Duluth Holdings, Inc., doing business as Duluth Trading, reduced its loss in the first quarter and raised its full-year earnings guidance as a turnaround strategy focused on scaling back on promotions and slower-selling SKUs gains traction.

Summary of the First Quarter ended May 3, 2026

  • Net loss of $10.0 million compared to net loss of $15.3 million in the prior year’s first quarter.
  • Gross margin reaches 57.4 percent, an expansion of 540 basis points versus the prior year.
  • Reported EPS of negative 29 cents; and adjusted EPS of negative 20 cents adjusted for impairment charges of $2.7 million and restructuring expenses of $1.4 million, net of tax.
  • Adjusted EBITDA increased by $6.4 million from the prior year to $2.6 million.
  • Inventory down $43.7 million, or 24.8 percent, compared with last year.
  • Cash and cash equivalents of $6.1 million with net liquidity of $99.5 million.

President and CEO Stephanie Pugliese stated, “I am pleased with the strong Q1 results as we focus on our customers and continue to build on our promotional reset, operational excellence, and inventory discipline. These efforts led to enhanced gross margin, reduced inventory, improved profitability and stronger liquidity.”

Pugliese concluded, “Customers are responding positively to our core products, seasonal prints and patterns, and our newest marketing campaign, ‘For folks who work their butts off.’ As we look ahead, our focus remains on delivering the core, high-quality, solution-based products that resonate most with our customers and creating an exceptional experience.”

Operating Results for the First Quarter ended May 3, 2026
Net sales decreased by $4.1 million, or 4.0 percent, to $98.6 million for the three months ended May 3, 2026, compared to $102.7 million in the three months ended May 4, 2025. Direct-to-consumer net sales decreased by 8.7 percent to $57.1 million, driven by lower web traffic and web conversion rates, partially offset by higher average order values. Retail store net sales increased by 3.3 percent to $41.5 million, driven by higher average order values in comparable stores, coupled with the opening of two new stores in the third quarter of 2025.

Gross margin expanded by 540 basis points to 57.4 percent of net sales in the three months ended May 3, 2026, compared to 52.0 percent of net sales in the three months ended May 4, 2025. The increase in the gross margin rate was primarily driven by higher average unit retail prices resulting from reduced promotional activity, coupled with lower product costs from the company’s direct-to-factory sourcing initiative, partially offset by tariff costs.

Selling, general and administrative expenses decreased $3.4 million, or 5.2 percent, to $61.8 million in the three months ended May 3, 2026, compared to $65.2 million in the three months ended May 4, 2025. Selling, general and administrative expenses as a percentage of net sales decreased by 70 basis points to 62.7 percent in the three months ended May 3, 2026, compared to 63.4 percent in the three months ended May 4, 2025. The decrease in selling, general and administrative expense as a percentage of net sales was mainly driven by leverage on variable expenses, driven by efficiencies across our fulfillment network, coupled with a reduction in personnel expenses.

Balance Sheet and Liquidity
The company ended the quarter with $6.1 million in cash and cash equivalents, $62.3 million in net working capital, and and $6.0 million in outstanding debt under the $100.0 million Asset-Based Lending facility, resulting in approximately $100 million in net liquidity.

Fiscal 2026 Outlook
For Fiscal 2026, the company is:

  • Affirming previously issued fiscal 2026 net sales guidance range of $540 million to $560 million;
  • Raising previously issued fiscal 2026 Adjusted EBITDA1 guidance to $28 million to $32 million, compared to the previous guidance of $26 million to $30 million; and
  • Affirming capital expenditures, inclusive of software hosting implementation costs, of approximately $12 million

Image courtesy Duluth Trading