Duluth Holdings Inc. Announces Second Quarter 2026 Financial Results
DULUTH HOLDINGS INC. (DLTH) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Duluth Holdings Inc. Announces Second Quarter 2026 Financial Results Net Income improvement over prior year driven by gross margin expansion Continued improvement in working capital driven by a 15.5% reduction in inventory Strong balance sheet with approximately $96
How this was made
The 30-second read
Why it matters
The earnings beat and guidance raise suggest near‑term upside, but reliance on tariff refunds may limit sustainability.
Market read
Earnings release with upgraded guidance is a primary catalyst for DLTH and may affect related apparel stocks.
What to watch
Tariff refund impact may be non-recurring; future margins could normalize lower.
Second-quarter profitability improved on tariff refunds and gross-margin expansion, while net sales declined.
Net income, adjusted EBITDA, cash flow and liquidity improved, but net sales declined 7.8% as direct-to-consumer and retail traffic weakened. The reported profit improvement included $16.3 million in tariff refunds.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net salesGAAP | $121.4M | – | decreased by $10.3 million, or 7.8% |
| Cost of goods sold (excluding depreciation and amortization)GAAP | $33.03M | – | – |
| Gross profitGAAP | $88.36M | – | – |
| Gross marginGAAP | 72.8% of net sales | – | expanded by 1,810 basis points |
| Gross margin excluding the impact of tariff refundsother | 59.6% | – | an expansion of 490 basis points compared to the prior year |
| Selling, general and administrative expensesGAAP | $69.5M | – | increased $0.7 million, or 1.1% |
| Selling, general and administrative expenses as a percentage of net salesGAAP | 57.3% | – | increased by 510 basis points |
| Operating incomeGAAP | $18.85M | – | – |
| Interest expenseGAAP | $768 | – | – |
| Income before income taxesGAAP | $18.47M | – | – |
| Income tax expenseGAAP | $61 | – | – |
| Net incomeGAAP | $18.4M | – | – |
| Net income attributable to controlling interestGAAP | $18.36M | – | – |
| Diluted earnings per share attributable to controlling interestGAAP | $0.50 | – | – |
| Basic earnings per share attributable to controlling interestGAAP | $0.52 | – | – |
| Adjusted net income attributable to controlling interestnon-GAAP | $18.36M | – | – |
| Adjusted EPSnon-GAAP | $0.50 | – | – |
| EBITDAnon-GAAP | $25.97M | – | – |
| Adjusted EBITDAnon-GAAP | $27M | – | – |
| Six-month net salesGAAP | $220.0M | – | – |
| Six-month operating income (loss)GAAP | $9.62M | – | – |
| Six-month net income (loss)GAAP | $8.37M | – | – |
| Six-month diluted earnings per share attributable to controlling interestGAAP | $0.23 | – | – |
| Six-month adjusted EBITDAnon-GAAP | $29.66M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Direct-to-consumerDeclines in web traffic and web conversion as a result of reduced promotional activity partially offset by higher average order values. | $70.1M | – | decreased by 11.5% |
| Retail storeLower traffic, partially offset by higher average order values in comparable stores, coupled with two new stores opened in the third quarter of 2025. | $51.3M | – | decreased by 2.4% |
Fiscal 2026 outlook
- Revenue$540 million to $560 million
- NoteAdjusted EBITDA of $38 million to $42 million, including the impact of tariff refunds
- Notecapital expenditures, inclusive of software hosting implementation costs, of approximately $12 million
What drove it
- $16.3 million in tariff refunds contributed to net income and adjusted EBITDA.
- The Company recorded a reduction to cost of goods sold of $16.0 million related to refunds of previously incurred tariff charges.
- Gross-margin expansion excluding tariff refunds was primarily driven by higher average unit retail prices from reduced promotional activity and improved product costs from the direct-to-factory sourcing initiative.
- Higher average order values partially offset lower direct-to-consumer web traffic, web conversion and retail traffic.
- Selling, general and administrative expenses as a percentage of net sales increased mainly because of advertising and shipping expenses.
Concerns
- Net sales decreased by $10.3 million, or 7.8%.
- Direct-to-consumer net sales decreased by 11.5% due to declines in web traffic and web conversion.
- Retail store net sales decreased by 2.4% driven by lower traffic.
- Reported gross margin and profitability included the impact of tariff refunds.
- Selling, general and administrative expenses as a percentage of net sales increased by 510 basis points to 57.3%.
What to watch
- Web traffic and web conversion following the promotional reset.
- Retail traffic and comparable-store average order values.
- The durability of gross-margin improvement excluding tariff refunds.
- Execution of the direct-to-factory sourcing initiative.
- Fiscal 2026 net sales within the affirmed $540 million to $560 million guidance range.
- Delivery of Fiscal 2026 Adjusted EBITDA guidance of $38 million to $42 million.
Balance sheet and cash flow
- Cash and cash equivalents of $26.8 million
- Net working capital of $85.7 million
- Zero outstanding debt on the $70.0 million Asset Based Lending facility
- Approximately $96 million of net liquidity
- Inventory down $22.9 million or 15.5% vs. last year
- Inventory, net of $125,152 as of August 2, 2026, compared to $148,051 as of August 3, 2025
- TRI long-term debt, less current maturities of $22,829 as of August 2, 2026
- Net cash provided by operating activities of $15,455 for the six months ended August 2, 2026, compared to net cash used in operating activities of $(24,436) for the six months ended August 3, 2025
- Purchases of property and equipment of $(2,495) for the six months ended August 2, 2026, compared to $(3,572) for the six months ended August 3, 2025
- Cash and cash equivalents at end of period of $26,799, compared to $5,738
Analysis
Duluth Trading reported a 7.8% decline in second-quarter net sales to $121.4 million, with both major channels lower. Direct-to-consumer net sales decreased 11.5% to $70.1 million as reduced promotional activity coincided with lower web traffic and web conversion. Retail store net sales decreased 2.4% to $51.3 million on lower traffic. Higher average order values partly offset the traffic-related pressure in both channels.
Profitability improved sharply. Gross margin expanded by 1,810 basis points to 72.8%, aided by a $16.0 million reduction to cost of goods sold related to tariff-charge refunds. Excluding tariff refunds, gross margin was 59.6%, an expansion of 490 basis points that the Company attributed to higher average unit retail prices and better product costs from direct-to-factory sourcing. Selling, general and administrative expenses rose 1.1% to $69.5 million, but increased to 57.3% of sales as revenue declined and advertising and shipping expenses rose.
Net income was $18.4 million compared to $1.3 million in the prior-year quarter, and diluted EPS was $0.50 compared to $0.04. The release states that tariff refunds contributed $16.3 million and a $0.44 impact to reported and adjusted EPS. Adjusted EBITDA was $27.0 million compared to $12.0 million. The results therefore show substantial reported earnings improvement, while the tariff-refund benefit is central to interpreting the magnitude of that increase.
Working-capital and liquidity metrics improved. Inventory was down $22.9 million or 15.5% versus last year, cash and cash equivalents were $26.8 million, and net liquidity was approximately $96 million. The Company reported $15,455 of net cash provided by operating activities for the six months ended August 2, 2026, compared with net cash used in operating activities of $(24,436) in the prior-year period. There was zero outstanding debt on the $70.0 million Asset Based Lending facility.
For Fiscal 2026, the Company affirmed net sales guidance of $540 million to $560 million and capital expenditures of approximately $12 million. It raised Adjusted EBITDA guidance to $38 million to $42 million from $28 million to $32 million, including the impact of tariff refunds. The key reported tension for the second half is whether improved pricing, sourcing and inventory discipline can support the guidance while traffic and direct-to-consumer conversion remain under pressure.
Management, verbatim
Our second quarter performance demonstrates strong execution of our operational priorities, inventory discipline, and successful promotional reset. By combining gross margin expansion with effective inventory management, we have delivered another quarter of improved profitability and free cash flow. Our core products continue to lead the way with customers responding favorably to our high-quality, solution-based workwear.
Stephanie Pugliese, President and CEO
As we enter the second half of the year, we are excited about our enhanced product offering including our new Hellbent work pants, No Quit utility shirts, and Heirloom prints. We remain focused in advancing our ‘Build to Last’ strategy, maximizing channel productivity, and consistently delivering an exceptional customer experience.
Stephanie Pugliese, President and CEO
Not in the filing
stated, not guessed- Prior-quarter comparisons for reported metrics
- Quarterly operating cash flow
- A quantified free cash flow figure
- Dividend information
- Share repurchase information
- Fiscal 2026 gross-margin guidance
- Fiscal 2026 operating-expense guidance
- Fiscal 2026 tax-rate guidance
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Duluth Holdings (NASDAQ:DLTH) is a lifestyle workwear brand. The 8‑K filing provides its first public disclosure of Q2 results and FY guidance.
Ticker impact
Duluth Holdings reported Q2 2026 results with net income of $18.4M, raised FY adjusted EBITDA guidance to $38M-$42M, and affirmed net sales guidance.
Potential price rally of 5-10% over the next few days.
Guidance raise and profit improvement exceed expectations; market likely to reprice the stock.
Market effects
Positive signal for the workwear/apparel sector, may lift peers.
Limited to US consumer discretionary market.
Low
Counterpoint
Inventory reduction could signal demand weakness; watch for sales decline.
Key entities
- ExecutiveStephanie Pugliese
President and CEO of Duluth Holdings, provided commentary on results.
