Destination XL Q2 sales fall on lower store traffic; exits FullBeauty merger

Destination XL

09/09/2026 12:09

Overview
US Big + Tall apparel retailer's fiscal Q2 sales fell 3.4% yr/yr, comparable sales down 3.5%
Adjusted EPS for fiscal Q2 rose to $0.05 from $0.01 yr/yr
Company withdrew from proposed merger with FullBeauty, citing concerns over FullBeauty's performance

Outlook
Company expects fiscal 2026 marketing costs to be about 5.8% of sales
Company sees fiscal 2026 capital expenditures at $8 mln-$10 mln, down from prior $9 mln-$12 mln
Company estimates tariffs to impact fiscal 2026 gross margin by about 100 basis points if current rates remain

Result Drivers
LOWER STORE TRAFFIC - Co said sales decline was primarily due to decreased store traffic as consumers remained cautious amid inflation, higher energy costs, and economic uncertainty
TARIFF REFUND - Net income and gross margin benefited from a $4.6 mln tariff refund received in the quarter
GLP-1 MEDICATION IMPACT - Co said use of GLP-1 and similar weight-loss medications among customers is contributing to structural changes in demand

Company press release: ID:nGNXFvFC8

Key Details
Metric
Beat/Miss
Actual
Consensus Estimate
Q2 Sales
Beat
$111.60 mln
$109 mln (1 Analyst)
Q2 Adjusted EPS
Beat
$0.05
-$0.04 (1 Analyst)
Q2 EPS
 
$0.04
 
Q2 Net Income
 
$2 mln
 
Q2 Adjusted EBITDA
 
$7.70 mln
 
Q2 Comparable sales Growth
 
-3.50%
 

Analyst Coverage
The one available analyst rating on the shares is "buy"
The average consensus recommendation for the apparel & accessories retailers peer group is "buy"
Wall Street's median 12-month price target for Destination XL Group Inc is $1.50, about 138.1% above its September 8 closing price of $0.63

Reuters Recommended Reads
Sept 9 - Women's apparel retailer J.Jill beats Q2 profit on tariff refund
Sept 9 - Footwear retailer Caleres' Q2 sales beat estimates on gains across brands
Sept 8 - Homewares retailer Dunelm prelim FY26 sales slightly beat on digital and omnichannel growth

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)