Destination XL Group reevaluates FullBeauty merger amid sales decline

Destination XL Group (DXL), the US-based integrated commerce specialty retailer of Big plus Tall menswear, has reported its financial results for the first quarter of fiscal 2026 ended May 2, 2026. Alongside the earnings report, the company announced that its board of directors is reevaluating its previously announced merger with FullBeauty Brands.

The Canton, Massachusetts-headquartered retailer stated that while the board continues to believe in the industrial logic of the combination, the increasingly challenging consumer environment since the execution of the agreement in December 2025, combined with FullBeauty’s indebtedness, means the existing terms are no longer in the best interests of DXL stockholders.

“The DXL Board of Directors is committed to creating stockholder value and taking actions that are in the best interests of DXL and its stockholders,” said Lionel Conacher, the chairman of the board of DXL, in a statement. “Our objective is to determine the path forward that best positions DXL and its stockholders for future success.”

First quarter financial performance

During the first quarter, total sales reached 103.33 million dollars, down 2.1 percent from 105.53 million dollars in the first quarter of fiscal 2025. Comparable sales for the quarter decreased 3.8 percent year-over-year (YoY).

The company reported a net loss of 5.94 million dollars, or 0.11 dollars per diluted share, compared to a net loss of 1.94 million dollars, or 0.04 dollars per diluted share, in the prior year's first quarter. On a non-GAAP basis, adjusting for a normalized tax rate of 26% and adding back transaction-related costs, the adjusted net loss was 3.43 million dollars, or 0.06 dollars per diluted share. Adjusted EBITDA stood at a loss of 0.70 million dollars, down from a positive adjusted EBITDA of 0.20 million dollars in the first quarter of fiscal 2025.

The net sales decrease was driven by a 4.6 percent decline in brick and mortar store comparable sales, while the direct-to-consumer (D2C) business dropped by 1.6 percent. Traffic declines were noted as the primary culprit, though partially mitigated by gains in conversion and average order value. Performance slowed severely through the quarter; comparable sales fell 1.3 percent in February, 2.7 percent in March, and 6.8 percent in April. DXL blamed the April deceleration on macroeconomic factors including inflation, global conflicts, and rising fuel costs, as well as structural shifts from weight-loss medications.

Tech investments and weight-loss trends

The retailer continues to deploy its Fitmap personalized sizing technology, rolling it out to 188 stores during the quarter. Over 100,000 customers have engaged with the platform, showing higher conversion rates and lower returns. Additionally, DXL launched artificial intelligence initiatives to enrich product data attributes and improve digital discoverability.

Addressing the impact of glucagon-like peptide-1 (GLP-1) and similar weight-loss medications, DXL noted a meaningful portion of its base is utilizing these treatments.

Harvey Kanter, the president and chief executive officer of DXL, stated the brand is adjusting by widening assortments in smaller sizes. The group views the trend as a short-term hurdle but a long-term opportunity, as sizing fluctuations cause temporary shopping pauses before customers return to stabilize their wardrobes.

For the remainder of fiscal 2026, capital expenditures are projected to range between 8 million dollars and 12 million dollars. Store development will be tightly controlled, focusing on conversions of its remaining Casual Male XL storefronts into the DXL format, alongside routine portfolio maintenance and technological upgrades. DXL closed two stores during the first quarter, leaving its total fleet at 293 stores spanning 1.99 million square feet.