Destination XL and FullBeauty Brands merge to form a new apparel giant adapting to market changes driven by weight loss drugs.

Destination XL Group (DXL) and FullBeauty Brands have announced an agreement to merge, creating a new entity poised to become a significant player in the size-inclusive apparel market. The companies finalized the agreement on Thursday, positioning the combined business to leverage the strengths of both companies in serving a broader customer base in the plus-size sector.

The newly formed company projects approximately $1.2 billion in annual net sales, reflecting the scale of the combined operation. Furthermore, the merger is anticipated to unlock significant operational efficiencies, with expected cost synergies reaching $25 million annually by 2027. The ownership structure of the combined entity will see FullBeauty shareholders hold a 55% majority stake, while Destination XL shareholders will possess the remaining 45%.

This strategic move comes at a time when the broader plus-size clothing market is experiencing growth driven by increased consumer focus on body positivity. However, the industry faces a significant challenge with the rising popularity of GLP-1 weight loss medications, such as Ozempic. While industry analysts note that users of these drugs often purchase new apparel as they shed sizes, there is a substantial risk for size-inclusive retailers that customers will eventually lose enough weight to fall outside their core size ranges, potentially forcing them to shop elsewhere.

DXL brings a strong physical retail footprint with over 250 stores under the DXL and Casual Male XL banners, primarily focusing on big and tall men's apparel. FullBeauty complements this with a diverse digital portfolio of over a dozen plus-size brands, including prominent names like Cuup, Woman Within, and Roaman's. Recognizing the market shift driven by weight fluctuations, the combined company plans to utilize offerings such as DXL’s FiTMAP and FullBeauty’s free exchange program to meet customers throughout their weight-fluctuation journey, ensuring continued loyalty even as their size changes.

The merger follows a period of financial difficulty for DXL, whose shares have declined approximately 45% year-to-date amid a year-over-year decrease in total revenue. As of Thursday's close, the company's shares were valued at $1.56, giving it an $84 million market capitalization. FullBeauty, meanwhile, emerged from bankruptcy in 2019 and counts Oaktree Capital Management as its largest investor. The transaction, which requires approval from DXL shareholders, is expected to be finalized in the first half of 2026, subject to customary closing conditions.