The news: Inclusive-sizing retailers Destination XL Group and FullBeauty Brands announced an agreement to merge. The deal is expected to close in the first half of 2026.

FullBeauty CEO Jim Fogarty will lead the combined company, which would serve a customer base of 34 million households and operate 296 stores. DXL CFO Peter Stratton will continue in that role for the merged business.

Why is this happening? The companies aim to create what they’re calling a “category-defining retailer for inclusive apparel” that leverages their deep customer insights, manufacturing capabilities, and expertise in producing high-quality pieces for big-and-tall and plus-size shoppers.

• “The sector has traditionally lacked coordinated offerings, leaving many customers with limited choices and inconsistent shopping experiences,” Fogarty told investors. “This merger positions us to address those gaps by bringing together two leading companies with complementary strengths, creating a retailer that delivers greater assortment, improved fit, and a powerful omnichannel experience.”
• The deal aims to generate $25 million in annual cost savings by 2027 by trimming cost of goods, introducing organizational efficiencies, reducing overhead, and pursuing other savings initiatives. The combined company expects to realize a significant portion of those savings within the first 12 months.
• They also anticipate greater scale advantages in product development while maintaining the agility to adjust sourcing operations and mitigate tariff exposure.

Our take: While GLP-1 weight-loss drugs have dampened the apparel industry’s enthusiasm for inclusive clothing, there’s still a sizable, underserved market out there waiting to be tapped. More than 2 in 5 US adults (42.4%) are considered obese, and 1 in 11 (9.2%) is considered severely obese, per the National Health and Nutrition Examination Survey. Yet, despite that scale, relatively few retailers are meaningfully serving their needs.

The merger serves as a reminder that the inclusive-apparel opportunity has all too often been underserved. By combining scale, product expertise, and customer insights, DXL and FullBeauty have an opportunity to build the type of consistent, high-quality offerings that shoppers in this category have long lacked. If the companies can deliver better fit, broader assortment, and a smoother omnichannel experience, they could become the default destination for millions of consumers who’ve historically struggled to find clothing that suits them.