Destination XL on Wednesday called off merger plans with fellow U.S. firm FullBeauty, just weeks after Zodiac Partners made an offer to acquire all outstanding shares of the plus-size retailer, which its board declined.
The merger of equals deal, which was first reported in December and was expected to close in the second half of 2026, looked to provide FullBeauty shareholders with 55% of the combined company, while Destination XL (DXL) shareholders were expected to own 45%.
In a statement on Wednesday, the Canton, Massachusetts-based firm said it is “engaging with FullBeauty in constructive discussions to determine the best path forward,” adding “given the increasingly challenging consumer environment since the execution of the merger agreement in December 2025 and FullBeauty’s indebtedness, the board believes that the existing terms of the merger agreement are not in the best interests of DXL stockholders.”
“The DXL board of directors is committed to creating stockholder value and taking actions that are in the best interests of DXL and its stockholders,” said Lionel Conacher, chairman of the board of DXL, in explaining the company’s decision to call of the merger talks with FullBeauty.
“Our objective is to determine the path forward that best positions DXL and its stockholders for future success.”
Last month, Zodiac Partners, a Camac Fund affiliate based in Florida, complicated the merger by offering to acquire all outstanding DXL shares for $0.82 each, valuing the company at $46 million.
DXL and its board of directors ultimately rejected the bid to take the plus-size fashion company private on May 27, adding the offer “does not reflect the company’s underlying value.”
On Wednesday, the company also reported a first-quarter sales downturn of 2.1% to $103.3 million, with sales weighed down by a 3.8% decline in comparable sales. Meanwhile, net loss widened to $5.9 million, or a loss of $0.11 per diluted share during the first quarter, compared to a net loss of $1.9 million, or $0.04 per diluted share, in the prior-year period.
“While comparable sales declined 3.8%, we saw positive momentum in key areas of the business, including higher conversion rates and increased average order value across both stores and online,” said DXL president and CEO, Harvey Kanter.
“We believe these trends reinforce that the adjustments we are making to our merchandise assortment, promotional strategy, and customer experience are aligning better with today’s value-conscious consumer. We will continue to navigate the challenging environment, building on the strength of our offering and assortment and the trust our customers place in the DXL brand.”
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