Interim leaders at Destination XL have rolled out a package of new initiatives to address falling sales, expressing confidence to investors that these moves will support a near-term return to growth.
Sales Declines Continue in Second Quarter
On Wednesday, the retailer revealed that second quarter sales reached $111.6 million, a 3.4% decrease year over year. Total comparable sales were down 3.5%, with stores specifically experiencing a 4.3% drop and the company’s direct-to-consumer segment falling by 1.6%. However, the company posted a net income of $2 million for the quarter, thanks in large part to a $4.6 million refund received for tariffs. This is a significant improvement over the net loss of $265,000 recorded for the same period the previous year.
During a Wednesday conference call with analysts, Chief Financial Officer Peter Stratton identified “store traffic remains our most significant challenge.” He noted that customer feedback surveys show key demand pressures: ongoing customer weight loss efforts, new spending priorities, and delayed purchases have all contributed to fewer in-store visits.
Merger Discussions with FullBeauty End
Addressing rumors about potential corporate changes, Destination XL clarified that it will not proceed with a previously considered merger with FullBeauty, describing the option as “no longer advisable” for its shareholders. For more comprehensive information, the company directs interested parties to a September 2 filing with the U.S. Securities and Exchange Commission.
The company had previously reported a smaller annual sales decline of 2.1% last quarter, which had followed a sharper 6% drop in the fourth quarter.
Restructuring Efforts: Store Closures, New Leadership and Growth Focus
To address ongoing challenges, Stratton announced that operational changes would include shutting down some stores for improved efficiency and productivity. “Three stores will be closed this year,” he stated, also mentioning that several dozen lease renewals will be closely reviewed for possible closure in the coming months. The objective is to close locations with substantial potential for sales transfer to nearby stores, thereby increasing overall store portfolio productivity. Stratton added, “We need to improve our return on assets.”
Alongside these changes, the company appointed Jimmy Olsson as chief growth officer effective September 2, marking the debut of this executive position as part of the transformation plan. Olsson, whose background includes roles at Todd Snyder, Walmart, Coach, American Eagle Outfitters, and Gap Inc., outlined his vision for a “four pillar growth strategy” intended to heighten store traffic, sharpen product messaging, and ramp up new customer acquisition efforts.
The rollout of FitMap body scanning technology is anticipated to play a key role in the company’s growth. Olsson stated, “More than 150,000 customers have now been scanned, and our data shows that these individuals tend to increase their spending after the scan.” This initiative is expected to help the company adjust to trends among its customer base, where research finds many are taking GLP-1 medications, prompting them to temporarily cut back on apparel buying during active weight loss periods. The majority, however, plan to return to Destination XL as their weight stabilizes.
Additional strategic priorities include growing Destination XL’s private label assortment and enhancing brand visibility—both areas Olsson described as crucial in addressing shortfalls in attracting new clientele. “Driving new customer acquisition is the priority most exposed by this quarter’s traffic miss,” he noted.
Future Plans and Leadership Outlook
Interim CEO Lionel Conacher remains optimistic despite sluggish store traffic, saying that “a resumption in sales growth is imminent.” The company’s leadership is relying on carefully planned store closures, technology upgrades, and new executive appointments to fuel a recovery in top-line growth while optimizing how resources are used. More updates are anticipated as these strategies progress and as the company continues adapting to evolving consumer trends.