Duluth Holdings Reports Improved Profitability Despite Lower Q2 Sales
Duluth Holdings Inc. (NASDAQ:DLTH) reported second-quarter fiscal 2026 results showing improved profitability and stronger cash flow despite a decline in net sales. The company reduced promotional activity, leading to a 7.8% drop in net sales to $121.4 million but saw adjusted EBITDA rise to $27 million. Gross margin excluding tariff refunds expanded significantly by 490 basis points year-over-year to 59.6%. Inventory levels dropped sharply due to clearance reductions, and the company ended with strong cash reserves of $26.8 million. Duluth raised its full-year adjusted EBITDA guidance to between $38 million and $42 million, including a tariff refund of $16.3 million, while maintaining sales expectations of $540 million-$560 million. Management plans to increase marketing investment ahead of the holiday season as it continues shifting toward a smaller core-product assortment. CEO Stephanie Pugliese emphasized moving away from discount-heavy strategies and focusing on proven product lines. Direct-to-consumer sales declined slightly, but higher average order values and increased website traffic partially offset lower conversion rates. Retail store sales fell 2.4%, impacted by reduced foot traffic despite improved inventory availability.
Tickers: $DLTH
Topics: cash flow ebitda inventory management profitability sales