 606~~), which amends the accounting guidance on revenue recognition. The amendments in this ASU are intended to provide a framework for addressing revenue issues, improve comparability of revenue recognition practices, and improve disclosure requirements. This ASU sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity is required to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. To assess the impact of ASU 2014-09, the Company reviewed its current accounting policies and practices, identified all material revenue streams, assessed the impact of the ASU on its material revenue streams and identified potential differences with current policies and practices. The Company adopted this standard on February 4, 2018, with no material impact ~~on the Company’s~~ ~~Consolidated Financial Statements, using the modified retrospective approach.~~ ~~Further disclosures related to the adoption of this standard are provided below in Note 2,~~ ~~Revenue Recognition~~.

In~~March 2016, the FASB issued~~ ~~ASU2016~~-04~~, “Liabilities—Extinguishments of Liabilities: Recognition of Breakage for Certain Prepaid Stored-Value Products,~~” which amends exempting gift cards and other prepaid stored-value products from the guidance on extinguishing financial liabilities. Rather, they will be subject to breakage accounting consistent with the new revenue guidance in Topic 606. However, the exemption only applies to breakage liabilities that are not subject to unclaimed property laws or that are attached to segregated bank accounts (e.g., consumer debit cards). ~~The Company~~ ~~adopted this pronouncement as of February 4, 2018. The adoption of this standard did not have a material impact on the Company’s~~ ~~Consolidated Financial Statements~~.

~~In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~,” ~~which reduces the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230. The Company~~ ~~adopted this pronouncement as of February 4, 2018. The adoption of this standard did not have a material impact on the Company’s~~ ~~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 Company~~ ~~adopted~~

~~this pronouncement as of February 4, 2018. The adoption of this standard did not have a material impact on the Company’s~~ ~~Consolidated Financial Statements~~.

~~In May 2017, the FASB issued ASU~~ ~~2017-09, “Compensation—Stock Compensation (Topic 718)”~~which provides clarity in order to reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. ~~The Company~~ ~~adopted this pronouncement as of February 4, 2018. The adoption of this standard did not have a material impact on the Company’s~~ ~~Consolidated Financial Statements~~.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” This ASU is a comprehensive new ~~leases~~ standard that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. It ~~will require~~requires lessees to recognize lease assets and lease liabilities for most leases, including those leases previously classified as operating leases under ~~current~~ GAAP. The ASU retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous ~~leases~~lease guidance. ~~In July 2018, the FASB issued~~ ASU~~2018~~-11 “~~Leases (Topic 842): Targeted Improvements.” Prior to~~ ~~ASU2018~~-11, 2016-02 requires a modified retrospective transition ~~was required~~ for financing or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements. In July 2018, the FASB issued ASU 2018-11 “Leases (Topic 842): Targeted Improvements~~ASU2018~~-11” that allows entities ~~an additional transition method~~ to ~~the existing requirements whereby an entity could adopt the provisions of~~ ~~ASU~~ ~~2016-02 by recognizing~~recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without adjustment to the financial statements for periods prior to adoption.~~ASU~~ ~~2016-02 is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted.~~

The Company ~~will adopt~~adopted ASU 2016-02 on February 3, 2019 on a modified retrospective basis and applied the new standard ~~in the first quarter of fiscal 2019 by not restating comparative periods and recognizing~~to all leases through a cumulative-effect adjustment to beginning accumulated deficit. As a result, comparative financial information has not been restated and continues to be reported under the ~~opening balance sheet of retained earnings~~accounting standards in ~~accordance with ASU 2018-11. The~~effect for the respective periods.

On February 3, 2019, the Company ~~has implemented its leasing software solution to enable compliance with accounting and disclosure requirements. The Company is continuing to identify necessary changes~~recognized leases, primarily related to its ~~business processes~~stores and ~~controls~~corporate headquarters, on its Consolidated Balance Sheet, as right-of use assets of $214.1 million with corresponding lease liabilities of $254.5 million and eliminated certain existing lease-related asset and liabilities as a net adjustment to ~~support~~the right-of-use assets. In connection with this adoption, the Company recorded a transition adjustment, which was a net credit of $5.3 million to opening accumulated deficit. This adjustment reflected the net of (i) the recognition of the Company’s deferred gain from a sale-leaseback of $10.3 million, (ii) the write-off of initial direct costs of $1.2 million and (iii) the recognition of impairments, upon adoption, on certain right-of-use assets totaling $3.8 million. The new ~~standard. While we are still in~~standard had a material impact on the ~~process~~Consolidated Balance Sheet as a result of ~~quantifying~~ the ~~impact, we expect~~recognition of the right-of-use assets, the corresponding lease obligations and the net credit to accumulated deficit of $5.3 million. Because the Company recognized the outstanding deferred gain from a sale-leaseback of $10.3 million, with the adoption of the new standard, ~~to result in a material gross-up~~results of ~~our Consolidated Balance Sheets as a result~~operations will not have the future benefit of ~~recognizing lease liabilities and right~~approximately $1.5 million, which was the annual amortization being recognized over the initial 20-year term of ~~use assets, which will be subject to long-lived asset impairment testing under ASC 360.~~the sale-leaseback of the Company’s corporate office. The ~~Company does not expect the~~ adoption of the new standard ~~to have a~~had no material impact on ~~its results~~Consolidated Statement of ~~operations or liquidity.~~ Cash Flows.

The following is a discussion of the Company’s lease policy under the new lease accounting standard:

The Company ~~plans~~determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to ~~elect~~use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments, initial direct costs and any lease incentives are included in the value of those right-of use assets. As the interest rate implicit in the Company’s leases is not readily determinable, the Company utilizes its incremental borrowing rate, based on information available at the lease measurement date to determine the present value of future payments.

The Company’s store leases typically contain options that permit renewals for additional periods of up to five years each. In general, for store leases with an initial term of 10 years or more, the options to extend are not considered reasonably certain at lease commencement. For stores leases with an initial term of 5 years, the Company evaluates each lease independently and, only when the Company considers it reasonably certain that it will exercise an option to extend, will the associated payment of that option be included in the measurement of the right-of-use asset and lease liability. Renewal options are not included in the lease term for automobile and equipment leases because they are not considered reasonably certain of being exercised at lease commencement. Renewal options were not considered for the Company’s corporate headquarter and distribution center lease, which was entered into in 2006 and was for an initial 20-year term. At the end of the initial term, the Company will have the opportunity to extend this lease for six additional successive periods of five years. The Company elected the lessee non-lease component separation practical expedient, which permits the Company to not separate non-lease components from the lease components to which they relate. The Company ~~expects to make~~also made an accounting policy election that the recognition requirement of ASU 842 will ~~keep~~not be applied to certain, if any, non-store leases, with a term of 12 months or less, ~~off the balance sheet and result in~~ recognizing those lease payments on a straight-line basis over the lease term. As

For store leases, the ~~Company’s~~Company accounts for lease components and non-lease components as a single lease component. Certain store leases ~~do not provide an implicit rate, it plans to use its incremental borrowing rate~~may require additional payments based on ~~information available at commencement date to determine the present value of future payments.~~

~~In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated~~sales volume, as well as reimbursement for real estate taxes, common area maintenance and insurance, and are expensed as incurred as variable lease costs. Other ~~Comprehensive Income.” The amendments in this update allow a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts~~store leases contain one fixed lease payment that includes real estate taxes, common area maintenance and ~~Jobs Act. However, because the amendments only relate to the reclassification~~insurance. These fixed payments are considered part of the ~~income tax effects of the Tax Cuts~~lease payment and ~~Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be~~ included in ~~income from continuing operations is not affected. The amendments in this update also require certain disclosures about stranded tax effects. The amendments in this update are effective~~the right-of-use assets and lease liabilities.

See Note 4 ‘‘Leases’’ for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact this pronouncement will have on its Consolidated Financial Statements.additional information.

In August 2018, the FASB issued ASU ~~2018~~-13,2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” This guidance modifies the disclosure requirements on fair value measurements in Topic 820 by removing disclosures regarding transfers between Level 1 and Level 2 of the fair value hierarchy, by modifying the measurement uncertainty disclosure, and by requiring additional disclosures for Level 3 fair value measurements, among others. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the impact this pronouncement will have on its Consolidated Financial Statements.

No other new accounting pronouncements, issued or effective during the first nine months of fiscal ~~2018,~~2019, have had or are expected to have a significant impact on the Company’s Consolidated Financial Statements.

~~On February 4, 2018, the Company~~ ~~adopted~~ ~~Revenue from Contracts with Customers~~ ~~(“ASC~~ ~~606”)~~ using the modified retrospective approach for all contracts not completed as of the date of adoption. Results for the reporting periods beginning on February 4, 2018 are presented under ASC 606, while prior period amounts continue to be reported in accordance with accounting under ASC 605, ~~Revenue Recognition. There was no material impact to the Company’s Consolidated Financial Statements as a result of adopting ASC 606.~~

The Company operates as a retailer of big &and tall men’s ~~apparel,~~clothing, which includes ~~both retail~~ stores, direct and ~~a direct business.~~wholesale. Revenue is recognized by the operating segment that initiates a customer’s order. Store sales are defined as sales that originate and are fulfilled directly at the store level. Direct sales are defined as sales that originate online, including those initiated online at the store ~~level.~~level, on its website or on third-party marketplaces. Wholesale sales are defined as sales made to wholesale customers pursuant to the terms of each customer’s contract with the Company. Generally, all revenues are recognized when control of the promised goods is transferred to customers, in an amount that reflects the consideration in exchange for those goods. Sales tax collected from customers and remitted to taxing authorities is excluded from revenue and is included as part of accrued expenses on the Consolidated Balance Sheets.

~~Unredeemed Loyalty Coupons.~~ The Company offers a free loyalty program to its customers for which points accumulate based on the purchase of merchandise. Over 90% of the Company’s customers participate in the loyalty program. Under ASC 606, these loyalty points provide the customer with a material right and a distinct performance obligation with revenue deferred and recognized when the points are expected to redeem or expire. The cycle of earning and redeeming loyalty points is generally under one year in duration. The loyalty accrual, net of breakage, was $1.2 million and $0.6 million at November 3, 2018 and February 3, 2018, respectively.11

Unredeemed Gift Cards, Gift Certificates, and Credit Vouchers. Upon issuance of a gift card, gift certificate, or credit voucher, a liability is established for its cash value. The liability is relieved and net sales are recorded upon redemption by the customer. Based on historical redemption patterns, the Company can reasonably estimate the amount of gift cards, gift certificates, and credit vouchers for which redemption is remote, which is referred to as ~~"breakage"~~“breakage”. Breakage is recognized over two years in proportion to historical redemption trends and is recorded as sales in the Consolidated Statements of Operations. The gift card liability, net of breakage, was ~~$1.2~~$2.1 million and ~~$2.2~~$2.4 million at November ~~3, 2018~~2, 2019 and February ~~3, 2018,~~2, 2019, respectively.

Unredeemed Loyalty Coupons. The Company offers a free loyalty program to its customers for which points accumulate based on the purchase of merchandise. Over 90% of the Company’s customers participate in the loyalty program. Under ASC 606, Revenue from Contracts with Customers, these loyalty points provide the customer with a material right and a distinct performance obligation with revenue deferred and recognized when the points are expected to redeem or expire. The cycle of earning and redeeming loyalty points is generally under one year in duration. The loyalty accrual, net of breakage, was $1.3 million and $1.0 million at November 2, 2019 and February 2, 2019, respectively.

Shipping. Shipping and handling costs are accounted for as fulfillment costs and are included in cost of sales for all periods presented. Amounts related to shipping and handling that are billed to customers are recorded in sales, and the related costs are recorded in cost of goods sold, including occupancy costs, in the Consolidated Statements of Operations.

As noted above under Segment Information in Note 1, the Company’s business consists of one reportable segment, its retail segment. Substantially all of the Company’s revenue is generated from its ~~retail store operations~~stores and ~~its~~ direct ~~business.~~businesses. The operating results from the wholesale segment, which were immaterial, have been aggregated with this reportable segment for the first nine months of fiscal 2019, but the revenues are separately reported below. Accordingly, ~~we have~~the Company has determined that the following sales channels depict the nature, amount, timing, and uncertainty of how revenue and cash flows are affected by economic factors:

	For the Three Months Ended						For the Nine Months Ended						For the three months ended								For the nine months ended
(in thousands)	November 3, 2018			October 28, 2017			November 3, 2018			October 28, 2017			November 2, 2019				November 3, 2018				November 2, 2019				November 3, 2018
Retail sales	$	85,478	79.8%	$	82,804	79.8%	$	272,834	79.6%	$	265,739	79.9%
Store sales													$	81,054	78.1	%	$	85,106	79.8	%	$	262,888	78.5	%	$	272,413	79.6	%
Direct sales		21,591	20.2%		20,896	20.2%		69,772	20.4%		66,715	20.1%		22,676	21.9	%		21,591	20.2	%		71,915	21.5	%		69,772	20.4	%
Total sales	$	107,069		$	103,700		$	342,606		$	332,454
Retail segment													$	103,730			$	106,697			$	334,803			$	342,185
Wholesale segment														2,851				372				7,996				421
Total Sales													$	106,581			$	107,069			$	342,799			$	342,606

On May 24, 2018, the Company entered into the Seventh Amended and Restated Credit Agreement with Bank of America, N.A., as agent, providing for a secured $140.0 million credit facility. On May 31, 2019, the Credit Facility was amended to expand the definition of its borrowing base to include certain receivables, as defined in the First Amendment. On September 5, 2019, the Company entered into the Second Amendment to the Credit Facility (the “Second Amendment”). The Second Amendment was requested by the Company to improve its Excess Availability over the next two years and impacts only the $15.0 million “first-in, last out” (FILO) term facility (the ~~“New Credit Facility”~~“FILO loan”), which is discussed below under long-term debt. The ~~New~~Second Amendment also waived a technical occurrence of an Event of Default under the Credit Facility ~~replaced~~arising from the Company’s ~~existing credit facility with Bank~~disposition of ~~America.~~certain immaterial trademark registrations (as amended, the “Credit Facility”).

The ~~New~~ Credit Facility ~~continues to provide~~provides maximum committed borrowings of $125.0 million in revolver loans, with the ability, pursuant to an accordion feature, to increase the ~~New~~ Credit Facility by an additional $50.0 million upon the request of the Company

and the agreement of the lender(s) participating in the increase (the “Revolving Facility”). ~~There were no changes to the~~The Revolving Facility provides for a sublimit of $20.0 million for commercial and standby letter of credits ~~or the sublimit of~~and up to $15.0 million for swingline loans. The Company’s ability to borrow under the ~~New Credit~~Revolving Facility (the “Loan Cap”) is determined using an availability formula based on eligible assets. ~~The New~~Pursuant to the Second Amendment, the Credit Facility requires the Company to maintain a minimum consolidated fixed charge coverage ratio of 1.0:1.0 if its excess availability under the ~~New~~ Credit Facility fails to be equal to or greater than the greater of ~~10%~~12.5 % of the Loan Cap and $7.5 million. After May 24, 2021 and through the maturity date, the percentage of the Loan Cap of 12.5% will be reduced to 10%. The

maturity date of the ~~New~~ Credit Facility ~~was extended from October 29, 2019~~ tois May 24, 2023. The Company’s obligations under the ~~New~~ Credit Facility are secured by a lien on substantially all of its assets.

At November 2, 2019, the Company had outstanding borrowings under the Revolving Facility of $68.5 million, before unamortized debt issuance costs of $0.3 million. Outstanding standby letters of credit were $2.7 million and outstanding documentary letters of credit were $0.3 million. Unused excess availability at November 2, 2019 was $40.6 million. Average monthly borrowings outstanding under the Revolving Facility during the first nine months of fiscal 2019 were $58.7 million, resulting in an average unused excess availability of approximately $38.5 million. The ~~New Credit~~Company’s ability to borrow under the Revolving Facility ~~includes a new $15.0 million “first in, last out” (FILO) term facility (the “FILO Facility”), which is discussed below under long-term debt.~~

was determined using an availability formula based on eligible assets, with increased advance rates based on seasonality.

Borrowings made pursuant to the Revolving Facility ~~will~~ bear interest, calculated under either the Federal Funds rate or the LIBOR rate, at a rate equal to the following: (a) the Federal Funds rate plus a varying percentage based on the Company’s excess availability, of either 0.25% or 0.50%, or (b) the LIBOR rate (the Company being able to select interest periods of 1 week, 1 month, 2 months, 3 months or 6 months) plus a varying percentage based on the Company’s excess availability, of either 1.25% or 1.50%.

At November 3, 2018, the Company had outstanding borrowings under the Revolving Facility of $57.7 million, before unamortized debt issuance costs of $0.4 million. Outstanding standby letters of credit were $2.9 million and outstanding documentary letters of credit were $2.3 million. Unused excess availability at November 3, 2018 was $45.4 million. Average monthly borrowings outstanding under the previous credit facility and new Revolving Facility during the first nine months of fiscal 2018 were $56.3 million, resulting in an average unused excess availability of approximately $33.6 million.

The Company iswas also subject to an unused line fee of 0.25%. ~~In connection with the New Credit Facility, the Company wrote-off $0.1 million of unamortized debt issuance costs.~~ At November ~~3, 2018,~~2, 2019, the Company’s prime-based interest rate was ~~5.50%~~5.00%. At November ~~3, 2018,~~2, 2019, the Company had approximately ~~$52.0~~$65.0 million of its outstanding borrowings in LIBOR-based contracts with an interest rate of ~~3.50%~~3.06%. The LIBOR-based contracts expired on November ~~7, 2018.~~4, 2019. When a LIBOR-based borrowing expires, the borrowings ~~revert~~reverted 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 Revolving Facility at November ~~3, 2018~~2, 2019 approximated the carrying value.

(in thousands)	November 3, 2018			February 3, 2018			November 2, 2019			February 2, 2019
FILO loan	$	15,000		$	—
Equipment financing notes		—			501
Term loan, due 2019		—			11,750
FILO Loan							$	15,000		$	15,000
Less: unamortized debt issuance costs		(257	)		(190	)		(201	)		(243	)
Total long-term debt		14,743			12,061			14,799			14,757
Less: current portion of long-term debt		—			1,392			—			—
Long-term debt, net of current portion	$	14,743		$	10,669		$	14,799		$	14,757

The total borrowing capacity under the FILO ~~Facility~~loan is based on a borrowing base, generally defined as a specified percentage of the value of eligible accounts, including certain trade names, that step down over time, plus a specified percentage of the value of eligible inventory that steps down over time. The Second Amendment to the Credit Facility extended these advance rates by approximately a year before they begin to step down. There can be no voluntary prepayments on the FILO ~~Facility~~loan during the first year. After its one-year anniversary, the FILO ~~Facility~~loan can be repaid, in whole or in part, subject to certain payment conditions. The term loan expires on May 24, 2023, if not repaid in full prior to that date.

~~Borrowings~~As a result of extending the advance rates under the FILO loan, the applicable margin rates for borrowings are increased by approximately 50 basis points temporarily through May 24, 2021, at which time the margin rates will revert back to the original terms. Accordingly, borrowings made under the FILO ~~Facility~~loan will bear interest, calculated under either the Federal Funds rate or the LIBOR rate, at a rate equal to the following: (a) the Federal Funds rate plus a ~~varying~~carrying percentage based on the Company’s excess availability, of either 2.25% or 2.50% until May 24, 2021 or 1.75% or 2.00% after May 24, 2021 or (b) the LIBOR rate (the Company being able to select interest periods of 1 week, 1 month, 2 months, 3 months or 6 months) plus a varying percentage based on the Company’s excess availability of either 3.25% or 3.50% until May 24, 2021, or 2.75% or 3.00%. after May 24, 2021. At November ~~3, 2018,~~2, 2019, the outstanding balance of $15.0 million was in a ~~2-month~~1-month LIBOR-based contract with an interest rate of ~~5.07%~~5.14%. The LIBOR-based contract ~~will expire~~expired on ~~December 9, 2018.~~November 17, 2019. When a LIBOR-based ~~borrowing~~contract expires, the Company can enter into a new LIBOR-based borrowing arrangement.

The Company leases all of its store locations and its corporate headquarters, which also includes its distribution center, under operating leases. The store leases typically have initial terms of 5 years to 10 years, with options that usually permit renewal for additional five-year periods. The initial term of the lease for the corporate headquarter was for 20 years, with the opportunity to extend for six additional successive periods of five years, beginning in fiscal 2026. The Company also leases certain equipment and other assets under operating leases, typically with initial terms of 3 to 5 years. The Company is generally obligated for the cost of property taxes, insurance and common area maintenance fees relating to its leases, which are considered variable lease costs and are expensed as incurred.

~~Equipment Financing Loans~~The following table is a summary of the Company’s components of net lease cost for the three and nine months ended November 2, 2019:

Supplemental cash flow information related to ~~a Master Loan and Security Agreement with Banc~~leases for the first nine months ended November 2, 2019 is as follows:

Supplemental balance sheet information related to leases as 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 were for a term of 48 months and accrued interest at fixed rates ranging from 3.07% to 3.50%.November 2, 2019 is as follows:

The ~~Company repaid, in full, without penalty,~~table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining ~~outstanding balance~~years to the operating lease liabilities recorded on the ~~Notes during the second quarter~~Consolidated Balance Sheet as of ~~fiscal 2018.~~

As previously disclosed in the ~~Company entered into a term loan agreement with respect to a new $15.0 million senior secured term loan facility with Wells Fargo Bank, National Association~~Company's Consolidated Financial Statements for the year ending February 2, 2019, future minimum lease payments for noncancelable operating leases, under the previous lease accounting standard, were as administrative and collateral agent (the “Term Loan Facility”). The effective date of the Term Loan Facility was October 29, 2014 (the “Effective Date”). In connection with the New Credit Facility, discussed above, on May 24, 2018 this Term Loan Facility was repaid in full, without penalty. In connection with the repayment, the Company wrote-off approximately $0.1 million in unamortized debt issuance costs associated with this Term Loan Facility.follows at February 2, 2019:

~~Interest on the Term Loan Facility was at a rate per annum equal to the greater of (a) 1.00% and (b) the one month LIBOR rate, plus 6.50%.~~14

The following is a summary of the Company’s Long-Term Incentive ~~Plans.~~Plan (“LTIP”). All equity awards granted under long-term incentive plans are issued from the Company’s stockholder-approved 2016 Incentive Compensation Plan. See Note 5,6, Stock-Based Compensation.

~~Under~~At November 2, 2019, the ~~Company’s First Amended~~Company has two active LTIPs: 2018-2020 LTIP and Restated Long Term Incentive Plan (“LTIP”), for fiscal 2016 and fiscal 2017 the Compensation Committee established performance targets which cover a two-year performance period (each a “Performance Period”), thereby creating overlapping Performance Periods.2019-2021 LTIP. Each participant in the plan ~~is entitled to receive an award~~participates based on that participant’s “Target Cash Value” which is defined as the participant’s annual base salary (on the participant’s effective date) multiplied by his or her LTIP ~~percentage, which was 100% for the Company’s Chief Executive Officer, 70% for senior executives and 25% for other participants in the plan. Effective October 22, 2018, the~~percentage. Under each LTIP, percentage for its vice president managing director level was increased from 25% to 50%. Because of the overlapping two-year Performance Periods, the Target Cash Value for any award is based on one year of annual salary. All awards granted under both the 2016-2017 LTIP and 2017-2018 LTIP were in restricted stock units (RSUs).

~~For each participant,~~ 50% of ~~the~~each participant’s Target Cash Value is subject to time-based vesting and 50% is subject to performance-based vesting. ~~The time-vested portion of~~All time-based awards under the ~~award vests in two installments with~~2018-2020 LTIP were restricted stock units (RSUs). For the 2019-2021 LTIP, 50% of the ~~time-vested portion vesting on April 1 following the fiscal year end which marks the end of the applicable Performance Period~~time-based awards granted were RSUs 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. Awards for any achievement of performance targets would not be granted until the performance targets are achieved and would then be subject to additional vesting through August 31 following the end of the applicable Performance Period. were cash.

For the 2016-2017 Performance Period, the Company achieved 54.4% of its “DXL Comparable Store Marginal Cash-Over-Cash Return” target, 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. The minimum threshold for the EBITDA target was not achieved. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Accordingly, subsequent to the end of fiscal 2017, in the first quarter of fiscal 2018,On March 19, 2019, the Compensation Committee of the Board of Directors (the “Compensation Committee”) approved a ~~27.2%~~25% payout ~~resulting in awards totaling $0.5 million, with a grant date~~based on the achievement of ~~April~~performance targets under the 2017-2018 LTIP, which ended February 2, ~~2018.~~2019. On ~~that date,~~March 19, 2019, the Company granted ~~265,749~~150,299 RSUs ~~which~~with a fair value of $0.5 million. The RSUs vested, net of any forfeitures, on August 31, ~~2018.~~

~~On April 2, 2018, in~~2019. In conjunction with the grant of the RSUs, the Company reclassified ~~$0.4~~$0.3 million of the liability accrual from “Accrued expenses and other current liabilities” to “Additional paid-in ~~capital.”~~capital” in the first nine months of fiscal 2019. See the Consolidated Statement of Changes in Stockholders’ Equity.

~~For~~ In addition to the ~~2017-2018 Performance Period, the Compensation Committee established two~~ performance ~~targets under the LTIP (the “2017-2018 LTIP”), as follows:~~

~~Assuming that~~awards, the Company ~~achieves the performance target at target levels and all time-vested~~will have incurred stock-based compensation of approximately $2.0 million for its time-based awards, ~~vest, the compensation expense associated with the 2017-2018 LTIP is estimated to be approximately $4.0 million. Approximately half of the compensation expense relates to the time-vested RSUs,~~ which is being expensed over thirty-six months, ~~based on the respective vesting dates. Through the end of the first nine months of fiscal 2018, no accrual has been made for performance awards under the 2017-2018 LTIP.~~ through April 1, 2020.

In June 2018, the Company amended its LTIP ~~by executing the Second Amended and Restated LTIP, as further amended in October 2018 (the “Amended LTIP”), which~~to, among other things, ~~extends~~extend the performance period for awards to three years, beginning with grants in fiscal 2018. 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 vests in four installments with the first 25% vesting on the later of April 1 following the grant date or one-year from the date of grant. Each of the remaining three tranches will vest on April 1, 2020, April 1, 2021 and April 1, 2022. The performance-based vesting is subject to the achievement of the performance target(s)Performance targets for the ~~applicable Performance Period.~~2018-2020 LTIP and the 2019-2021 LTIP were established and approved by the Compensation Committee on October 24, 2018 and August 7, 2019, respectively. Awards for any achievement of performance targets ~~would~~will not be granted until the performance targets are achieved and ~~would~~ then will be subject to additional vesting through August 31, ~~following the end of the applicable Performance Period.~~

~~On October 24, 2018, the Compensation Committee established two performance targets for~~2021 and August 31, 2022, respectively. The time-based awards under the 2018-2020 ~~Performance Period under~~LTIP and the ~~Amended~~2019-2021 LTIP ~~(the “2018-2020 LTIP”) as follows:~~

Assuming that the Company achieves the performance ~~target~~targets at target levels and all ~~time-vested~~time-based awards vest, the compensation expense associated with the 2018-2020 LTIP is estimated to be approximately ~~$4.1~~$3.8 million. Approximately half of the compensation expense relates to the time-vested RSUs, which is being expensed straight-line over ~~forty-one~~41 months. Through the end of the ~~first nine months~~third quarter of fiscal ~~2018, no accrual~~2019, the Company has ~~been made~~accrued $0.2 million for performance awards under the 2018-2020 LTIP.

5.For the 2019-2021 LTIP, assuming that the Company achieves the performance targets at target levels and all time-based awards vest, the compensation expense is estimated to be approximately $4.1 million. Approximately half of the compensation relates to time-based awards, 50% RSUs and 50% cash, which is being expensed straight-line over 44 months. There was no accrual at November 2, 2019 for performance awards under the 2019-2021 LTIP.

The Company has one active stock-based compensation plan: the 2016 Incentive Compensation Plan (the “2016 Plan”). The initial share reserve under the 2016 Plan was 5,725,538 shares of ~~our~~ common stock. A grant of a stock option award or stock appreciation right will reduce the outstanding reserve on a one-for-one basis, meaning one share for every share granted. A grant of a full-value award, including, but not limited to, restricted stock, restricted stock units and deferred stock, will reduce the outstanding reserve by a fixed ratio of 1.9 shares for every share granted. During the third quarter of fiscal 2019, on August 8, 2019, the Company’s shareholders approved an amendment to increase the share reserve by an additional 2,800,000 shares. At November ~~3, 2018,~~2, 2019, the Company had ~~4,576,630~~3,699,319 shares available under the 2016 Plan.

In accordance with the terms of the 2016 Plan, any shares outstanding under the previous 2006 Incentive Compensation Plan (the “2006 Plan”) at August 4, 2016 that subsequently terminate, expire or are ~~canceled~~cancelled for any reason without having been exercised or paid are added back and become available for issuance under the 2016 Plan, with stock options being added back on a one-for-one basis and full-value awards being added back on a 1 to 1.9 basis. At November ~~3, 2018, there are 804,782~~2, 2019, 784,251 stock options ~~and 128,408 full-value awards that remain~~remained outstanding under the 2006 Plan.

The 2016 Plan is administered by the Compensation Committee. The Compensation Committee is authorized to make all determinations with respect to amounts and conditions covering awards. Options are not granted at a price less than fair value on the date of the grant. Except with respect to 5% of the shares available for awards under the 2016 Plan, no award will become exercisable unless such award has been outstanding for a minimum period of one year from its date of grant.

The following tables summarize the share activity and stock option activity for the Company’s 2006 Plan and 2016 Plan, on a combined basis, for the first nine months of fiscal ~~2018:~~2019:

	Restricted shares			Restricted stock units ⁽¹⁾			Deferred shares ⁽²⁾			Fully-vested shares ⁽³⁾			Total number of shares			Weighted-average grant-date fair value ⁽⁴⁾		Restricted shares			RSUs ⁽¹⁾			Deferred shares ⁽²⁾			Fully-vested shares ⁽³⁾			Performance Share Units ⁽⁴⁾		Total number of shares			Weighted-average grant-date fair value
Shares
Outstanding non-vested shares at beginning of year		36,666			1,048,552			115,457			—			1,200,675		$	3.43		30,000			1,372,628			204,040			—			—		1,606,668		$	2.93
Shares granted		30,000			1,050,650			82,289			105,645			1,268,584		$	2.48		—			1,234,439			72,668			110,370			720,000		2,137,477		$	1.77
Shares vested/issued		(3,333	)		(627,220	)		(7,708	)		(105,645	)		(743,906	)	$	2.98		(10,000	)		(788,763	)		(8,857	)		(110,370	)		—		(917,990	)	$	2.94
Shares canceled		(33,333	)		(91,747	)		—			—			(125,080	)	$	2.84		(20,000	)		(126,052	)		—			—			—		(146,052	)	$	2.38
Outstanding non-vested shares at end of quarter		30,000			1,380,235			190,038			—			1,600,273		$	2.93		—			1,692,252			267,851			—			720,000		2,680,103		$	2.03

	Number of shares			Weighted-average exercise price per option		Weighted-average remaining contractual term	Aggregate intrinsic value		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		1,195,910		$	4.80		$	21,750		957,400		$	4.50	5.1 years	$	16,878
Options granted		153,888		$	2.48			—		—			—			—
Options expired and canceled		(366,626	)	$	4.73			2,000		(92,592	)	$	2.50			—
Options exercised		—			—			—		(46,296	)	$	2.50			—
Outstanding options at end of quarter		983,172		$	4.49	5.1 years	$	144,396		818,512		$	4.84	3.4 years	$	—
Options exercisable at end of quarter		829,284		$	4.87	4.3 years	$	26,308		813,512		$	4.85	3.3 years	$	—

For the first nine months of fiscal 2019, the Company granted 720,000 PSUs, 1,234,439 RSUs and 72,668 shares of deferred stock. For the first nine months of fiscal 2018, the Company granted 153,888 stock options, 30,000 shares of restricted stock, 1,050,650 RSUs and 82,289 ~~shares of deferred stock. For the first nine months of fiscal 2017, the Company granted 30,000 stock options, 484,558 shares of restricted stock, 804,701 RSUs and 74,968~~ 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 trading day immediately preceding the date of grant.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. There were no stock options granted in the first nine months of fiscal 2019. The following assumptions were used for grants for the first nine months of fiscal ~~2018 and fiscal 2017, respectively:~~2018:

The Company granted ~~40,309~~25,751 shares of common stock, with a fair value of approximately ~~$81,081,~~$52,493, to certain of its non-employee directors as compensation in lieu of cash in the first nine months of fiscal ~~2018.~~2019.

The Company recognized total stock-based compensation expense of ~~$1.1~~$1.4 million and ~~$1.3~~$1.1 million for the first nine months of fiscal ~~2018~~2019 and fiscal ~~2017,~~2018, respectively. The total compensation cost related to time-vested stock options, restricted stock, RSU and ~~RSU~~PSU awards not yet recognized as of November ~~3, 2018~~2, 2019 was approximately ~~$2.9~~$3.2 million, net of estimated forfeitures, which will be expensed over a weighted average remaining life of 3430 months.

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 nine months ended				For the three months ended				For the nine months ended
	November 3, 2018		October 28, 2017		November 3, 2018		October 28, 2017		November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
(in thousands)
Common stock outstanding:
Basic weighted average common shares outstanding		49,352		48,607		49,068		48,966		50,089		49,352		49,853		49,068
Common stock equivalents – stock options and restricted stock ⁽¹⁾		—		—		—		—		—		—		—		—
Diluted weighted average common shares outstanding		49,352		48,607		49,068		48,966		50,089		49,352		49,853		49,068

The following potential common stock equivalents were excluded from the computation of diluted earnings per share in each period, because the exercise price of such options was greater than the average market price per share of common stock for the respective periods or because of the unearned compensation associated with either stock options, restricted stock units, restricted or deferred stock had an anti-dilutive effect.

	For the three months ended				For the nine months ended				For the three months ended				For the nine months ended
	November 3, 2018		October 28, 2017		November 3, 2018		October 28, 2017		November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
(in thousands, except exercise prices)
Stock options		963		1,295		963		1,295		819		963		804		963
Restricted stock units		754		1,106		786		1,109		1,242		754		679		786
Restricted and deferred stock		24		54		57		78		114		24		114		57
Range of exercise prices of such options	$2.25 - $7.02		$1.85 - $7.02		$2.25- $7.02		$1.85 - $7.02		$1.85 - $7.02		$2.25 - $7.02		$2.25- $7.02		$2.25 - $7.02

The above options, which were outstanding at November ~~3, 2018,~~2, 2019, expire from March 19, 2020 to June 29, 2028.

Shares of unvested ~~time-based~~ restricted stock of 30,000 shares at November 3, 2018 ~~and 53,333 shares at October 28, 2017~~ were excluded from the computation of basic earnings per ~~share and will continue to be excluded until such shares vest.~~

~~The 30,000~~share. There were no unvested shares of restricted stock outstanding at November ~~3, 2018~~2, 2019.

The 720,000 PSUs are ~~considered issued~~excluded from basic and ~~outstanding. Each~~diluted earnings per share ~~of restricted stock has all of~~until 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~~market condition is ~~forfeited.~~achieved.

~~At November 3, 2018, the Company had total deferred tax assets of approximately $52.5 million, total deferred tax liabilities of $4.0 million and a corresponding valuation allowance of $48.5 million.~~

Since the end of fiscal 2014, the Company has ~~had~~maintained a full valuation allowance against its ~~net~~ deferred tax assets. While the Company has projected it will return to profitability, generate taxable income and ultimately emerge from a three-year cumulative loss, based on the Company’s forecast for fiscal ~~2018,~~2019, the Company believes that a full valuation allowance remains appropriate at this time. Realization of the Company’s deferred tax assets is dependent on generating sufficient taxable income in the near term. At November 2, 2019, the Company had total deferred tax assets of $58.6 million, total deferred tax liabilities of $9.9 million and a valuation allowance of $48.7 million.

As of November ~~3, 2018,~~2, 2019, for federal income tax purposes, the Company has net operating loss carryforwards of ~~$141.4~~$141.5 million, which will expire from fiscal 2022 through fiscal 2036 and net operating loss carryforwards of ~~$16.9~~$26.6 million that are not subject to expiration. For state income tax purposes, the Company has ~~$89.3~~$94.8 million of net operating losses that are available to offset future taxable ~~income.~~income, which will expire from fiscal 2019 through fiscal 2039. Additionally, the Company has ~~$2.8~~$2.9 million of net operating loss carryforwards related to the Company’s operations in ~~Canada.~~Canada, which will expire from fiscal 2025 through fiscal 2039.

The ~~utilization~~Company’s financial statements reflect the expected future tax consequences of ~~net operating loss carryforwards and the realization of~~uncertain 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.

~~As of February 4, 2018,~~positions that the Company ~~is calculating its tax provision based~~has taken or expects to take on ~~the newly enacted U.S. statutory rate of 21%. The tax benefit for the third quarter and first nine months of fiscal 2018 included~~ a tax expense of $45,000 and $92,000 in other comprehensive income (loss), which resulted in a tax benefit on the Consolidated Statement of Operations related to the corresponding decrease in valuation allowance, partially offset by a tax expense for certain states’ margin tax. The tax provision for the nine months of fiscal 2017 primarily represented certain states’ margin 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~~return, based solely on the technical merits of the tax position. The liability for unrecognized tax ~~benefit~~benefits at November ~~3, 2018~~2, 2019 was approximately $2.0 ~~million. This amount is directly~~million and was associated with a prior ~~year~~ tax position related to exiting the Company’s direct business in ~~Europe.~~Europe during fiscal 2013. The amount of unrecognized tax ~~benefit~~benefits has been presented as a reduction in the reported amounts of ~~its~~the Company’s federal and state net operating ~~loss~~losses carryforwards. ~~It is the Company’s policy to record interest and penalties on unrecognized tax benefits as income taxes; however, no~~No penalties or interest have been accrued on this liability because the carryforwards have not yet been utilized. The reversal of this liability would result in a tax benefit being recognized in the period in which the Company determines the liability is no longer necessary.

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

On May 16, 2018, the Company committed to a corporate restructuring plan (“Restructuring”) to accelerate the Company's path to profitability by better aligning its expense structure with its revenues. The Company eliminated 56 positions, which represented approximately 15% of its corporate work force, or 2% of its total work force, in connection with the Restructuring. On May 16, 2018, 36 employees were notified of their termination, with the remaining 20 positions representing open positions that will not be filled. The Company offered cash severance benefits to the eligible affected employees. Each affected employee’s eligibility for these severance benefits is contingent upon such employee’s execution (and no revocation) of a separation agreement, which includes a general release of claims against the Company.

~~The Company incurred an aggregate charge of approximately $1.9 million, of which $0.3 million was incurred in~~ the third quarter and first nine months of fiscal ~~2018,~~2019 and fiscal 2018. The Company’s net tax benefit for ~~employee severance and one-time termination benefits, as well as other employee-related costs associated with the~~

~~Restructuring. Approximately $1.5 million of the $1.9 million will be cash expenditures. At November 3, 2018, the Company has an accrued liability related to the restructuring of $0.3 million.~~

Pursuant to the terms of the Transition Agreement between the Company and Mr. Levin dated March 20, 2018, as amended (the “Transition Agreement”), Mr. Levin is expected to resign as an officer and director of the Company on January 1, 2019, at which time he will be entitled to receive his base salary, AIP bonus and LTIP compensation over the following twelve months.

~~On November 27, 2018, subsequent to the end of~~ the third quarter and first nine months of fiscal ~~2018,~~2019 was the Company entered into a letter agreement with Mr. Levin (the “Letter Agreement”). The Letter Agreement is a supplement to the Transition Agreement between the Company and Mr. Levin, and sets forth Mr. Levin’s initial transition duties and consulting activities that he will be required to perform under the termsresult of the ~~Transition Agreement~~deferred tax impact of $70,000 and $151,000, respectively, in ~~the event that the Company does not appoint~~other comprehensive income (loss), which resulted in a ~~successor CEO~~corresponding decrease in valuation allowance. This income tax benefit was partially offset by ~~December 31, 2018 and, pursuant to the terms of the Transition Agreement, Mr. Levin resigns as President and Chief Executive Officer and as a Director of the Company on January 1, 2019.~~

In accordance with the terms of the Letter Agreement, effective January 1, 2019, if no successor CEO has been appointed by December 31, 2018, Mr. Levin will begin serving as the Company’s acting CEO and, as such, its principal executive officer (collectively, “Acting CEO”) through the earliest of: (i) April 30, 2019 (subject to an extension by the Company on the same terms through no later than June 30, 2019); (ii) the date that a successor CEO commences employment or (iii) termination of his employment by the Company. As compensation, Mr. Levin will receive $200,000 per month but in no event less than $800,000.

~~During~~tax expense, primarily for certain states’ margin tax. The net tax benefit for the third quarter and first nine months of fiscal 2018, primarily related to certain states’ margin tax, which was partially offset by the tax benefit recognized as a result of the deferred tax impact of $45,000 and $92,000, respectively, in other comprehensive income (loss) which resulted in a corresponding decrease in valuation allowance.

In connection with Mr. Levin’s retirement and the appointment of Mr. Kanter as the Company’s President and Chief Executive Officer, the Company has incurred ~~costs~~certain transition costs. For the first nine months of ~~approximately $0.4~~fiscal 2019 and 2018, the Company has incurred $0.7 million and $0.6 million, respectively, related to CEO search costs, Acting CEO consulting costs, housing allowance and legal fees. In addition, in accordance with the terms of the transition agreement between the Company and Mr. Levin, the Company is accruing for estimated future cash payments that Mr. Levin will be entitled to under his transition agreement and existing performance plans, if and when such targets are achieved.

Results for the third quarter and first nine months of fiscal 2018 included a charge of $0.3 million and $1.9 million, respectively, in connection with its corporate restructuring in May 2018, which reduced its corporate work force by approximately 15%. The charge represented employee severance, one-time termination benefits and other employee-related costs associated with the restructuring.

During the third quarter of fiscal 2019, the Company closed its Rochester Clothing store located in London, England. In connection with this store closure, the Company incurred a charge of approximately $1.7 million, which included a non-cash charge of $0.8 million related to the recognition of the accumulated foreign currency translation adjustment. The remainder of the charge primarily related to ~~the CEO search.~~ lease termination and inventory liquidation costs.

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 our expectations with respect to ~~CEO transition costs, CEO search process, cash flows, gross profit margins, merchandise margins, marketing costs, restructuring charges, selling, general~~our strategic plans to grow our customer base and ~~administrative expenses,~~drive top-line sales; store counts ~~inventory levels, capital expenditures, borrowings, interest costs,~~and store closures, comparable sales growth and ~~earnings~~free cash flow for fiscal ~~2018,~~2019, targeted marketing spend, capital investments, and the ~~expected~~ impact of ~~investments in marketing~~the wholesale business on 2018 sales and longer term impact on customer acquisition and brand awareness, anticipated savings from our corporate restructuring, and the anticipated number of store openings and closings in fiscal 2018.future growth. 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 February ~~3, 2018,~~2, 2019, included in our Annual Report on Form 10-K for the year ended February ~~3, 2018,~~2, 2019, as filed with the Securities and Exchange Commission on March ~~23, 2018~~22, 2019 (our “Fiscal ~~2017~~2018 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 ~~2017~~2018 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,~~limitation, risks relating to the execution of our corporate strategy, and our ability to grow our ~~market share,~~wholesale segment, predict customer tastes and fashion trends, forecast sales growth trends, maintain and build our brand awareness 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 &and tall men’s ~~apparel~~clothing with retail, wholesale and direct operations in the United States ~~Canada~~ and ~~London, England.~~Canada. We operate under the trade names of Destination XL^®, DXL^®, DXL Outlets, Casual Male XL^®, Casual Male XL Outlets and Rochester Clothing. At November ~~3, 2018,~~2, 2019, we operated ~~216~~229 Destination XL stores, 1517 DXL outlet stores, 6750 Casual Male XL retail stores, 3028 Casual Male XL outlet stores and 52 Rochester Clothing stores. Our e-commerce site, ~~DestinationXL.com,~~dxl.com, 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 1, 2020 and February 2, 2019 ~~and February 3, 2018~~ as “fiscal ~~2018”~~2019” and “fiscal ~~2017,~~2018,” respectively. ~~Fiscal 2018 is a 52-week period~~Both fiscal 2019 and fiscal ~~2017 was a 53-week period.~~2018 are 52-week periods.

~~We report~~Historically, we have had two principal operating segments: our ~~operations as one reportable segment, Big & Tall Men’s Apparel.~~stores and direct businesses. We consider ~~our retail and direct (e-commerce) businesses, especially in our growing omni-channel environment,~~these two operating segments to be similar in terms of economic characteristics, production processes and operations, and have therefore aggregated them into one reportable segment, retail segment, consistent with our omni-channel business approach. In fiscal 2018, we launched a ~~single reporting~~wholesale segment, which we consider a third operating segment. However, due to the immateriality of the wholesale segment’s revenues, profits and assets for the nine months ended November 2, 2019 and November 3, 2018, its operating results have been aggregated with the retail segment for both periods.

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. After our announcement in the beginning of fiscal 2019 that we would be closing our Rochester Clothing stores, we removed these stores from the comparable sales base. 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.

~~In addition, our~~Our customer’s shopping experience continues to evolve across multiple channels and we are continually ~~changing~~adapting to meet his needs. ~~As part of our omni-channel initiatives, the~~The majority of our ~~retail~~ stores have the capability of fulfilling online orders if merchandise is not available in the warehouse. As a result, we continue to see more transactions that begin online but are ultimately ~~satisfied~~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 a 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 do not report comparable sales separately for our retail ~~and e-commerce businesses.~~segment. However, as we continue to invest in building our e-commerce platform, bringing a heightened digital focus to our Company, additional disclosure on our e-commerce growth as it relates to our current initiatives is important. We define store sales as sales that originate and are fulfilled directly at the store level. E-commerce sales, which we also refer to as direct sales, are defined as sales that originate online, ~~including those initiated online~~whether through our website, at the store ~~level.~~ level or through a third-party marketplace.

The following is a summary of results for the third quarter and first nine months of fiscal ~~2018~~2019 as compared to the prior year’s third quarter and first nine months, including adjusted EBITDA and adjusted net loss, which are non-GAAP measures. Please see “Non-GAAP Financial Measures” below for reconciliations of these non-GAAP measures.

During the third quarter of fiscal 2018, we continued to see solid growth in our comparable sales base, while maintaining a healthy gross margin, and cost savings in our SG&A(selling, general and administrative) expenses. As a result, our net loss for the third quarter of fiscal 2018 was $(0.04) per diluted share, an $(0.08) improvement from the net loss of $(0.12) for the third quarter of fiscal 2017. For the first nine months of fiscal 2018, our adjusted EBITDA more than doubled to $6.6 million, from $2.8 million for the same period of the prior year. As a result of our performance year to date, we are updating our guidance for 2018, which we discuss in detail below.

We have seen a consistent improvement in sales since the fourth quarter of fiscal 2017, with a comparable sales increase in the third quarter of fiscal 2018 of 3.4%, or $3.4 million. We saw positive sales growth across all regions, with particularly strong comparable sales in the Northeast and Southeast regions. Our results were driven by productivity in stores, with improved store traffic and strong conversion rates, and growth in our direct business. During the third quarter, we launched our new website, which offers a cleaner look and feel, with easier navigation, updated site functionality and streamlined checkout. Visually, the updated website provides a stronger showcase for our brands and product offerings, which we believe will resonate better with our customers. On a trailing 12-month basis, our direct business represented 21.2% of our total sales at the end of the third quarter of fiscal 2018, as compared to 20.8% at the end of the third quarter of fiscal 2017.

Our reduced SG&A costs, primarily related to payroll cost savings, also contributed to the improvement in earnings. As discussed in more detail below, in the second quarter we initiated a corporate restructuring to accelerate our path to profitability, including a corporate workforce reduction of approximately 15%. Given that our transformation to the DXL concept is essentially complete, we are intently focused on improving our adjusted EBITDA margin, as a percentage of total sales. Our current strategy includes growing our brand and better expense management. The corporate restructuring aligns us with those objectives.

We also remain focused on improving our liquidity and reducing our debt levels. Last quarter, we amended our credit facility with Bank of America, N.A., which extended the maturity date of the facility from October 2019 to May 2023. We also reduced our borrowing rates under the revolving facility by 25 basis points and added a $15.0 million “first in last out” (FILO) facility at a substantially lower borrowing rate than our previous term loan facility. At the end of the third quarter of fiscal 2018, we have reduced our total debt outstanding by $9.4 million to $72.0 million from $81.4 million at the end of the third quarter of fiscal 2017.

As mentioned above, in May 2018, we executed a restructuring plan (“Restructuring”) to accelerate the Company's path to profitability by better aligning its expense structure with its revenues. We eliminated 56 positions, which represented approximately 15% of our corporate work force, or 2% of our total work force. On May 16, 2018, 36 employees were notified of their termination with the remaining 20 positions representing open positions that will not be filled. In connection with the Restructuring, we incurred an aggregate charge of $1.9 million for employee severance and one-time termination benefits, as well as other employee-related costs associated with the Restructuring. Of the total charge of $1.9 million, $0.3 million was recorded in the third quarter of fiscal 2018. Approximately $1.5 million of the $1.9 million was cash expenditures.

As a result of this Restructuring, we expect to realize savings of approximately $5.6 million in SG&A expenses in fiscal 2018, which is reflected in our fiscal 2018 earnings expectations. The $5.6 million in savings primarily related to corporate payroll, travel, benefits and non-essential project expenses, with expected annualized savings of approximately $10.3 million. Of the $10.3 million, we expect $6.6 million to come from corporate staffing changes, $2.0 million from changes to defined contribution plans and $1.7 million from other non-essential general and administrative costs.

~~Our “Built XL~~” advertising campaign emphasizes fit, expertise, clothing brands, in-store experience, and one-stop shopping. We are highlighting our key differentiators and working to make an emotional connection with our core consumer. In our Spring campaign, we reduced the number of weeks as compared to fiscal 2017, but we saw a strong increase in store and web traffic once our Spring campaign launched. We were pleased with the reaction to this campaign and its effect on our overall brand awareness.

~~Our Fall/Holiday campaign, which launched in late November, is a continuation of the Spring “Built XL” advertising campaign. Radio advertising began the week of Thanksgiving with a television ad starting after the Thanksgiving holiday, consistent with last year’s marketing campaign.~~

In addition to the media campaign, we will also be increasing the circulation of our direct mail campaign and strengthening offers under our loyalty program. This holiday season, we will also be testing a holiday catalog to our top customers which will highlight current fashion and product offerings.

On March 23, 2018, the Company announced Mr. Levin’s plan to retire on December 31, 2018, and the engagement of Heidrick & Struggles International Inc. to lead a search process to identify a successor for Mr. Levin. That search process was terminated on October 1, 2018. On November 26, 2018, the Company engaged Russell Reynolds Associates to lead a new CEO search process, which we expect to be completed by the end of the first quarter of fiscal 2019.

On November 27, 2018, the Company entered into a letter agreement with Mr. Levin, whereby, if no successor CEO has been appointed by December 31, 2018, Mr. Levin will assume the role of Acting CEO from January 1, 2019 through April 30, 2019, unless such agreement is extended by the Board of Directors through June 30, 2019. In connection with assuming this role, Mr. Levin will receive additional compensation of $200,000 per month, but in no event less than $800,000.

The Company expects to incur an aggregate charge of approximately $2.1 million for CEO transition costs in fiscal 2018, related primarily to expenses incurred pursuant to the Transition Agreement and the CEO search. During the third quarter and first nine months of ~~fiscal 2018,~~ the ~~Company incurred costs~~prior year, including adjusted EBITDA, which is a non-GAAP measure. Please see “Non-GAAP Financial Measures” below for a reconciliation of ~~approximately $0.4 million and $0.6 million, respectively, related primarily~~net loss to adjusted EBITDA.

~~The Company expects~~third quarter, we were pleased to ~~incur additional charges~~see quarter-over-quarter improvement in sales, with an increase in our comparable sales for the third quarter of 0.2%. Comparable sales were low single-digit negative at the start of the third quarter, but improved over the 13 weeks, with positive comparable sales in October in the low single-digits. We were also pleased with the growth in our direct business during the third quarter, which increased mid-single digits over the prior year driven by double-digit DXL.com (DTC) traffic. Contributing to our total sales during the third quarter of fiscal 2019 was our wholesale business, which generated $2.9 million, or an increase of ~~approximately $0.4~~$2.5 million ~~for CEO search costs and approximately $1.2 million, assuming target, of future cash payments that Mr. Levin may be entitled to under existing performance plans, if and when such targets~~over the prior year quarter. We are ~~achieved.~~

~~Based on~~pleased with the ~~positive~~steady progress we are making with this new business, with total sales ~~trend that we have experienced~~ for the first nine months of fiscal ~~2018,~~2019 of $8.0 million.

Gross margin for the third quarter decreased approximately 310 basis points from last year’s third quarter. During the quarter, we ~~are updating~~tested a variety of new promotional events to further drive the omni-channel retail experience, aligning direct and store promotions. While the promotional events were unsuccessful in driving the sales results we had hoped for, we did gain some valuable insights that will benefit our ~~earnings guidance~~future promotions. We had expected the tests we developed and implemented in-store could be capable of driving incremental traffic and while they did achieve that directionally, the promotions were not sufficiently offset by traffic. We also saw a higher sell through of clearance merchandise. Lastly, our gross margin also was impacted by a change to our internal inventory aging policy as part of our ongoing "diagnostic" of the inventory mix. In recent years, our tailored clothing assortments have struggled from a noticeable shift and continued shift in customer preference to casual sportswear. As a result, the inventory diagnostic in the third quarter resulted in an increase in our lower of cost or market reserves on certain aged inventory, particularly in tailored clothing. As a result of this exercise, we recorded a $0.9 million non-cash charge to gross margin to maintain a healthy inventory position. As we previously mentioned, as our wholesale business grows, it will continue to negatively impact our gross margin rate, due to the nature of those margins being significantly lower than our retail business.

Our results for the third quarter of fiscal ~~2018. As discussed above, the Company expects to incur an aggregate~~2019 also included a charge of ~~$2.1~~$1.7 million related to the closure of ~~CEO transition costs in fiscal 2018, a decrease~~our London Rochester Clothing store and the exit from our ~~previous disclosure~~London operations. The largest component of ~~$4.2 million.~~

~~Our strategy for fiscal 2018 remains focused on customer acquisition, customer retention, and customer re-activation. Our marketing spend for~~this charge was the ~~year is expected to be approximately $24.0 million, which is less than~~recognition of the ~~fiscal 2017 spend~~accumulated foreign currency translation adjustment of approximately ~~$29.5 million, but greater than~~$0.8 million. The remainder of the ~~fiscal 2016 spend of $18.0 million. Compared~~charge related primarily to ~~fiscal 2017, we are projecting that our total sales for~~lease termination and inventory liquidation costs.

For the year will be negatively impacted by one less week of sales and a net decrease in store count of ten stores, worth approximately $5.3 million in sales. Fiscal 2017 included a 53rd week, with sales of $6.9 million and operating income of $1.6 million.

Total sales for the third quarter of fiscal ~~2018 increased 3.2%~~2019 decreased 0.5% to $106.6 million from $107.1 million ~~from $103.7 million from~~in the third quarter of fiscal ~~2017.~~2018. The ~~increase~~decrease of ~~$3.4~~$0.5 million in total sales was principally due to a ~~comparable~~decrease in sales ~~increase~~ of ~~3.4%, or $3.4~~$2.0 million ~~an increase of $0.7 million~~from closed stores and a decrease in ~~non-comparable sales from DXL stores open less than 13 months, a $0.7 million shift in calendar weeks due to the 53~~^rd ~~week in fiscal 2017 and~~ other revenue, which includes loyalty and alterations, of ~~$0.3~~approximately $1.1 million. These ~~increases~~decreases were partially offset by ~~closed stores~~an increase in wholesale revenue of ~~$1.7~~$2.5 million and comparable sales increase for the third quarter of 0.2%, or $0.2 million. Comparable sales during the third quarter of fiscal 2019 improved during the quarter with comparable sales in August down 2.3%, September up 0.2% and October up 2.5%. While traffic continues to be down, our conversion rate and number of transactions were up low single digits. We did see a decrease in our dollars per transaction, which was primarily driven by our promotional and clearance activity. With respect to our direct business, we saw a double-digit percentage increase in site traffic, which resulted in a mid-single digit increase in direct sales for the third quarter of fiscal 2019.

For the first nine months of fiscal ~~2018,~~2019, our total sales increased ~~3.1%~~0.1% to ~~$342.6~~$342.8 million ~~from $332.5~~as compared to $342.6 million for the first nine months of fiscal ~~2017.~~2018. The increase of ~~$10.2~~$0.2 million was ~~primarily~~principally due to ~~a comparable sales~~an increase in wholesale revenue of ~~3.0%, or $9.5~~$7.6 million ~~non-comparable sales of $5.8 million and $2.0 million as a result of the shift in calendar weeks. These increases were~~partially offset by ~~the~~a decrease in sales from closed stores of ~~$6.5~~$5.3 million and a decrease in ~~other revenues~~comparable sales of ~~$0.7 million.~~

Our focus in fiscal 2018 is on achieving topline growth through customer acquisition, customer retention, and customer re-activation, and capturing a greater share of wallet by providing a great guest experience wherever our target customer decides to shop, whether in our stores(0.3)%, or ~~online. During~~$1.1 million for the ~~third quarter~~first nine months of fiscal 2018, we launched our updated website, which enhances our digital presence and provides our customers with improved functionality. Our goal is to increase touchpoints across all of our e-commerce platforms with the objective of growing and retaining our customer base. 2019.

On a trailing twelve-month basis, direct sales as a percentage of total retail sales were ~~21.2%~~22.4% at the end of the third quarter of fiscal ~~2018~~2019 as compared to ~~20.8%~~21.2% at the end of the third quarter of the prior year. For the first nine months of fiscal ~~2018,~~2019, our direct sales were ~~20.4%~~21.5%, up from ~~20.1%~~20.4% for the first nine months of the prior year.

Our stores also performed strongly during the quarter, with comparable sales increases across all regions, especially in the Northeast and Southeast, which outperformed the chain. Store traffic has been improving each quarter, but this quarter we saw store traffic move positive. This improvement, coupled with our continued increases in conversions and dollars per transactions, contributed to the sales growth this quarter.

~~Our end-of-rack customer represented 45.7% of our bottoms business, up slightly from 45.3% in the first nine months of fiscal 2017.~~

For the third quarter of fiscal ~~2018,~~2019, our gross margin rate, inclusive of occupancy costs, was ~~44.0%~~41.1% as compared to a gross margin rate of ~~43.2%~~44.0% for the third quarter of fiscal ~~2017.~~2018. The 80decrease of 290 basis points was due to a decrease in merchandise margins of 310 basis points partially offset by a 20 basis point improvement ~~was the result of a 90 basis point decrease~~ in occupancy costs as a percent of sales. The 310 basis point decrease in merchandise margin, as compared to the prior year’s third quarter, was due, in part, to approximately 110 basis points related to higher clearance selling and promotional activity. The remainder of the merchandise margin decrease came from an inventory diagnostic that resulted in an 80 basis point decrease related to the write-off of aged inventory and 120 basis points due to the growth of our wholesale segment, which by its nature has lower merchandise margins than our retail business. The 80 basis point decrease for the write-off of aged inventory was due to a change to our inventory aging policy for which we incurred a charge of approximately $0.9 million, which represented approximately 0.8% of our total inventory cost. The improvement in occupancy costs, as a percentage of sales, ~~partially offset by~~was due to a decrease of ~~10 basis points~~$0.4 million in ~~merchandise margins.~~total occupancy costs, primarily related to closed stores, as compared to the prior year’s third quarter.

For the first nine months of fiscal ~~2018,~~2019, our gross margin rate, inclusive of occupancy costs, was ~~45.0%~~43.1% as compared to ~~44.9%~~a gross margin rate of 45.0% for the first nine months of fiscal ~~2017.~~2018. The ~~increase~~decrease of 10190 basis points was due to a 60decrease in merchandise margins of 240 basis points partially offset by a 50 basis point ~~decrease~~improvement in occupancy costs as a percent of ~~sales partially offset by a~~sales. The 240 basis point decrease in merchandise ~~margins of 50 basis points.~~

~~The decrease in merchandise margins for the third quarter of fiscal 2018~~margin was due to ~~a slight shift~~approximately 110 basis points related to higher clearance selling and promotional activity, 30 basis points related to the write-off of aged inventory and 100 basis points due to the growth of our wholesale segment.

The improvement in ~~product mix from our private label brands to our designer brands. For the first nine months of fiscal 2018, increases in shipping costs were also a factor. Occupancy~~occupancy costs, as a percentage of sales, ~~improved as~~was due to a ~~result~~decrease of ~~the leveraging of the sales base. For the third quarter and first nine months of fiscal 2018,~~$1.8 million in total occupancy costs, ~~decreased $0.3 million and $0.4 million, respectively,~~primarily related to closed ~~stores.~~stores, as compared to the prior year’s first nine months.

As a percentage of sales, SG&A expenses for the third quarter of fiscal ~~2018~~2019 were ~~37.8%~~39.5% as compared to ~~40.5%~~37.8% for the third quarter of fiscal ~~2017.~~2018. On a dollar basis, SG&A ~~decreased~~increased by ~~$1.5~~$1.7 million for the third quarter of fiscal ~~2018. The decrease~~2019. This increase was ~~due~~primarily attributable to increases in corporate severance of $0.5 million, $0.3 million in marketing costs, $0.4 million in information technology and an increase of $0.2 million in expenses related to our wholesale segment. In addition, as a ~~reduction in payroll and payroll~~result of adopting the new lease accounting standard (ASC 842) at the beginning of fiscal 2019, we are no longer receiving a $0.4 million quarterly benefit from amortizing a deferred gain related ~~cost.~~to the sale-leaseback of our corporate office.

For the first nine months of fiscal ~~2018,~~2019, SG&A expenses were ~~39.0%~~39.1% as compared to ~~41.3%~~39.0% for the first nine months of fiscal ~~2017.~~2018. On a dollar basis, SG&A ~~expenses decreased $3.6~~expense increased $0.6 million, primarily due to the prior period’s recognition of $1.1 million of deferred gain on the sale-leaseback, as discussed above, and an insurance gain of $0.6 million in the prior year, which did not repeat in fiscal 2019. In addition, wholesale business expenses increased $0.6 million, corporate severance increased $0.5 million and supporting costs for our direct business increased $0.5 million, which ties directly to our growth in the direct business. Partially offsetting these increases in SG&A expenses were savings of $2.3 million recognized in the first half of fiscal 2019 due to the corporate restructuring in May 2018, a decrease of approximately $0.2 million in marketing ~~costs~~and a decrease of approximately $2.2 million, due to a reduction in the number of weeks in the Spring campaign, a reduction in payroll and payroll related costs of approximately $2.5 million and other supporting costs of approximately $0.9 million. These savings were partially offset by an increase of approximately $2.1$0.3 million in ~~costs related to e-commerce and technology initiatives.~~ incentive accruals.

SG&A expenses are managed through two primary cost centers: Customer Facing Costs and Corporate ~~Support~~Supporting Costs. Customer Facing Costs, which include store payroll, marketing, and other store operating costs, represented ~~23.0%~~22.9% of sales infor the first nine months of fiscal ~~2018~~2019 as compared to ~~23.9%~~23.0% of sales infor the first nine months of last year. On an annual basis, management targets marketing expenses to be at approximately 5% of sales. Corporate ~~Support~~Supporting Costs, which include the distribution center, support, and other corporate overhead costs, represented ~~16.0%~~16.2% of sales infor the first nine months of fiscal ~~2018~~2019 compared to ~~17.4%~~16.0% of sales infor the first nine months of last year. The Company ~~will continue~~continues to ~~address~~examine and rationalize its entire SG&A cost structure to improve its EBITDA margins and overall profitability.

In the second quarter of fiscal 2017, we incurred an asset impairment charge of $1.7 million for the write-off of certain store assets. This amount was previously included in depreciation and amortization in the Consolidated Financial Statements for the first nine months of fiscal 2017 but was reclassified to impairment of assets in the Consolidated Financial Statements for fiscal year 2017. For consistency, the prior year results included in the Consolidated Financial Statements for the first nine months of fiscal 2018 reflect this year-end reclassification to impairment of assets.

Depreciation and amortization for the third quarter ~~of fiscal 2018 decreased $0.5 million to $7.2 million as compared to $7.7 million for the third quarter of fiscal 2017. For the~~and first nine months of fiscal ~~2018, depreciation~~2019 of $6.3 million and ~~amortization~~$18.9 million, respectively, decreased ~~$1.4~~from $7.2 million toand $21.9 million, ~~from $23.3 million~~respectively, for the third quarter and first nine months of fiscal ~~2017.~~2018. With the ~~DXL~~majority of our new store growth ~~substantially~~ complete, our depreciation costs ~~have started to decrease.~~are decreasing. In addition, depreciation and amortization in the prior year included amortization on our Casual Male trademark, which is now fully amortized.

Net interest expense for the third quarter of fiscal ~~2018 of~~2019 increased to $0.9 million as compared to $0.8 million ~~decreased slightly from $0.9~~ for the third quarter of fiscal ~~2017 million. The decrease in interest costs is~~2018 due to ~~a reduction in total debt outstanding at the end of the third quarter of fiscal 2018 as compared to the prior year, partially offset by~~ an increase in ~~interest~~both average borrowings and effective borrowing rates.

~~For the first nine months of fiscal 2018, interest expense of $2.6 million increased slightly from $2.5 million for the first nine months of fiscal 2017.~~ Net interest expense for the first nine months of fiscal ~~2018 include~~2019 decreased by less than $0.1 million to $2.6 million as compared to the first nine months of fiscal 2018. This slight decrease in interest costs was due to the write-off of ~~approximately $0.2 million of unamortized~~ debt issuance costs in fiscal 2018 associated with ~~entering into~~the prepayment of our term loan, partially offset by a ~~New Credit Facility~~slight increase in average borrowings and an increase in effective borrowing rates for the ~~repayment~~first nine months of fiscal 2019 as compared to the Term Loan Facility, as discussed below. As a result of the New Credit Facility and the repayment of the Term Loan Facility, we expect to realize, on an annualized basis, savings of approximately $0.7 million due to more favorable interest rates.prior year.

At November 3, 2018, we had total deferred tax assets of $52.5 million, total deferred tax liabilities of $4.0 million and a corresponding valuation allowance of $48.5 million. The deferred tax assets included approximately $39.0 million of net operating loss carryforwards and approximately $2.8 million of deferred gain on our sale-leaseback and, to a lesser extent, other book/tax timing differences.

~~At the end of fiscal 2014, we~~We established a full valuation allowance against our deferred tax ~~assets.~~assets at the end of fiscal 2013. Based on our ~~earnings guidance~~forecast for fiscal ~~2018,~~2019, we believe that a full valuation allowance continues to remain appropriate at this time.

~~Beginning with~~The discrete tax rate method was used for calculating tax expense. Due to current period losses, our current tax provision for the first ~~quarter~~nine months of fiscal 2019 and fiscal 2018 ~~we are calculating our~~was primarily due to current state margin tax, ~~provision~~ based on ~~the newly enacted U.S. statutory rate of 21%. Our~~gross receipts less certain deductions. The total income tax ~~provision~~benefit for the third quarter and first nine months of fiscal ~~2018 and fiscal 2017 was primarily due to current state margin tax. The third quarter and first nine months of fiscal 2018~~2019 included a deferred tax ~~expense~~impact of ~~$45,000~~$70,000 and ~~$92,000,~~$151,000, respectively, in other comprehensive income (loss), which resulted in a tax benefit on the Consolidated Statement of Operations related to the corresponding decrease in valuation allowance. Similarly, the total income tax benefit for the third quarter and first nine months of fiscal 2018 included a deferred tax impact of $45,000 and $92,000, respectively, in other comprehensive income (loss) which resulted in a tax benefit due to its corresponding decrease in valuation allowance.

For the third quarter of fiscal ~~2018,~~2019, we had a net loss of $(7.2) million, or $(0.14) per diluted share, compared with a net loss of $(2.0) million, or $(0.04) per diluted share, ~~compared with a net loss of $(5.7) million, or $(0.12) per diluted share,~~ for the third quarter of fiscal ~~2017.~~2018. For the first nine months of fiscal ~~2018,~~2019, we had a net loss of $(10.2) million, or $(0.21) per diluted share, as compared with a net loss of $(6.3) million, or $(0.13) per diluted ~~share, as compared with a net loss of $(15.5) million, or $(0.32) per diluted share for the first nine months of fiscal 2017.~~share.

Results for the third quarter and first nine months of fiscal 2018 includes charges of $0.7 million and $2.5 million, respectively, associated with the Company’s restructuring and CEO transition costs discussed above. Results for the first nine months of fiscal 2017 included an impairment charge of $1.7 million for the write-down of certain store assets.23

On a non-GAAP basis, ~~the~~before exit costs associated with our London operations, CEO transition costs, corporate restructuring charges and assuming a normalized tax rate of 26% for all periods, adjusted net loss ~~for the third quarter and first nine months of fiscal 2018 was ($0.02) and ($0.06)~~ per ~~diluted share, respectively, as compared to the adjusted net loss of ($0.09) per diluted share and ($0.21) per diluted~~ share for the third quarter and first nine months of fiscal ~~2017, respectively. Results~~2019 was ($0.08) per diluted share and ($0.12) per diluted share, respectively, as compared to adjusted net loss of ($0.02) per diluted share and ($0.06) per diluted share, respectively, for the third quarter and first nine months of fiscal 2018 were adjusted for the restructuring charge and CEO transition costs of $0.7 million and $2.5 million, respectively. Results for the first nine months of fiscal 2017 were adjusted for the impairment charge of $1.7 million. Further, all periods were adjusted to assume a normalized tax rate of 26%.2018.

Our inventory on November 2, 2019, increased approximately $3.8 million to $120.2 million, as compared to $116.4 million at November 3, 2018. The increase was primarily due to an increase in wholesale inventory as well as an increase in style-presentation levels in our better and best collections in our retail stores as we drive branded collections. At November 3, 2018, total inventory was $116.4 million compared to $103.3 million at February 3, 2018 and $119.9 million at October 28, 2017. The 2.9% decrease of $3.5 million from October 28, 2017 was due to inventory initiatives that began in fiscal 2016 to improve timing of receipts and reduce weeks of supply on hand. At November 3, 2018,2, 2019, our clearance inventory ~~which includes inventory in our “dots” program as well as certain merchandise that has been permanently marked down,~~ represented ~~11.7%~~10.0% of our total inventory, as compared to ~~9.7%~~11.3% at October 28, 2017. We believe that this slight increase is due to more customers gravitating toward our new, full-price fashion merchandise in the Fall assortment, as opposed to last year where we were seeing higher sell-throughs on clearance product.November 3, 2018.

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 with Bank of America, N.A., (“Credit Facility”), which was most recently amended ~~and restated~~ in ~~May 2018.~~September 2019 (“Credit Facility”). Our current cash needs are primarily for working capital (essentially inventory requirements), capital expenditures and growth initiatives. We plan to manage our working capital and it is expected that excess cash from operations will be directed toward our growth initiatives and debt reductions.

Our capital expenditures in fiscal 2018 are expected to be approximately $12.5 million, and while capital expenditures may have to be funded periodically during the year from our credit facility, by the end of fiscal 2018 all capital expenditures are expected to be funded from cash flow from operations. We currently believe that our existing cash generated by operations together with our ~~credit facility~~Credit Facility will be sufficient within current forecasts for us to meet our foreseeable liquidity requirements.

For fiscal 2018, we expect cash flow from operating activities of $22.5 million to $26.5 million (including tenant allowances), and positive free cash flow of $10.0 million to $14.0 million that we expect to use to reduce outstanding debt.

~~Cash flow from operations for~~ the first nine months of fiscal ~~2018 was $(1.3)~~2019, cash flow from operations decreased by approximately $13.1 million to $(14.4) million as compared to ~~$5.2~~$(1.3) million for the first nine months of fiscal 2017. The decrease in cash flow from operations was primarily due to the prior year benefiting from inventory reduction initiatives, which have now annualized, resulting in a $10.6 million swing as well as a decrease in tenant allowances from the prior year of approximately $5.4 million, which corresponds to our decrease in capital expenditures. These decreases in cash flow from operations were partially offset by our improved earnings of $9.2 million. Capital expenditures for the first nine months of fiscal

2018 decreased to $9.8 million as compared to $18.4 million for the first nine months of fiscal 2017, due to opening fewer stores. For the first nine months of fiscal 2018, we opened two DXL stores, one DXL outlet store and rebranded three Casual Male XL stores to DXL stores, as compared to 20 store openings for the first nine months of fiscal 2017. Partially offsetting this decrease in store capital was an increase in capital expenditures related to our IT and website initiatives. The majority of the planned capital for these IT and website initiatives was incurred in the first half of fiscal 2018. Free cash flow, a non-GAAP measure, ~~was~~decreased by $14.3 million to $(25.4) million for the first nine months of fiscal 2019 as compared to $(11.1) million for the first nine months of fiscal 2018. The primary reason for this decrease of $14.3 million in free cash flow was due to a decrease in Adjusted EBITDA and the timing of working capital, namely accounts payable, accrued expenses and incentive payments earned in fiscal 2018 but paid out in fiscal 2019. At November 2, 2019, accrued expenses were substantially lower than the prior year due to certain rent and lease related liabilities that were eliminated upon adoption of ASC 842. As mentioned above, our inventory levels increased as compared to ~~$(13.2)~~prior year levels as a result of increasing in-store style presentation for certain brands in our better and best collections, as well as an increase related to our wholesale inventory. Capital expenditures for the first nine months of fiscal 2019 increased slightly to $11.0 million as compared to $9.8 million for the first nine months of fiscal ~~2017.~~ 2018.

This decrease in free cash flow, as a result of the timing in working capital, resulted in an increase of $10.9 million in total debt outstanding at November 2, 2019 as compared to November 3, 2018. The following is a summary of our total debt outstanding at November ~~3, 2018~~2, 2019 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	$	57,671	$	(381	)	$	57,290	$	68,483	$	(298	)	$	68,185
FILO loan		15,000		(257	)		14,743
FILO Loan									15,000		(201	)		14,799
Total debt	$	72,671	$	(638	)	$	72,033	$	83,483	$	(499	)	$	82,984

In the second quarter of fiscal 2018, we amended and restated our credit facility with Bank of America, N.A (our “New Credit Facility”) which extended the maturity date to May 24, 2023. The New Credit Facility continues to provide provides for a maximum committed borrowing of $125.0 million, which, pursuant to an accordion feature, ~~could~~may be increased to $175.0 million upon our request and the agreement of the lender(s) participating in the increase (the “Revolving Facility”). The ~~New~~ 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. Borrowings made pursuant to the Revolving Facility under the ~~New~~ Credit Facility will bear interest, calculated under either the Federal Funds rate or the LIBOR rate, at a rate equal to the following: (a) the Federal Funds rate plus a varying percentage based on the Company’s excess availability, of either 0.25% or 0.50%, or (b) the LIBOR rate (the Company being able to select interest periods of 1 week, 1 month, 2 months, 3 months or 6 months) plus a varying percentage based on the Company’s excess availability, of either 1.25% or 1.50%. The current maturity date is May 24, 2023.

We had outstanding borrowings of ~~$57.7~~$68.5 million under the ~~New~~ Credit Facility at November ~~3, 2018.~~2, 2019. At November ~~3, 2018,~~2, 2019, outstanding standby letters of credit were ~~$2.9~~$2.7 million and outstanding documentary letters of credit were ~~$2.3~~$0.3 million. The average monthly borrowing outstanding under the ~~our credit facility~~Credit Facility during the first nine months ended November ~~3, 2018~~2, 2019 was approximately ~~$56.3~~ $58.7

million, resulting in an average unused excess availability of approximately ~~$33.6~~$38.5 million. Unused excess availability at November ~~3, 2018~~2, 2019 was ~~$45.4~~$40.6 million.

The ~~New~~ Credit Facility also ~~included~~includes a FILO ~~facility~~loan for $15.0 ~~million, the proceeds of which were used to repay our previous Term Loan Facility.~~million. The total borrowing capacity under the FILO ~~Facility~~loan is based on a borrowing base, generally defined as a specified percentage of the value of eligible accounts, including certain trade names, that ~~step~~steps down over time, plus a specified percentage of the value of eligible inventory that steps down over time. During the third quarter of fiscal 2019, we entered into an amendment that extended these advance rates for approximately one year before they begin to step down. There can be no voluntary prepayments on the FILO ~~Facility~~ loan during the first year. After its one-year anniversary, the FILO ~~Facility~~ loan can be repaid, in whole or in part, subject to certain payment conditions.

~~Borrowings~~As a result of extending the advance rates under the FILO loan, the applicable margin rates for borrowings are increased by approximately 50 basis points temporarily through May 24, 2021, at which time the margin rates will revert back to the original terms. Accordingly, current borrowings made under the FILO ~~Facility~~loan will bear interest, calculated under either the Federal Funds rate or the LIBOR rate, at a rate equal to the following: (a) the Federal Funds rate plus a varying percentage based on the Company’s excess availability, of either ~~1.75%~~2.25% or ~~2.00%~~ 2.50% or (b) the LIBOR rate (the Company being able to select interest periods of 1 week, 1 month, 2 months, 3 months or 6 months) plus a varying percentage based on the Company’s excess availability, of either ~~2.75%~~3.25% or ~~3.00%~~3.50%. At November ~~3, 2018,~~2, 2019, the outstanding balance of $15.0 million was in a ~~2-month~~1-month LIBOR-based contract with an interest rate of ~~5.07%~~5.14%.

We previously 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 were secured by a security interest in all of our rights, title and interest in and to certain equipment. The Notes accrued interest at fixed rates ranging from 3.07% to 3.50%. During the second quarter of fiscal 2018, the Company repaid in full the remaining balance on these Notes, without penalty.

We previously had a senior secured term loan facility with Wells Fargo Bank, National Association as administrative and collateral agent (the “Term Loan Facility”). The interest rate on the Term Loan Facility was equal to the greater of (a) 1.00% and (b) the one-month LIBOR rate, plus 6.50%. The Term Loan Facility, with a maturity date of October 29, 2019 and an outstanding balance of $11.5 million, was repaid in full, without penalty, during the second quarter of fiscal 2018 in connection with the New Credit Facility.

The following table sets forth the open stores and related square footage at November 2, 2019 and November 3, 2018, ~~and October 28, 2017,~~ respectively:

	November 3, 2018				October 28, 2017				November 2, 2019				November 3, 2018
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		216		1,683		211		1,659		229		1,736		216		1,683
DXL Outlets		15		78		14		72		17		82		15		78
Casual Male XL Retail		67		225		81		280		50		164		67		225
Casual Male Outlets		30		91		33		103		28		84		30		91
Rochester Clothing		5		51		5		51		2		21		5		51
Total Stores		333		2,128		344		2,165		326		2,087		333		2,128

Below is a summary of store openings and closings from February ~~3, 2018~~2, 2019 to November ~~3, 2018:~~

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 February 3, 2018		212			14		78			33			5		342
At February 2, 2019																		216		15			66			30			5			332
New stores⁽¹⁾		1			—		—			—			—		1			—		—			—			—			—			—
Rebranded stores ⁽²⁾		3			—		(3	)		—			—		—			11		3			(12	)		(2	)		—			—
Replaced stores⁽³⁾		1			1		(1	)		(1	)		—		—			2		—			(2	)		—			—			—
Closed retail stores⁽⁴⁾		(1	)		—		(7	)		(2	)		—		(10	)		—		(1	)		(2	)		—			(3	)		(6	)
At November 3, 2018		216			15		67			30			5		333
At November 2, 2019																		229		17			50			28			2			326

Our capital expenditures for the first nine months of fiscal ~~2018~~2019 were ~~$9.8~~$11.0 million as compared to ~~$18.4~~$9.8 million for the first nine months of fiscal ~~2017. We have~~2018. During the first nine months of fiscal 2019, we opened 2two DXL retail stores, 1rebranded 14 Casual Male XL retail and outlet stores to 11 DXL retail stores and three DXL outlet stores as compared to opening two DXL retail stores, one DXL outlet and ~~rebranded 3~~three Casual Male XL stores rebranded to a DXL stores during the first nine months of fiscal ~~2018 as compared~~2018.

In the fourth quarter of fiscal 2019, we plan to 19close our two remaining Rochester Clothing stores and one DXL retail ~~stores~~store.

Effective February 3, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842).” As a result of the adoption, we established our leases as right-of-use assets of $214.1 million and ~~1 DXL outlet for~~established corresponding lease liabilities of $254.5 million on our Consolidated Balance Sheet at February 3, 2019. The $40.3 million difference between the right-of-use assets and lease liabilities was primarily attributable to the elimination of certain existing lease-related assets and liabilities as a net adjustment to the right-of-use assets. In the first nine months of fiscal ~~2017.~~

~~For fiscal 2018, our capital expenditures are expected~~2019, we recognized a net credit to ~~be approximately $12.5~~opening accumulated deficit of $5.3 million to recognize: (i) the remaining deferred gain of $10.3 million from a sale-leaseback transaction (ii) the recognition of impairments, upon adoption, of certain right-to-use assets of $3.8 million and ~~we expect to receive approximately $1.1 million in tenant allowances to offset these expenditures. This includes approximately $1.8 million, excluding any allowance, related to~~(iii) the ~~opening~~write-off of ~~2 new DXL retail stores, the remodeling~~initial direct costs of 3 Casual Male XL to DXL retail stores and 1 DXL outlet store, and approximately $10.7 million for continued information technology projects, website initiatives and general overhead projects. In addition, for fiscal 2018, we expect to close approximately 9 Casual Male XL stores, 3 Casual Male XL outlet stores and 1 DXL store.

~~There have been no material changes to the critical accounting policies and estimates disclosed in our Form 10-K for the year ended February 3, 2018.~~$1.2 million. See Note 1 to the Consolidated Financial ~~Statements included in this report for information on recent accounting pronouncements and changes in accounting principles.~~Statements.

Adjusted net loss, adjusted net loss per diluted share, free cash flow ~~EBITDA~~ and ~~adjusted~~Adjusted 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 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 performance, especially when comparing such results to previous periods and that they are useful as an additional means for investors to evaluate our operating results, when reviewed in conjunction with our GAAP financial statements. Reconciliations of these non-GAAP measures are presented in the following tables (certain columns may not foot due to rounding):

Adjusted net loss and adjusted net loss per diluted share. ~~The above discussion includes an~~Adjusted net loss and adjusted net loss for the third quarter and first nine months of fiscal 2018 and fiscal 2017 on a non-GAAP basis, which reflected results before corporate restructuring, CEO transition costs, impairment charges and assumesper share reflect an adjustment assuming a normal tax rate of 26%. and the add-back of exit costs associated with London operations, CEO transition and corporate restructuring costs. 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 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 26%.

The following is a reconciliation of the net loss to adjusted net loss, adjusted for corporate restructuring charge, CEO transition costs and impairment charges and assumes a normal tax rate of 26% for the third quarter and first nine months of fiscal 2018 and fiscal 2017:

	For the three months ended												For the nine months ended												For the three months ended												For the nine months ended
	November 3, 2018						October 28, 2017						November 3, 2018						October 28, 2017						November 2, 2019						November 3, 2018						November 2, 2019						November 3, 2018
	$			Per diluted share			$			Per diluted share			$			Per diluted share			$			Per diluted share			$			Per diluted share			$			Per diluted share			$			Per diluted share			$			Per diluted share
(in thousands, except per share data)
Net loss (GAAP basis)	$	(2,005	)	$	(0.04	)	$	(5,706	)	$	(0.12	)	$	(6,300	)	$	(0.13	)	$	(15,502	)	$	(0.32	)	$	(7,190	)	$	(0.14	)	$	(2,005	)	$	(0.04	)	$	(10,233	)	$	(0.21	)	$	(6,300	)	$	(0.13	)
Adjust:
CEO transition costs																										-						430						702						560
Corporate restructuring		262		$	0.01			-			-			1,922		$	0.04			-			-			-						262						-						1,892
CEO transition costs		430		$	0.01			-			-			530		$	0.01			-			-
Impairment of assets		-			-			-			-			-			-			1,718		$	0.04
Add back actual income tax provision (benefit)		(22	)		-			-			-			(19	)		-			64			-
Exit costs associated with London operations																										1,737						-						1,737						-
Add back actual income tax benefit																										(49	)					(22	)					(78	)					(19	)
Add income tax benefit, assuming a normal tax rate of 26%		347		$	0.01			1,484		$	0.03			1,005		$	0.02			3,567		$	0.07			1,431						347						2,047						1,005

Adjusted net loss (non-GAAP basis)	$	(988	)	$	(0.02	)	$	(4,222	)	$	(0.09	)	$	(2,862	)	$	(0.06	)	$	(10,153	)	$	(0.21	)	$	(4,071	)	$	(0.08	)	$	(988	)	$	(0.02	)	$	(5,825	)	$	(0.12	)	$	(2,862	)	$	(0.06	)

Weighted average number of common shares outstanding:
diluted basis for a net loss position					49,352						48,607						49,068						48,966
Weighted average number of common shares
outstanding on a diluted basis																													50,089						49,352						49,853						49,068

Free Cash Flow. We define free cash flow as cash flow from operating activities less capital expenditures. Free cash flow excludes the mandatory and discretionary repayment of debt. Free cash flow is a metric that management uses to monitor liquidity. We expect to fund our ongoing capital expenditures with cash flow from operations.

	For the nine months ended						For the nine months ended
(in millions)	November 3, 2018			October 28, 2017			November 2, 2019			November 3, 2018
Cash flow from operating activities (GAAP basis)⁽¹⁾	$	(1.3	)	$	5.2		$	(14.4	)	$	(1.3	)
Capital expenditures, infrastructure projects		(8.0	)		(5.8	)		(7.2	)		(8.0	)
Capital expenditures for DXL stores		(1.8	)		(12.6	)		(3.8	)		(1.8	)
Free Cash Flow (non-GAAP basis)	$	(11.1	)	$	(13.2	)	$	(25.4	)	$	(11.1	)

~~EBITDA and~~ Adjusted EBITDA. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and ~~amortization. Adjusted EBITDA~~amortization and is ~~calculated as EBITDA~~ before exit costs associated with London operations, CEO transition costs, corporate restructuring charges and any impairment ~~charges and CEO transition costs.~~of assets. We believe that ~~EBITDA and~~ adjusted EBITDA ~~are~~is useful to investors in evaluating our performance. With the significant capital investment we have made over the past several years in connection with DXL store openings, we have had increased levels of depreciation and interest, and therefore, management uses adjusted EBITDA as a key metric to measure profitability and economic productivity.

	For the three months ended						For the nine months ended						For the three months ended						For the nine months ended
	November 3, 2018			October 28, 2017			November 3, 2018			October 28, 2017			November 2, 2019			November 3, 2018			November 2, 2019			November 3, 2018
(in millions)
Net loss (GAAP basis)	$	(2.0	)	$	(5.7	)	$	(6.3	)	$	(15.5	)	$	(7.2	)	$	(2.0	)	$	(10.2	)	$	(6.3	)
Add back:
CEO transition costs														-			0.4			0.7			0.6
Corporate restructuring		0.3			-			1.9			-			-			0.3			-			1.9
CEO transition costs		0.4			-			0.6			-
Impairment of assets		-			-			-			1.7
Provision for income taxes		-			-			-			0.1
Exit costs associated with London operations														1.7			-			1.7			-
Benefit for income taxes														-			-			(0.1	)		-
Interest expense		0.8			0.9			2.6			2.5			0.9			0.8			2.6			2.6
Depreciation and amortization		7.2			7.7			21.9			23.3			6.3			7.2			18.9			21.9
Adjusted EBITDA (non-GAAP basis)	$	6.6		$	2.8		$	20.7		$	12.1		$	1.7		$	6.6		$	13.6		$	20.7

~~The following table is a reconciliation of non-GAAP measures used in our Fiscal 2018 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 ~~the~~our Revolving Facility of our Credit Facility to fund our working capital needs. Our Credit Facility is not used for trading or speculative purposes. As part of our Credit Facility, we also have an outstanding $15.0 million FILO loan. In addition, we have available letters of credit as sources of financing for our working capital requirements. Borrowings under the Credit Facility, which expires May 24, 2023,, bear interest at variable rates based on Bank of America’s prime rate or LIBOR.

At November ~~3, 2018, the~~2, 2019, we had outstanding borrowings of approximately $68.4 million, of which approximately $65.0 million were in LIBOR-based contracts with an interest rate ~~on our prime based~~of approximately 3.06%. The remainder was prime-based borrowings, ~~was 5.50%~~with a rate of 5.00%. At November ~~3, 2018,~~2, 2019, the $15.0 million outstanding borrowings under ~~our~~the FILO loan were in a ~~LIBOR~~LIBOR-based contract with an interest rate of ~~5.07% and approximately $52.0 million of our outstanding borrowings under our Revolving Facility were in LIBOR contracts with an interest rate of 3.50%~~5.14%.

Based upon a sensitivity analysis as of November ~~3, 2018,~~2, 2019, assuming average outstanding borrowing during the first nine months of fiscal ~~2018~~2019 of ~~$56.3~~$58.7 million under our ~~Revolving~~Credit Facility and $15.0 million outstanding under our FILO loan, a 50 basis point increase in interest rates would have resulted in a potential increase in interest expense of approximately ~~$356,500~~$368,500 on an annualized basis.

Our ~~Rochester Clothing store located in London, England conducts business in British pounds and our~~ two DXL stores located in Ontario, Canada conduct business in Canadian dollars. As of November ~~3, 2018,~~2, 2019, sales from these stores were immaterial to consolidated sales. As such, we believe that movement in foreign currency exchange rates will not have a material adverse effect on our financial position or results of operations. Our Rochester Clothing store, which was located in London, England and closed in August 2019, conducted business in British pounds. In connection with that store closing, we recognized an expense of approximately $0.8 million associated with the recognition of the accumulated foreign currency translation adjustment.

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 November ~~3, 2018.~~2, 2019. 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 November ~~3, 2018,~~2, 2019, our disclosure controls and procedures were effective.

~~No change~~During the nine-month period ended November 2, 2019, we adopted new guidance for lease accounting. We implemented internal controls to ensure we adequately evaluated leasing arrangements and properly assessed the impact of the new guidance to facilitate the adoption. Additionally, we implemented new business processes, internal controls, and modified information technology systems to assist in the ongoing application of the new guidance. There were no other changes in our internal control over financial reporting ~~(as~~(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended November ~~3, 2018~~2, 2019 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 ~~Form 10-K for the year ended February 3, 2018.~~Fiscal 2018 Annual Report.

On October 22, 2018, the Compensation Committee of the Board of Directors approved the First Amendment to the Second Amended and Restated Long-Term Incentive Plan ( the “Amended LTIP”), as filed as Exhibit 10.1 to this Form 10-Q for the quarter ending November 3, 2018. The Amended LTIP amended Section 7(e) to clarify the payment of performance-based awards in connection with a Change in Control as it relates to a performance period that has not yet ended or has not previously been vested or paid. In addition, Section 16 of the Amended LTIP was amended to update the 409(a) language to be consistent with the Company’s 2016 Incentive Compensation Plan.None.

~~On October 24, 2018, the Compensation Committee established two performance targets for the 2018-2020 Performance Period under the Amended LTIP (the “2018-2020 LTIP”) as follows:~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware	04-2623104
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
555 Turnpike Street Canton, MA	02021
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	DXLG	NASDAQ Stock Market LLC

	For the three		For the nine
	months ended		months ended
	November 2, 2019		November 2, 2019
(in thousands)
Operating lease cost⁽¹⁾	$	13,500	$	39,968
Short-term lease costs ⁽²⁾		—		—
Variable lease costs⁽¹⁾		4,201		12,200
Total lease costs	$	17,701	$	52,168

(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	43,633
Non-cash operating activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	3,245

Operating leases:
Weighted average remaining lease term	5.5 yrs.
Weighted average discount rate		7.12	%


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


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

(in thousands)
2019 (remaining)	$	14,395
2020		55,304
2021		54,233
2022		49,174
2023		41,257
Thereafter		68,831
Total minimum lease payments	$	283,194
Less: amount of lease payments representing interest		49,820
Present value of future minimum lease payments	$	233,374
Less: current obligations under leases		41,063
Long-term lease obligations	$	192,311

(in thousands)
2019	$	57,364
2020		52,699
2021		50,380
2022		45,061
2023		36,605
Thereafter		56,638
Total minimum lease payments	$	298,747

	~~For the nine months ended~~
	November 3, 2018	~~October 28, 2017~~
Expected volatility	48.9% - 57.1%			~~49.9~~	%
Risk-free interest rate	2.55% - 2.63%		~~1.44%~~
Expected life	3.0 - 4.5 ~~yrs.~~		~~3.0~~ yrs
Dividend rate	-		—

	Third Quarter			First Nine Months
	(in millions)
Sales for fiscal 2017	$	103.7		$	332.5
Less 2017 sales for stores that have closed /converted		(1.7	)		(6.5	)
Adjustment to sales for the shift in calendar weeks		0.7			2.0
	$	102.7		$	328.0

Increase in comparable sales		3.4			9.5
Non-comparable sales, primarily DXL stores open less than 13 months		0.7			5.8
Other, net		0.3			(0.7	)
Sales for fiscal 2018	$	107.1		$	342.6

	Projected
	Fiscal 2018
(in millions, except per share data)				per diluted share
Net loss (GAAP basis)	$(9.8)-$(12.8)
Add back:
Restructuring charge		1.9
CEO transition costs		2.1
Provision for income taxes		0.1
Interest expense		3.4
Depreciation and amortization		29.3
Adjusted EBITDA (non-GAAP basis)	$24.0-$27.0

Net loss (GAAP basis)	$(9.8)-$(12.8)			$(0.20)-$(0.26)
Add back:
Restructuring charge		1.9		$0.04
CEO transition costs		2.1		$0.04
Add back tax provision and record benefit assuming 26%	1.8 -2.7			$0.04-$0.05
Adjusted net loss (non-GAAP basis)	$(4.0) -$(6.1)			$(0.08)-$(0.13)
Weighted average common shares outstanding - diluted		49.1

Cash flow from operating activities (GAAP basis)	$22.5 -$26.5
Capital expenditures, infrastructure projects		(10.7	)
Capital expenditures for DXL stores		(1.8	)
Free Cash Flow (non-GAAP basis)	$10.0-$14.0


10.1		~~First Amendment~~Destination XL Group, Inc.’s 2016 Incentive Compensation Plan, as amended(included as Exhibit 10.1 to the ~~Second Amended~~Company’s Current Report on Form 8-K filed August 9, 2019, and ~~Restated Long-Term Incentive Plan~~incorporated herein by reference). †


10.2		Waiver and Second Amendment to ~~Employment~~Seventh Amended and ~~Chairman Compensation~~Restated Credit Agreement ~~between~~dated as of September 5, 2019, by and among Bank of America, N.A., as Administrative Agent and Collateral Agent, the Lenders identified therein, the Company, as Lead Borrower, the Company and ~~Seymour Holtzman~~CMRG Apparel, LLC, as Borrowers, and the Guarantors identified therein (included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September ~~7, 2018,~~6, 2019, and incorporated herein by reference). *†

10.3		~~Second Amended and Restated~~ Employment Agreement dated ~~as of~~ October ~~8, 2018~~29, 2019 between the Company and ~~Brian S. Reaves (included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 9, 2018, and incorporated herein by reference)~~Erica Welling Moran. *†

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.~~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 November ~~3, 2018,~~2, 2019, 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: November ~~30, 2018~~22, 2019	By:	/S/ John F. Cooney
		John F. Cooney
		Vice President, Managing Director, Chief Accounting Officer and Corporate Controller (Duly Authorized Officer and Chief Accounting Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company