Destination XL Group 2026 Q3 Earnings Wider Losses Amid Revenue Decline

Destination XL Group (DXLG) reported Q3 2026 earnings on Dec 11, 2025, with results undershooting expectations. Revenue fell 5.2% year-over-year to $101.88 million, missing forecasts, while losses widened to $0.08 per share, a 166.7% deterioration from Q3 2025. The stock surged post-earnings, reflecting optimism around the FullBeauty merger.

Revenue

The Retail segment accounted for the entire revenue of $101.88 million, with Store sales contributing $74.54 million and Direct sales adding $27.34 million. Total sales remained flat compared to the prior year, though both channels saw declines. The segment breakdown highlights a reliance on physical retail, which made up 73% of total sales.

Earnings/Net Income

Net losses widened to $-4.12 million in Q3 2026, a 128.3% increase from $-1.80 million in Q3 2025. The EPS loss of $0.08, significantly worse than the $0.03 loss forecast, underscores deteriorating profitability amid declining sales and margin pressures.

Post-Earnings Price Action Review

The strategy of buying DXLG shares after a revenue raise quarter-over-quarter and holding for 30 days underperformed sharply. Over three years, it returned -85.62%, lagging the 67.12% benchmark. The -0.80 Sharpe ratio and 0% maximum drawdown indicate high risk with no reward, suggesting the strategy failed to capitalize on positive momentum while avoiding further losses.

CEO Commentary

Harvey Kanter emphasized the FullBeauty merger as a transformative step, combining strengths in Big + Tall men’s apparel and plus-size women’s fashion. The merger aims to leverage shared design and operational capabilities to drive growth, with $25 million in projected annual cost synergies by 2027 and $45 million pro forma EBITDA.

Guidance

The combined entity, to be 55% owned by FullBeauty and 45% by DXL, expects to close the merger in H1 2026. Financial terms include a $172 million term loan maturing in 2029. Operational goals include expanding omnichannel capabilities and cross-selling to enhance margins.

Additional News

Destination XL Group’s merger with FullBeauty, announced Dec 12, 2025, created a $1.2 billion combined entity with $45 million pro forma EBITDA. The all-stock deal, valued at $70 million LTM Adjusted EBITDA post-synergies, aims to capture underserved inclusive apparel markets. Jim Fogarty (FullBeauty CEO) and Peter Stratton (DXL CFO) will lead the new company, with headquarters in Canton, MA, and expanded operations in New York, Indianapolis, and El Paso.

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