Duluth (DLTH) Q3 2025 earnings summary

Executive summary

• Net sales for Q3 2024 were $127.1 million, down 8.1% year-over-year, with nine-month sales at $385.4 million, a 3.9% decrease.

• Q3 net loss widened to $28.5 million from $10.5 million prior year; adjusted net loss was $13.8 million, reflecting $6.2 million restructuring and $10.1 million tax valuation allowance.

• Adjusted EBITDA for Q3 was $(6.8) million, down $5.2 million year-over-year; nine-month adjusted EBITDA was $5.7 million.

• Gross margin expanded by 210 basis points to 52.3% due to sourcing initiatives, despite lower transaction volume and gross profit.

• Digital traffic and average order value grew, but overall transactions and store traffic declined.

Financial highlights

• Gross margin improved to 52.3% in Q3 2024 from 50.2% prior year; nine-month gross margin was 52.4%.

• SG&A expenses rose to $82.9 million (65.2% of sales), deleveraged by 600 basis points.

• Adjusted EPS loss was $0.41; reported EPS loss was $0.85 for Q3.

• Inventory balance increased 33% year-over-year, with 97% in current products.

• Quarter-end liquidity was $165 million, with $9.3 million in cash and $44 million in debt.

Outlook and guidance

• Full-year 2024 net sales guidance is $640 million, including Costco order and 53rd week.

• Full-year gross margin expected to decline by about 125 basis points to 49.0% due to higher promotions and inventory actions.

• SG&A expenses (excluding sales tax contingency) projected to deleverage by 80 basis points; advertising to be about 10% of sales.

• Capital expenditures for 2024 expected to be $23 million, down from $53.2 million in 2023.

• Year-end liquidity expected to exceed $200 million, supported by a $200 million revolving credit facility.