Destination XL Posts Narrower Loss, Bets Turnaround on Body Scans and Store Cuts

Quick Facts

DXL posted Q2 fiscal 2026 sales of $111.6 million, down 3.4% year over year, but beat analyst estimates of $109.14 million.
Net income of $2.0 million was driven largely by a $4.6 million tariff refund; adjusted EBITDA rose to $7.7 million from $4.7 million a year earlier.
The company’s ‘Fit for Growth’ strategy centers on FitMAP body scanning, private brand expansion, and a multiyear store rationalization program.

Destination XL Group is drawing a line under two years of revenue decline. The big-and-tall specialty retailer reported second-quarter fiscal 2026 results on September 9 and outlined a turnaround plan it says will return the business to sales growth.

Total sales for the quarter came in at $111.6 million, down 3.4% from $115.5 million in the same period last year. Comparable sales fell 3.5%, with store comps off 4.3% and direct business down 1.6%. Despite the declines, DXL cleared Wall Street’s revenue forecast of $109.14 million and delivered adjusted EPS of $0.05, up from $0.01 a year ago.

Net income was $2.0 million, or $0.04 per diluted share, compared to a net loss of $0.3 million in Q2 fiscal 2025. A $4.6 million tariff refund was a key driver of that profit. Adjusted EBITDA reached $7.7 million, up from $4.7 million in the prior-year quarter.

Interim CEO Lionel Conacher told analysts the business showed clear signs that a resumption in sales growth is imminent. He framed the company’s efforts as executing a clear strategy to return to profitability while taking decisive action to reduce costs and evolve its assortment, promotional approach, and customer experience.

The ‘Fit for Growth’ Plan

DXL’s turnaround rests on four pillars: establishing fit authority through its FitMAP body scanning program, expanding private brands, building brand awareness, and acquiring new customers.

FitMAP, available on the DXL mobile app and in more than 80 stores, captures 243 body measurements to generate a personalized fit profile across 25-plus brands. Chief Growth Officer Jimmy Olsson said more than 150,000 customers have been scanned. The most recent 12-month cohort of scanned customers is spending more than they did before scanning, he said.

Olsson also addressed GLP-1 weight-loss drugs directly. Based on customer surveys, a meaningful portion of DXL’s customer base is currently using GLP-1 medications. Olsson said those customers tend to pause apparel purchases during their weight-loss journey, but a majority report they intend to return to DXL once they reach a stable size. He called fit the right lens for addressing what he described as a genuine structural shift in the customer base.

Store Rationalization Underway

CFO Peter Stratton called store traffic the company’s most significant challenge. DXL closed three stores in 2026 and has a few dozen leases coming up for renewal in 2027. Stratton said the company will evaluate each location individually over the next six months before deciding how many additional closures to pursue.

He described the effort as a multiyear project intended to improve sales per square foot and four-wall profit over time.

Financial Footing

DXL entered the current fiscal year with no debt and approximately $28.8 million in cash and investments after closing fiscal 2025 with total sales of $435.0 million, down from $467.0 million in fiscal 2024. The full-year fiscal 2025 net loss was $35.9 million, including a non-cash charge of $20.4 million to establish a valuation allowance against deferred tax assets.

The company’s clean balance sheet gives it room to execute the turnaround without the pressure of debt service. Whether FitMAP adoption and store rightsizing can offset the structural headwinds from GLP-1 drug adoption will determine how quickly that growth returns.