Duluth (DLTH) investor relations material

Executive summary

• Net loss narrowed to $10.1 million from $28.2 million year-over-year for Q3, with adjusted EBITDA improving by $5.5 million to -$0.7 million, driven by higher gross margin and lower SG&A.

• Gross margin expanded for consecutive quarters, reaching 53.8%, supported by reduced promotional activity, improved product costs, and higher average unit retail sales.

• Inventory levels reduced by 17% year-over-year to $192.2 million, supporting improved free cash flow and operational efficiency.

• Cash and cash equivalents stood at $8.2 million, with net liquidity of $88.6 million at quarter end.

• Enhanced marketing, new store openings, and successful product collaborations drove brand engagement.

Financial highlights

• Q3 net sales were $114.9 million, down 9.6% year-over-year, with direct-to-consumer sales down 15.5% and retail store sales up 0.4%.

• Gross margin increased to 53.8% from 52.3% year-over-year, despite a $3.0 million tariff impact.

• SG&A expenses decreased by 14.1% to $70.7 million, representing 61.5% of net sales.

• Adjusted EPS loss was $0.23, excluding a $2.0 million tax valuation allowance.

• Ended Q3 with net liquidity of $88.6 million and net debt of $36.4 million; post-peak, fully paid down credit line with liquidity of ~$125 million.

Outlook and guidance

• Fiscal 2025 Adjusted EBITDA guidance affirmed at $23–$25 million, raising the lower end of the previous range.

• Net sales guidance updated to $555–$565 million, down from previous $570–$595 million.

• Tariff impact for the year projected at $12 million, down from $15 million, offset by price increases and cost management.

• Cost savings expected to exceed $10 million, now targeting $12 million.

• Capital expenditures for the year projected at ~$17 million.