Destination XL Group, Inc. (NASDAQ: DXLG) reported financial results for the second quarter of fiscal 2026 on September 9, 2026. Total sales for the quarter were $111.6 million, a decrease of 3.4% compared to the same period in the prior year. Comparable sales decreased by 3.5% year-over-year, with sequential improvement noted from a 5.7% decline in May to a 1.9% decline in July.
Net income for the second quarter was $2.0 million, or $0.04 per diluted share. This compares to a net loss of $(0.3) million, or $0.00 per diluted share, in the prior year. The company noted that the current net income includes a tariff refund of $4.6 million. Adjusted EBITDA for the quarter was $7.7 million, and adjusted net income was $0.05 per diluted share.
The company reported gross margin of 47.9% for the quarter, an increase of 270 basis points from the prior year. This improvement was driven by the $4.6 million tariff refund and a 340 basis point increase in merchandise margin, partially offset by increased shipping costs and markdown activity.
Regarding its strategic priorities, Destination XL highlighted its FiTMAP fit technology platform, which is currently available in 188 stores and has been used by over 150,000 customers. The company also discussed investments in artificial intelligence to improve product data quality and discoverability. Additionally, Destination XL addressed the impact of GLP-1 weight-loss medications on customer sizing needs.
In a significant development, the company announced that its Board of Directors has determined that the proposed merger with FullBeauty is no longer advisable. The Board cited FullBeauty's declining operating performance, increased indebtedness, and concerns regarding negative equity value as reasons for rejecting the deal. The company urged stockholders to vote against the issuance proposal outlined in the Preliminary Proxy Statement filed on September 2, 2026.
