Duluth Holdings, Inc. (dba Duluth Trading Company), the lifestyle brand of men’s and women’s workwear, casual wear, outdoor apparel, and accessories, reported net sales decreased 7.0 percent to $131.7 million for the fiscal second quarter ended August 3, compared to $141.6 million in the prior-year Q3 period ended July 28, 2024.

  • Direct-to-consumer net sales declined 13.7 percent to $79.1 million in Q2, primarily due to lower traffic, partly offset by higher average order values.
  • Retail store net sales increased 5.3 percent to $52.6 million, primarily driven by higher average order values.

“We are encouraged by our second-quarter results, reflecting positive momentum in our turnaround efforts,” offered company President and CEO Stephanie Pugliese in the company’s earnings release. “Our team made notable improvements in the business, including promotional reset, expense management, and inventory discipline. These efforts led to enhanced gross margin, reduced SG&A, and lower inventory levels.”

Profitability and Expenses Summary
Gross margin increased 240 basis points to 54.7 percent of net sales in the second quarter, compared to 52.3 percent of net sales in the prior-year Q2 period. The increase in gross margin rate was primarily driven by a rise in average unit retail (AUR) sales resulting from reduced promotional activity, combined with a decrease in product costs due to a direct-to-factory sourcing initiative.

Selling, general and administrative (SG&A) expenses decreased $5.2 million, or 7.1 percent, to $68.8 million in the second quarter compared to $74.0 million in the prior-year Q2 period. SG&A expenses as a percentage of net sales decreased to 52.2 percent in the second quarter, compared to 52.3 percent in the prior-year Q2 period. The decrease in SG&A expense as a percentage of net sales was primarily attributed to leveraging outbound shipping costs, which resulted from higher average order values, along with a reduction in personnel and depreciation expenses.

Net income of $1.3 million in the second quarter compared to a net loss of $2.0 million in the prior-year second quarter.

Reported EPS was $0.04 per share, and Adjusted EPS amounted to $0.03 per share adjusted for restructuring charges of $0.7 million, net of tax, and tax valuation allowance of ($0.9) million.

Adjusted EBITDA increased $1.5 million from the prior-year period to $12.0 million, at 9.1 percent of net sales.

“While pleased with our Q2 results, we acknowledge the significant work ahead,” Pugliese added. “I am dedicated to leveraging our foundational work in product sourcing, optimizing our fulfillment center network, and rationalizing our store portfolio. As we approach our peak selling season, our focus remains on simplifying the business, reducing expenses, mitigating tariff impacts, and delivering on our promise to consumers with excellence.”

Balance Sheet and Liquidity Summary
Inventory down $20.7 million or 12.2 percent compared to last year.

The company ended the quarter with $5.7 million in cash and cash equivalents, $56.9 million in net working capital, $32.5 million in outstanding debt on the $100.0 million revolving line of credit, and $73.3 million in net liquidity.

Fiscal 2025 Outlook
The company said it is maintaining its previously issued fiscal 2025 financial guidance.

“Looking beyond this year, I am committed to refocusing our marketing and product assortment to celebrate the self-reliant spirit of our consumers. I am confident that business simplification and a focus on Duluth Trading’s core strengths will create shareholder value and ultimately restore the company to profitable growth,” concluded Pugliese.

 Image courtesy Duluth Holdings, Inc.