Destination XL Group, Inc. Reports Second Quarter Financial Results
DXL posted higher profitability on improved margins and a tariff refund despite softer sales, and its board now opposes the planned FullBeauty merger.
Rhea-AI Summary
Destination XL Group (DXLG) reported fiscal 2Q 2026 sales of $111.6 million, down 3.4% year over year, and net income of $2.0 million, or $0.04 per diluted share.
Comparable sales declined 3.5%, with stores down 4.3% and the direct business down 1.6%, as traffic remained pressured, although monthly trends improved from May to July. Gross margin, including occupancy, rose to 47.9% from 45.2%, driven mainly by a $4.6 million tariff refund that added about 410 basis points to merchandise margin. Adjusted net income was $0.05 per diluted share versus $0.01 a year ago, and adjusted EBITDA increased to $7.7 million from $4.7 million. Cash and investments were $20.1 million with no debt. The board, after reassessing the environment and FullBeauty’s performance and leverage, determined the proposed merger with FullBeauty is no longer advisable and is recommending that stockholders vote against the related share issuance.
Positive
- Net income improved to $2.0 million ($0.04 per diluted share) from a $0.3 million loss in 2Q 2025
- Adjusted EPS rose to $0.05 from $0.01 year over year in 2Q
- Adjusted EBITDA increased to $7.7 million from $4.7 million in the prior-year quarter
- Gross margin expanded to 47.9% from 45.2%, aided by a $4.6 million tariff refund
- Free cash flow for the first six months improved to $(8.7) million from $(14.2) million due to lower store-development capex
- Balance sheet held $20.1 million in cash and investments with no outstanding debt at quarter-end
Negative
- Total sales declined 3.4% year over year to $111.6 million in 2Q 2026
- Comparable sales fell 3.5% in 2Q, with store comps down 4.3% and direct down 1.6%
- Cash and investments decreased to $20.1 million from $33.5 million year over year
- Transaction-related costs tied to the proposed FullBeauty merger rose to $1.8 million from $0.1 million
- Operating cash flow for the first six months was negative $(2.8) million versus $(2.1) million a year earlier
- Free cash flow before store-development capex was negative $(8.3) million for the first six months, slightly worse than $(7.6) million
News Explained
Negative six-month cash flow leaves DXLG reliant on existing liquidity and borrowing capacity, while future tariff costs remain uncertain.
The stated watch item is tariff exposure: if current rates remain in effect without additional tariffs, the company estimates an approximately 100-basis-point fiscal-year gross-margin impact, excluding refunds already realized.
Key Figures
- Total sales
- $111.6 million
- Q2 fiscal 2026; down 3.4% year over year
- Comparable sales
- -3.5%
- Q2 fiscal 2026 versus Q2 fiscal 2025
- Net income
- $2.0 million
- Q2 fiscal 2026; $0.04 per diluted share
- Tariff refund
- $4.6 million
- Included in Q2 fiscal 2026 net income
- Adjusted EBITDA
- $7.7 million
- Q2 fiscal 2026 versus $4.7 million in Q2 fiscal 2025
- Cash and investments
- $20.1 million
- As of August 1, 2026; no outstanding debt
- Operating cash flow
- $(2.8) million
- First six months of fiscal 2026
- Merger issuance recommendation
- AGAINST
- DXL Board recommendation regarding the FullBeauty share issuance proposal
Previous Earnings Reports
-
Sales declined and the company posted a net loss with lower cash and investments year over year.
-
Annual sales and earnings declined while a FullBeauty merger was expected to deliver cost synergies.
-
Sales and comparable sales declined with net loss and negative adjusted EBITDA amid a merger announcement.
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Key Terms
adjusted ebitda financial
non-gaap measure financial
glp-1 medical
comparable sales financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
Sales of
CANTON, Mass., Sept. 09, 2026 (GLOBE NEWSWIRE) -- Destination XL Group, Inc. (NASDAQ: DXLG)(“DXL” or the “Company”), the leading integrated-commerce specialty retailer of Big + Tall men’s clothing and footwear, today reported operating results for the second quarter of fiscal 2026.
Second Quarter Financial Highlights
- Total sales for the second quarter were
$111.6 million , down3.4% from$115.5 million in the second quarter of fiscal 2025. Comparable sales for the second quarter of fiscal 2026 decreased3.5% as compared to the second quarter of fiscal 2025. - Net income for the second quarter was
$2.0 million , or$0.04 per diluted share, as compared to a net loss of$(0.3) million , or$0.00 per diluted share, for the second quarter of fiscal 2025. Net income for the second quarter of fiscal 2026 includes a refund for tariffs of$4.6 million . - Adjusted net income (a non-GAAP measure) for the second quarter was
$0.05 per diluted share as compared to an adjusted net income of$0.01 per diluted share for the second quarter of fiscal 2025. - Adjusted EBITDA (a non-GAAP measure) for the second quarter was
$7.7 million as compared to$4.7 million for the second quarter of fiscal 2025. - Total cash and investments were
$20.1 million at August 1, 2026, as compared to$33.5 million at August 2, 2025, with no outstanding debt for either period.
Management’s Comments
“DXL’s singular commitment to serving the Big + Tall customer has allowed us to establish a differentiated leadership position in an underserved market that represents meaningful opportunities for future growth. We have a strong brand, loyal customer base and a clear understanding of our customers’ priorities. As we navigate a dynamic consumer environment, our team is focused on delivering the right product and value, deepening our engagement with customers across channels and operating the business with greater discipline,” said Lionel F. Conacher, Chairman and Interim Chief Executive Officer.
“Our second quarter results show encouraging sequential improvement in comparable sales trends and continued progress on the actions we are taking to strengthen the business. Comparable sales improved from down
Strategic Priorities
We continue to advance several strategic initiatives designed to strengthen our market leadership in the big + tall sector while enhancing the customer experience across channels.
FiTMAP®
We have exclusive rights to our fit technology platform until 2030. FiTMAP® remains one of the Company’s most important long-term growth drivers. This FiTMAP technology is currently available in 188 stores. Since launch, over 150,000 customers have engaged with the platform, and early results continue to reinforce its value. Customers who use FiTMAP have demonstrated stronger conversion, higher average order values, greater purchase frequency and lower return rates, underscoring the role personalized fit can play in driving both customer satisfaction and profitable growth.
Leverage AI
We are sharpening our focus on artificial intelligence (“AI”) as consumer shopping behavior evolves. As the Company believes AI-powered search and discovery tools may become increasingly important in ecommerce, the Company is investing to ensure that its products and content are more visible, relevant and accessible in these emerging environments. We have launched new AI initiatives to improve product data quality, enrich item-level attributes and strengthen our ability to connect product, pricing and inventory information across AI-enabled platforms. These efforts are intended to improve discoverability, support future commerce applications and position the Company to compete effectively as digital shopping journeys become more conversational and agent-driven.
GLP-1 Medications and Similar Weight-Loss Medications
We continue to deepen our understanding of how the use of glucagon-like peptide-1 (“GLP-1”) medications and similar weight-loss medications may be influencing customer behavior and category demand. Our 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 thoughtfully by broadening select assortments in smaller sizes and using customer insights to inform future merchandising, marketing and re-engagement strategies. Importantly, the Company sees this as both a near-term challenge and a long-term opportunity: while some customers may pause apparel purchases during periods of rapid size change, many express 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.
Merger with FullBeauty
In connection with the merger with FBB Holdings I, Inc., a Delaware corporation (“FullBeauty”), we filed an Amendment No. 1 to Preliminary Proxy Statement (as amended, the “Preliminary Proxy Statement”) with the U.S. Securities and Exchange Commission (the “SEC”) on September 2, 2026.
As described in the Preliminary Proxy Statement, our Board of Directors (the “DXL Board”), as part of its ongoing fiduciary duties to the Company’s stockholders, has continued to evaluate the merger. As part of that evaluation, the DXL Board has considered, among other things, (i) the increasingly challenging consumer environment since the execution of the merger agreement in December 2025, (ii) FullBeauty’s continuing decline in operating performance and financial results, including lower-than-expected net sales, net income (loss), adjusted EBITDA and cash flow from operations as compared to both prior-year performance and prior projections (and the corresponding heightened risk that FullBeauty will not achieve its projections for the current fiscal year), (iii) FullBeauty’s increased level of indebtedness, (iv) concerns regarding FullBeauty’s potential negative equity value, and (v) the substantial economic dilution that DXL stockholders would experience if the merger were consummated on its current terms.
Based on this evaluation, including these considerations, the DXL Board has determined that the merger and the transactions contemplated by the merger agreement, including the issuance proposal, are no longer advisable and are not in the best interests of DXL and its stockholders.
The DXL Board encourages stockholders to read carefully in their entirety the Preliminary Proxy Statement and the Definitive Proxy Statement, when it becomes available, and urges stockholders to carefully consider the DXL Board’s recommendation that stockholders vote “AGAINST” the issuance proposal. The Preliminary Proxy Statement can be found on DXL’s investor relations website at investor.dxl.com or the SEC’s website at www.sec.gov.
Second Quarter Results
Sales
Total sales for the second quarter of fiscal 2026 were
The comparable sales decrease of
Gross Profit
For the second quarter of fiscal 2026, our gross margin rate, inclusive of occupancy costs, was
Our gross margin rate increased by 270 basis points, driven by an increase of 340 basis points in merchandise margin, partially offset by a 70 basis point increase in occupancy costs. The increase in merchandise margin as compared to the second quarter of fiscal 2025 is primarily due to a refund of
Given the volatility that currently exists around trade discussions, it is difficult to determine the potential impact that continuing tariffs may have on our financial results for fiscal 2026. However, if currently enacted rates remain in effect throughout fiscal 2026, and no additional tariffs, including those under U.S. trade laws, are added, we estimate that the impact of the current administration’s tariffs on gross margin for fiscal 2026, exclusive of refunds realized, will be approximately 100 basis points.
The 70 basis point increase in occupancy costs for the second quarter, as a percent of sales, was primarily due to the deleveraging of sales. On a dollar basis, occupancy costs increased
Selling, General & Administrative
As a percentage of sales, SG&A (selling, general and administrative) expenses for the second quarter of fiscal 2026 were
On a dollar basis, SG&A expenses decreased by
Marketing costs were
Management views SG&A expenses through two primary cost centers: Customer Facing Costs and Corporate Support Costs. Customer Facing Costs, which include store payroll, marketing and other store and direct operating costs, represented
Transaction-Related Costs
Transaction-related costs for the second quarter of fiscal 2026 and fiscal 2025 were
Interest Income, Net
Net interest income for the second quarter of fiscal 2026 was
Income Taxes
Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any. Each quarter, we update our estimate of the annual effective tax rate and make a year-to-date adjustment to the provision.
For the second quarter of fiscal 2026, the Company's effective tax rate was (1.6)% as compared to an effective tax rate of
Net Income (Loss)
For the second quarter of fiscal 2026, net income was
The increase in earnings for the second quarter of fiscal 2026 as compared to the second quarter of fiscal 2025 was driven primarily by the tariff refund and lower incentive-based accruals, partially offset by a decrease in sales and an increase in transaction-related expenses.
We have fully reserved against our deferred tax assets and, therefore, the net income in the second quarter of fiscal 2026 does not reflect a normal provision or benefit for income taxes for the Company. On a non-GAAP basis, adjusting for a normal tax rate of
Adjusted EBITDA
Adjusted EBITDA, a non-GAAP measure, for the second quarter of fiscal 2026 was
Cash Flow
Cash flow from operations for the first six months of fiscal 2026 was
Free cash flow, before capital expenditures for store development, a non-GAAP measure, was
Free cash flow, a non-GAAP measure, was
| For the Six Months Ended | ||||||||
| (in millions) | August 1, 2026 | August 2, 2025 | ||||||
| Cash flow from operating activities (GAAP basis) | $ | (2.8 | ) | $ | (2.1 | ) | ||
| Capital expenditures, excluding store development | (5.6 | ) | (5.5 | ) | ||||
| Free Cash Flow before capital expenditures for store development (non-GAAP basis) | $ | (8.3 | ) | $ | (7.6 | ) | ||
| Capital expenditures for store development | (0.4 | ) | (6.6 | ) | ||||
| Free Cash Flow (non-GAAP basis) | $ | (8.7 | ) | $ | (14.2 | ) | ||
Non-GAAP Measures
Adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), adjusted net income (loss) per diluted share, free cash flow before capital expenditures for store development and free cash flow are non-GAAP financial measures. Please see “Non-GAAP Measures” below and reconciliations of these non-GAAP measures to the comparable GAAP measures that follow in the tables below.
Balance Sheet & Liquidity
As of August 1, 2026, we had cash and investments of
As of August 1, 2026, our inventory decreased
Retail Store Information
The following is a summary of our retail square footage since the end of fiscal 2023 through the end of the second quarter of fiscal 2026:
| At August 1, 2026 | Year End 2025 | Year End 2024 | Year End 2023 | |||||||||||||||||||||
| # of Stores | Sq Ft. (000’s) | # of Stores | Sq Ft. (000’s) | # of Stores | Sq Ft. (000’s) | # of Stores | Sq Ft. (000’s) | |||||||||||||||||
| DXL retail | 257 | 1,843 | 258 | 1,853 | 247 | 1,795 | 232 | 1,725 | ||||||||||||||||
| DXL outlets | 17 | 86 | 17 | 86 | 15 | 76 | 15 | 76 | ||||||||||||||||
| CMXL retail | 5 | 15 | 5 | 15 | 8 | 25 | 17 | 55 | ||||||||||||||||
| CMXL outlets | 14 | 41 | 15 | 44 | 18 | 54 | 19 | 57 | ||||||||||||||||
| Total | 293 | 1,985 | 295 | 1,998 | 288 | 1,950 | 283 | 1,913 | ||||||||||||||||
During the first six months of fiscal 2026, we closed one DXL retail store and one Casual Male XL outlet store. We expect our capital expenditures for fiscal 2026 to range from
Digital Commerce Information
We distribute our national brands and private brand merchandise directly to consumers through our stores, website, app, and third-party marketplaces. Digital 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. Our direct business is a critical component of our business and an area of significant growth opportunity for us. For the second quarter of fiscal 2026, our direct sales were
Conference Call
The Company will hold a conference call to review its financial results on Wednesday, September 9, 2026 at 9:00 a.m. ET.
To participate in the live webcast, please pre-register at:
https://register-conf.media-server.com/register/BI8c4f05c8c3264e639204d7543c946a86
Upon registering, you will be emailed a dial-in number, and unique PIN.
For listen-only, please join and register at: https://edge.media-server.com/mmc/p/4tu7vgo9. An archived version of the webcast may be accessed by visiting the "Events" section of the Company's investor relations website for up to one year.
During the conference call, the Company may discuss and answer questions concerning business and financial developments and trends. The Company’s responses to questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been disclosed previously.
Non-GAAP Measures
In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release contains non-GAAP financial measures, including adjusted net income (loss), adjusted net income (loss) per diluted share, adjusted EBITDA, adjusted EBITDA margin, free cash flow before capital expenditures for store development, and free cash flow. The presentation of these non-GAAP measures is not in accordance with GAAP and should not be considered superior to or as a substitute for net income (loss), net income (loss) per diluted share or cash flows from operating activities or any other measure of performance derived in accordance with GAAP. In addition, not all companies calculate non-GAAP financial measures in the same manner and, accordingly, the non-GAAP measures presented in this release may not be comparable to similar measures used by other companies. The Company believes the inclusion of these non-GAAP measures helps investors gain a better understanding of the Company’s performance, especially when comparing such results to previous periods, and that they are useful as an additional means for investors to evaluate the Company's operating results when reviewed in conjunction with the Company's GAAP financial statements. Reconciliations of these non-GAAP measures to their comparable GAAP measures are provided in the tables below.
Adjusted net income (loss) and adjusted net income (loss) per diluted share reflect an adjustment assuming a normal tax rate of
Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization and adding back transaction-related expenses. Adjusted EBITDA margin is calculated as adjusted EBITDA divided by total sales. The Company believes that providing adjusted EBITDA and adjusted EBITDA margin is useful to investors to evaluate the Company’s performance and are key metrics to measure profitability and economic productivity.
Free cash flow is a metric that management uses to monitor liquidity. Management believes this metric is important to investors because it demonstrates the Company’s ability to strengthen liquidity while supporting its capital projects and new store development. Free cash flow is calculated as cash flow from operating activities, less capital expenditures and excludes the mandatory and discretionary repayment of debt. Free cash flow before capital expenditures for store development is calculated as cash flow from operating activities less capital expenditures other than capital expenditures for store development. Capital expenditures for store development includes capital expenditures for new stores, conversions of Casual Male XL stores to DXL and remodels. Capital expenditures related to store relocations and maintenance are not included in store development.
About Destination XL Group, Inc.
Destination XL Group, Inc. is the leading retailer of Men’s Big + Tall apparel that provides the Big + Tall man the freedom to choose his own style. Subsidiaries of Destination XL Group, Inc. operate DXL Big + Tall retail and outlet stores and Casual Male XL retail and outlet stores throughout the United States, and an e-commerce website, DXL.COM, and mobile app, which offer a multi-channel solution similar to the DXL store experience with the most extensive selection of online products available anywhere for Big + Tall men. The Company is headquartered in Canton, Massachusetts, and its common stock is listed on the Nasdaq Capital Market under the symbol "DXLG." For more information, please visit the Company's investor relations website: https://investor.dxl.com.
Forward-Looking Statements
Certain statements and information contained in this press release constitute forward-looking statements under the federal securities laws, including statements regarding our belief that we have established a differentiated leadership position in an underserved market that represents meaningful opportunities for future growth; our belief that we have a strong brand, a loyal customer base and a clear understanding of our customers’ priorities; our belief that the sequential improvement in comparable sales trends in the second quarter are encouraging and shows continued progress on the actions we are taking to strengthen the business; our belief that traffic remained under pressure across stores and digital; our belief that our disciplined operating approach and focus on execution will position us to drive continued performance improvements over the remainder of the year; our belief that our results for the second quarter reflect our continued progress against our strategic priorities; our belief that our customers are responding positively to the adjustments we are making to our merchandise assortment, promotional strategy, and customer experience; our belief that our strategic initiatives will provide us opportunities for future growth and enable us to return to profitability; our belief that FiTMAP remains one of the Company’s most important long-term growth drivers; our belief that early results for FiTMAP technology continue to reinforce its value; our belief that personalized fit solutions can drive both customer satisfaction and profitable growth; our belief that AI-powered search and discovery tools are becoming increasingly important in ecommerce; our belief that the new AI initiatives that were launched will improve product data quality, enrich item-level attributes and strengthen our ability to connect product, pricing and inventory information across AI-enabled platforms; our intention that our AI initiatives will improve discoverability, support future commerce applications and position us to compete effectively as digital shopping journeys become more conversational and agent-driven; our belief that GLP-1 medications and similar weight-loss medications present both near-term challenges and long-term opportunities; our continued belief that GLP-1 medications and similar weight loss medications are contributing to structural changes in customer demand within the big + tall category; our belief, based on our research, that while some customers may pause apparel purchases during periods of rapid size change, we expect many will return once they reach a more stable size profile; our belief that we can strengthen retention, reactivation and lifetime value over time by remaining closely aligned with evolving customer needs; our belief that the comparable sales for May reflected lower traffic as consumers remained cautious amid pressure on discretionary spending from inflation, higher energy costs, global conflict and broader economic uncertainty; our belief that the comparable sales for June and July reflected Father’s Day and other promotional activities that helped offset the continued decline in traffic; our belief that it is difficult to determine the potential impact that tariffs may have on our financial results for fiscal 2026; our expectation that the impact of tariffs on pre-tariff gross margin for fiscal 2026, exclusive of refunds realized, will be approximately 100 basis points; our expectation that for fiscal 2026, marketing costs will be approximately
The discussion of forward-looking information requires the management of the Company to make certain estimates and assumptions regarding the Company's strategic direction and the effect of such plans on the Company's financial results. The Company's actual results and the implementation of its plans and operations may differ materially from forward-looking statements made by the Company. The Company encourages readers of forward-looking information concerning the Company to refer to its filings with the Securities and Exchange Commission, including without limitation, its Annual Report on Form 10-K filed on March 19, 2026, its Amendment No. 1 to Annual Report on Form 10-K/A filed on May 26, 2026, its Amendment No. 1 to the Preliminary Proxy Statement filed on September 2, 2026, its Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission that set forth certain risks and uncertainties that may have an impact on future results and the direction of the Company, including risks relating to changes in consumer spending in response to economic factors; the impact of inflation with rising costs and high interest rates; the impact of tariffs; the impact of ongoing worldwide conflicts on the global economy; potential labor shortages; and the Company’s ability to grow its market share, predict customer tastes and fashion trends, forecast sales growth trends, and compete successfully in the U.S. men’s big and tall apparel market.
Forward-looking statements contained in this press release speak only as of the date of this release. Subsequent events or circumstances occurring after such date may render these statements incomplete or out of date. The Company undertakes no obligation and expressly disclaims any duty to update such statements.
Additional Information About the Merger and Where to Find It
In connection with the merger with FullBeauty, we filed the Preliminary Proxy Statement with the SEC on September 2, 2026. Investors and security holders are encouraged to read the Preliminary Proxy Statement, as well as any other relevant documents filed with the SEC in connection with the merger or incorporated by reference into the Preliminary Proxy Statement, because such documents contain important information regarding the merger and related matters. Investors and security holders may obtain these documents, and any other documents we have filed with the SEC, free of charge at the SEC’s website, www.sec.gov, or by accessing our website at investor.dxl.com. In addition, documents filed with the SEC by us will be available free of charge by writing to us at 555 Turnpike Street, Canton, Massachusetts 02021, Attention: Corporate Secretary.
DXL and certain of its directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of DXL in connection with the merger. Information about DXL’s directors and executive officers, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in DXL’s Annual Report on Form 10-K/A, which was filed with the SEC on May 26, 2026, including under the headings “Director Compensation,” “Compensation Discussion and Analysis,” “Executive Compensation,” and “Security Ownership of Management,” and in the Amendment No. 1 to the Preliminary Proxy Statement, which was filed with the SEC on September 2, 2026, including under the headings “The Merger—Interests of DXL’s Directors and Executive Officers in the Merger,” “DXL’s Executive Compensation,” “Executive Officers and Directors Following the Merger” and “Principal Stockholders of DXL.” To the extent holdings of our common stock by our directors and executive officers have changed from the amounts of our common stock held by such persons as reflected therein, such changes have been or will be reflected on Initial Statements of Beneficial Ownership of Securities on Form 3, Statements of Changes in Beneficial Ownership on Form 4 or Annual Statements of Changes in Beneficial Ownership of Securities on Form 5, in each case filed with the SEC, including the Form 4s filed by each of the non-executive directors on August 6, 2025, the Form 4s filed by each of the executive officers on September 3, 2025, the Form 4s filed by each of the non-executive directors on November 5, 2025, the Form 4s filed by each of the non-executive directors on February 4, 2026, the Form 4s filed by each of the executive officers on April 3, 2026, the Form 4s filed by each of the non-executive directors on May 6, 2026, the Form 4s filed by each of the non-executive directors on August 5, 2026 and the Form 4s filed by a non-executive director and executive officer on August 14, 2026.
FullBeauty and its chief executive officer may be deemed to be participants in the solicitation of proxies from the stockholders of DXL in connection with the merger. Information about FullBeauty and its chief executive officer can be found in the Form 8-K filed by DXL with the SEC on December 11, 2025 and in the Amendment No. 1 to the Preliminary Proxy Statement filed by DXL with the SEC on September 2, 2026, including under the heading “Executive Officers and Directors Following the Merger.”
Additional information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the Preliminary Proxy Statement regarding the merger. Free copies of this document may be obtained as described above.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
Investor Relations Contact:
investor.relations@dxlg.com
(603) 933-0541
Destination XL Group Media Contact:
Aaron Palash / Michael Reilly / Carly King
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
| DESTINATION XL GROUP, INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | |||||||||||||
| Sales | $ | 111,556 | $ | 115,505 | $ | 214,891 | $ | 221,038 | ||||||||
| Cost of goods sold including occupancy | 58,146 | 63,322 | 115,729 | 121,273 | ||||||||||||
| Gross profit | 53,410 | 52,183 | 99,162 | 99,765 | ||||||||||||
| Expenses: | ||||||||||||||||
| Selling, general and administrative | 45,732 | 47,506 | 92,214 | 94,886 | ||||||||||||
| Transaction-related costs | 1,766 | 98 | 3,007 | 161 | ||||||||||||
| Depreciation and amortization | 3,974 | 3,876 | 7,942 | 7,512 | ||||||||||||
| Total expenses | 51,472 | 51,480 | 103,163 | 102,559 | ||||||||||||
| Operating income (loss) | 1,938 | 703 | (4,001 | ) | (2,794 | ) | ||||||||||
| Interest income, net | 78 | 200 | 140 | 484 | ||||||||||||
| Income (loss) before provision for income taxes | 2,016 | 903 | (3,861 | ) | (2,310 | ) | ||||||||||
| Provision for income taxes | (33 | ) | 1,168 | 29 | (106 | ) | ||||||||||
| Net income (loss) | $ | 2,049 | $ | (265 | ) | $ | (3,890 | ) | $ | (2,204 | ) | |||||
| Net income (loss) per share: | ||||||||||||||||
| Basic | $ | 0.04 | $ | (0.00 | ) | $ | (0.07 | ) | $ | (0.04 | ) | |||||
| Diluted | $ | 0.04 | $ | (0.00 | ) | $ | (0.07 | ) | $ | (0.04 | ) | |||||
| Weighted-average number of common shares outstanding: | ||||||||||||||||
| Basic | 55,271 | 53,816 | 55,094 | 53,708 | ||||||||||||
| Diluted | 56,296 | 53,816 | 55,094 | 53,708 | ||||||||||||
| DESTINATION XL GROUP, INC. | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
| August 1, 2026, January 31, 2026 and August 2, 2025 | ||||||||||||
| (In thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| August 1, | January 31, | August 2, | ||||||||||
| 2026 | 2026 | 2025 | ||||||||||
| ASSETS | ||||||||||||
| Cash and cash equivalents | $ | 17,022 | $ | 23,807 | $ | 14,015 | ||||||
| Short-term investments | 3,087 | 5,029 | 19,529 | |||||||||
| Inventories | 75,509 | 73,522 | 78,891 | |||||||||
| Other current assets | 10,321 | 8,608 | 10,210 | |||||||||
| Property and equipment, net | 56,611 | 60,010 | 60,046 | |||||||||
| Operating lease right-of-use assets | 191,368 | 194,068 | 205,012 | |||||||||
| Intangible assets | 1,150 | 1,150 | 1,150 | |||||||||
| Deferred tax assets, net of valuation allowance | — | — | 19,496 | |||||||||
| Other assets | 716 | 753 | 494 | |||||||||
| Total assets | $ | 355,784 | $ | 366,947 | $ | 408,843 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Accounts payable | $ | 22,915 | $ | 22,941 | $ | 24,423 | ||||||
| Accrued expenses and other liabilities | 21,531 | 26,685 | 24,358 | |||||||||
| Operating leases | 206,803 | 209,227 | 219,134 | |||||||||
| Stockholders' equity | 104,535 | 108,094 | 140,928 | |||||||||
| Total liabilities and stockholders' equity | $ | 355,784 | $ | 366,947 | $ | 408,843 | ||||||
| CERTAIN COLUMNS IN THE FOLLOWING TABLES MAY NOT FOOT DUE TO ROUNDING | ||||||||||||||||||||||||||||||||
| GAAP TO NON-GAAP RECONCILIATION OF ADJUSTED NET INCOME (LOSS) AND ADJUSTED NET INCOME (LOSS) PER DILUTED SHARE (unaudited) | ||||||||||||||||||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | |||||||||||||||||||||||||||||
| $ | Per diluted share | $ | Per diluted share | $ | Per diluted share | $ | Per diluted share | |||||||||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||||||||||||||
| Net income (loss) (GAAP) | $ | 2,049 | $ | 0.04 | $ | (265 | ) | $ | (0.00 | ) | $ | (3,890 | ) | $ | (0.07 | ) | $ | (2,204 | ) | $ | (0.04 | ) | ||||||||||
| Add back: | ||||||||||||||||||||||||||||||||
| Transaction-related costs | 1,766 | 98 | 3,007 | 161 | ||||||||||||||||||||||||||||
| Actual provision (benefit) for income taxes | (33 | ) | 1,168 | 29 | (106 | ) | ||||||||||||||||||||||||||
| $ | 3,782 | $ | 1,001 | $ | (854 | ) | $ | (2,149 | ) | |||||||||||||||||||||||
| Income tax provision (benefit), assuming a normalized tax rate of | 983 | 260 | (222 | ) | (559 | ) | ||||||||||||||||||||||||||
| Adjusted net income (loss) (non-GAAP) | $ | 2,799 | $ | 0.05 | $ | 741 | $ | 0.01 | $ | (632 | ) | $ | (0.01 | ) | $ | (1,590 | ) | $ | (0.03 | ) | ||||||||||||
| Weighted average number of common | ||||||||||||||||||||||||||||||||
| shares outstanding on a diluted basis | 56,296 | 53,816 | 55,094 | 53,708 | ||||||||||||||||||||||||||||
| GAAP TO NON-GAAP RECONCILIATION OF ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN (unaudited) | |||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | ||||||||||||||
| (in millions) | |||||||||||||||||
| Net income (loss) (GAAP) | $ | 2.0 | $ | (0.3 | ) | $ | (3.9 | ) | $ | (2.2 | ) | ||||||
| Add back: | |||||||||||||||||
| Transaction-related expenses | 1.8 | 0.1 | 3.0 | 0.2 | |||||||||||||
| Provision (benefit) for income taxes | (0.0 | ) | 1.2 | 0.0 | (0.1 | ) | |||||||||||
| Interest income, net | (0.1 | ) | (0.2 | ) | (0.1 | ) | (0.5 | ) | |||||||||
| Depreciation and amortization | 4.0 | 3.9 | 7.9 | 7.5 | |||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 7.7 | $ | 4.7 | $ | 6.9 | $ | 4.9 | |||||||||
| Sales | $ | 111.6 | $ | 115.5 | $ | 214.9 | $ | 221.0 | |||||||||
| Adjusted EBITDA margin (non-GAAP), as a percentage of sales | 6.9 | % | 4.0 | % | 3.2 | % | 2.2 | % | |||||||||
| GAAP TO NON-GAAP RECONCILIATION OF FREE CASH FLOW (unaudited) | ||||||||
| For the Six Months Ended | ||||||||
| (in millions) | August 1, 2026 | August 2, 2025 | ||||||
| Cash flow from operating activities (GAAP basis) | $ | (2.8 | ) | $ | (2.1 | ) | ||
| Capital expenditures, excluding store development | (5.6 | ) | (5.5 | ) | ||||
| Free Cash Flow before capital expenditures for store development (non-GAAP basis) | $ | (8.3 | ) | $ | (7.6 | ) | ||
| Capital expenditures for store development | (0.4 | ) | (6.6 | ) | ||||
| Free Cash Flow (non-GAAP basis) | $ | (8.7 | ) | $ | (14.2 | ) | ||
FAQ
How did monthly comparable sales trend during the second quarter of fiscal 2026?
Comparable sales declined 5.7% in May, 2.8% in June and 1.9% in July. The company described this as sequential improvement, helped by Father’s Day and other promotions, although store and digital traffic remained under pressure.
What factors drove the gross margin increase in the quarter?
The gross margin rate, including occupancy, rose to 47.9% from 45.2%. Merchandise margin improved by 340 basis points, primarily due to a $4.6 million tariff refund worth about 410 basis points, partially offset by higher shipping costs from fuel surcharges and increased markdowns on clearance sales. Occupancy costs rose 70 basis points as a percentage of sales due to deleverage.
How is DXL using its FiTMAP fit technology platform?
DXL has exclusive rights to FiTMAP until 2030. The technology is available in 188 stores, and more than 150,000 customers have used it. Customers who use FiTMAP have shown higher conversion, larger average order values, greater purchase frequency and lower return rates, which the company links to better personalized fit.
How does DXL view the impact of GLP-1 and similar weight-loss medications on its business?
Company research indicates a meaningful portion of customers use GLP-1 and similar medications, leading to more dynamic sizing needs. DXL is broadening some assortments in smaller sizes and using customer insights to shape merchandising, marketing and re-engagement. Management sees a near-term challenge as some customers pause purchases during rapid size change, but also a long-term opportunity as many intend to return once sizes stabilize.
Where can stockholders find more information about the proposed FullBeauty merger and the board’s recommendation?
The company has filed an Amendment No. 1 to its Preliminary Proxy Statement with the SEC. Stockholders are encouraged to read the Preliminary Proxy Statement and the Definitive Proxy Statement, when available, which can be accessed on DXL’s investor relations website at investor.dxl.com or on the SEC’s website at www.sec.gov.