Destination XL Group, Inc.

Good day, everyone, and welcome to DestinationXL Group, Inc.' 's conference call to discuss our first quarter fiscal 2026 financial results. Today's call is being recorded. At this time, I would like to turn the call over to Ms. Shelly Mokas, Vice President of Financial Reporting and SEC Compliance at DXL. Please go ahead, Shelly.

Thank you, Michelle, and good morning, everyone. We appreciate you joining us on DestinationXL Group's first quarter fiscal 2026 earnings call. Joining me today are Harvey Cantor, our President and Chief Executive Officer, and Peter Stratton, our Chief Financial Officer. During today's call, we will reference certain non-GAAP financial measures that we believe provide useful supplemental information regarding our performance. Please refer to our earnings release, which was filed this morning and is available on our Investor Relations website for additional information and reconciliations of those measures. Today's discussion will also include forward-looking statements regarding the company's strategic initiatives potential impact of current tariffs, and other expectations for fiscal 2026. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. Additional information regarding those risks and uncertainties is included in the company's filings with the Securities and Exchange Commission. With that, I will turn the call over to our CEO, Harvey Cantor. Harvey?

Thank you, Shelly, and good morning, everyone. As always, we appreciate your time and interest in DXL. Before I get into our quarterly results, let me start by reiterating our confidence that DXL is well positioned for growth and value creation. DXL has a solid foundation built on the strength of our brand, loyal brand relationships with our customer and financial position. The changes we are making to our assortment, promotional strategy, and customer experience to better align with today's value-conscious big and tall consumer are beginning to bear fruit. Our inventory levels are clean and stable. Inventory turnover is strong, and clearance levels are in line with our 10% targets. Additionally, we just delivered the strongest quarterly comparable sales result in the past three years at negative 3.8%. We are clear-eyed with respect to the headwinds in our market and continue to take decisive action to navigate these challenges. We are aligning our cost structure with our revenue structure by reviewing corporate overhead and our store portfolios. We are leaving no stone unturned and working with urgency to finalize and implement these cost-saving actions over the coming months. Importantly, DXL has a fortress balance sheet. with over $16 million of cash on hand, no debt, and excess availability of $70 million, giving us flexibility as we continue strengthening our business for the future. We are pleased with the traction we are already driving through our growth initiatives, which we'll talk about shortly, and believe we have a solid plan in place to return DXL to profitability. And with that, let me turn to our first quarter results. I am pleased to report that our first quarter performance reflected improvement as we began fiscal 2026, which was due to the company-specific initiatives which we have been implementing. Comparable sales were down 1.3% in February, down 2.7% in March, and down 6.8% in April. While the shift in the Easter calendar had some effect on the comparison between March and April, we also believe softer April demand reflected broader macroeconomic pressure on consumer confidence and discretionary spending, including the current global conflict, higher fuel costs, and inflation. We also believe the growing impact GLP-1 medications is contributing to structural change in demand within the big and tall category. For the quarter, comparable sales were down 3.8%, representing our best quarterly comp performance since the second quarter of 2023. Although we still have meaningful work ahead, we are encouraged by the improvement in the quarter and believe it may indicate that our turnaround efforts are beginning to gain traction. For the quarter, store comparable sales were down 4.6%, and our direct comparable sales down were down 1.6%. store traffic remains our most significant challenge. Although we continue to be encouraged by the relative stability in conversion and dollars per transaction, which has helped offset a portion of that pressure. In direct, we saw improvement in conversion driven by enhancements to the app and the overall site experience. And we also benefited from solid clearance performance, primarily through the direct channel. More broadly, The direct business generated demand through paid search, paid social, and programmatic marketing, while ongoing improvements in the app's performance, site experience, and speed supported better conversion. We continue to carefully evaluate our marketing allocation to strike the right balance between attracting new customers, which has improved since the fourth quarter, and reengaging repeat and lapse customers where spending remains more cautious. Encouragingly, when new customers discover DXL, they continue to respond well to our assortment, proprietary fit, and value proposition. At the same time, many existing customers appear to be shopping more on a need than on a discretionary want basis. Based on customer surveys and related insight, that behavior appears to reflect a combination of weight loss journeys, shifting spending priorities, and delayed purchasing decisions. Importantly, we believe the underlying affinity for the DXL experience remains very strong. Our merchandising efforts remain focused on sharpening value, strengthening private brands, and improving inventory flow to better align with current demand. Private brands accounted for 65.9% of the first quarter sales compared with 65% in the prior period. We are also leaning further into private brands, particularly Harbor Bay, as an opening price and value driver while continuing to improve storytelling around quality, fit, and value across every channel. Our creative and messaging have become more focused on essentials, cost per wear, and our trusted fit, reinforcing our position with a more value conscious customer. We are also rebalancing the promotional calendar towards higher margin and higher inventory risk categories so that promotions can help drive demand while protecting profitability and reducing future inventory exposure. Operationally, the team is actively managing supply chain and extended transit times that delay certain key spring receipts. In response, our sourcing partners are working to pull forward production where possible, vendors are booking containers earlier, and our flow and allocation strategies are being adjusted to better reflect current sales trends. At the same time, our Nordstrom's marketplace business continues to be building momentum, with first quarter demand up more than 20% versus last year, supported by stronger storytelling, improved product visibility, expanded placement in high traffic categories, and curated events, such as the upcoming Father's Day Gifts Guide. Overall, our merchandising organization is responding proactively to softer recent sales with a tighter, more focused approach to improve conversion, grow margin, and improve inventory productivity. A second topic that remains top of mind is tariffs. In April, US Customs and Border Protection launched an online portal through which companies may submit refund requests. During the first quarter, we submitted a claim seeking a refund of approximately $4 million related to tariffs previously paid. The timing and amount of any recovery remains uncertain, and we would recognize any recovery when considered realizable. Given the current volatility surrounding trade discussions, it remains difficult to determine the full impact tariffs may have on our fiscal 2026 results. However, if currently enacted rates remain in effect through fiscal 2026 and no additional tariffs are imposed, we estimate that the impact of tariffs on gross margin exclusive of any refunds realized, will be approximately 100 basis points, which is an improvement from our previous estimate of 150 basis points. As we look forward, we remain focused on a small number of strategic priorities that we believe can meaningfully strengthen the business over time. Three of the most important are FitMap, our application of AI, and our work to better understand GLP-1 related customer behavior. What connects these priorities is that each reflects a meaningful shift in how our customer shops, how he discovers product, and how we need to evolve to serve him more effectively. These are not side initiatives. They are our strategic growth levers that we believe can improve customer engagement, sharpen our competitive position, and create more durable long-term value. First, FitMap. FitMap is a strong example of that strategy in action. We have exclusive rights to our FitMap technology platform until 2030. FitMap remains one of the company's most important strategic long-term growth drivers. During the quarter, we completed a rollout of FitMap across all 188 stores that we're rolling out to enhance the customer journey. Since launch, more than 100,000 customers have engaged with the platform, and early results continue to reinforce its value. Customers who use FitMath have demonstrated stronger conversion, higher average order values, greater purchase frequency, and lower return rates, underscoring the personalized fit element, which it can play in driving both customer satisfaction and profitable growth. Our focus now is on continuing to build adoption and extending the value of that fit map more seamlessly across all channels and over time. The second pillar is AI. We are sharpening our focus on artificial intelligence as consumer shopping behavior continues to evolve. As AI-powered search and discovery tools become increasingly important in e-commerce, we are investing to ensure that our products are in content, are more visible, relevant, and accessible across these emerging environments, including conversational and agent-driven experiences that differ meaningfully from traditional keyword-based search. During the quarter, we launched new AI initiatives to improve product quality, enrich item-level attributes, and strengthen our ability to connect product, pricing, and inventory information across AI-enabled platforms. These efforts are designed to improve discoverability, support future commerce applications, and position DXL to compete effectively as a digital shopping partner in the journey and become more conversational and increasingly agent-assisted. The third pillar is GLP-1, an area where we are working to be thoughtful, data-driven, and proactive. We continue to deepen our understanding of how GLP-1 usage may be influencing consumer behavior and category demand. Our in-house research indicates that a meaningful portion of our customer base is currently using GLP-1 medications, contributing to more dynamic sizing needs over time. We are responding by broadening our select assortments in smaller sizes and using customer insights to inform future merchandising, marketing, and re-engagement strategies. Importantly, we view this as both a near-term challenge and, most importantly, a long-term opportunity. While some customers may pause apparel purchases during periods of rapid size change, many of our guests have indicated an intention to return once they reach a more stable size profile. By staying closely aligned with these evolving customer needs, we believe we can strengthen retention, reactivation, and lifetime value over time. Taken together, these three priorities reflect our broader effort and focus to evolve the Excel in step with the way our customer is changing and to position the business for continued relevance and resilience. And with that, I'll turn the call over to Peter for a view of our financial results. Peter?