Destination XL Group reported second-quarter net sales fell 3.4% to $111.6 million and comparable sales dropped 3.5%, while adjusted EBITDA jumped to $7.7 million from $4.7 million a year earlier. Interim CEO Lionel Conacher framed the quarter as proof a turnaround is taking hold, and CFO Peter Stratton called the quarterly comp the strongest in 3 years, with comparable sales improving from down 5.7% in May to down 1.9% in July. Adjusted EPS reached $0.05, up from $0.01, and GAAP net income hit $2.0 million, helped by a $4.6 million tariff refund; gross margin rose 270 basis points to 47.9%, but nearly all of that gain traces back to the refund, and without it merchandise margin would have been roughly 70 basis points worse than last year. The company also walked away from its planned merger with FullBeauty, a deal the board concluded would have diluted existing stockholders given FullBeauty's weakening finances, though the deal still needs SEC clearance and a stockholder vote before it is formally dead. Stratton called store traffic the company's single biggest hurdle, with physical store comps down 4.3% and direct sales down 1.6%, and Chief Growth Officer Jimmy Olsson said customers on GLP-1 weight-loss medications tend to stop buying apparel altogether for a period before their sizing stabilizes.
Destination XL Group IncQ2 profit surge on a $4.6M tariff refund and 270bp gross-margin gain, but net sales fell 3.4% and comps dropped 3.5%.
Destination XL walked away from the merger, citing FullBeauty's weakening finances as dilutive to DXL stockholders.
