Financial Data and Key Metrics Changes - Net sales for Q3 were $101.9 million, down from $107.5 million in the same quarter last year, primarily due to a 7.4% decrease in comparable sales, partially offset by new store sales [21][22] - Gross margin rate was 42.7%, compared to 45.1% in Q3 of the previous year, with occupancy cost deleverage contributing 210 basis points to the decline [22] - EBITDA for the quarter was a loss of $2 million, compared to earnings of $1 million in Q3 of the previous year [23] Business Line Data and Key Metrics Changes - The shift towards value-driven private brands was noted, as these brands sell at lower average unit retails but generate higher margins [21] - The add-to-sales ratio for Q3 increased slightly to 6% from 5.7% last year, indicating strong returns from paid search and social channels [23] Market Data and Key Metrics Changes - Comparable sales were negative 6.7% in August, negative 9.3% in September, and negative 5.8% in October, with October being the best month year-to-date [21] Company Strategy and Development Direction - The merger with FullBeauty aims to create a scaled, category-defining retailer for inclusive apparel, addressing the fragmented market for plus-size and Big and Tall customers [4][10] - The combined company will focus on enhancing operational efficiency, expanding product offerings, and leveraging synergies to drive growth [8][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the merger's potential to create long-term shareholder value and improve customer experience through a broader range of products and services [9][10] - The companies aim to capture $25 million in annual run rate cost synergies by 2027, with significant actions expected within the first 12 months post-merger [17][18] Other Important Information - The merger is structured as a 100% stock-for-stock transaction, with DXL shareholders owning 45% and FullBeauty shareholders owning 55% of the combined company [17] - The combined entity is expected to generate approximately $1.2 billion in net sales and $70 million in Adjusted EBITDA post-merger [10][11] Q&A Session Summary Question: Can you provide details on the expected capital structure post-closing? - The total debt expected upon closing is $172 million, with more information to be provided in the proxy statement [29][30] Question: What are the expectations for ongoing CapEx for the combined entity? - The focus will be on commercial synergies and maintaining infrastructure, with specific plans to be developed as the teams integrate [35][36] Question: What trends has FullBeauty seen in sales over the past year? - FullBeauty has experienced similar comp trends to DXL, focusing on cost structure and marketing efficiency to maintain EBITDA flow-through [55][56] Question: How will the two organizations create synergy in marketing and pricing? - The companies will leverage their strengths in sourcing, DTC capabilities, and brand positioning to drive growth and efficiency [42][43]

Financial Data and Key Metrics Changes - Net sales for Q3 2025 were $101.9 million, down from $107.5 million in Q3 2024, primarily due to a 7.4% decrease in comparable sales, although new stores contributed to non-comparable sales [22][24] - Gross margin rate decreased to 42.7% from 45.1% in the same quarter last year, with occupancy costs contributing 210 basis points to the decline [23] - EBITDA for the quarter was a loss of $2 million compared to earnings of $1 million in Q3 2024 [24] Business Line Data and Key Metrics Changes - The shift towards value-driven private brands was noted, as these brands sell at lower average unit retails but generate higher margins [22] - The add-to-sales ratio for Q3 increased slightly to 6% from 5.7% last year, indicating strong returns from paid search and social channels [24] Market Data and Key Metrics Changes - Comparable sales by month showed negative trends: -6.7% in August, -9.3% in September, and -5.8% in October, with October being the best month year-to-date [22] Company Strategy and Development Direction - The merger with FullBeauty aims to create a scaled, category-defining retailer for inclusive apparel, addressing the fragmented market for plus-size and big and tall customers [4][10] - The combined company will leverage strengths in manufacturing, data science, and digital scale to enhance operational efficiency and customer experience [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the merger's potential to create long-term value for shareholders and improve operational efficiencies [4][10] - The focus will be on capturing $25 million in annual run rate cost synergies by 2027, with significant actions expected within the first 12 months post-merger [17][18] Other Important Information - The merger is structured as a 100% stock transaction, with DXL shareholders owning 45% and FullBeauty shareholders owning 55% of the combined company [17] - The combined entity is expected to generate approximately $1.2 billion in net sales and $70 million in Adjusted EBITDA post-merger [10][11] Q&A Session Summary Question: What is the expected capital structure post-closing? - The total debt expected upon closing is $172 million, with a term loan maturing in August 2029 at LIBOR plus 750 [28][30] Question: What will be the post-closing cash balance for the combined entity? - Specific pro forma numbers will be provided in the proxy statement, but the focus is on the $172 million term loan as the outstanding debt [32] Question: What are the trends in sales and EBITDA profitability for FullBeauty? - FullBeauty has seen similar comp trends to DXL, working on cost structure and marketing expenses to maintain EBITDA flow-through [53] Question: How will the two businesses manage promotions and pricing? - The focus will be on capturing cost and commercial synergies, with opportunities for cross-selling and leveraging each brand's strengths [42][46]

Core Viewpoint - The merger between Destination XL Group, Inc. (DXL) and FullBeauty Brands, Inc. aims to create one of the largest omni-channel retailers in the inclusive sizing market, with combined annual net sales of approximately $1.2 billion, targeting accelerated growth in an underserved market [1][3]. Financial Overview - The combined company is expected to achieve $25 million in annual run-rate cost synergies within the first 12 months post-merger, enhancing financial position and free cash flow generation [1][10]. - The last twelve months ending October 2025 saw combined net sales of approximately $1.2 billion, with an Adjusted EBITDA of approximately $45 million, leading to a projected $70 million of LTM Adjusted EBITDA post-synergies [3][10]. Market Positioning - The merger will unite complementary brands and capabilities, positioning the combined entity as a leader in inclusive sizing apparel, with a direct-to-consumer sales mix of 73% and bricks-and-mortar at 27% [2][11]. - The combined company will have a customer database of approximately 34 million households and 296 stores, enhancing its direct-to-consumer presence [11]. Strategic Benefits - The merger is expected to create a powerful omni-channel platform, leveraging each company's strengths to accelerate growth and improve operational efficiency [7][8]. - The combined entity will focus on fit, flexibility, and customer support, catering to a diverse customer base, including those experiencing weight fluctuations [11]. Leadership and Governance - Jim Fogarty, CEO of FullBeauty, will serve as the CEO of the combined company, with Peter Stratton from DXL as CFO, maintaining headquarters in Canton, MA [13]. - The Board of Directors will consist of 9 members, with equal representation from both companies [14]. Transaction Details - The merger will be executed as an all-stock transaction, with FullBeauty shareholders owning 55% and DXL shareholders owning 45% of the combined company [4][15]. - The transaction has received unanimous approval from both companies' Boards and is expected to close in the first half of fiscal year 2026, pending shareholder approval [16][18].