Duluth (DLTH) investor relations material

Executive summary

• Net income for Q2 2026 rose to $18.4 million from $1.3 million year-over-year, driven by a $16.3 million tariff refund and gross margin expansion.

• Adjusted EBITDA for Q2 2026 reached $27.0 million, up from $12.0 million last year, reflecting the impact of tariff refunds.

• Inventory reduced by $22.9 million (15.5%) year-over-year, supporting improved working capital.

• Cash and cash equivalents at $26.8 million, with net liquidity of $96.1 million and zero debt on the ABL facility.

• Strategic shift to a focused core product strategy, improved customer metrics, and transition to scalable growth phase.

Financial highlights

• Net sales for Q2 2026 were $121.4 million, down 7.8% year-over-year; direct-to-consumer sales declined 11.5%, retail store sales down 2.4%.

• Gross margin expanded to 72.8% (including tariff refunds); excluding refunds, gross margin was 59.6%, up 490 basis points.

• Adjusted EPS was $0.50, with $0.44 attributable to tariff refunds.

• Operating income for the quarter was $18.8 million, up from $2.4 million year-over-year.

• Free cash flow reached $13 million for the quarter, a $41 million improvement year-over-year.

Outlook and guidance

• Fiscal 2026 net sales guidance affirmed at $540–$560 million.

• Adjusted EBITDA guidance raised to $38–$42 million, up from $28–$32 million, including tariff refunds.

• Capital expenditures for the year expected to be approximately $12 million.

• Second half sales expected between -2% and +2% year-over-year; Q3 to moderate due to lapping prior year clearance events.

• Management expects continued macroeconomic headwinds, including inflation and recessionary concerns.