Destination XL Group has decided to go it alone — at least for the time being.
On Wednesday when it released its delayed first-quarter results, the Canton, Mass.-based men’s big and tall retailer said its board has decided that its planned merger with FullBeauty Brands is “not in the best interest of DXL shareholders.”
Instead, it is re-evaluating its future and is “engaging with FullBeauty in constructive discussions to determine the best path forward.”
The decision to put the brakes on the merger is a result of “the increasingly challenging consumer environment since the executive of the merger agreement in December 2025 and FullBeauty’s indebtedness,” the company said.
As reported, DXL agreed at the end of last year to merge with FullBeauty, an inclusive-size retailer for men and women that operates under the FullBeauty and KingSize names. Under the terms of the deal, a newly formed subsidiary of DXL would have been created, with DXL remaining the publicly traded entity.
At closing, which was expected to be completed in the first half of this fiscal year, certain of FullBeauty’s equity and debt holders would complete a committed subscription of $92 million, through the sale of common stock in exchange for a combination of new equity and outstanding debt equitization, resulting in a term loan outstanding at closing of about $172 million, with a maturity of August 2029, the companies said.
But the waters were muddied last month when Zodiac Partners II, a West Palm Beach, Fla.-based acquisition entity of Camac Fund, made an all-cash tender offer to acquire all outstanding shares of DXL for 82 cents a share, in a deal valued at $46 million. Although the DXL board unanimously rejected the Zodiac offer on May 26, the fund pointed out that FullBeauty was a formerly bankrupt company and the merger would place a “large debt burden” on the newly formed DXL company “in a very uncertain macro environment.”
DXL management declined to comment further on the FullBeauty situation during its analyst call on Wednesday morning. But Harvey Kanter, president and chief executive officer, who was expected to leave when the FullBeauty merger was completed, reiterated his intention to retire from the company on Aug. 11 at the end of his current contract.
Kanter, who has been CEO for seven years, said he and the board have been discussing succession planning for some time and it’s a topic “our board takes very seriously, and the board will ensure we have the right leadership in place to lead DXL beyond Aug. 11. In the meantime, I am committed to leading the company as we continue to make a meaningful difference in our customer’s life, return the business to growth and create long-term shareholder value.”
The news came as the retailer widened its loss in the first quarter. The net loss was $5.9 million, or 11 cents a diluted share, as compared to a net loss of $1.9 million, or 4 cents a share, for the first quarter of fiscal 2025. The adjusted net loss was 6 cents a share, compared to 4 cents a share the prior year.
Sales for the quarter dipped 2.1 percent to $103.3 million from $105.5 million with comparable-store sales falling 3.8 percent. By month, comps were down 1.3 percent in February, 2.7 percent in March and 6.8 percent in April, Kanter said. The soft sales in April reflected “broader macroeconomic pressure on consumer confidence and discretionary spending,” as well as the growing impact of GLP-1 medications on the big and tall category.
Kanter said store traffic remains challenging, with comps at physical stores down 4.6 percent but only 1.6 percent online.
Despite the poor showing, the company believes it is on the right track. “DXL has a solid foundation built on the strength of our brand, loyal brand relationships with our customer and financial position,” Kanter told analysts. “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 percent targets.”
He said the 3.8 percent decline in comps was actually the strongest result the chain has delivered within the past three years. “We are aligning our cost structure with our revenue structure by reviewing corporate overhead and our store portfolio,” he said. “We are leaving no stone unturned and working with urgency to finalize and implement these cost-saving actions over the coming months.”
Kanter also pointed to the company’s $60 million in cash on hand, lack of debt and availability of another $70 million if needed, as positives.
Turning to merchandising, he said efforts continue to be focused on “sharpening value, strengthening private brands and improving inventory flow to better align with current demand. Private brands accounted for 65.9 percent of the first-quarter sales, compared with 65 percent in the prior period. We are also leaning further into private brands, particularly Harbor Bay as an opening price and value driver,” Kanter detailed.
The company’s partnership with Nordstrom’s marketplace appears to be building momentum, he said, with fourth-quarter demand up more than 20 percent over the prior year.
Overall, he said DXL is “rebalancing” its promotional calendar toward “higher margin and higher inventory risk categories so promotions can help drive demand while protecting profitability.”
Kanter said DXL has submitted a request of about $4 million to the U.S. Customs and Border Protection for tariff refunds, and although the timing and amount of any refund remains uncertain, he expects the company to realize benefits of about 100 basis points if no additional tariffs are imposed.
