Destination XL Group 2026 Q3 Earnings Net Loss Widens 128.3%

Destination XL Group (DXLG) reported its fiscal 2026 Q3 earnings on Dec 11, 2025, missing expectations on both revenue and earnings. The company posted a net loss of $4.12 million, a 128.3% increase from the $1.80 million loss in Q3 2025, while revenue fell 5.2% year-over-year to $101.88 million. Management highlighted the FullBeauty merger as a strategic pivot to redefine inclusive apparel markets.

Revenue

The total revenue for the quarter declined to $101.88 million, driven by weaker retail performance. The Retail segment accounted for the entire revenue, with Store sales contributing $74.54 million and Direct sales adding $27.34 million. The segment breakdown underscores a shift toward in-store transactions, though total sales remained flat compared to prior periods.

Earnings/Net Income

Destination XL Group’s losses deepened to $0.08 per share in Q3 2026, a 60% miss of the $0.05 forecast. The net loss expanded to $4.12 million, reflecting operational challenges and merger-related costs. The earnings performance highlights significant underperformance relative to analyst expectations.

Post-Earnings Price Action Review

The strategy of buying DXLG shares after a revenue raise quarter-over-quarter on the financial report release date and holding for 30 days resulted in a significant underperformance. Over the past three years, this approach yielded a return of -85.62%, vastly underperforming the benchmark return of 67.12%. The strategy’s Sharpe ratio of -0.80 indicates substantial risk aversion, while the maximum drawdown of 0% suggests it avoided losses but also failed to capture gains.

CEO Commentary

Harvey Kanter emphasized the FullBeauty merger as a “pivotal step” to redefine inclusive apparel, leveraging complementary strengths in design, sizing, and logistics. The combined entity aims to generate $25 million in annual cost synergies by 2027 and optimize supply chains to drive profitability.

Guidance

The merger is projected to close in H1 2026, with $25 million in annual cost synergies by 2027. The combined company will trade as DXLG, with $1.2 billion in trailing 12-month net sales and $70 million in Adjusted EBITDA post-synergy capture. Operational priorities include optimizing logistics and supplier networks.

Additional News

Destination XL Group’s merger with FullBeauty, announced Dec 12, 2025, aims to create a $1.2 billion inclusive apparel retailer. The all-stock deal will see FullBeauty shareholders own 55% and DXL 45%, with Jim Fogarty (FullBeauty’s CEO) leading the combined entity. Despite the strategic optimism, DXLG shares fell 14.7% post-announcement, reflecting market skepticism. The merger assumes $172 million in debt and targets $25 million in cost synergies by 2027.