Duluth (DLTH) Q2 2026 earnings summary

Executive summary

• Achieved net income of $1.3 million in Q2 2025, reversing a prior-year net loss of $2.0 million, with adjusted EBITDA up $1.5 million to $12.0 million (9.1% of sales).

• Gross margin improved to 54.7% from 52.3% year-over-year, driven by reduced promotional activity, cost control, and higher average order values.

• Net sales declined 7.0% year-over-year to $131.7 million, with direct-to-consumer sales down 13.7% and retail store sales up 5.3%.

• Inventory was reduced by $20.7 million (12.2%) year-over-year, reflecting disciplined management.

• Ongoing turnaround efforts focused on business simplification, cost control, promotional reset, and inventory discipline.

Financial highlights

• Q2 net sales: $131.7 million, down 7% year-over-year; gross margin expanded 240 bps to 54.7%.

• Adjusted EPS: $0.03; reported EPS: $0.04; net income margin improved to 1.0% from (1.4)% year-over-year.

• Adjusted EBITDA: $12.0 million, up $1.5 million year-over-year (9.1% of sales).

• SG&A spend: $68.8 million, down $5.2 million (7.1%) year-over-year; SG&A as % of sales improved by 10 bps.

• Inventory at quarter end: $148.1 million, down $20.7 million (12%) year-over-year.

Outlook and guidance

• Fiscal 2025 adjusted EBITDA guidance maintained at $20 million–$25 million.

• Tariff impact expected to be $15 million for the year, mainly in the second half, mitigated by price increases and vendor negotiations.

• Year-end inventory projected to decrease by double digits; capital expenditures plan held at $17 million.

• Management expects cash flow from operations and credit facility availability to cover working capital and capital expenditures.