Destination XL reports fiscal 2025 net loss amid sector headwinds

The US specialty retailer Destination XL Group (DXL) has reported a net loss of 35.90 million dollars for the fiscal year 2025, ended January 31, 2026. This result compares to a net income of 3.10 million dollars in fiscal 2024.

Total sales for the year reached 435 million dollars, representing a 6.9 percent decrease from the 467 million dollars recorded in the previous year. Comparable sales fell by 8.4 percent for the full year, with brick and mortar stores down 6.9 percent and the direct-to-consumer (D2C) business declining 11.8 percent.

The annual results were significantly impacted by a non-cash charge of 20.40 million dollars to establish a full valuation allowance against net deferred tax assets. Excluding certain items, the adjusted net loss for fiscal 2025 was 11.50 million dollars, or 0.21 dollars per diluted share.

Strategic shift toward private brands and technology

In response to the challenging environment in the big + tall sector, DXL is pivoting its assortment strategy. The group intends to increase private brand penetration from 57 percent at the start of fiscal 2025 to over 60 percent in fiscal 2026, reaching more than 65 percent by fiscal 2027.

The retailer is also leaning into its proprietary FiTMAP technology, a contactless digital scanning solution. By the end of fiscal 2025, the technology was available in 121 locations; it has since been rolled out to 188 stores.

President and chief executive officer, Harvey Kanter, stated that the company exited the year with a clean inventory position and 28.80 million dollars in cash and investments. "Fiscal 2025 as a whole reflects the ongoing challenges facing the big + tall retail sector. Traffic remained soft, consumer sentiment was cautious, and customers shopped less frequently," Kanter said.

Merger with Fullbeauty Brands

DXL is currently moving toward a merger with the US direct-to-consumer retailer Fullbeauty Brands. The transaction, announced on December 11, 2025, is expected to close in the second quarter of fiscal 2026.

The combined entity is projected to generate 1.20 billion dollars in revenue. Management expects the merger to yield 25 million dollars in annual run-rate cost synergies.

Fullbeauty reported sales of approximately 0.70 billion dollars for the 53 weeks ended January 3, 2026. The merger will integrate DXL with a portfolio of inclusive brands, including OneStopPlus, Catherines, and Eloquii.

Outlook for fiscal 2026

The group has observed a stronger start to the new financial year, with February comparable sales down only 1.3 percent. The D2C business showed growth of 3.4 percent during the month. Due to economic headwinds, DXL has decided to pause new store openings for the coming year. During fiscal 2025, the company opened eight DXL stores.

The company continues to monitor trade policy volatility. If current tariff rates remain unchanged, the group estimates a 150 basis point impact on gross margin for fiscal 2026.