Duluth Holdings Inc.

First-quarter net sales were $98.6 million, down 4% year over year. Gross margin was 57.4%, up 540 basis points from 52.0% last year. Reported EPS was negative $0.29 versus negative $0.44 a year ago, and adjusted EPS was negative $0.20 versus negative $0.44. Net income improved by $5.2 million to negative $10 million, and adjusted EBITDA was positive $2.6 million versus negative $3.8 million last year. SG&A fell $3.4 million, or 5.2%, to $61.8 million. Inventory ended at $132.4 million, down $43.7 million, or 24.8%, year over year. For fiscal 2026, management reaffirmed sales guidance of $540 million to $560 million, raised adjusted EBITDA guidance to $28 million to $32 million from $26 million to $30 million, and kept capex guidance at about $12 million.

Stephanie Pugliese framed the quarter as validation that Duluth’s strategic pivot is working: fewer promotions, tighter SKU assortment, stronger brand-focused marketing and more disciplined operations. She emphasized that the company is prioritizing long-term brand equity and higher-quality transactions over short-term volume, pointing to higher average order values, stronger sales per customer and improved Net Promoter Score. Her tone was confident but measured, acknowledging that top-line pressure remains and that there is still work to do to rebuild the customer file.

Heena Agrawal highlighted four straight quarters of improved year-over-year net income margin and free cash flow, saying the company has achieved a healthier margin profile and more robust balance sheet. She cited gross margin of 57.4%, SG&A of $61.8 million, inventory of $132.4 million and net liquidity of approximately $100 million, with cash and equivalents at $6.1 million and $6 million outstanding on the ABL facility. She also noted $3 million of capex for the quarter, mainly for final phases of Manhattan Omni, and said tariffs were still assumed at prior guidance levels, with no benefit booked from the approximately $12 million of prior-year IEEPA tariffs the company has applied to refund.

In Q&A, analysts focused on what is embedded in full-year gross margin and whether the company is fully capturing the benefit of the promotional reset in guidance. Management said the first quarter ran ahead of the prior gross margin plan, and they are now modeling about another 30 basis points of full-year benefit from the reset. On customer acquisition, Stephanie said the company is shifting toward upper-funnel brand spend and reactivating high-value customers at about one-third of the cost of new customer acquisition, while Heena added that the back half should be easier to stabilize because they will lap the reset and prior-year price increases. When asked about the $2.7 million impairment, Heena said it related to the closed Salt Lake City fulfillment center.