Dive Brief:
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Plus apparel companies Destination XL Group and FullBeauty Brands on Thursday announced an agreement to merge and expect their deal to close in the first half of 2026.
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FullBeauty Chief Executive Officer Jim Fogarty will be CEO of the combined company, which will have a customer base of 34 million households and a fleet of 296 stores. DXL CFO Peter Stratton will serve as financial chief for the combined business.
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The companies anticipate $25 million in annual cost savings by 2027. For the last 12 months through October this year, the two delivered combined net sales of some $1.2 billion. Total debt upon closing will be $172 million, executives said on a call Thursday, which is FullBeauty debt that is being assumed by DXL.
Dive Insight:
DXL and FullBeauty call their plans “a merger of equals” that creates “a scaled, category-defining retailer for inclusive apparel.” Its nine-member board will include four directors appointed by FullBeauty, four by DXL and one independent director chosen by the go-forward directors prior to closing.
Plus fashion is a challenging space, hampered by a lack of visibility on runways and perennially ignored by many mainstream apparel companies. DXL said Thursday that Q3 total sales fell more than 5% year over year to $101.9 million, and comps tumbled more than 7%. Gross margin and merchandise margins shrank and net loss widened in the period.
FullBeauty is a private company that has grown via acquisition in the past several years, snapping up legacy retailers like Catherines as well as DTC players like Dia, Eloquii and intimates brand Cuup.
Yet “the combined company only captures a portion of a largely untapped market, highlighting significant growth opportunities ahead,” the companies said in their release. This could be true despite the increasing use of GLP-1 drugs to lose weight.
Analysts see waist sizes in the U.S. shrinking somewhat due to the medications, but believe this has only a marginal effect on the plus-apparel market. DXL and FullBeauty are already adapting to it, saying Thursday that their “shared focus on fit, flexibility and ongoing customer support positions the combined company to meet new and existing customers at every stage of their weight-fluctuation journey – including those using GLP-1 medications – through offerings such as DXL’s FiTMAP and FullBeauty’s free exchange program.”
DXL introduced its size-scanning technology last month.
“By uniting DXL and FullBeauty we are creating a leader in a fragmented market that will define the next decade of inclusive fashion,” Fogarty said, adding that the companies expect their tie-up “to deliver sustainable growth, stronger margins and long-term shareholder value — while expanding choice for customers in an apparel category that has historically lacked options.”
Once the all-stock transaction closes, shareholders of women’s size-inclusive conglomerate FullBeauty will own 55% of the company, and those of big and tall men’s specialist DXL will own 45%. DXL will remain a publicly traded company.
