Duluth (DLTH) Q2 2025 earnings summary

Executive summary

• Net sales grew 1.8% year-over-year to $141.6 million in Q2 2024, driven by product innovation and improved shopper conversion, with gross margin expanding by 90 basis points to 52.3% due to sourcing initiatives.

• Adjusted EBITDA rose 23.9% to $10.6 million (7.5% of net sales), while adjusted net loss was $0.6 million, excluding $1.6 million restructuring and $2.4 million non-recurring sales tax expense.

• Net loss was $3.7 million, compared to $2.0 million loss in prior year, with SG&A expenses up 4.6% year-over-year, including a $2.4 million non-recurring sales tax expense.

• Paid off $11 million in debt, ending the quarter debt-free with $210 million in liquidity and $9.8 million in cash.

• Strategic initiatives in product innovation, fulfillment network optimization, and retail store portfolio are progressing, with two new stores planned for 2025 and ongoing investments in technology.

Financial highlights

• Q2 net sales: $141.6 million, up 1.8% year-over-year; gross margin: 52.3%, up 90 basis points from last year.

• Adjusted EPS loss: $0.02, improved by $0.04 from last year; reported EPS loss: $0.11.

• Adjusted EBITDA: $10.6 million (7.5% of net sales), up 23.9% year-over-year.

• SG&A expenses: $76.3 million (53.9% of sales), up 4.6% year-over-year, including a $2.4 million non-recurring sales tax expense.

• Cash and cash equivalents stood at $9.8 million; net working capital was $79.8 million.

Outlook and guidance

• Fiscal 2024 outlook reaffirmed: net sales of ~$640 million, adjusted EPS of ($0.22), and adjusted EBITDA of ~$39 million, excluding restructuring and sales tax accrual.

• Capital expenditures for the year expected to be ~$25 million, focused on technology and logistics.

• Projecting full-year gross margin expansion of 150 basis points, with sourcing and innovation expected to drive margin gains for the next four years.

• Cash flow from operations and credit facility are expected to cover working capital and capital expenditures for the foreseeable future.

• SG&A (excluding sales tax) to deleverage by 80 basis points; advertising to remain at ~11% of sales.