Destination XL Group (DXLG) Q4 2026 earnings summary

Executive summary

• Entered into a merger agreement with FullBeauty Brands in December 2025, expected to close in Q2 2026 pending shareholder approval, targeting $1.2B in revenue and $25M in annual cost synergies.

• Fiscal 2025 sales declined 6.9% to $435.0M, with comparable sales down 8.4% year-over-year; both stores and direct channels saw declines.

• Net loss for fiscal 2025 was $(35.9)M, or $(0.66) per diluted share, compared to net income of $3.1M in fiscal 2024.

• Severe Arctic weather in January 2025 disrupted store operations, but sales trends improved in February and March 2026, with comp sales at -1.3% in February.

• Strategic focus remains on cost control, inventory discipline, private brand expansion, digital enhancements, and initiatives like FiTMAP.

Financial highlights

• Q4 2025 sales were $112.1M, down from $119.2M in Q4 2024; full-year sales were $435M, down from $467M.

• Gross margin for fiscal 2025 was 43.4%, down from 46.5% in 2024, impacted by higher occupancy costs and tariffs.

• Adjusted EBITDA for the full year was $1.6M, down from $19.9M in 2024.

• Ended the year with $28.8M in cash and investments, no debt, and $55.1M in credit facility availability.

• Took a non-cash charge of $20.4M in Q4 to establish a full valuation allowance against deferred tax assets.

Outlook and guidance

• No specific financial guidance for fiscal 2026 provided due to pending merger; expect to revisit guidance post-transaction.

• Anticipate comp sales improvement in the first half of 2026, aiming for break-even before summer and positive comps later in the year.

• Capital expenditures for 2026 expected to be $8–12M, focused on technology and infrastructure, with new store openings paused.

• Private brand penetration targeted to exceed 60% in fiscal 2026 and 65% in fiscal 2027.