Vacation spot XL Group, Inc. and its longtime competitor KingSize are merging.
On Thursday, the Canton, Mass.-based males’s huge and tall retailer Vacation spot XL stated it is going to merge with FBB Holdings Inc., an inclusive-size retailer for women and men that operates beneath the FullBeauty and KingSize names.
The mixed enterprise could have annual gross sales of about $1.2 billion.
Underneath the phrases of the merger settlement, FullBeauty will merge with a newly shaped subsidiary of DXL, with DXL remaining the publicly traded entity beneath the ticker image DXLG. As well as, at closing, sure of FullBeauty’s fairness and debt holders will full a dedicated subscription of $92 million, via the sale of frequent inventory in alternate for a mix of recent fairness and excellent debt equitization, leading to a time period mortgage excellent at closing of about $172 million, with a maturity of August 2029, the businesses stated.
FullBeauty was based in 1910 and serves each plus-size ladies and massive and tall males beneath the FullSize and KingSize names. On account of the merger, DXL and FullBeauty will mix as a public firm with gross sales of roughly $1.2 billion and adjusted earnings earlier than curiosity, taxes, depreciation and amortization of about $70 million, based mostly on the efficiency of each companies for the final 12 months ending October 2025.
Direct-to-consumer will account for 73 p.c of gross sales and DXL’s brick-and-mortar shops the rest. FullBeauty has no bodily shops.
Following the completion of the all-stock transaction, FullBeauty and DXL shareholders will personal 55 p.c and 45 p.c of the mixed firm, respectively.
FullBeauty has been on a development spurt of late. The corporate, which grew out of the Redcats mail order enterprise that was owned by PPR earlier than the posh large modified its identify to Kering, already has a number of plus-size manufacturers concentrating on Boomers and older Gen Xers, together with Catherines, WomanWithin and Jessica London. Up to now a number of years it has acquired Dia & Co., which has each a size-inclusive market and a styling service that makes use of algorithms and human stylists to suggest seems to be to consumers. It additionally bought the intimates model Cuup and the fashionable Eloquii, which was owned by Walmart.
Jim Fogarty, chief government officer of FullBeauty, will function CEO of the mixed firm and Harvey Kanter, president and CEO of DXL, will exit the enterprise after the deal has closed. Peter Stratton, present chief monetary officer of DXL, will function CFO of the mixed firm. Its headquarters will stay in Canton, with a “vital presence in New York Metropolis, Indianapolis and El Paso,” the corporations stated.
The mixed firm’s board will comprise 9 administrators — 4 appointed by FullBeauty, 4 by DXL and one unbiased director to be mutually agreed upon by the go-forward administrators previous to closing.
“By uniting DXL and FullBeauty we’re creating a frontrunner in a fragmented market that can outline the subsequent decade of inclusive style,” stated Fogarty. “Collectively we shall be a robust engine for innovation — combining knowledge science, digital scale, proprietary match know-how and differentiated retailer experience. With our shared values and mission, unbelievable portfolio of manufacturers, complementary capabilities, enhanced monetary profile, confirmed document of profitable model integrations and the dimensions of a bigger public firm, we anticipate to ship sustainable development, stronger margins and long-term shareholder worth — whereas increasing selection for purchasers in an attire class that has traditionally lacked choices.”
“We’re enthusiastic about what this transaction means for our associates, clients and shareholders,” stated Kanter. “Along with FullBeauty, we shall be higher in a position to serve our clients throughout the plus-size and massive and tall attire market, offering them extra manufacturers, extra kinds and extra choices whether or not they store in shops or on-line via our highly effective omnichannel platform. Our shareholders will profit from the upside potential of our giant, mixed firm as we seize development alternatives, leverage our match experience, execute on value synergies and use our enhanced monetary place to put money into our enterprise. We sit up for working with FullBeauty and becoming a member of our groups to ship on the promise of this mix.”
Lionel Conacher, chairman of the present board of DXL, stated, “Following a complete evaluate of this transaction, the board decided that this mix has the potential to create vital worth for and is the very best path ahead for DXL shareholders. We sit up for working collectively to information the mixed firm to even higher success as one group.”
Steve Tesoriere, portfolio supervisor of funds managed by Oaktree Capital Administration, L.P. and director of FullBeauty, added, “As the biggest particular person proprietor of FullBeauty, we sit up for collaborating within the vital upside potential this transaction creates. We anticipate the mixed firm will generate stable free money stream and generate very enticing shareholder returns.”
The companies could have a direct-to-consumer base of 34 million households and 296 shops. The mixed enterprise shall be 54 p.c ladies’s and 46 p.c males’s, Fogarty stated on a day earnings name.
The transaction is predicted to generate $25 million in annual run-rate value synergies by 2027 primarily via cost-of-goods optimization, organizational efficiencies, decreased overhead bills and different cost-saving measures, the businesses stated Thursday. The mixed firm intends to start capturing these synergies promptly after closing the transaction, with a good portion to be actioned throughout the first 12 months.
The merger is predicted to shut within the first half of fiscal 12 months 2026. These approving of the deal embrace Fund 1 Investments LLC, certainly one of DXL’s largest shareholders, which made a proposal final December to take the retailer non-public. The funding agency owns about 19.4 p.c of the prevailing voting share of DXL.
Individually, DXL reported third-quarter earnings on Thursday, posting a web lack of $4.1 million, or 8 cents a share, increased than the $1.8 million, or 3 cents a share, reported within the prior-year interval. Whole gross sales had been down 5.2 p.c to $101.9 million from $107.5 million, and comparable-store gross sales fell 7.4 p.c within the interval, a 5.2 p.c drop in shops and 13.1 p.c on-line.
Kanter stated the outcomes “mirror a giant and tall buyer who is just not procuring as continuously or spending as a lot cash with DXL as we now have seen in prior years. There was a discernible shift in buyer desire in the direction of entry-level value factors and personal manufacturers, which compels us to increase and evolve our core assortment to supply a higher collection of our non-public and value-driven manufacturers.”
