Duluth (DLTH) investor relations material

Executive summary

• Achieved strong Q1 2026 performance with gross margin expansion to 57.4%, reduced inventory by 24.8%, and improved profitability through a strategic reset focused on brand equity, operational excellence, and core products.

• Net sales for Q1 2026 declined 4% year-over-year to $98.6 million, primarily due to lower direct-to-consumer sales, while retail store sales grew 3.3% on higher average order values and new store openings.

• Net loss narrowed to $10.0 million from $15.3 million year-over-year, with adjusted EBITDA improving to $2.6 million from negative $3.8 million.

• Reduced promotional days by over 50% and discount depth by 700 basis points, resulting in a 14% increase in full-price sales and 17% higher average unit retail year-over-year.

• Customer quality improved, with sales per customer up 10% and net promoter score rising 16% year-over-year.

Financial highlights

• Gross margin expanded by 540 basis points to 57.4% of net sales, with gross profit increasing to $56.6 million.

• SG&A expenses decreased by $3.4 million (5.2%) to $61.8 million, leveraging by 70 basis points.

• Adjusted EBITDA reached $2.6 million, a $6.4 million improvement year-over-year.

• Inventory reduced by $43.7 million (24.8%) to $132.4 million, with clearance inventory dollars down 17.4%.

• Free cash flow improved by $42.6 million compared to the same period last year.

Outlook and guidance

• Affirmed full-year fiscal 2026 net sales guidance of $540–$560 million, with adjusted EBITDA guidance raised to $28–$32 million.

• Capital expenditure guidance maintained at $12 million (2.2% of sales).

• Multi-year plan targets 1–3% revenue CAGR, 200–300 bps gross margin expansion, and adjusted EBITDA margin of 8–10% by 2028.

• Free cash flow projected to build from ~$16 million in 2025 to $30–40 million by 2028.