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 August 15, ~~2019,~~2020, the registrant had ~~49,957,299~~51,554,917 shares of common stock, $0.01 par value per share, outstanding.

	August 3, 2019			February 2, 2019			August 1, 2020			February 1, 2020
	(Fiscal 2019)			(Fiscal 2018)			(Fiscal 2020)			(Fiscal 2019)

ASSETS
Current assets:
Cash and cash equivalents	$	5,493		$	4,868		$	20,414		$	4,338
Accounts receivable		4,397			4,420			2,574			6,219
Inventories		110,374			106,837			87,388			102,420
Prepaid expenses and other current assets		12,424			11,535			9,908			10,883
Total current assets		132,688			127,660			120,284			123,860

Non-current assets:
Property and equipment, net of accumulated depreciation and amortization		85,953			92,525			65,258			78,279
Operating lease right-of-use assets		200,480			—			157,095			186,413
Intangible assets		1,150			1,150			1,150			1,150
Other assets		3,453			4,741			593			1,215
Total assets	$	423,724		$	226,076		$	344,380		$	390,917

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of deferred gain on sale-leaseback		—			1,465
Accounts payable		36,929			34,418		$	18,533		$	31,763
Accrued expenses and other current liabilities		17,499			30,140			20,899			18,123
Operating leases, current		41,372			—			45,626			41,176
Borrowings under credit facility		49,451			41,908			66,545			39,301
Total current liabilities		145,251			107,931			151,603			130,363

Long-term liabilities:
Long-term debt, net of current portion		14,785			14,757
Long-term debt								14,841			14,813
Operating leases, non-current		197,388			—			165,310			182,051
Deferred rent and lease incentives		—			31,839
Deferred gain on sale-leaseback, net of current portion		—			8,793
Other long-term liabilities		3,881			4,116			5,241			5,267
Total long-term liabilities		216,054			59,505			185,392			202,131

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, 62,668,221 and 62,241,834 shares issued at August 3, 2019 and February 2, 2019, respectively		627			622
Preferred stock, $0.01 par value, 1,000,000 shares authorized, NaN issued								—			—
Common stock, $0.01 par value, 100,000,000 shares authorized, 63,840,794 and 63,297,598 shares issued at August 1, 2020 and February 1, 2020, respectively								638			633
Additional paid-in capital		311,706			310,393			313,874			312,933
Treasury stock at cost, 12,755,873 shares at August 3, 2019 and February 2, 2019		(92,658	)		(92,658	)
Treasury stock at cost, 12,755,873 shares at August 1, 2020 and February 1, 2020								(92,658	)		(92,658	)
Accumulated deficit		(151,301	)		(153,534	)		(208,494	)		(156,054	)
Accumulated other comprehensive loss		(5,955	)		(6,183	)		(5,975	)		(6,431	)
Total stockholders' equity		62,419			58,640			7,385			58,423
Total liabilities and stockholders' equity	$	423,724		$	226,076		$	344,380		$	390,917

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

	For the Three Months Ended						For the Six Months Ended						For the Three Months Ended						For the Six Months Ended
	August 3, 2019			August 4, 2018			August 3, 2019			August 4, 2018			August 1, 2020			August 3, 2019			August 1, 2020			August 3, 2019
	(Fiscal 2019)			(Fiscal 2018)			(Fiscal 2019)			(Fiscal 2018)			(Fiscal 2020)			(Fiscal 2019)			(Fiscal 2020)			(Fiscal 2019)

Sales	$	123,245		$	122,206		$	236,218		$	235,537		$	76,442		$	123,245		$	133,669		$	236,218
Cost of goods sold including occupancy costs		68,676			65,681			132,236			128,324			54,945			68,676			98,958			132,236
Gross profit		54,569			56,525			103,982			107,213			21,497			54,569			34,711			103,982

Expenses:
Selling, general and administrative		47,478			47,795			92,089			93,195			25,795			47,478			57,907			92,089
CEO transition costs		—			—			702			130			—			—			—			702
Corporate restructuring		—			1,570			—			1,630
Impairment of assets														—			—			16,335			—
Depreciation and amortization		6,210			7,382			12,548			14,706			5,340			6,210			11,072			12,548
Total expenses		53,688			56,747			105,339			109,661			31,135			53,688			85,314			105,339

Operating income (loss)		881			(222	)		(1,357	)		(2,448	)		(9,638	)		881			(50,603	)		(1,357	)

Interest expense, net		(851	)		(958	)		(1,715	)		(1,844	)		(1,052	)		(851	)		(1,793	)		(1,715	)

Income (loss) before provision for income taxes		30			(1,180	)		(3,072	)		(4,292	)
Income (loss) before provision (benefit) for income taxes														(10,690	)		30			(52,396	)		(3,072	)
Provision (benefit) for income taxes		(8	)		5			(29	)		3			24			(8	)		44			(29	)


Net income (loss)	$	38		$	(1,185	)	$	(3,043	)	$	(4,295	)	$	(10,714	)	$	38		$	(52,440	)	$	(3,043	)


Net income (loss) per share - basic and diluted	$	0.00		$	(0.02	)	$	(0.06	)	$	(0.09	)	$	(0.21	)	$	0.00		$	(1.03	)	$	(0.06	)

Weighted-average number of common shares outstanding:
Basic		49,867			49,060			49,734			48,926			51,078			49,867			50,918			49,734
Diluted		50,175			49,060			49,734			48,926			51,078			50,175			50,918			49,734

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

	For the Three Months Ended						For the Six Months Ended						For the Three Months Ended						For the Six Months Ended
	August 3, 2019			August 4, 2018			August 3, 2019			August 4, 2018			August 1, 2020			August 3, 2019			August 1, 2020			August 3, 2019
	(Fiscal 2019)			(Fiscal 2018)			(Fiscal 2019)			(Fiscal 2018)			(Fiscal 2020)			(Fiscal 2019)			(Fiscal 2020)			(Fiscal 2019)
Net income (loss)	$	38		$	(1,185	)	$	(3,043	)	$	(4,295	)	$	(10,714	)	$	38		$	(52,440	)	$	(3,043	)

Other comprehensive income before taxes:
Foreign currency translation		(59	)		(94	)		(83	)		(239	)		(5	)		(59	)		(39	)		(83	)
Pension plans		191			156			392			330			253			191			495			392
Other comprehensive income before taxes		132			62			309			91			248			132			456			309
Tax provision related to items of other comprehensive income		(30	)		(21	)		(81	)		(47	)		—			(30	)		—			(81	)
Other comprehensive income, net of tax		102			41			228			44			248			102			456			228
Comprehensive income (loss)	$	140		$	(1,144	)	$	(2,815	)	$	(4,251	)	$	(10,466	)	$	140		$	(51,984	)	$	(2,815	)

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

																	Accumulated
					Additional												Other
	Common Stock				Paid-in			Treasury Stock						Accumulated			Comprehensive
	Shares		Amounts		Capital			Shares			Amounts			Deficit			Income (Loss)			Total
Balance at February 1, 2020		63,297	$	633	$	312,933			(12,755	)	$	(92,658	)	$	(156,054	)	$	(6,431	)	$	58,423
Board of directors compensation		93		1		148															149
Stock compensation expense						452															452
Issuance of common stock, upon RSUs release		437		4		(4	)														—
Deferred stock vested		6		—		—															—
Accumulated other comprehensive income (loss):
Pension plan, net of taxes																		242			242
Foreign currency, net of taxes																		(34	)		(34	)
Net loss															(41,726	)					(41,726	)
Balance at May 2, 2020		63,833	$	638	$	313,529			(12,755	)	$	(92,658	)	$	(197,780	)	$	(6,223	)	$	17,506
Stock compensation expense						345															345
Deferred stock vested		8		—		—															—
Accumulated other comprehensive income (loss):
Pension plan, net of taxes																		253			253
Foreign currency, net of taxes																		(5	)		(5	)
Net loss															(10,714	)					(10,714	)
Balance at August 1, 2020		63,841	$	638	$	313,874			(12,755	)	$	(92,658	)	$	(208,494	)	$	(5,975	)	$	7,385

Accumulated

Additional

Other

Common Stock

Paid-in

Treasury Stock

Accumulated

Comprehensive

Shares

Amounts

Capital

Shares

Amounts

Deficit

Income (Loss)

Total

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

414

414

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

(78
)

—

(192
)

(192
)
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

3

—

—

—

Accumulated other comprehensive income (loss):

Pension plan, net of taxes

142

142

Foreign currency, net of taxes

(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

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
Balance at February 2, 2019																									62,242		$	622	$	310,393			(12,755	)	$	(92,658	)	$	(153,534	)	$	(6,183	)	$	58,640
Board of directors compensation		37			—		140															140			36			—		142															142
Stock compensation expense							407															407								414															414
Restricted stock units (RSUs) granted for achievement of performance-based compensation, reclassified from liability to equity							381															381
RSUs granted for achievement of performance-based compensation, reclassified from liability to equity																														304															304
Issuance of common stock, upon RSUs release		165			2		(2	)														—			374			4		(4	)														—
Issuance of restricted stock		30			—		—															—
Shares withheld for taxes related to net share settlement of RSUs																									(78	)		—		(192	)														(192	)
Deferred stock vested		3			—		—															—			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																			129			129																				150			150
Foreign currency, net of taxes																			(126	)		(126	)																			(24	)		(24	)
Net loss																(3,110	)					(3,110	)																(3,081	)					(3,081	)
Balance at May 5, 2018		61,721		$	617	$	308,483			(12,755	)	$	(92,658	)	$	(142,395	)	$	(6,240	)	$	67,807
Balance at May 4, 2019																									62,576		$	626	$	311,057			(12,755	)	$	(92,658	)	$	(151,339	)	$	(6,057	)	$	61,629
Board of directors compensation		58			1		143															144			45			—		142															142
Stock compensation expense							382															382								514															514
Issuance of common stock, upon RSUs release		157			1		(1	)														—			67			1		(1	)														—
Shares withheld for taxes related to net share settlement of RSUs																									(3	)		—		(6	)														(6	)
Cancellation of restricted stock		(33	)		—		—															—			(20	)		—		—															—
Deferred stock vested		2			—		—															—			3			—		—															—
Accumulated other comprehensive income (loss):
Pension plan, net of taxes																			116			116																				142			142
Foreign currency, net of taxes																			(75	)		(75	)																			(40	)		(40	)
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
Net income																																							38						38
Balance at August 3, 2019																									62,668		$	627	$	311,706			(12,755	)	$	(92,658	)	$	(151,301	)	$	(5,955	)	$	62,419

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

	For the Six Months Ended						For the Six Months Ended
	August 3, 2019			August 4, 2018			August 1, 2020			August 3, 2019
	(Fiscal 2019)			(Fiscal 2018)			(Fiscal 2020)			(Fiscal 2019)
Cash flows from operating activities:
Net loss	$	(3,043	)	$	(4,295	)	$	(52,440	)	$	(3,043	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of deferred gain on sale-leaseback		—			(733	)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
Amortization of deferred debt issuance costs		69			101			72			69
Write-off of deferred debt issuance costs		—			186
Impairment of assets								16,335			—
Depreciation and amortization		12,548			14,706			11,072			12,548
Stock compensation expense		928			789			797			928
Board of Directors stock compensation		284			284
Board of directors stock compensation								149			284

Changes in operating assets and liabilities:
Accounts receivable		23			782			3,645			23
Inventories		(3,537	)		420			15,032			(3,537	)
Prepaid expenses and other current assets		(889	)		(1,657	)		975			(889	)
Other assets		(441	)		135			622			(441	)
Accounts payable		2,511			(1,561	)		(13,230	)		2,511
Operating leases, net		(2,115	)		—			4,487			(2,115	)
Deferred rent and lease incentives		—			(1,698	)
Accrued expenses and other liabilities		(5,420	)		(666	)		3,488			(5,420	)
Net cash provided by operating activities		918			6,793
Net cash provided by (used for) operating activities								(8,996	)		918

Cash flows from investing activities:
Additions to property and equipment, net		(7,597	)		(7,365	)		(2,128	)		(7,597	)
Net cash used for investing activities		(7,597	)		(7,365	)		(2,128	)		(7,597	)

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		7,502			(770	)		27,225			7,502
Debt issuance costs associated with credit facility amendment								(25	)		—
Tax withholdings paid related to net share settlements of RSUs		(198	)		—			—			(198	)
Net cash provided by financing activities		7,304			1,426			27,200			7,304
Net increase in cash and cash equivalents		625			854			16,076			625
Cash and cash equivalents:
Beginning of period		4,868			5,362			4,338			4,868
End of period	$	5,493		$	6,216		$	20,414		$	5,493

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~~(collectively with its subsidiaries, referred to as the “Company”), the accompanying unaudited ~~consolidated financial statements~~Consolidated Financial Statements contain all adjustments necessary for a fair presentation of the interim financial statements. These financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with the notes to the Company’s audited ~~consolidated financial statements~~Consolidated Financial Statements for the fiscal year ended February ~~2, 2019~~1, 2020 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March ~~22, 2019.~~19, 2020.

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~~2020 and fiscal ~~2018~~2019 are 52-week periods ending on January 30, 2021 and February 1, 2020, respectively.

On March 11, 2020, the World Health Organization declared the current outbreak of a novel coronavirus disease (“COVID-19”) as a global pandemic. The COVID-19 pandemic has had an adverse effect on the Company’s operations, employees, distribution and ~~February~~logistics, its vendors and customers. All of the Company’s store locations were closed temporarily on March 17, 2020. The Company began reopening stores in late April and by the end of June 2020 all retail stores had been reopened. While all of our stores are open, they are operating with reduced operating hours and it has been and may continue to be necessary to close and re-open stores in response to any ongoing COVID concerns.

In response to the uncertainty that exists relating to the COVID-19 pandemic, the Company has taken significant precautionary measures to reduce expenses, preserve liquidity, and mitigate the adverse impact of the pandemic to the Company. The majority of the Company’s workforce was furloughed in March 2020 and 34 employees were laid-off in May 2020. As store locations were reopened, employees were gradually brought back, however, due to the reduced store traffic and sales, 430 store associates were laid-off in July. For the safety of its employees, employees at the Company’s headquarters will continue to work from home, where possible, until at least January 2021. For store personnel and roles that require employees to be on-site, such as its distribution center, the Company is providing protective equipment, practicing social distancing and has increased sanitizing standards. The management team (director-level and above) took a temporary salary reduction ranging from 10%-20% during the period April 5, 2020 through August 2, ~~2019, respectively.~~2020 and the Company’s non-employee directors suspended their second quarter fiscal 2020 compensation.

In March 2020, as a proactive measure, the Company drew $30.0 million under its revolving facility in order to increase the Company’s cash position and preserve financial flexibility. In addition, in April 2020 the Company entered into an amendment to its credit facility to, among other things, increase its borrowing base availability and permit the Company the ability to enter into promissory notes with its merchandise vendors. See Note 3, Debt, for a discussion of the amendment. During the second quarter of fiscal 2020, the Company entered into rent concessions with the majority of its landlords, in the form of rent abatements, rent deferments and, to a lesser extent, lease term extensions. See Note 4, Leases, for more discussion. Further, since early March, the Company has taken proactive steps to manage cash by substantially eliminating capital spend, negotiating deferred payment terms with vendors and, in limited cases, entering into short term notes, reducing operating expenses and cancelling purchase orders for merchandise, where possible. The Company intends to proceed cautiously and continue to take proactive steps to manage its liquidity.

The Company has ~~historically had two~~3 principal operating segments: its stores, direct and ~~direct~~wholesales businesses. The Company considers ~~these two~~its stores and direct operating segments to be similar in terms of economic characteristics, production processes and operations, and has therefore aggregated them into ~~one~~1 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~~Due to the immateriality of the wholesale segment’s revenues, profits and assets, ~~at August 3, 2019,~~ its operating results are aggregated with the retail segment for ~~all~~both periods.

The Company has reclassified a total of $190,228 in costs, incurred in the first six months of fiscal 2018 from “Selling, general and administrative” to “CEO transition costs” and “Corporate restructuring.” These costs were initially reported in “Selling, general and administrative” in the first six months of fiscal 2018.

In ~~the fourth quarter of~~ fiscal 2018, the Company purchased the rights to the domain name “dxl.com.” The domain name has a carrying value of $1.2 million and is considered an indefinite-lived asset. Due to the significant impact of the COVID-19 pandemic on the Company’s business during the first six months of fiscal 2020, the Company performed a qualitative review of the domain name as of May 2, 2020 and August 1, 2020, and concluded that it was more likely than not that the intangible asset was not impaired and therefore no quantitative assessment was required. As a result of the ongoing uncertainty surrounding the impact of the COVID-19 pandemic on the Company’s operations, it may be necessary to perform similar qualitative reviews at various points throughout the remainder of fiscal 2020.

During the first six months ~~ended~~of fiscal 2020, the Company received extended payment terms with certain of its merchandise vendors, by entering into short-term notes. The short-term notes, totaling $3.5 million, have terms of less than one-year and accrue interest at an annual rate of 4.0%, with payments due monthly. At August ~~3, 2019, no event or circumstance occurred which would cause a reduction~~1, 2020, the outstanding balance of the notes was $2.0 million and is included in Accounts Payable on the ~~fair value of this intangible asset.~~Consolidated Balance Sheet.

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 August ~~3, 2019,~~1, 2020, 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 asset, is measured on a non-recurring basis in connection with the Company’s annual impairment ~~test. The fair value of the domain name was determined to approximate carrying value, due to its recent acquisition in December,~~test 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 six months ended August ~~3, 2019~~1, 2020 and August ~~4, 2018,~~3, 2019, respectively, were as follows:

	August 3, 2019									August 4, 2018									August 1, 2020									August 3, 2019
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	$	(5,371	)	$	(686	)	$	(6,057	)	$	(5,711	)	$	(529	)	$	(6,240	)	$	(6,236	)	$	13		$	(6,223	)	$	(5,371	)	$	(686	)	$	(6,057	)

Other comprehensive income (loss) before reclassifications, net of taxes		27			(40	)		(13	)		58			(75	)		(17	)		77			(5	)		72			27			(40	)		(13	)

Amounts reclassified from accumulated other comprehensive income, net of taxes ⁽¹⁾		115			—			115			58			—			58			176			—			176			115			—			115

Other comprehensive income (loss) for the period		142			(40	)		102			116			(75	)		41			253			(5	)		248			142			(40	)		102

Balance at end of quarter	$	(5,229	)	$	(726	)	$	(5,955	)	$	(5,595	)	$	(604	)	$	(6,199	)	$	(5,983	)	$	8		$	(5,975	)	$	(5,229	)	$	(726	)	$	(5,955	)

	August 3, 2019									August 4, 2018									August 1, 2020									August 3, 2019
For the six 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	$	(5,521	)	$	(662	)	$	(6,183	)	$	(5,840	)	$	(403	)	$	(6,243	)	$	(6,478	)	$	47		$	(6,431	)	$	(5,521	)	$	(662	)	$	(6,183	)

Other comprehensive income (loss) before reclassifications, net of taxes		55			(64	)		(9	)		115			(201	)		(86	)		154			(39	)		115			55			(64	)		(9	)

Amounts reclassified from accumulated other comprehensive income, net of taxes ⁽¹⁾		237			—			237			130			—			130			341			—			341			237			—			237

Other comprehensive income (loss) for the period		292			(64	)		228			245			(201	)		44			495			(39	)		456			292			(64	)		228

Balance at end of quarter	$	(5,229	)	$	(726	)	$	(5,955	)	$	(5,595	)	$	(604	)	$	(6,199	)	$	(5,983	)	$	8		$	(5,975	)	$	(5,229	)	$	(726	)	$	(5,955	)

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. ~~During~~

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model based on the assumptions in the table below as it relates to stock options granted during the first six months of fiscal ~~2019,~~2020. There were no grants of stock options during the first six months of fiscal 2019.

The Company ~~granted~~has outstanding performance stock units (PSUs) with a market condition. ~~See Note 6 for disclosure concerning the assumptions and valuation method used to determine the~~The respective grant-date fair value ~~of the award~~ and ~~the associated~~ derived service ~~period over which~~periods assigned to the ~~associated stock compensation will be recognized.~~PSUs were determined using a Monte Carlo model. The valuation included assumptions with respect to the Company’s historical volatility, risk-free rate and cost of equity.

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.

As a result of the significant impact of the COVID-19 pandemic on the Company’s business during the first quarter of fiscal 2020 and the continued uncertainty, the Company reassessed the recoverability of the carrying value for its long-lived assets as of May 2, 2020, assuming that its stores would gradually open throughout the second quarter of fiscal 2020 but that consumer retail spending will remain substantially curtailed for a period of time. Due to uncertainty around the duration and extent of the pandemic’s impact on future cash flows, the Company’s projections were based on multiple probability-weighted scenarios. Based on the results of that assessment, the Company recorded an impairment charge of $16.3 million in the first quarter of fiscal 2020. The impairment charge included approximately $12.5 million for the write-down of certain right-of-use assets and $3.8 million for the write-down of property and equipment, related to stores where the carrying value exceeded fair value.

There was no0 material impairment of long-lived assets in the second quarter of fiscal 2020 or for first six months of fiscal ~~2019 or fiscal 2018.~~2019.

~~In February 2016, the FASB issued ASU 2016-02, “~~Leases ~~(Topic 842)~~.” This ASU is a comprehensive new standard that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. It requires lessees to recognize lease assets and lease liabilities for most leases, including those leases previously classified as operating leases under 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 lease guidance. ASU 2016-02 requires a modified retrospective transition 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~~” that allows entities to 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.

The Company adopted ASU 2016-02, ~~on February 3,~~“Leases (Topic 842)” in the first quarter of fiscal 2019 on a modified retrospective basis and applied the new standard 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~~

Under ASC 842, the ~~accounting standards in effect for the respective periods.~~

On February 3, 2019, the Company recognized leases, primarily related to its stores and 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 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 had a material impact on the Consolidated Balance Sheet as a result of the 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, results of operations will not have the future benefit of approximately $1.5 million, which was the annual amortization being recognized over the initial 20-year term of the sale-leaseback of the Company’s corporate office. The adoption of the new standard had no material impact on Consolidated Statement of Cash Flows.

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

~~The~~ Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments, initial direct costs and any lease incentives are included in the value of those right-of use assets. As the interest rate implicit in the Company’s leases is not readily determinable, the Company utilizes its incremental borrowing rate, based on information available at the lease measurement date to determine the present value of future payments. The Company elected the lessee non-lease component separation practical expedient, which permits the Company to not separate non-lease components from the lease components to which they relate. The Company also made an accounting policy election that the recognition requirement of ASC 842 will not be applied to certain, if any, non-store leases, with a term of 12 months or less, recognizing those lease payments on a straight-line basis over the lease term. At August 1, 2020, the Company has 0 short-term leases.

The Company’s store leases typically contain options that permit renewals for additional periods of up to five years each. In general, for store leases with an initial term of 10 years or more, the 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~~headquarters and distribution center lease, which was entered into in 2006 and was for an initial 20-year term. At the end of the initial term, the Company will have the opportunity to extend this lease for ~~six~~6 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 also made an accounting policy election that the recognition requirement of ASU 842 will not be applied to certain, if any, non-store leases, with a term of 12 months or less, recognizing those lease payments on a straight-line basis over the lease term.

For store leases, the Company accounts for lease components and non-lease components as a single lease component. Certain store leases may require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance and insurance, and are expensed as incurred as variable lease costs. Other store leases contain one periodic fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the right-of-use assets and lease liabilities.

Tenant allowances are included as an offset to the right-of-use asset and amortized as reductions to rent expense over the associated lease term.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326) — Measurement of Credit Losses on Financial Instruments.” This guidance amends several aspects of the measurement of credit losses on financial instruments, including trade receivables. Topic 326 replaces the existing incurred credit loss model with an impairment model (known as the current expected credit loss ("CECL") model), which is based on expected losses rather than incurred losses. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this standard in the first quarter of fiscal 2020 and it did not have a material impact on the Company’s Consolidated Financial Statements.

In August 2018, the FASB issued ASU 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~~Company adopted this standard in the first quarter of fiscal 2020 with new disclosures adopted on a prospective basis. The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” This standard simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740, Income Taxes, while also clarifying and amending existing guidance, including interim-period accounting for enacted changes in tax law. This standard is effective ~~for all entities~~ for fiscal years, and for interim periods within those fiscal years, beginning after December 15, ~~2019.~~2020, with early adoption permitted. In the first quarter of fiscal 2020, the Company elected early adoption of ASU 2019-12. The ~~Company is currently evaluating~~provisions related to intra period tax allocation and interim recognition of enactment of tax laws are being adopted on a prospective basis. The effect of the ~~impact this pronouncement will have on its~~ adoption of ASU 2019-12 was not material to the Company's Consolidated Financial ~~Statements.~~Statements.

No ~~other~~ new accounting pronouncements, issued or effective during the first six months of fiscal ~~2019,~~2020, have had or are expected to have a significant impact on the Company’s Consolidated Financial Statements.

The Company operates as a retailer of big and tall men’s clothing, which includes stores, direct and 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, 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 Gift Cards, Gift Certificates, and Credit Vouchers. Upon issuance of a gift card, gift certificate, or credit voucher, a liability is established for its cash value. The liability is relieved and net sales are recorded upon redemption by the customer. Based on historical redemption patterns, the Company can reasonably estimate the amount of gift cards, gift certificates, and credit vouchers for which redemption is remote, which is referred to as “breakage”. Breakage is recognized over two years in proportion to historical redemption trends and is recorded as sales in the Consolidated Statements of Operations. The gift card liability, net of breakage, was ~~$1.6~~$2.1 million and ~~$2.4~~$2.7 million at August ~~3, 2019~~1, 2020 and February ~~2, 2019,~~1, 2020, 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 ~~$1.1~~$1.0 million and $1.0 million at August ~~3, 2019~~1, 2020 and February ~~2, 2019,~~1, 2020, 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~~1 reportable segment, its retail segment. Substantially all of the Company’s revenue is generated from its stores and direct businesses. The operating results from the wholesale segment, which were immaterial, have been aggregated with this reportable segment, ~~for the first six months of fiscal 2019,~~ but the revenues are separately reported below. Accordingly, the Company has determined that the following sales channels depict the nature, amount, timing, and uncertainty of how revenue and cash flows are affected by economic factors:

	For the three months ended								For the six months ended								For the three months ended								For the six months ended
(in thousands)	August 3, 2019				August 4, 2018				August 3, 2019				August 4, 2018				August 1, 2020				August 3, 2019				August 1, 2020				August 3, 2019
Store sales	$	95,119	78.9	%	$	97,972	80.2	%	$	181,834	78.7	%	$	187,316	79.5	%	$	38,465	53.9	%	$	95,119	78.9	%	$	70,792	55.9	%	$	181,834	78.7	%
Direct sales		25,406	21.1	%		24,214	19.8	%		49,239	21.3	%		48,181	20.5	%		32,959	46.1	%		25,406	21.1	%		55,841	44.1	%		49,239	21.3	%
Retail segment	$	120,525			$	122,186			$	231,073			$	235,497			$	71,424			$	120,525			$	126,633			$	231,073
Wholesale segment		2,720				20				5,145				40				5,018				2,720				7,036				5,145
Total Sales	$	123,245			$	122,206			$	236,218			$	235,537			$	76,442			$	123,245			$	133,669			$	236,218

On May 24, 2018, the Company entered into the Seventh Amended and Restated Credit Agreement, as amended, with Bank of America, N.A., as agent, providing for a secured $140.0 million credit facility. On ~~May 31, 2019,~~April 15, 2020, the Company entered into a Third Amendment to the Seventh Amended and Restated Credit Facility, ~~was~~as amended (the “Third Amendment”). The Third Amendment, among other things, (i) extended the current advance rate of 10%, under the “first-in, last out” (FILO) term facility (the “FILO loan”), from May 24, 2020 to ~~expand~~December 31, 2020, at which time it will step-down to 7.5%; (ii) lowered the ~~definition~~Loan Cap, as described below, and eliminated the springing financial covenant, (iii) increased the Applicable Margins under the FILO and Revolving Facility (defined below) by 150 basis points and (iv) permitted the Company to enter into promissory notes with vendors in satisfaction of ~~its borrowing base~~outstanding payables for existing goods, in an aggregate amount not to ~~include certain receivables, as defined in the amendment~~exceed $15.0 million (as amended, the “Credit Facility”).

The Credit Facility provides maximum committed borrowings of $125.0 million in revolver loans, with the ability, pursuant to an accordion feature, to increase the 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”). The Revolving Facility provides for a sublimit of $20.0 million for commercial and standby ~~letter~~letters of ~~credits~~credit and up to $15.0 million for swingline loans. The Company’s ability to borrow under the Revolving Facility (the “Loan Cap”) is determined using an availability formula based on eligible assets. ~~The Credit Facility requires~~Pursuant to the ~~Company to maintain a minimum consolidated fixed charge coverage ratio of 1.0:1.0 if its~~Third Amendment, the excess availability under the Credit Facility ~~fails to~~cannot be ~~equal to or greater~~less than the greater of (i) 10% of the Revolving Loan Cap ~~and $7.5~~(calculated without giving effect to the FILO (first-in, last-out) Push Down Reserve) or (ii) $10.0 million. The maturity date of the Credit Facility is May 24, 2023. The Company’s obligations under the Credit Facility are secured by a lien on substantially all of its assets.

To help manage its near-term liquidity in light of the uncertainty related to COVID-19 and provide financial flexibility, the Company drew $30.0 million ~~“first~~under its secured revolving credit facility in ~~last out” (FILO) term facility (the “FILO loan”), which is discussed below under long-term debt.~~

March 2020. At August ~~3, 2019,~~1, 2020, the Company had outstanding borrowings under the Revolving Facility of ~~$49.8~~$66.8 million, before unamortized debt issuance costs of $0.3 million. ~~Outstanding~~At August 1, 2020, outstanding standby letters of credit were ~~$2.6~~$2.8 million and outstanding documentary letters of credit were ~~$1.3~~$0.6 million. Unused excess availability was $12.4 million at August ~~3, 2019 was $44.5 million.~~1, 2020. Average monthly borrowings outstanding under the Revolving Facility during the first six months of fiscal ~~2019~~2020 were ~~$56.4~~$69.2 million, resulting in an average unused excess availability of approximately ~~$37.6~~$23.2 million. The Company’s ability to borrow under the Revolving Facility was determined using an availability formula based on eligible assets, with increased advance rates based on seasonality.

Borrowings made pursuant to the Revolving Facility 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%~~1.75% or ~~0.50%~~2.00%, 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%~~2.75% or ~~1.50%~~3.00%. The Company was also subject to an unused line fee of 0.25%. At August ~~3, 2019,~~1, 2020, the Company’s prime-based interest rate was ~~5.75%~~5.25%. At August ~~3, 2019,~~1, 2020, the Company had approximately ~~$45.0~~$62.0 million of its outstanding borrowings in LIBOR-based contracts with an interest rate of ~~3.56%~~4.00%. The LIBOR-based contracts expired on August ~~4, 2019.~~3, 2020. When a LIBOR-based borrowing expires, the borrowings ~~reverted~~revert back to prime-based borrowings unless the Company enters into a new LIBOR-based borrowing arrangement.

12Borrowings and repayments under the Revolving Facility for the six months ended August 1, 2020 and August 3, 2019 were as follows:

The fair value of the amount outstanding under the Revolving Facility at August ~~3, 2019~~1, 2020 approximated the carrying value.

(in thousands)	August 3, 2019			February 2, 2019			August 1, 2020			February 1, 2020
FILO Loan	$	15,000		$	15,000		$	15,000		$	15,000
Less: unamortized debt issuance costs		(215	)		(243	)		(159	)		(187	)
Total long-term debt		14,785			14,757			14,841			14,813
Less: current portion of long-term debt		—			—			—			—
Long-term debt, net of current portion	$	14,785		$	14,757		$	14,841		$	14,813

The total borrowing capacity under the FILO loan is based on a borrowing base, generally defined as a specified percentage of the value of eligible accounts ~~including~~(including certain trade ~~names,~~names) that step down over time, plus a specified percentage of the value of eligible inventory that steps down over time. ~~There can be no voluntary prepayments on~~The Third Amendment to the ~~FILO loan during the first year. After its one-year anniversary, the~~Credit Facility extended these advance rates by approximately seven months before they begin to step down. The FILO 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 were increased by approximately 150 basis points. Accordingly, borrowings made under the FILO 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 carrying percentage based on the Company’s excess availability, of either ~~1.75%~~3.75% or ~~2.00%~~4.00% until May 24, 2021 or 3.25% or 3.50% 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 ~~2.75%~~4.75% or ~~3.00%.~~5.00% until May 24, 2021, or 4.25% or 4.50% after May 24, 2021. At August ~~3, 2019,~~1, 2020, the outstanding balance of $15.0 million was in a ~~1-week~~6-month LIBOR-based contract with an interest rate of ~~5.06%~~6.00%. The LIBOR-based contract expired on ~~August 4, 2019.~~November 15, 2020. When a LIBOR-based contract expires, the borrowings revert back to prime-based borrowings unless the Company ~~can enter~~enters into a new LIBOR-based borrowing arrangement.

The Company paid interest and fees totaling $1.6 million and $1.8 million for the six months ended August 1, 2020 and August 3, 2019, respectively.

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~~6 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.

Due to the COVID-19 pandemic and all stores having to close temporarily, the Company held rent payments for the period of April through June 2020. During the second quarter of fiscal 2020, the Company received concessions with the majority of its landlords in the form of rent deferrals, abatements and, to a lesser extent, lease extensions. For the remainder of the leases, the outstanding lease payments were paid and the leases remain in good standing. ASC 842 requires the assessment of any lease modification to determine if the modification should be treated as a separate lease and if not, modification accounting would be applied. Lease modification accounting requires the recalculation of the ROU asset, lease liability and lease expense over the respective lease term. In April 2020, the FASB issued guidance allowing entities to make a policy election to account for lease concessions related to the COVID-19 pandemic as though enforceable rights and obligations for those concessions existed. The election applies to any lessor-provided lease concession related to the impact of the COVID-19 pandemic, provided the concession does not result in a substantial increase in the rights of the lessor or in the obligations of the lessee. The Company has opted not to elect this practical expedient and instead account for these rent concessions as lease modifications during the second quarter of fiscal 2020 in accordance with ASC 842. As of August 1, 2020, no material amounts related to leases remain in Accounts Payable, and the Company’s operating leases liabilities represent the present value of the remaining future minimum lease payments updated based on second quarter concessions and lease modifications.

The following table is a summary of the Company’s components of net lease cost for the ~~three~~second quarter and first six months ended August 1, 2020 and August 3, 2019:

	For the three		For the six		For the three months ended				For the six months ended
	months ended		months ended
	August 3, 2019		August 3, 2019		August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
(in thousands)
Operating lease cost⁽¹⁾	$	13,215	$	26,468	$	11,300	$	13,215	$	23,932	$	26,468
Short-term lease costs ⁽²⁾		—		—
Variable lease costs⁽¹⁾		3,954		7,999		3,266		3,954		7,069		7,999
Total lease costs	$	17,169	$	34,467	$	14,566	$	17,169	$	31,001	$	34,467

Supplemental cash flow and balance sheet information related to leases for the first six months ended August ~~3, 2019 is as follows:~~

~~Supplemental balance sheet information related to leases as of~~1, 2020 and August 3, 2019 is as follows:

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the Consolidated Balance Sheet as of August ~~3, 2019:~~1, 2020:

As previously disclosed in the 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 follows at February 2, 2019:

(in thousands)
2019	$	57,364
2020		52,699
2020 (remaining)			$	27,978
2021		50,380		58,166
2022		45,061		49,959
2023		36,605		41,321
2024				31,031
Thereafter		56,638		38,509
Total minimum lease payments	$	298,747	$	246,964
Less: amount of lease payments representing interest				36,028
Present value of future minimum lease payments			$	210,936
Less: current obligations under leases				45,626
Long-term lease obligations			$	165,310

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

At August ~~3, 2019,~~1, 2020, the Company has ~~two~~three active ~~LTIPs, its 2017-2018~~LTIPs: 2018-2020 LTIP, 2019-2021 LTIP and ~~2018-2020~~2020-2022 LTIP. Each participant in the plan 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. Under each LTIP, 50% of each participant’s Target Cash Value is subject to time-based vesting and 50% is subject to performance-based vesting. All time-based awards ~~for both the 2017-2018 LTIP and~~under the 2018-2020 LTIP were granted ~~on the effective date on each LTIP and all awards were~~ in restricted stock units (RSUs). and the time-based awards for the 2019-2021 LTIP were granted in a combination of 50% RSUs and 50% cash. For the 2020-2022 LTIP, the time-based awards were granted in a combination of 50% stock options and 50% cash.

~~The performance~~Performance targets for the ~~Company’s 2017-2018~~2018-2020 LTIP, 2019-2021 LTIP and 2020-2022 LTIP were established and approved by the Compensation Committee ~~of the Board of Directors (the” Compensation Committee”)~~ on March 31, 2017 and covered a two-year period performance period, which ended on February 2, 2019. Awards for any achievement of performance targets are not granted until the performance targets are achieved and then are subject to additional vesting throughOctober 24, 2018, August ~~31 following the end of the applicable performance period. The time-vested portion of the 2017-2018 LTIP vests in two installments with 50% of the time-vested portion vesting on April 1,~~7, 2019, and ~~50% vesting on April 1, 2020.~~

On March 19, 2019, the Compensation Committee approved a 25% payout of its performance targets for the 2017-2018 LTIP, resulting in awards totaling $0.5 million. On that date, the Company granted 150,299 RSUs, which will vest, net of any forfeitures, on August 31, 2019. In conjunction with the grant of the RSUs, the Company reclassified $0.3 million of the liability accrual from “Accrued expenses and other current liabilities” to “Additional paid-in capital” in the first six months of fiscal 2019. See the

Consolidated Statement of Changes in Stockholders’ Equity. In addition to the performance awards, the Company expects to incur stock-based compensation of approximately $2.0 million for its time-based awards, which is being expensed over thirty-six months, through April 1, 2020.

In June ~~2018, the Company amended its LTIP to, among other things, extend the~~11, 2020, respectively. The performance period for ~~awards to~~each LTIP is three ~~years, beginning with grants in fiscal 2018. On October 24, 2018, the Compensation Committee established performance targets for the 2018-2020 LTIP.~~years. Awards for any achievement of performance targets will not be granted until the performance targets are achieved and then will be subject to additional vesting through August 31, ~~2021.~~2021, August 31, 2022 and August, 31, 2023, respectively. The ~~time-vested portion of~~time-based awards under the ~~award vests~~2018-2020 LTIP, 2019-2021 LTIP and 2020-2022 LTIP vest in four equal installments ~~vesting on October 24, 2019,~~through April 1, ~~2020,~~2022, April 1, ~~2021~~2023 and April 1, ~~2022.~~

2024, respectively. Assuming that the Company achieves the performance ~~target~~targets at target levels and all time-based awards vest, the compensation expense associated with the 2018-2020 LTIP, 2019-2021 LTIP and 2020-2022 LTIP is estimated to be approximately ~~$4.1 million.~~$3.7 million, $3.8 million and $3.8 million, respectively. Approximately half of the compensation expense for each LTIP relates to the ~~time-vested RSUs,~~time-based awards, which isare being expensed straight-line over ~~forty-one months.~~ 41 months, 44 months and 46 months, respectively.

Through the end of the second quarter of fiscal ~~2019,~~2020, the Company has accrued $0.2 million for performance awards under the 2018-2020 LTIP and $0.1 million for performance awards under the ~~2018-2020~~2020-2022 LTIP. There was 0 accrual at August 1, 2020 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 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~~1 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. ~~At August 3, 2019 the Company had 2,424,220 shares available under the 2016 Plan. Subsequent to the end of the second quarter of fiscal 2019, on~~On August 8, 2019, the Company’s shareholders approved an amendment to increase the share reserve by an additional 2,800,000 shares. At August 1, 2020, the Company had 842,466 shares available under the 2016 Plan. Subsequent to the end of the second quarter of fiscal 2020, the Company’s shareholders approved an amendment to increase the share reserve by an additional 1,740,000 shares.

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 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 August ~~3, 2019, 784,251~~1, 2020, 464,016 stock options 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 and inducement awards, on a combined basis, for the first six months of fiscal ~~2019:~~2020:

	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		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		30,000			1,372,628			204,040			—			—		1,606,668		$	2.93		1,420,803			295,604			—			720,000		2,436,407		$	1.95
Shares granted		—			390,299			43,455			65,995			720,000		1,219,749		$	1.84		—			45,714			69,440			—		115,154		$	1.08
Shares vested/issued		(10,000	)		(441,094	)		(5,455	)		(65,995	)		—		(522,544	)	$	3.19		(436,839	)		(13,936	)		(69,440	)		—		(520,215	)	$	2.20
Shares canceled		(20,000	)		(35,271	)		—			—			—		(55,271	)	$	2.77		(17,443	)		—			—			—		(17,443	)	$	2.11
Outstanding non-vested shares at end of quarter		-			1,286,562			242,040			—			720,000		2,248,602		$	2.28		966,521			327,382			—			720,000		2,013,903		$	1.84

	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 (in 000's)
Stock Options
Outstanding options at beginning of year		957,400		$	4.50	5.1 years	$	16,878		754,833		$	4.84	2.6 years		$	—
Options granted(1)		—			—			—		3,185,542		$	0.55		—		2
Options expired and canceled		(92,592	)	$	2.50			—		(264,146	)	$	4.85		—		—
Options exercised		—			—			—		—			—		—		—
Outstanding options at end of quarter		864,808		$	4.71	3.6 years	$	—		3,676,229		$	1.12	9.0 years		$	—
Options exercisable at end of quarter		854,808		$	4.74	3.6 years	$	—		490,687		$	4.83	3.1 years		$	—

For the first six months of fiscal 2020, the Company granted stock options to purchase an aggregate of 3,185,542 shares of common stock and 45,714 shares of deferred stock. For the first six months of fiscal 2019, the Company granted 720,000 PSUs, 390,299 RSUs and 43,455 shares of deferred stock. ~~For~~The Company’s non-employee directors voted to suspend their compensation for the ~~first six months~~second quarter of fiscal ~~2018, the Company granted 153,888 stock options, 67,305 shares of restricted stock, 334,625 RSUs and 54,798 shares of deferred stock.~~

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

~~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~~2020. Subsequently, such compensation resumed in the ~~first six months~~third quarter of fiscal ~~2019. The following assumptions were used for grants for the first six months of fiscal 2018:~~2020.

The Company granted ~~15,397~~23,148 shares of common stock, with a fair value of approximately ~~$34,995,~~$24,999, to certain of its non-employee directors as compensation in lieu of cash in the first six months of fiscal ~~2019.~~2020. As mentioned above, the non-employee directors voted to suspend their second quarter compensation.

The Company recognized total stock-based compensation expense of ~~$0.9~~$0.8 million and ~~$0.8~~$0.9 million for the first six months of fiscal ~~2019~~2020 and fiscal ~~2018,~~2019, respectively. The total compensation cost related to time-vested stock options, ~~restricted stock,~~ RSU and PSU awards not yet recognized as of August ~~3, 2019~~1, 2020 was approximately ~~$2.5~~$2.7 million, net of estimated forfeitures, which will be expensed over a weighted average remaining life of 2932 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 six months ended				For the three months ended				For the six months ended
	August 3, 2019		August 4, 2018		August 3, 2019		August 4, 2018		August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
(in thousands)
Common stock outstanding:
Basic weighted average common shares outstanding		49,867		49,060		49,734		48,926		51,078		49,867		50,918		49,734
Common stock equivalents – stock options and restricted stock ⁽¹⁾		308		—		—		—		—		308		—		—
Diluted weighted average common shares outstanding		50,175		49,060		49,734		48,926		51,078		50,175		50,918		49,734

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 six months ended				For the three months ended				For the six months ended
	August 3, 2019		August 4, 2018		August 3, 2019		August 4, 2018		August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
(in thousands, except exercise prices)
Stock options		865		1,147		850		1,147		3,676		865		3,676		850
Restricted stock units		1,056		80		1,040		80		963		1,056		963		1,040
Restricted and deferred stock		85		30		63		36		160		85		160		63
Range of exercise prices of such options	$1.85 - $7.02		$1.85 - $7.02		$2.00- $7.02		$1.85 - $7.02		$0.53 - $7.02		$1.85 - $7.02		$0.53 - $7.02		$2.00 - $7.02

The above options, which were outstanding at August ~~3, 2019,~~1, 2020, expire from ~~March 19, 2020~~January 31, 2021 to June ~~29, 2028.~~11, 2030.

~~Shares of unvested restricted stock of 30,000 shares at August 4, 2018 were excluded~~Excluded from the computation of ~~basic earnings per share. There were no unvested shares of restricted stock outstanding at August 3, 2019.~~

~~The 720,000 PSUs are excluded from~~ basic and diluted earnings per share for both periods were 720,000 shares of unvested performance stock units. These performance-based awards will be included in the computation of basic and diluted earnings per share if, and when, the respective performance targets are achieved. In addition, 327,382 shares and 242,040 shares of deferred stock at August 1, 2020 and August 3, 2019, respectively, were excluded from basic earnings per share. Outstanding shares of deferred stock are not considered issued and outstanding until the ~~market condition is achieved.~~vesting date of the deferral period.

Since the end of fiscal 2014, the Company has maintained a full valuation allowance against its 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 2019,~~ the Company believes that a full valuation allowance remains appropriate at this ~~time.~~time, based on the Company’s forecast for fiscal 2020. Realization of the Company’s deferred tax assets is dependent on generating sufficient taxable income in the near term. At August ~~3, 2019,~~1, 2020, the Company had total deferred tax assets of ~~$58.3~~$107.4 million, total deferred tax liabilities of ~~$10.4~~$47.4 million and a valuation allowance of ~~$47.9~~$60.0 million.

As of August ~~3, 2019,~~1, 2020, for federal income tax purposes, the Company has net operating loss carryforwards of ~~$141.5~~$158.2 million, which will expire from fiscal 2022 through fiscal 2036 and net operating loss carryforwards of ~~$20.8~~$34.0 million that are not subject to expiration. For state income tax purposes, the Company has ~~$91.5~~$112.2 million of net operating losses that are available to offset future taxable income, which will expire from fiscal ~~2019~~2020 through fiscal ~~2039.~~2040. Additionally, the Company has ~~$3.5~~$3.9 million of net operating loss carryforwards related to the Company’s operations in Canada, which will expire from fiscal 2025 through fiscal ~~2039.~~2040.

The Company’s financial statements reflect the expected future tax consequences of uncertain tax positions that the Company has taken or expects to take on a tax return, based solely on the technical merits of the tax position. The liability for unrecognized tax benefits at August ~~3, 2019~~1, 2020 was approximately $2.0 million and was associated with a prior tax position related to exiting the Company’s direct business in Europe during fiscal 2013. The amount of unrecognized tax benefits has been presented as a reduction in the reported amounts of the Company’s federal and state net operating losses carryforwards. 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.

In March 2020, the Coronavirus Aid, Relief and Economic Security Act, ("CARES Act") was signed into law. This law includes several taxpayer favorable provisions which may impact the Company including relaxed interest expense limitations, a carryback of net operating losses, permitted accelerated depreciation on certain store build out costs and allowance for the deferral of employer FICA taxes. The CARES Act also included an Employee Retention Credit, which provided the Company with a $1.2 million refundable tax credit in the second quarter of fiscal 2020. The refundable tax credit allowed eligible employers to receive a 50% tax credit for each employee up to $10,000 in wagesand other eligible expenses. This credit only impacts payroll taxes, which are recorded in pre-tax income and has no impact on the income tax provision. In addition, it provided for the accelerated payment of any refundable alternative minimum tax credit (“AMT”). Accordingly, during the second quarter of fiscal 2020, the Company received $1.1 million for its refundable AMT receivable.

The discrete tax rate method was used for calculating tax expense for the second quarter and first six months of fiscal ~~2019~~2020 and fiscal ~~2018.~~2019. The net tax provision for the second quarter and first six months of fiscal 2020, primarily related to certain states’ margin tax. The Company’s net tax benefit for the second quarter and first six months of fiscal 2019 was the result of the deferred tax impact of

~~$30,000~~ $30,000 and $81,000, respectively, in other comprehensive income (loss), which resulted in a corresponding decrease in valuation allowance. This income tax benefit was partially offset by tax expense, primarily for certain states’ margin tax. The income tax provision for the second quarter and first six 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 $21,000 and $47,000, 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 certain transition costs. For~~Results for the first six months of fiscal 2019, ~~and 2018, the Company has incurred~~included $0.7 million ~~and $0.1 million, respectively,~~ related to CEO search costs, Acting CEO consulting costs, housing allowance and legal fees. ~~In addition,~~

The Company’s common stock is publicly traded and listed on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “DXLG.” Nasdaq has continued listing standards that the Company must maintain to avoid delisting, including, among others, a minimum bid price requirement of $1.00 per share. On April 9, 2020, the Company received a letter from the Listing Qualifications staff of Nasdaq notifying the Company that, based upon the closing bid price of its common stock for the last 30 consecutive trading days, the Company was not in ~~accordance~~compliance with Nasdaq Listing Rule 5450(a)(1), as the minimum bid price for the Company’s common stock was less than $1.00 per share for the previous 30 consecutive trading days. At that time, the Company was granted a 180 calendar-day grace period to regain compliance with the ~~terms~~minimum bid price requirement. On April 17, 2020, the Company received a follow-up letter from the Listing Qualifications staff notifying the Company that Nasdaq had determined to toll all

compliance periods through June 30, 2020. Accordingly, the Company’s 180 calendar-day grace period to regain compliance with the minimum bid price requirement was extended to December 21, 2020.

The Notice does not result in the immediate delisting of the ~~transition agreement between~~Company’s common stock from the Nasdaq Global Select Market. The Company ~~and Mr. Levin,~~intends to monitor the ~~Company is accruing~~closing bid price of the Company’s common stock to allow a reasonable period for ~~estimated future cash payments that Mr. Levin~~the price to rebound from its recent decline but will ~~be entitled~~continue to ~~under his transition agreement and existing performance plans, if and when such targets are achieved.~~

Inconsider its available options to regain compliance. Subsequent to the end of the second quarter of fiscal ~~2018,~~2020, on August 12, 2020, the Company ~~incurred~~received approval from its shareholders to effect a ~~charge~~reverse stock split of ~~$1.6 million~~the Company’s issued and outstanding common stock at a ratio of not less than 1-for-2 and not more than 1-for-5, such ratio, and the timing and implementation of such reverse stock split, to be determined in ~~connection with its corporate restructuring~~the sole discretion of the Company’s Board of Directors. There can be no assurance that the Company will be able to ~~reduce its corporate work force by approximately 15%. The charge represented employee severance, one-time termination benefits and other employee-related costs associated~~regain compliance with the ~~restructuring.~~ minimum bid price requirement or maintain compliance with the other listing requirements.

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~~ability to ~~our strategic plans to grow our customer base and drive top-line sales; store counts, comparable sales growth and free cash flow for fiscal 2019 and~~withstand the impact of the ~~wholesale~~COVID-19 pandemic on our business and results in fiscal 2020 and to manage through the pandemic, our efforts to restructure and reduce costs, expected inventory levels in the second half of 2020, the impact of direct sales on ~~future growth.~~results in fiscal 2020, the ability to keep some or all of our reopened stores open and operating during more normalized hours, and our expected liquidity for the next 12 months. These forward-looking statements generally relate to plans and objectives for future operations and are based upon management’s reasonable estimates of future results or trends. The forward-looking statements in this Quarterly Report should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited ~~consolidated financial statements~~Consolidated Financial Statements and notes to those statements included elsewhere in this Quarterly Report and our audited ~~consolidated financial statements~~Consolidated Financial Statements for the year ended February ~~2, 2019,~~1, 2020, included in our Annual Report on Form 10-K for the year ended February ~~2, 2019,~~1, 2020, as filed with the Securities and Exchange Commission on March ~~22, 2019~~19, 2020 (our “Fiscal ~~2018~~2019 Annual Report”).

Numerous factors could cause our actual results to differ materially from such forward-looking statements. We encourage readers to refer to ~~the~~our “Risk Factors” ~~section~~found in Part II, Item 1A of this Quarterly Report, which supplements our discussion of “Risk Factors” found in Part I, Item 1A of our Fiscal ~~2018~~2019 Annual ~~Report, that sets~~Report. This discussion set forth certain risks and uncertainties that may have an impact on future results and direction of our Company, including, without limitation, risks relating to the COVID-19 pandemic, the execution of our corporate strategy, and our ability to grow our 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 clothing with retail, wholesale and direct operations in the United States and Toronto, Canada. We operate under the trade names of Destination XL^®, DXL^®, DXL Outlets, Casual Male XL^®,and Casual Male XL ~~Outlets and Rochester Clothing.~~Outlets. At August ~~3, 2019,~~1, 2020, we operated ~~221~~228 Destination XL stores, 1617 DXL outlet stores, 5949 Casual Male XL retail stores, 2923 Casual Male XL outlet ~~stores and 3 Rochester Clothing~~ stores. Our e-commerce site, 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 January 30, 2021 and February 1, 2020 ~~and February 2, 2019~~ as “fiscal ~~2019”~~2020” and “fiscal ~~2018,~~2019,” respectively. Both fiscal ~~2019~~2020 and fiscal ~~2018~~2019 are 52-week periods.

~~Historically, we~~We have ~~had two~~three principal operating segments: our stores, direct business and our wholesale business. We consider our stores and direct ~~businesses. We consider these two operating~~business 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 wholesale segment, which we consider a third operating segment. However, due~~Due to the immateriality of the wholesale segment’s revenues, profits and assets, ~~for the six months ended August 3, 2019 and August 4, 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 from our comparable sales the three Rochester stores that closed during the first six months of fiscal 2019. The method of calculating comparable sales varies across the retail industry and, as a result, our calculation of comparable sales is not necessarily comparable to similarly titled measures reported by other retailers.

Our customer’s shopping experience continues to evolve across multiple channels and we are continually adapting to meet ~~his~~our guests’ needs. The majority of our stores have the capability of fulfilling online orders if merchandise is not available in the warehouse. As a result, we continue to see more transactions that begin online but are ultimately completed at the store level. Similarly, if a customer visits a store and the item is out of stock, the associate can order the item through our website. A customer also has the ability to order online and pick-up in a ~~store. Because this omni-channel approach~~store and, more recently due 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 segment. However, as~~COVID-19 pandemic, pick-up at curbside. 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, whether through our website, at the store level or through a third-party marketplace.

Due to the fact that our stores were closed temporarily during much of the second quarter and first six months of fiscal 2020 and continue to operate with reduced hours due to the COVID-19 pandemic, we have not included a discussion of comparable sales for the second quarter and first six months of fiscal 2020 as we do not believe it provides a meaningful metric of our performance during the period.

On March 11, 2020, the World Health Organization declared COVID-19 as a global pandemic. The COVID-19 pandemic has negatively affected the global economy, disrupted global supply chains, and created significant disruption of the financial and retail markets, including a disruption in consumer demand for men’s clothing and accessories. While the pandemic has had, and will likely continue to have, a significant adverse effect on our business, financial condition, and results of operations, we moved early and decisively over the past several months to preserve our financial flexibility and position ourselves to withstand the short-term impact of the pandemic and its impact on the consumer. We continue to communicate consistently and transparently with our employees, suppliers, landlords and banks and believe this direct and active communication has meaningfully enhanced the level of partnership and trust to support the plans we have in place to manage through the pandemic.

We closed all of our retail stores on March 17, 2020 and, beginning at the end of April 2020 and continuing into the second quarter of fiscal 2020, we started to gradually reopen stores. As of the end of June, all stores had been reopened although all operating at reduced hours. Since the reopening, some stores have had to close for periods of time. Store sales were gradually improving in the early weeks of the second quarter, but we started to see some dips as certain key areas of the country began experiencing a resurgence of the virus. We expect that this uncertainty will continue for the remainder of fiscal 2020 and we may have to close and reopen certain store locations to protect our associates and customers, in response to state and local guidelines. Accelerating the trend that we saw in the first quarter of fiscal 2020, sales from our direct business increase by $7.6 million, and accounted for approximately 46.1% of our retail sales compared to 21.1% for last year’s second quarter and it is playing a vital role as we are seeing our customers’ shopping preferences shift to online. Given the increased demand, we have been very fortunate that our distribution center has been able to operate without any business disruption. As we previously announced, we began selling protective masks through our wholesale business in the second quarter of fiscal 2020. The sale of protective masks to wholesale accounts accounted for $4.1 million of our $5.0 million in wholesale sales.

We believe that managing and preserving our liquidity is our top priority to navigate through the pandemic. We have been proactive and decisive in managing our cash obligations. We proactively worked with our leasing partners to mitigate cash burn from short-term lease obligations while our stores were closed. Over the past two quarters, we have worked with our vendors on extended payment terms, including entering into short-term promissory terms with vendors. During the second quarter, we negotiated short term rent relief agreements, primarily through rent abatements and rent deferments, with the majority of our landlords. As a result of lease modifications, the Company has reduced rent payments by approximately $10.0 million for fiscal 2020. As of the end of the second quarter, all store leases were current and in good standing.

We have restructured our business, where possible, to reduce operating costs to align with expected sales levels. All of our store associates and approximately 60% of our corporate office had been on furlough since March 2020. As we reopened stores in the second quarter, we gradually brought many of these associates back, doing our best to extend benefits to others remaining on furlough. However, given our current sales expectations in light of the continuing impact of the pandemic on consumer spending, there were approximately 34 corporate associates in May 2020 and 430 store associates in July 2020 that were terminated and not brought back from furlough. In addition to the furlough, our corporate management team (director level and above) also took a temporary salary reduction, ranging from 10% to 20%, from April 5, 2020 until the end of the second quarter and our non-employee members of board of directors suspended their compensation for the second quarter as well. We also eliminated much of our advertising expense during the second quarter, focusing our marketing spend on digital advertising.

In the first quarter of fiscal 2020, we drew $30.0 million under our revolving credit facility to preserve our access to cash and we also amended our credit facility to improve our excess availability under our revolver. At August 1, 2020, we had $20.4 million in cash, total debt outstanding, net of debt issuance costs, of $81.4 million and remaining availability under our credit facility of $12.4 million.

Total debt, net of cash, for the second quarter of fiscal 2020 was $61.0 million, as compared to $58.7 million in the second quarter of fiscal 2019. At August 1, 2020, our accounts payable balance of $18.5 million, which included $2.0 million of promissory notes payable through April 2021, compared to an accounts payable balance of $36.9 million at August 3, 2019. As we previously mentioned, we cancelled approximately $148 million, at retail, in merchandise receipts for fiscal 2020, and have been focused on keeping our current inventory healthy. At August 1, 2020, our inventory was at $87.4 million, down from $110.4 million at the end of the second quarter last year. While we expect our inventory to increase in the third quarter as we prepare for the fall season, this lower level of inventory negatively impacts our availability under the credit facility. Our access to liquidity will remain our primary objective for the balance of fiscal 2020 and we do believe that we have sufficient liquidity to meet our working capital requirements over the next twelve months, given no further significant shutdowns of the economy.

As we head into the second half of fiscal 2020, we are cautiously optimistic. Prior to the COVID-19 pandemic, our key objective was to grow our direct business, and with the current pandemic, those initiatives have just been accelerated and we are working to meet the changing shopping behaviors of our customers. We are working towards becoming a “digital first” retailer, because the vast majority of consumers begin their shopping experience, whether it be online or in a store, with their digital phones. With the current disruption in the retail landscape, we also see potential opportunity to attract a new customer base to our business.

The following is a summary of results for the second quarter and the first six months of fiscal ~~2019~~2020 as compared to ~~the second quarter and first six months of~~ the prior year, including adjusted EBITDA, which is a non-GAAP measure. Please see “Non-GAAP Financial Measures” below for a reconciliation of net ~~income (loss)~~loss to adjusted EBITDA.

	For the three months ended					For the six months ended						For the three months ended					For the six months ended
	August 3, 2019		August 4, 2018			August 3, 2019			August 4, 2018			August 1, 2020			August 3, 2019		August 1, 2020			August 3, 2019
(in millions, except per share data)
Net income (loss)	$	0.0	$	(1.2	)	$	(3.0	)	$	(4.3	)	$	(10.7	)	$	0.0	$	(52.4	)	$	(3.0	)
Adjusted EBITDA (Non-GAAP basis)	$	7.1	$	8.7		$	11.9		$	14.0		$	(4.3	)	$	7.1	$	(23.2	)	$	11.9

Per diluted share:																��
Net income (loss)	$	0.00	$	(0.02	)	$	(0.06	)	$	(0.09	)	$	(0.21	)	$	0.00	$	(1.03	)	$	(0.06	)
Adjusted net income (loss) (Non-GAAP basis)	$	0.00	$	0.01		$	(0.04	)	$	(0.04	)	$	(0.15	)	$	0.00	$	(0.52	)	$	(0.04	)

While sales for the second quarter of fiscal 2019 were disappointing and below our expectations, we were pleased to see an improvement over the first quarter. Our second quarter comparable sales were flat to last year as compared to the first quarter, which had a comparable sales decline of (1.2)%. The flat comparable sales in the second quarter were driven by a positive comparable sales increase from our direct business, which helped to offset the low single-digit comparable sales decrease from our stores. As with many clothing retailers, the delay of warm weather that we experienced at the end of the first quarter continued into May and negatively affected sales among our seasonal merchandise categories early in the second quarter. As we have historically seen, however, as the warmer weather arrived, sales among these categories picked up through the balance of the second quarter.

Contributing to our total sales during the second quarter of fiscal 2019 was an increase of $2.7 million from our wholesale business. We are pleased with the steady progress we are making with this new business, with total sales for the first six months of fiscal 2019 of $5.1 million. It is important for us to ensure that we are building a strong infrastructure and financial discipline for this segment of our business. We believe that this business will be a strong complement to our retail business and will provide us an opportunity to expand our customer base.

The tough retail sales environment and colder weather impacted sales which fell below our expectations, and as a result, we increased our promotional stance during the second quarter in an effort to drive traffic and maintain a healthy inventory, which had a negative impact on our merchandise margins. In addition, while we saw improvement in our wholesale margin from the first quarter of fiscal 2019, our merchandise margin for the second quarter was impacted by our wholesale business, due to the nature of those margins being significantly lower than our retail business.

For the first six months of fiscal 2019, our cash flow from operations decreased by $5.9 million as compared to the prior year’s first six months, primarily due to a decrease in Adjusted EBITDA and the timing of working capital. Our inventory on August 3, 2019, increased approximately $7.5 million as compared to August 4, 2018. Approximately half of the increase in inventory was primarily due to the acceleration of receipts from China due to impending tariffs, wholesale inventory to be delivered in the third quarter, and replacement inventory of certain styles that were impacted by a cargo vessel fire in the first quarter. The balance was driven by a door-base expansion and an increase in style-presentation levels in our better and best collections as we drive branded collections.

For fiscal 2019, we expect to deliver comparable sales growth in our omni-channel retail business and to generate free cash flow. Since Mr. Kanter joined the Company on April 1, 2019, we have made progress in developing the mission, vision and strategic plan that is now beginning to inform and define our transformation as we look forward and develop the strategy to engage the Big and Tall men across the omni-channel landscape. We are making capital investments in both our customer relationship capabilities and our data infrastructure and analytics capabilities. We believe that these investments are required as we move forward in this digitally-driven retail environment in which we operate today.

In fiscal 2019, we plan to open 2 new DXL retail stores, rebrand 12 Casual Male XL retail stores to DXL retail stores and rebrand 1 Casual Male XL outlet to a DXL outlet store. We also plan to close 5 Casual Male XL retail stores (two of which will be closed in connection with the opening of the two DXL stores), 1 DXL store and our 5 remaining Rochester Clothing stores.

Total sales for the second quarter of fiscal ~~2019 increased 0.9%~~2020 decreased 38.0% to ~~$123.2~~$76.4 million from ~~$122.2~~$123.2 million in the second quarter of fiscal ~~2018.~~2019. We were able to open our stores sooner than expected during the second quarter, and by the end of June, all locations had been reopened. However, with the resurgence of the virus in certain key areas of the country, we started to experience a slowdown in sales from stores in those impacted geographies as July progressed. We continued to see a shift to online shopping during the second quarter and expect to see a similar trend through the remainder of fiscal 2020. Sales from direct business were driven by sales from our DXL.com website, which increased 69% over the prior year second quarter. The ~~increase~~strong growth in our direct business, is a direct outcome of ~~$1.0 million~~the digital strategies we have implemented and the customers’ shift in ~~total sales was principally due~~shopping preferences further grow in response to ~~an increase in~~COVID-19. Our wholesale ~~revenue of $2.7 million partially offset by a decrease of $1.8~~business contributed $5.0 million in sales ~~from closed stores. Comparable sales for~~during the second quarter, ~~of fiscal 2019 were flat. Our sales were negatively impacted~~as compared to $2.7 million in the prior year, driven primarily by the ~~delayed arrival~~sale of ~~warm weather at the start of the second quarter but were pleased to see steady improvement over the course of the second quarter.~~$4.1 million in protective masks.

~~For~~Total sales for the first six months of fiscal ~~2019, our total sales increased 0.3%~~2020 decreased 43.4% to ~~$236.2~~$133.7 million ~~as compared to $235.5~~from $236.2 million for the first six months of fiscal ~~2018. The increase of $0.7 million~~2019. This decrease was principally due to ~~an increase in wholesale revenue~~the closing of ~~$5.1 million partially offset by a~~all of our store locations on March 17, 2020 as well as the decrease in ~~sales from closed stores~~consumer spending as a direct result of ~~$3.3 million~~the COVID-19 pandemic. With increasing unemployment and ~~a decrease in comparable sales of (0.5)%, or $1.2 million.~~

Asthe continued uncertainty surrounding the pandemic, we expect to continue to ~~invest~~market to our customers primarily through digital and direct means, in an effort to drive traffic to both our digital capabilities, we believe it is important to monitor direct sales as a percentage of total retail sales. On a trailing twelve-month basis, direct sales as a percentage of total retail sales were 22.0% at the end of the second quarter of fiscal 2019 as compared to 21.2% at the end of the second quarter of the prior year. For the first six months of fiscal 2019, our direct sales were 21.3%, up from 20.5% for the first six months of the prior year.website and stores.

For the second quarter of fiscal ~~2019,~~2020, our gross margin rate, inclusive of occupancy costs, was ~~44.3%~~28.1% as compared to a gross margin rate of ~~46.3%~~44.3% for the second quarter of fiscal ~~2018.~~2019. The decrease of ~~200 basis points~~16.2% was ~~due to~~comprised of a ~~decrease in merchandise margins~~decline of ~~270 basis points partially offset by a 70 basis point improvement~~ 5.1% from the deleveraging

in occupancy costs, asdue to the decreased sales base, and a ~~percent~~decrease of ~~sales. The 270 basis point decrease~~11.1% in merchandise margins. Although merchandise margins were down in the second quarter, they were better than expected. We remained highly promotional during the first half of the second quarter in order to reduce inventories and drive our on-line business, but began to scale back after Father’s Day. Our gross margin improved significantly post Father’s Day, where we saw a merchandise margin improvement of 1260 basis points for the month of July, as compared to May. Because of the growth in our direct channel and free shipping promotions, shipping costs for the second quarter increased over the prior ~~year’s~~year. Because of the growth in our direct channel and free shipping promotions, shipping costs for the second quarter was due to the higher promotional activity of approximately 190 basis points and 80 basis points due to the impact of our wholesale segment, which by its nature has lower merchandise margins than our retail business. The improvement in occupancy costs, as a percentage of sales, was due to a decrease of $0.8 million in total occupancy costs, primarily related to closed stores, as compared toincreased over the prior ~~year’s second quarter.~~year.

For the first six months of fiscal ~~2019,~~2020, our gross margin, ~~rate,~~ inclusive of occupancy costs, was ~~44.0%~~26.0% as compared to ~~a gross margin rate of 45.5%~~44.0% for the first six months of fiscal ~~2018.~~2019. The decrease of ~~150 basis points~~18.1% was comprised of a decline of 8.6% from the deleveraging in occupancy costs, due to the store closures and overall reduced sales base, and a decrease of 9.5% in merchandise margins. The decrease in merchandise margins ~~of 220 basis points partially offset by a 70 basis point improvement~~reflects the increased promotional posture we took in ~~occupancy costs as a percent of sales. The 220 basis point decrease in merchandise margin was due~~response to ~~120 basis points related to~~COVID-19 and an increase in our inventory reserves of approximately $0.7 million in the first quarter of fiscal 2020. We have been highly promotional ~~activity due~~since our stores closed to ~~the~~encourage our customers to shop online and to mitigate a build-up of seasonal inventory.

Although by its nature, margins from our wholesale business are lower than ~~expected sales volume~~our retail business, the gross margin rate in the second quarter and ~~100 basis points due to the impact~~first six months of ~~our~~fiscal 2020 for wholesale ~~segment. The improvement in occupancy costs, as a percentage of sales, was due to a decrease of $1.4 million in total occupancy costs, primarily related to closed stores, as compared to~~significantly improved over the prior ~~year’s first six months.~~year.

As a percentage of sales, SG&A expenses for the second quarter of fiscal ~~2019~~2020 were ~~38.5%~~33.7% as compared to ~~39.1%~~38.5% for the second quarter of fiscal ~~2018.~~2019. On a dollar basis, SG&A decreased by ~~$0.3~~$21.7 million, or 45.7%, for the second quarter of fiscal ~~2019.~~ This decrease was primarily attributable to a $0.6 million decrease in marketing costs and a $0.3 million decrease in incentive accruals partially offset by an increase of $0.2 million in expenses related to our wholesales business. In addition,2020 as ~~a result of adopting 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~~compared to the ~~sale-leaseback of our corporate office.~~

prior year. For the first six months of fiscal ~~2019,~~2020, SG&A expenses were ~~39.0%~~43.3% as compared to ~~39.6%~~39.0% for the first six months of fiscal ~~2018.~~2019. On a dollar basis, SG&A expense decreased ~~$1.1~~$34.2 million ~~primarily due~~or 37.1%.

We took several steps to ~~savings~~reduce our operating costs while our stores were closed, including the furlough of ~~$2.3 million recognized~~both our store associates and certain corporate associates, a reduction in marketing costs, a temporary salary reduction of 10-20% for management and the suspension of non-employee director compensation for the second quarter. As we reopened stores during the second quarter, our operating costs were realigned with the expected sales levels and associates were brought back on a staggered schedule. We continue to assess and rationalize our entire SG&A cost structure. Given the changes to our business as a result of this pandemic, we are restructuring various areas to ensure that we can operate most efficiently. This included the elimination of approximately 34 corporate positions in the first quarter ~~due to the corporate restructuring in May 2018, a $0.5 million decrease in marketing costs and a decrease~~ of $0.3 million in incentive accruals. These savings were partially offset by an increase of $0.6 million in expenses related to our wholesale business, the prior period’s recognition of $0.7 million of deferred gain on the sale-leaseback, as discussed above,fiscal 2020 and an ~~insurance gains of $0.6 million~~additional 430 store associates in the ~~prior year which~~second quarter. With the reduced sales levels and store traffic, our stores are operating at minimal staffing levels and we did not ~~repeat in fiscal 2019.~~see an opportunity, at this time, to bring back certain positions from furlough, such as tailors and wardrobe consultants.

SG&A expenses are managed through two primary cost centers: Customer Facing Costs and Corporate Supporting Costs. Customer Facing Costs, which include store payroll, marketing, and other store operating costs, represented ~~23.3%~~20.0% of sales for the first six months of fiscal ~~2019~~2020 as compared to ~~23.6%~~23.3% of sales for the first six months of last year. ~~On an annual basis, management targets marketing expenses to be at approximately 5% of sales.~~ Corporate Supporting Costs, which include the distribution center, support, and other corporate overhead costs, represented ~~15.7%~~23.3% of sales for the first six months of fiscal ~~2019~~2020 compared to ~~16.0%~~15.7% of sales for the first six months of last year.

We regularly review assets for impairment indicators at the individual store level, as this represents the lowest level of identifiable cash flows. When indicators of impairment are present, a recoverability analysis is performed. Based on the indicators present in the first quarter of fiscal 2020, we completed a recoverability analysis, which included the impact of the COVID-19 pandemic on the operations of our stores and we used projections that were based on multiple probability-weighted scenarios, assuming that our stores gradually open throughout the second quarter of fiscal 2020 but that consumer retail spending will remain substantially curtailed for a period of time. As a result of that analysis, in the first quarter of fiscal 2020 we recorded an impairment charge of $16.3 million. The ~~Company continues~~impairment charge included approximately $12.5 million for the write-down of certain right-of-use assets, related to ~~examine~~leases where the carrying value exceeded fair value, and ~~rationalize its entire SG&A cost structure~~$3.8 million for the write-down of property and equipment, related to ~~improve its EBITDA margins and overall profitability.~~stores where the carrying value exceeded fair value. No impairment charge was recorded in the second quarter of fiscal 2020, however, as discussed above, there remains uncertainty regarding the impact of the COVID-19 pandemic on our future results of operations, which could result in additional impairments.

Depreciation and amortization for the second quarter and first six months of fiscal ~~2019~~2020 of $5.3 million and $11.1 million, respectively, decreased from $6.2 million and $12.5 million ~~respectively, decreased from $7.4 million and $14.7 million, respectively,~~ for the second quarter and first six months of fiscal 2018. With the majority of our new store growth complete, our depreciation costs are decreasing. In addition, depreciation and amortization in the prior year included amortization on our Casual Male trademark, which is now fully amortized. 2019.

Net interest expense for the second quarter and first six months of fiscal ~~2019 of~~2020 increased to $1.1 million and $1.8 million, respectively, as compared to $0.9 million and $1.7 ~~million, respectively, decreased slightly from $1.0 million and $1.8~~ million, respectively, for the second quarter and first six months of fiscal ~~2018. The slight decrease in interest costs was~~2019 due to ~~a decrease~~an increase in average borrowings, ~~outstanding offset by~~and an increase in the ~~average~~ effective borrowing ~~rate.~~ rates. As a result of our recent amendment to our Credit Facility in

April 2020, our interest rates under our Credit Facility, which includes our FILO loan, increased by approximately 150 basis points, which will increase our interest costs on a go-forward basis for the remainder of fiscal 2020. In addition, as discussed above, on March 20, 2020, we drew approximately $30.0 million against our revolving credit facility. This action was taken to provide the Company with flexibility to manage its cash flow during this uncertain time.

We established a full valuation allowance against our deferred tax assets at the end of fiscal 2013. Based on our forecast for fiscal ~~2019,~~2020, we believe that a full valuation allowance continues to remain appropriate at this time.

The discrete tax rate method was used for calculating tax expense. Due to current period losses, our current tax provision for the first six months of fiscal ~~2019~~2020 and fiscal ~~2018~~2019 was primarily due to current state margin tax, based on gross receipts less certain deductions. The total income tax benefit for the second quarter and first six months of fiscal 2019 also included a deferred tax impact of $30,000 and $81,000, 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 provision for the second quarter and first six months of fiscal 2018 included a deferred tax impact of $21,000 and $47,000, respectively, in other comprehensive income (loss) which resulted in a tax benefit due to its corresponding decrease in valuation allowance.

For the second quarter of fiscal ~~2019,~~2020, we had a net loss of $(10.7) million, or $(0.21) per diluted share, compared with net income of $0.0 million, or $0.00 per diluted share, ~~compared with a net loss of $(1.2) million, or $(0.02) per diluted share,~~ for the second quarter of fiscal ~~2018.~~2019. For the first six months of fiscal ~~2019,~~2020, we had a net loss of $(52.4) million, or $(1.03) per diluted share, as compared to a net loss of $(3.0) million, or $(0.06) per diluted ~~share, as compared with a net loss of $(4.3) million, or $(0.09) per diluted~~ share.

On a non-GAAP basis, before asset impairment costs and CEO transition costs ~~and restructuring charges~~ and assuming a normalized tax rate of 26% for all periods, adjusted net ~~income (loss)~~loss per share for the second quarter and first six months of fiscal ~~2019~~2020 was ~~$0.00~~($0.15) per diluted share and ($~~0.04)~~0.52) per ~~diluted share,~~shares, respectively, as compared to adjusted net income (loss) of ~~$0.01~~$0.00 per diluted share and ($0.04) per diluted share, respectively, for the second quarter and first six months of ~~2018.~~2019.

Our inventory on August ~~3, 2019, increased~~1, 2020, decreased approximately ~~$7.5~~$23.0 million to ~~$110.4~~$87.4 million, as compared to ~~$102.9~~$110.4 million at August ~~4, 2018. Approximately half of the increase in inventory was primarily due~~3, 2019. We began reacting to the ~~acceleration~~pandemic with respect to inventory in early March by ultimately cancelling approximately $148 million, at retail, of ~~receipts from China due~~open orders for fiscal 2020. With respect to ~~impending tariffs, wholesale inventory~~the remainder of fiscal 2020, we expect to be ~~delivered in the third quarter, and replacement~~responsive to business changes, but expect that our fall inventory ~~of certain styles that were impacted by~~buys will be below fiscal 2019 levels. Our objective is to maintain a ~~cargo vessel fire in the first quarter. The balance was driven by a door-base expansion and an increase in style-presentation levels in~~healthy inventory, which will include narrowing our ~~better and best collections as we drive branded collections.~~assortment while also continuing to manage clearance levels. At August ~~3, 2019,~~1, 2020, our clearance inventory decreased by $2.2 million and represented ~~10.9%~~11.3% of our total inventory, as compared to ~~10.1%~~10.9% at August ~~4, 2018.~~3, 2019.

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 in ~~May 2019~~April 2020 (“Credit Facility”). ~~Our current~~Although our cash ~~needs are primarily for working capital (essentially inventory requirements), capital expenditures and growth initiatives. We plan~~flows from operations has been significantly impacted by the lost revenue as of result of the COVID-19 pandemic, we believe that we have taken sufficient steps to manage our ~~working capital and it is expected that excess~~available cash ~~from operations will be directed toward our growth initiatives and debt reductions. We currently believe that our existing cash generated by operations together with~~flow for the foreseeable future. During the first six months of fiscal 2020, we amended our Credit Facility to increase our borrowing base, negotiated extended payment terms with vendors, cancelled inventory purchase orders, reduced operating costs and reduced capital spending. Based on our current projections, we believe our cash on hand, availability under our Credit Facility, ongoing cash generated from our direct business, wholesale business and from the our retail operations, although they are operating on reduced hours, will be sufficient ~~within current forecasts~~to cover our working capital requirements and limited capital expenditures for usthe next 12 months. However, the extent to ~~meet~~which the COVID-19 pandemic will impact our ~~foreseeable liquidity requirements.~~financial results will depend on future developments, which are highly uncertain and cannot be precisely predicted at this time.

For the first six months of fiscal ~~2019,~~2020, cash flow from operations decreased by approximately ~~$5.9~~$9.9 million to ~~$0.9~~$(9.0) million as compared to ~~$6.8~~$0.9 million for the first six months of fiscal ~~2018.~~2019. Free cash flow, a non-GAAP measure, decreased by ~~$6.1~~$4.4 million to $(11.1) million for the first six months of fiscal 2020 as compared to $(6.7) million for the first six months of fiscal ~~2019 as compared to $(0.6) million for the first six months of fiscal 2018.~~2019. The primary reason for this decrease ~~of $6.1 million~~ in free cash flow was due to a decrease in Adjusted EBITDA and the timing of working capital. At August 3, 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. In addition, an increase of $3.0 million in incentive payments related to fiscal 2018 also contributed to theearnings offset by a decrease in ~~free cash flow. As mentioned above, our inventory levels~~capital expenditures. Cash flow from financing activities increased $19.9 million to $27.2 million for the first six months of fiscal 2020 as compared to prior year levels as a result of increasing in-store style presentation for certain brands in our better and best collections, as well as accelerated receipts due to impending tariffs and wholesale inventory to be delivered in the third quarter. Capital expenditures$7.3 million for the first six months of fiscal 2019, ~~increased slightly~~due to ~~$7.6~~the $30.0 million ~~as compared~~draw-down on our Credit Facility in March 2020 to ~~$7.4 million for~~provide the ~~first six months of fiscal 2018.~~Company with financial flexibility during the pandemic.

~~This decrease in free cash flow, as a result of the timing in working capital, resulted in an increase of $3.1 million in total debt outstanding at August 3, 2019 as compared to August 4, 2018.~~ 25

The following is a summary of our total debt outstanding at August ~~3, 2019~~1, 2020 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	$	49,770	$	(319	)	$	49,451	$	66,803	$	(258	)	$	66,545
FILO Loan		15,000		(215	)		14,785		15,000		(159	)		14,841
Total debt	$	64,770	$	(534	)	$	64,236	$	81,803	$	(417	)	$	81,386

Our Credit Facility provides for a maximum committed borrowing of $125.0 million, which, pursuant to an accordion feature, may be increased to $175.0 million upon our request and the agreement of the lender(s) participating in the increase (the “Revolving Facility”). The Credit Facility includes a sublimit of $20.0 million for commercial and standby letters of credit and a sublimit of up to $15.0 million for swingline loans. Borrowings made pursuant to the Revolving Facility under the 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%~~1.75% or ~~0.50%~~2.00%, 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%~~2.75% or ~~1.50%~~3.00%. The current maturity date is May 24, 2023.

We had outstanding borrowings of ~~$49.8~~$66.8 million under the Credit Facility at August ~~3, 2019.~~1, 2020. At August ~~3, 2019,~~1, 2020, outstanding standby letters of credit were ~~$2.6~~$2.8 million and outstanding documentary letters of credit were ~~$1.3~~$0.6 million. The average monthly borrowing outstanding under the Credit Facility during the first six months ended August ~~3, 2019~~1, 2020 was approximately ~~$56.4~~$69.2 million, resulting in an average unused excess availability of approximately ~~$37.6~~$23.2 million. Unused excess availability at August ~~3, 2019~~1, 2020 was ~~$44.5~~$12.4 million.

The Credit Facility also includes a FILO loan for $15.0 million. The total borrowing capacity under the FILO loan is based on a borrowing base, generally defined as a specified percentage of the value of eligible accounts, including certain trade names, that steps down over time, plus a specified percentage of the value of eligible inventory that steps down over time. ~~There can be no voluntary prepayments on~~During the first quarter of fiscal 2020, we entered into an amendment that extended these advance rates to December 2020 before they begin to step down.

As a result of extending the advance rates under the FILO loan, ~~during~~ the ~~first year. After its one-year anniversary, the~~ ~~FILO loan~~ ~~can be repaid, in whole or in part, subject to certain payment conditions.~~

~~Borrowings~~applicable margin rates for borrowings were increased by approximately 150 basis points. Accordingly, current borrowings made under the FILO 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%~~3.75% or ~~2.00%~~4.00% 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%~~4.75% or ~~3.00%~~5.00%. At August ~~3, 2019,~~1, 2020, the outstanding balance of $15.0 million was in a ~~1-week~~6-month LIBOR-based contract with an interest rate of ~~5.06%~~6.00%.

The following table sets forth the open stores and related square footage at August 1, 2020 and August 3, 2019, ~~and August 4, 2018,~~ respectively:

	August 3, 2019				August 4, 2018				August 1, 2020				August 3, 2019
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		221		1,704		216		1,687		228		1,729		220		1,697
DXL Outlets		16		82		15		78		17		82		16		82
Casual Male XL Retail		59		196		72		248		49		160		60		200
Casual Male Outlets		29		88		31		95		23		69		29		88
Rochester Clothing		3		36		5		51		-		-		3		36
Total Stores		328		2,106		339		2,159		317		2,040		328		2,103

~~Below~~In our efforts to preserve our liquidity, we have reduced the majority of our capital spending, unless such spending is ~~a summary of store openings and closings from February 2, 2019~~necessary to ~~August 3, 2019:~~

our immediate business needs. Our capital expenditures for the first six months of fiscal ~~2019~~2020 were ~~$7.6~~$2.1 million as compared to ~~$7.4~~$7.6 million for the first six months of fiscal ~~2018.~~2019. During the first six months of fiscal ~~2019,~~2020, we ~~opened one new DXL store, rebranded 4~~closed five Casual Male XL ~~retail stores to DXL retail stores~~outlets and one Casual Male XL ~~outlet to a DXL outlet as compared to opening 2 DXL~~ retail ~~stores, 1 DXL outlet and 3 Casual Male XL stores rebranded to DXL stores during the first six months of fiscal 2018.~~

In the second half of fiscal 2019, we plan to open 1 new DXL retail store and remodel 8 Casual Male XL to DXL retail stores. In addition, we expect to close 2 Casual Male XL retail stores (1 of which will be closed in connection with the opening of the DXL store), 1 DXL store and our 3 remaining Rochester Clothing 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 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 attributableThere have been no material changes to the ~~elimination of certain existing lease-related assets~~critical accounting policies and ~~liabilities as a net adjustment to~~estimates disclosed in our Form 10-K for the right-of-use assets. In the first six months of fiscal 2019, we recognized a net credit to 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 (iii) the write-off of initial direct costs of $1.2 million.year ending February 1, 2020. See Note 1 to the Consolidated Financial ~~Statements.~~Statements included in this report for information on recent accounting pronouncements and changes in accounting principles.

Adjusted net income (loss), adjusted net ~~(income) loss~~income (loss) per diluted share, free cash flow and 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 income (loss) and adjusted net income (loss) per diluted share. Adjusted net income (loss) and adjusted net income (loss) per share reflect an adjustment assuming a normal tax rate of 26% and the add-back of CEO transition and ~~corporate restructuring costs.~~impairment of assets. We have fully reserved against our deferred tax assets and, therefore, net ~~loss~~income (loss) is not reflective of earnings assuming a “normal” tax position. Adjusted net ~~income (loss)~~loss provides investors with a useful indication of the financial performance of the business, on a comparative basis, assuming a normalized tax rate of 26%.

	For the three months ended											For the six months ended												For the three months ended											For the six months ended
	August 3, 2019					August 4, 2018						August 3, 2019						August 4, 2018						August 1, 2020						August 3, 2019					August 1, 2020						August 3, 2019
	$			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 income (loss) (GAAP basis)	$	38		$	0.00	$	(1,185	)	$	(0.02	)	$	(3,043	)	$	(0.06	)	$	(4,295	)	$	(0.09	)	$	(10,714	)	$	(0.21	)	$	38		$	0.00	$	(52,440	)	$	(1.03	)	$	(3,043	)	$	(0.06	)
Adjust:
CEO transition costs		-					-						702						130						-						-					-						702
Corporate restructuring		-					1,570						-						1,630
Impairment of assets																									-						-					16,335						-
Add back actual income tax provision (benefit)		(8	)				5						(29	)					3						24						(8	)				44						(29	)
Add income tax benefit (provision), assuming a normal tax rate of 26%		(8	)				(101	)					616						658
Add income tax (provision) benefit, assuming a normal tax rate of 26%																									2,779						(8	)				9,376						616

Adjusted net income (loss) (non-GAAP basis)	$	22		$	0.00	$	289		$	0.01		$	(1,754	)	$	(0.04	)	$	(1,874	)	$	(0.04	)	$	(7,911	)	$	(0.15	)	$	22		$	0.00	$	(26,685	)	$	(0.52	)	$	(1,754	)	$	(0.04	)

Weighted average number of common shares
outstanding on a diluted basis					50,175					49,060						49,734						48,926						51,078						50,175					50,918						49,734

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 six months ended						For the six months ended
(in millions)	August 3, 2019			August 4, 2018			August 1, 2020			August 3, 2019
Cash flow from operating activities (GAAP basis)	$	0.9		$	6.8		$	(9.0	)	$	0.9
Capital expenditures, infrastructure projects		(5.2	)		(6.1	)		(1.4	)		(5.2	)
Capital expenditures for DXL stores		(2.4	)		(1.3	)		(0.7	)		(2.4	)
Free Cash Flow (non-GAAP basis)	$	(6.7	)	$	(0.6	)	$	(11.1	)	$	(6.7	)

Adjusted EBITDA. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization and is before CEO transition costs ~~restructuring charges~~ and any impairment of assets. We believe that adjusted EBITDA 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 six months ended						For the three months ended					For the six months ended
	August 3, 2019		August 4, 2018			August 3, 2019			August 4, 2018			August 1, 2020			August 3, 2019		August 1, 2020			August 3, 2019
(in millions)
Net income (loss) (GAAP basis)	$	0.0	$	(1.2	)	$	(3.0	)	$	(4.3	)	$	(10.7	)	$	0.0	$	(52.4	)	$	(3.0	)
Add back:
CEO transition costs		-		-			0.7			0.1			-			-		-			0.7
Corporate restructuring		-		1.6			-			1.6
Provision for income taxes		-		-			(0.0	)		0.0
Impairment of assets													-			-		16.3			-
Provision (benefit) for income taxes													-			-		0.0			-
Interest expense		0.9		1.0			1.7			1.8			1.1			0.9		1.8			1.7
Depreciation and amortization		6.2		7.4			12.5			14.7			5.3			6.2		11.1			12.5
Adjusted EBITDA (non-GAAP basis)	$	7.1	$	8.7		$	11.9		$	14.0		$	(4.3	)	$	7.1	$	(23.2	)	$	11.9

In the normal course of business, our financial position and results of operations are routinely subject to a variety of risks, including market risk associated with interest rate movements on borrowings and foreign currency fluctuations. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of these and other potential exposures.

We utilize cash from operations and from our 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 August ~~3, 2019,~~1, 2020, we had outstanding borrowings of approximately ~~$49.8~~$66.8 million, of which approximately ~~$45.0~~$62.0 million were in LIBOR-based contracts with an interest rate of approximately ~~3.56%~~4.00%. The remainder was prime-based borrowings, with a rate of ~~5.75%~~5.25%. At August ~~3, 2019,~~1, 2020, the $15.0 million outstanding borrowings under the FILO loan were in a LIBOR-based contract with an interest rate of ~~5.06%~~6.00%.

Based upon a sensitivity analysis as of August ~~3, 2019,~~1, 2020, assuming average outstanding borrowing during the first six months of fiscal ~~2018~~2020 of ~~$56.4~~$69.2 million under our 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 ~~$357,000~~$421,000 on an annualized basis.

Our ~~Rochester Clothing store located in London, England conducts business in British pounds and our~~ two DXL stores located in Ontario, Canada conduct business in Canadian dollars. ~~As of August 3, 2019, sales~~Both stores were closed temporarily on March 17, 2020 due to the COVID-19 pandemic and did not reopen until June 2, 2020 and June 16, 2020. Sales from these stores were immaterial to consolidated sales. As such, we believe that movement in foreign currency exchange rates will not have a material adverse effect on our financial position or results of operations.

As required by Rule 13a-15 under the Exchange Act, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of August ~~3, 2019.~~1, 2020. 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 August ~~3, 2019,~~1, 2020, our disclosure controls and procedures were effective.

~~During~~While the ~~six-month period ended August 3, 2019,~~majority of our employees are working remotely during the COVID-19 pandemic, 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 otherhave not experienced any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) ~~that occurred~~ during the ~~quarter~~first six months ended August ~~3, 2019~~1, 2020 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~~Except as described below, there have been no material changes to the risk factors as previously disclosed in Part I, Item 1A of our Fiscal ~~2018~~2019 Annual Report.

The global impact of the COVID-19 pandemic has had and, based on the current status and uncertainty, will likely continue to have a significant adverse effect on our business, financial results, liquidity, supply chain and workforce.

On March 11, 2020, the World Health Organization declared the current outbreak of a novel coronavirus disease (“COVID-19”) a global pandemic. Federal, state and local agencies have mandated various restrictions including travel restrictions, restrictions on public gatherings, state of emergencies, stay-at-home orders and closure of all non-essential businesses, among others.

The COVID-19 pandemic has had, and will likely continue to have, a significant adverse effect on our business, financial results and liquidity. All of our stores were closed on March 17, 2020 and remained closed the end of April 2020, at which point we began to open our stores on a gradual basis through June 30, 2020. While our direct and wholesale businesses were operational, our total revenues for the first six months of fiscal 2020 decreased by approximately 43.4%. Based on the continuing uncertainty regarding the pandemic, we are unable, within reason, to estimate the impact to the remainder of fiscal 2020. As such, we are focused on mitigating the effects of the COVID-19 pandemic and preserving our liquidity. These efforts included, among other things, (i) the furloughing of substantially all of our associates while our stores remained closed, (ii) temporarily reducing, on a tiered basis, the salaries of all members of management through August 2, 2020, (iii) suspending merit increases, (iv) eliminating approximately 34 positions in May 2020 and an additional 430 store associates in July 2020, (v) suspending compensation for non-employee directors for the second quarter of fiscal 2020, (vi) eliminating capital expenditures and operating expenses, where possible, (vii) negotiating with vendors and landlords for extended payment terms, (viii) cancelling approximately $148.0 million of on-order merchandise, at retail, (ix) drawing approximately $30.0 million under our credit facility and amending that facility to increase our borrowing base availability by delaying the step-down of our advance rates and amending the agreement to permit the Company the ability to enter into an aggregate of up to $15.0 million in promissory notes with merchandise vendors, and (x) pursuing all opportunities that may be available to us under the Coronavirus Aid, Relief and Economic Security Act, ("CARES Act").

The above actions may not be successful in mitigating the effects of this pandemic, which is highly uncertain and difficult to predict, and the actions that we take may negatively impact or delay our strategic initiatives. For example, even though the majority of our stores have reopened, we cannot be assured that (i) consumer demand and, therefore, sales will return to levels experienced prior to the pandemic, (ii) new practices or protocols could impact our business and may continue and/or increase, such as, for example, occupancy limitations, (iii) our stores can remain open if there is a resurgence of the virus and therefore need to close again, or (iv) our associates will be willing to staff our stores, as a result of health concerns. Furthermore;

In addition to the specific risks to our business noted above, we will also be subject to the long-term effects the COVID-19 pandemic may have on the U.S. economy as a whole. The U.S. is experiencing unprecedented unemployment and a possible economic recession that would likely impact consumer discretionary spending, and therefore consumer demand for our products. The magnitude of the impact of the COVID-19 pandemic will be determined by the length of time that the pandemic continues, and while government authorities’ measures relating to the pandemic may be relaxed as the pandemic abates, these measures may be reinstated as the pandemic continues to evolve. In addition to the risks noted above, the COVID-19 pandemic may also heighten other risks described in our Fiscal 2019 Annual Report, including risks to our supply chain, the health and safety of our customers and employees, and our ability to maintain compliance with the financial covenants under our Credit Facility.

Our common stock currently trades on The Nasdaq Global Select Market (“Nasdaq”). Nasdaq has continued listing standards that the Company must maintain to avoid delisting, including, among others, a minimum bid price requirement of $1.00 per share. On April 9, 2020, the Company received a letter from the Listing Qualifications staff of Nasdaq notifying the Company that, based upon the closing bid price of its common stock for the last 30 consecutive trading days, the Company was not in compliance with Nasdaq Listing Rule 5450(a)(1), as the minimum bid price for the Company’s common stock was less than $1.00 per share for the previous 30 consecutive trading days. At that time, the Company was granted a 180 calendar-day grace period to regain compliance with the

minimum bid price requirement. On April 17, 2020, the Company received a follow-up letter from the Listing Qualifications staff notifying the Company that they had determined to toll all compliance periods through June 30, 2020. Accordingly, the Company’s 180 calendar-day grace period to regain compliance with the minimum bid price requirement was extended to December 21, 2020.

The Notice does not result in the immediate delisting of the Company’s common stock from the Nasdaq Global Select Market. The Company intends to monitor the closing bid price of the Company’s common stock to allow a reasonable period for the price to rebound from its recent decline but will continue to consider its available options to regain compliance. There can be no assurance that the Company will be able to regain compliance with the minimum bid price requirement or maintain compliance with the other listing requirements.

On June 23, 2020, the Compensation Committee established the performance metrics for the 2020 Annual Incentive Plan (“AIP”), in which our Named Executive Officers participate. Our Named Executive Officers, as reported in the 2019 Proxy Statement are Messrs. Kanter, Stratton, Molloy, Chane and Gaeta. The potential payout for each performance metric is based on full-year results for fiscal 2020. A participant’s payout under the AIP is based on earned wages, accordingly, each participant’s earned wages for fiscal 2020 reflect a reduction in normal earnings due to either: (i) furlough or (ii) temporary pay reductions, ranging from 10% to 20%. Each of our Named Executive Officers took a temporary salary reduction of 20% for the period April 5, 2020 through August 2, 2020.

For fiscal 2020, Mr. Kanter, Mr. Stratton and Mr. Molloy will participate at 100%, 55% and 50% of their respective earned wages while Messrs. Chane and Gaeta will participate at 40% of their respective earned wages.

The following performance metrics and potential payouts levels are derived from the Company’s annual operating plan and budget for fiscal 2020, as revised in March 2020 for the COVID-19 pandemic. These metrics are intended to be achievable, with an approximate 50% probability; however, given the uncertainty surrounding the COVID-19 pandemic and its impact on our financial results, there is an inherent risk that these metrics may not be attainable. Consistent with prior years, we will disclose the actual targets under the AIP once the performance period has ended.

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

	August 1, 2020
Expected volatility	82.3% - 87.8%
Risk-free interest rate	0.22% - 0.27%
Expected life	3.0 - 4.0 yrs.
Dividend rate		—
Weighted average fair value of options granted	$0.32

(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	29,221
Non-cash operating activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	3,053


(dollars in thousands)	For the six months ended
Cash paid for amounts included in the measurement of lease liabilities:	August 1, 2020			August 3, 2019
Operating cash flows for operating leases⁽¹⁾	$	18,527		$	29,221
Non-cash operating activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	559		$	3,053
Net decrease in right-of-use assets due to lease modifications associated with rent concessions during the second quarter of fiscal 2020	$	(578	)	-

Weighted average remaining lease term	5.0 yrs.			5.6 yrs.
Weighted average discount rate	6.48%			7.10%


☒	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

~~Operating leases:~~	(1)
~~Weighted average remaining lease term~~	~~5.6 yrs~~
~~Weighted average discount rate~~		~~7.10~~	%This decrease in cash payments for the first six months of fiscal 2020 as compared to the prior year is primarily due to rent abatements and deferments negotiated during the second quarter of fiscal 2020 for rent obligations due while stores were closed.

(in thousands)
2019 (remaining)	$	28,785
2020		54,800
2021		53,422
2022		48,417
2023		40,251
Thereafter		65,169
Total minimum lease payments	$	290,844
Less: amount of lease payments representing interest		52,084
Present value of future minimum lease payments	$	238,760
Less: current obligations under leases		41,372
Long-term lease obligations	$	197,388

	~~August 4, 2018~~
~~Expected volatility~~	~~48.9% - 57.1%~~
~~Risk-free interest rate~~	~~2.55% - 2.63%~~
~~Expected life~~	~~3.0 - 4.5 yrs~~
~~Dividend rate~~		—

	Second Quarter			First Six Months
	(in millions)
Sales for fiscal 2018	$	122.2		$	235.5
Less 2018 sales for stores that have closed /converted		(1.8	)		(3.3	)
	$	120.4		$	232.2

Change in comparable sales		—			(1.2	)
Change in wholesale revenue		2.7			5.1
Non-comparable sales		0.3			0.3
Other, net		(0.2	)		(0.2	)
Sales for fiscal 2019	$	123.2		$	236.2

Number of Stores:	DXL		DXL Outlets		Casual Male XL Retail			Casual Male XL Outlets			Rochester Clothing			Total Stores
At February 2, 2019		216		15		66			30			5			332
New stores⁽¹⁾		—		—		—			—			—			—
Rebranded stores ⁽²⁾		4		1		(4	)		(1	)		—			—
Replaced stores⁽³⁾		1		—		(1	)		—			—			—
Closed retail stores⁽⁴⁾		—		—		(2	)		—			(2	)		(4	)
At August 3, 2019		221		16		59			29			3			328

				Potential Payout
Performance Metric	Weight			Threshold (50% payout)			Target (100% payout)			Maximum (150% payout, except Kanter where payout is 200%)

Sales		40	%		94.1	%		100.0	%		105.9	%

Adjusted EBITDA		40	%		89.1	%		100.0	%		110.9	%

Personal Goals (1)		20	%	-				100.0	%		150.0	%

4.1		Form of Indenture (included as Exhibit 4.1 to the Company’s Registration Statement on Form S-3 (File No. 333-238929) filed June 4, 2020 and incorporated herein by reference).

10.1		~~First Amendment to Seventh~~Third Amended and Restated Credit Facility dated as of May 31, 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 CMRG Apparel, LLC, as Borrowers, and the Guarantors identified thereinLong-Term Incentive Plan (included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June ~~6, 2019,~~12, 2020 and incorporated herein by ~~reference~~reference).).

10.2		~~Fourth~~ Amended Employment Agreement between the Company and ~~Restated Annual Incentive Plan (included~~Ujjwal Dhoot effective as ~~Exhibit 10.1~~of August 2, 2020.

10.3		Form of Non-Qualified Option Agreement for Associates (pursuant to the Company’s ~~Current Report on Form 8-K filed May 6, 2019, and incorporated herein by reference)~~Long-Term Incentive Plan, as amended).

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~~2002..
101.INS		Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
~~101~~101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File – The ~~following materials from~~cover page interactive data file does not appear in the ~~Company’s Quarterly Report on Form 10-Q for~~interactive data file because its XBRL tags are embedded within the ~~quarter ended August 3, 2019, formatted in~~Inline 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.document.

	DESTINATION XL GROUP, INC.

Date: August ~~28, 2019~~27, 2020	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