DLTH

Image source: The Motley Fool. Thursday, Sept. 3, 2026 at 9:30 a.m. ET Investor Relations - Chris Steffes President and Chief Executive Officer - Stephanie L. Pugliese Senior Vice President and Chief Financial Officer - Heena Agrawal Operator: Good day, and thank you for standing by. Welcome to the Duluth Holdings Second Quarter Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 1, 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Chris Steffes with Duluth Investor Relations. Please go ahead. Chris Steffes: Thank you, and welcome to today's call to discuss Duluth Trading's second quarter financial results. Our earnings release, which was issued this morning, is available on our Investor Relations Web site at ir.duluthtrading.com under news releases. I am here today with Stephanie L. Pugliese, president and chief executive officer and Heena Agrawal, senior vice president and chief financial officer. On today's call, management will provide prepared remarks and then open the call for questions. Before we begin, I would like to remind you that the comments on today's call will include forward looking statements. Which can be identified by the use of words such as estimate, anticipate, expect, and similar phrases. Forward looking statements by their nature involve estimates, projections, goals, forecasts, and assumptions and are subject to risks, and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward looking statements. Such risks and uncertainties include, but are not limited to, those that are described in our most recent annual report on Form 10 k and other SEC filings as applicable. These forward looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. With that, I will turn the call over to Stephanie. Stephanie L. Pugliese: Good morning, everyone. Thank you for joining us to discuss our second quarter fiscal 26 results. I am incredibly proud of our team for delivering another quarter of improved profitability and free cash flow. This accomplishment is a direct reflection of the team's commitment to operational rigor, and financial discipline. By staying focused on our core priorities, we have not only stabilized our margins, but also generated the financial flexibility required to accelerate our strategic initiatives. Our goals for Q2 were clear. We aim to drive improved profitability, maintain strength in our operational execution, deploy a marketing strategy focused on brand awareness and consideration, reduce our promotional reliance, and achieve a clean, healthy inventory position. I am pleased to report that we executed against each of these pillars effectively. Our operational excellence this quarter was most visible in our margin improvement and inventory management. We executed a deliberate cleanup of clearance inventory. Which is now down 43% compared to last year. This was not just about liquidating old stock. It was a reflection of the fundamental shift in our merchandising philosophy over the past year and a half. We have moved away from a broad assortment discount heavy approach toward a hero core product strategy. By reducing the total number of SKUs, and focusing our buys on proven winners, we have created a leaner, more agile inventory position. This reduction in clearance reliance has a double benefit. It cleans up our balance sheet and protects our brand equity by reducing the need for the deep site wide discounts that characterized previous years. And the reduction in deep discounting this quarter allowed us to deliver nearly 500 basis points of operational gross margin improvement year over the prior year. Turning to our marketing efforts. During the quarter, we saw strong response across our paid media channels such as Connected TV, Meta, and Search. In addition, our premium audio integration, including host response with Conan O'Brien, drove significant engagement and last click revenue. We also continued our Max Gluteus campaign. Tailored specifically for the folks who work their butts off, while leveraging key sports partnerships. Including investments in the NHL playoff. And this coming month, to showcase our expansive Fire Hose collection, our marketing campaign will be featured across linear and CTV broadcast, during upcoming college football matchups. No fabric embodies the Duluth DNA quite like Fire Hose. And we are proud to reinforce our legacy engage our customers, and spotlight the unmatched durability of these products. We continue to apply input from marketing results to go forward actions. Key learnings from Mother's Day and Prime Week enforced the critical need for full funnel media coordination and continuous brand messaging. And we are applying these insights to the second half of the year. Maintaining top of funnel brand presence ensures our hero products remain visible across all channels and creates sales momentum leading into key promotional moments. We are ramping up our upper funnel brand investments in the third quarter, to prime demand ahead of peak and capture early transitional shoppers. This will be coupled with amplified product storytelling across key events like fall grind days and our Big Dam Birthday. Further, we are investing in AI capabilities across organic and paid media to maximize our discoverability and optimize our digital footprint. All of these efforts center on growing our brand presence and ultimately increasing the customer fan base. As previously shared, our total customer base has contracted, as we have reset promotions. We are investing in the underlying health of our customer file and we have some proof points that we are building on. In Q2, customer average order value and sales per customer continue to improve over the prior year. And through the first half of the year, retention rates increased, and our net promoter score is up 11%. Our reactivation campaigns are working, and we re-engaged 9% more last fires in the quarter versus last year. In addition to our efforts, in our own stores and ecommerce to build awareness and engagement, our growth initiatives, like the Amazon wholesale launch, are showing positive early results. Giving us confidence in growing awareness and acquisition in the long term and in new ways. Central to our continued success is our Build to Last strategic roadmap. We have completed the Seal the Foundation phase which focused on stabilizing the business through rigorous margin protection and cost control. We addressed structural inefficiencies right sized our overhead, and established a leaner operating model that can better weather macroeconomic volatility. As we move to frame the structure, we have more work to do. And we are shifting our focus to scalable growth. This next phase involves continuing the discipline we have put in place while investing in our customers. Our core products, and our brand reach. We are beginning to build the systems and channels leaning into our store performance, improving our own ecommerce experience, and piloting a wholesale presence. That will create long term profitable growth. We are no longer just fixing the basics. We are constructing the framework for Duluth's future as a multichannel durable, and functional work apparel leader. And it all starts with the products that our customers love. Our focus on core first is anchored in our product innovation, and technical design philosophy. Core products like Flex Fire Hose, Heirloom Bibs, and buff naked underwear continued to outperform the overall pace of the business last quarter. And new products like our HellBent Work Pants and No-Quit Utility Shirts are not just additions to the assortment. They represent the importance of our functional design. Our philosophy is built on solution based workwear. Identifying a specific pain point for the person who works their butt off and solving it with superior fabric and construction. The HellBent line, for instance, utilizes advanced abrasion resistant materials and articulated patterning that allows for maximum mobility without sacrificing durability. These innovative, durable products justify a premium price point and reinforce our value equation. That Duluth gear is an investment that lasts longer and performs better than the competition. To support this product led growth, we are continuing to evolve our marketing into a more sophisticated full funnel engine. We are balancing top of funnel brand awareness through high impact professional and college sports partnerships and premium audio integration, with lower funnel conversion efforts. We are investing in AI driven search capabilities so that when customers ask for items like the best work pants, Duluth will ultimately be the first answer they see. Furthermore, our Duluth DieHards pilot is providing us with a wealth of actionable data. We are learning how our most valuable customers interact with us across channels. Allowing us to personalize content, and offers to drive higher lifetime value and retention. Now looking toward the back half of the year, we are excited about the opportunities in front of us to improve our sales trends and strengthen our customer file. Early sell throughs from our fall lineup are strong. Equally important, demand for our core products remains robust, at higher margin. While we expect last year's heavy volume of low margin clearance sales will temporarily weigh on Q3 top line results, we are reiterating sales guidance for the full year. Our priority for Duluth now is to increase our voice in the marketplace. Through full funnel marketing, reaching new brand fans via new channels, and by delighting our customers at every interaction. For this reason, through the remainder of this year, we will invest some of the additional cash from tariffs on the customer experience, improving our visibility with AI search, strengthening our store team's ability to serve customers well, and telling our story of functional, durable workwear throughout the full funnel. These investments are not just about the remainder of 2026. They are about positioning Duluth for sustained profitable growth for years to come. We are focused on delivering the back half of the year while setting our eyes on the raise the roof phase of our strategy in 12 to 18 months. We will continue to explore and invest in setting the stage for additional customer reach. Specifically understanding our store potential, and wholesale opportunities. And we will report on our progress in quarters to come. In closing, we are prepared and energized to deliver on the balance of the year. To delight our customers this holiday season, to continue along our Build to Last strategic path, and to bring long term profitable growth to this amazing brand. I am grateful for the talented team we have to bring this to fruition. I will now pass the call over to Heena to provide more detail on our financial performance. Heena Agrawal: Good morning, everyone, and thank you, Stephanie. I am pleased to report our financial performance for the second quarter of fiscal 26. Over the past 18 months, our team has successfully restored price integrity by completing a promotional reset. Through disciplined inventory and cash management, alongside enhanced integrated planning and execution, we have established operational stability. Our strategic focus on operational consistency, and agility in navigating macroeconomic headwinds have now driven 5 straight quarters of year over year gains in both net income margin and free cash flow. Our results this quarter demonstrate continued underlying margin expansion. Structural profitability, and a more robust balance sheet. Let me share our financial results and provide our updated outlook for the full fiscal year. Starting with our results for the second quarter of 26, with comparisons to prior year. As we continued our promotional reset and annualized price increases from 2025, we reported net sales of $121.4 million. down 7.8%. With improving quality of sales underlying gross margin, excluding tariff refunds, expanded by 490 basis points. And expanded by 1.81 thousand basis points including the impact of refunds. Our net income improved by $17.1 million to $18.4 million. Our reported and adjusted diluted EPS was $0.50. These results include $16.3 million in tariff refunds received during the period. contributing $0.44 per share. Adjusted EBITDA was $27 million an improvement of $15 million compared to $12 million in Q2 of last year. Excluding the impact of tariff refunds, adjusted EBITDA was $10.7 million at 8.8% of sales driven by our continued focus on profitable sales coupled with lower overhead and enhanced variable cost productivity. Partially offset by fuel cost increases and higher advertising investments. Looking closer at our top line metrics for the quarter, as we continued our promotional reset and annualized our pricing strategy net sales declined 7.8% to $121 million. Excluding the impact of wholesale net sales decreased 5.4%. During the first half, net sales decreased by 6.2% which was at the high end of our guidance range. Of -6% to -10%. Our direct to consumer net sales, excluding wholesale, were $69.5 million, a decrease of 7.6% as we completed our promotional reset and annualized price increases resulting in lower conversion. However, a 2.4% gain in average order value and 10% higher site traffic driven by increased marketing investment, partially offset this decline. In addition, mobile sales penetration increased by 90 basis points. Our network of 66 retail stores delivered net sales of $51.3 million, a decrease of 2.4%. Retail store sales were impacted by lower traffic and conversion. Partially offset by improved inventory availability and 6% higher average order value. Retail continued to outperform the direct channel delivering flat year on year sales for the first half. Regarding our newest distribution channel, Amazon, Duluth products have gained strong momentum since our mid July launch generating consistent week over week acceleration in sales. Men's product sales increased 0.5% driven by strong core demand in first layer and woven bottoms. Including Duluth Flex Fire Hose and Double-Flex denim. Women's product sales declined 15% driven largely by strategic SKU rationalization and reduced clearance sales. While gross margin continued to expand. AKHG brand sales declined 26% as we exited low margin categories such as swimwear, to improve gross margin. While CoolTug collections and shoreside woven bottoms. Delivered strong sell throughs. With fewer promotions and increased average prices, gross margin rate expanded across product categories and sales channels. In addition, excluding the impact of tariff refunds, underlying gross profit dollars, grew in both the second quarter and the first half of 26. Gross margin rate expanded by 1.81 thousand basis points. to 72.8% of net sales. Excluding $16 million of tariff refunds our Q2 gross margin was 59.6%, expanding by 490 basis points. This expansion was driven by our pricing and promotional reset, with average unit retails increasing by nearly 6% along with cost savings from our direct to factory sourcing initiative. These gains were partially offset by the impact of fuel price increases and carrier surcharge costs. For the first half of the year, underlying gross margin, excluding tariff refunds, was 58.7%. An expansion of 25 basis points versus prior year. Selling, general, and administrative expenses in the second quarter were $69 million, up $700 thousand or 1.1% compared to last year. Deleveraging by 510 basis points to 57.3% due to a decline in sales. Advertising costs represented 10.9% of sales, an increase of 200 basis points with an investment in increasing brand awareness. Shipping and variable costs deleveraged by 60 basis points driven by higher fuel costs and carrier surcharges partially offset by continued savings from consolidating the fulfillment center network with the closure of Salt Lake City fulfillment center. And store labor efficiencies. Overhead expenses were flat and deleverage by 250 basis points largely due to the decrease in sales and acceleration of incentive compensation accruals. Our ongoing operational discipline demonstrated by structural gains and fulfillment efficiency and prudent overhead management helped moderate deleveraging pressures and provided the flexibility to accelerate our brand building initiatives. Inventory at the end of the second quarter was $125.2 million, a reduction of $22.9 million or 15.5% compared to prior year. Our inventory mix at quarter end was also healthier with 85.4% in current products and 14.6% in clearance goods. versus 22.2% in the second quarter last year. Overall clearance inventory dollars were down 43.1%, while units decreased 46.6%. Primarily driven by right sized buying and higher sell through rates in seasonal spring summer clearance items. Year over year inventory improved for the fifth straight quarter due to enterprise planning and SKU rationalization. In addition, prioritizing inventory at our Adairsville hub and retail stores improved in stock levels by over 600 basis points. Our capital expenditures for the first half were $5.7 million, compared to $9.7 million in the prior year. With investments primarily in the final phases of Manhattan Omni fulfillment software. We ended the second quarter with a stronger balance sheet liquidity position. Cash and cash equivalents stood at $26.8 million with zero debt on our asset based lending facility. versus $32.5 million of debt on the facility at the same time last year. This resulted in a net liquidity position of approximately $96.1 million. Combined with our improved profitability continued working capital discipline, and capital expenditure guardrails the business generated free cash flow of $13 million by the end of the second quarter. An improvement of $41 million compared to the same period last year. We continue to optimize our store fleet to maximize omnichannel sales in priority markets and improve profitability of the overall store portfolio. We have finalized 5 of our 7 store lease renewals for this year. With the remaining 2 under negotiation. Looking ahead, 10 store leases are scheduled for renewal in 2027. Productivity across our store portfolio continues to trend upward marked by an 80 basis point expansion in Q2 adjusted EBITDA margin. And a 290 basis point gain year to date. Building on the 360 basis point expansion achieved in the first half of last year This reflects a cumulative 650 basis point margin expansion over a 2-year period across the first 6 months. Looking ahead to 2028 and beyond, as we lay the groundwork for our raise the roof growth phase we are investing to refine and optimize the size and layout of our next generation store format. Our supply chain transformation continues to deliver structural cost savings. In the last 2 years, we have consolidated the logistics network from 4 fulfillment centers to 2. This has allowed us to maximize the return on our investments In the fully automated 75% of total units in Q2. An increase of 230 basis points from last year. While reducing our overall network variable cost per unit by nearly 25%. At the same time, optimizing our carrier network has allowed us to sustain nationwide click to delivery speed while partially offsetting the impact of rising fuel expenses and surcharges. Looking ahead to full year fiscal 26, we are updating our financial outlook. By raising our adjusted EBITDA guidance while maintaining our overall net sales expectations. We are increasing our full year adjusted EBITDA expectation to between $38 million and $42 million up from our prior outlook of $28 million to $32 million. This updated projection includes the $16.3 million gain from tariff refunds. Partially offset by strategic growth investments and increased fuel expenses. We are reaffirming our full year net sales guidance of $540 million to $560 million First half net sales were -6.2%. Finishing at the top end of our targeted -6% to -10% range. While overall second half sales performance is projected to be between -2% to +2% we expect sales in the third quarter to moderate as we lap prior year clearance events that generated lower margin revenue. Our tariff rate for the second half of the year is assumed at approximately 15% to 16%. reflecting 12.5% for Q3 and back to the higher rates in Q4. Within SG and A, we anticipate marketing spend to accelerate in Q3 compared to last year. Due to earlier holiday shopping demand. And we expect continued headwinds in transportation costs. We are affirming full year capital expenditure guidance of approximately $12 million behind investments in Manhattan Omni fulfillment software Apple Pay, and maintenance. We are allocating capital and strategically reinvesting our cash flow and tariff refund proceeds across key priorities. First, we are fueling brand growth with incremental second half marketing investments across connected TV, college football, and high conversion search channels. Second, we are funding long term strategic initiatives including retail store growth and wholesale partnerships. To support the raise the roof stage of our build to last strategy for 2028 and beyond. Finally, we are being prudent in maintaining a reserve to counter macroeconomic and supply chain headwinds. In closing, validated by 5 consecutive quarters, of expanding margins and improving cash flow Our Q2 results demonstrate success of our turnaround. Driven by margin discipline, optimized inventory, and strong cash generation. With the seal of foundation phase complete, we are focusing on frame the structure. Capitalizing on our enhanced financial strength, to invest in growth initiatives, that drive strategic customer engagement and broader distribution. Having transitioned our financial model towards higher structural gross margin, decreased fulfillment cost, and greater working capital efficiency, we are maintaining a disciplined approach to capital allocation and have clear financial levers to drive sustainable, profitable growth as outlined in our build to last strategy. With that, I will turn the call over for questions. Operator: Star 1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1, 1 again. Our first question comes from Dylan Carden with William Blair. Dylan Carden: Thank you. I am curious if you can kinda spell out in guidance expectations for the third quarter, why that takes a step back? And maybe in that understanding kind of the drag of the Alaskan hard gear business, know that we are sort of 2 quarters into that. Inventory reset. I do not think you have ever quantified it as a percent of sales, but just how big of a headwind is that versus sort of the core Duluth business? Stephanie L. Pugliese: So, Dylan, I this is Stephanie. Morning. I can start with the Alaskan hard year conversation, then I will hand it over to Heena. On your other question around third quarter and guidance. Alaskan Hardgear is a relatively small part of our assortment overall. What we are finding is that we have got some specific core products Alaskan hard gear that are doing really well. It was an area of the business that over the past several years kind of fell victim, if you will, to the over assortment, overskew situation that the total business had. And so we have pulled that business back to the essence. Things like Stonerock pants, for example, and we are rebuilding into that. But think about it as a small part of the business, something that we think has opportunity in the long term. But it is really not an overall significant drag to what we are trying to do with the core men's and women's apparel. Heena Agrawal: Yes and good morning, Dylan. On Q3 guidance, we expect the trend in Q3 to be better than Q2. However, we are not repeating some of the clearance events As I mentioned in the call, our clearance inventory is down over 40% both in dollars and units. And so that is the reason for moderating our expectations on Q3. But it will be an improving trend versus Q2. Stephanie L. Pugliese: And I would categorize it, Dylan, as our reset really has been highly focused on the promotions that we turn on or trigger during specific time periods. And we are starting to lap that as we come into the back half of the year. That said, last year at this time, we were so heavily impacted by clearance and the negative from the standpoint of our inventory and our balance sheet and ultimately the margins, but it did generate short term top line volume for us. Specifically in the month of August and third quarter. That is a headwind for us in third quarter. Dylan Carden: Understood. So if I am thinking about back half down to up to is third quarter worse than that? And I guess if so, help me understand the inflection then in fourth quarter. Heena Agrawal: Is that lapping that clearance activity, is that sort of a marketing lagged effect? Yeah. So if you think about the -2% to +2%, the and the timing of the different quarters. Every quarter improves versus the prior quarter. So Q3 better than Q2, Q4 better than Q3. And that is what gets us to the minus 2. To plus 2 for the second half. Versus the first half. Okay. Stephanie L. Pugliese: The influx Yeah. But Q3, yes, lags Q4. Heena Agrawal: Q4 will be better because there will be even more evenness versus last year. When it comes to the amount of promotions, the pricing impact, the marketing impact and the inventory situation. Dylan Carden: And would you expect the recovery to be kinda led? I know it is further impaired. Versus the retail channel. But if you are doing all this marketing, would not you expect sort of the impact there to be mostly in the online channel, particularly as you lap the clearance activity? I know that is a higher clearance channel. Heena Agrawal: Yes. We expect the improvement in both channels. And like you said, the improvement is greater in the online channel versus the versus the retail channel. Especially in Q4. Dylan Carden: And sorry, last 1 for me. On inventory turns, if I kind of take the trailing 4 quarters, are still kind of below 2 And I am just kind of curious as you right size the inventory here, the opportunity embedded in getting more efficient in turn. Thanks. Stephanie L. Pugliese: Yeah, this is Stephanie. I will I will take that, Dylan. We do definitely see opportunity in the long term for improving inventory turns and to continue to skew rationalize the business. That said, the other thing that was very important to us is, as you know, our core product. And I believe we still have opportunity in that core product to be in a never out inventory situation. So that when our customers come either online or in the stores, we know that we are satisfying that demand at the time of need. So we are also looking at how we write size and flow our core product in a way that satisfies our customer and just creates that better experience where we are in stock all the time. So it is a play on the inventory around SKU rationalization, tightening down the or improving the sell throughs, particularly on noncore products. And then an always in stock position on core. Dylan Carden: Thank you very much. Stephanie L. Pugliese: Mm-hmm. Dylan Carden: Thank you. Operator: That will conclude today's question and answer session. This concludes today's conference call. Thank you for participating. You may now disconnect. Before you buy stock in Duluth, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Duluth wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $414,015!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,385,459!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. 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Net Income improvement over prior year driven by gross margin expansionContinued improvement in working capital driven by a 15.5% reduction in inventoryStrong balance sheet with approximately $96 million of net liquidity and zero debt on the Asset Based Lending facility MOUNT HOREB, Wis., Sept. 03, 2026 (GLOBE NEWSWIRE) -- Duluth Holdings Inc. (dba, Duluth Trading Company) (“Duluth Trading” or the “Company”) (NASDAQ: DLTH), a lifestyle brand of men’s and women’s workwear, casual wear, outdoor apparel and accessories, today announced its financial results for the fiscal Second Quarter ended August 2, 2026. Summary of the Second Quarter ended August 2, 2026 Net income of $18.4 million compared to net income of $1.3 million in the prior year second quarter. This includes the impact of $16.3 million in tariff refunds. Reported and adjusted EPS1 of $0.50. This includes a $0.44 impact from tariff refunds. Adjusted EBITDA2 of $27.0 million compared to $12.0 million in the prior year second quarter. This includes the impact of $16.3 million in tariff refunds. Inventory down $22.9 million or 15.5% vs. last year. Cash and cash equivalents of $26.8 million with net liquidity of $96.1 million. 1See Reconciliation of net income to adjusted net income and EPS to adjusted EPS in the accompanying financial tables.2See Reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA in the accompanying financial tables. Management Commentary President and CEO Stephanie Pugliese stated, “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.” Pugliese added, “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.” Operating Results for the Second Quarter ended August 2, 2026 Net sales decreased by $10.3 million, or 7.8%, to $121.4 million for the three months ended August 2, 2026 compared to $131.7 million in the three months ended August 3, 2025. Direct-to-consumer net sales decreased by 11.5% to $70.1 million due to declines in web traffic and web conversion as a result of reduced promotional activity partially offset by higher average order values. Retail store net sales decreased by 2.4% to $51.3 million driven by lower traffic, partially offset by higher average order values in comparable stores, coupled with two new stores opened in the third quarter of 2025. Gross margin expanded by 1,810 basis points to 72.8% of net sales in the three months ended August 2, 2026, compared to 54.7% of net sales in the three months ended August 3, 2025. We recorded a reduction to cost of goods sold of $16.0 million related to refunds of previously incurred tariff charges. Excluding the impact of tariff refunds, gross margin was 59.6% in the three months ended August 2, 2026, an expansion of 490 basis points compared to the prior year. This increase in gross margin rate was primarily driven by an increase in average unit retail prices from reduced promotional activity, coupled with an improvement in product costs from our direct to factory sourcing initiative. Selling, general and administrative expenses increased $0.7 million, or 1.1%, to $69.5 million in the three months ended August 2, 2026 compared to $68.8 million in the three months ended August 3, 2025. Selling, general and administrative expenses as a percentage of net sales increased by 510 basis points to 57.3% in the three months ended August 2, 2026, compared to 52.2% in the three months ended August 3, 2025. The increase in selling, general and administrative expenses as a percentage of net sales was mainly driven by an increase in advertising and shipping expenses, which was partially offset by leverage in variable expenses in our fulfillment centers and stores coupled with lower overhead expenses. Balance Sheet and Liquidity The Company ended the quarter with $26.8 million of cash and cash equivalents, $85.7 million of net working capital, and zero outstanding debt on the $70.0 million Asset Based Lending facility resulting in approximately $96 million of 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 $38 million to $42 million compared to the previous guidance of $28 million to $32 million, including the impact of tariff refunds Affirming capital expenditures, inclusive of software hosting implementation costs, of approximately $12 million 1See Reconciliation of Forecasted Net Income to Forecasted EBITDA and Forecasted EBITDA to Forecasted Adjusted EBITDA in the accompanying financial tables. Conference Call Information A conference call and audio webcast with analysts and investors will be held on Thursday, September 3, 2026, at 9:30 am Eastern Time to discuss the results and answer questions. Links to access earnings information: Live Webcast: https://edge.media-server.com/mmc/p/ikonm7ds/ Live Call: https://register-conf.media-server.com/register/BI318a2d17c9bf472ab0e924ba22a6be55 Webcast Archive: https://ir.duluthtrading.com/news-and-events/event-calendar About Duluth Trading Duluth Trading is a lifestyle brand for the Modern, Self-Reliant American. Based in Mount Horeb, Wisconsin, we offer high quality, solution-based workwear, casual wear, outdoor apparel and accessories for men and women who lead a hands-on lifestyle and who value a job well-done. We provide our customers an engaging and entertaining experience. Our marketing incorporates humor and storytelling that conveys the uniqueness of our products in a distinctive, fun way, and are available through our content-rich website, catalogs, and “store like no other” retail locations. We are committed to outstanding customer service backed by our “No Bull Guarantee” - if it’s not right, we’ll fix it. Visit our website at http://www.duluthtrading.com. Non-GAAP Measurements Management believes that non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Within this release, including the tables attached hereto, reference is made to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), Adjusted Net Income (Loss), Adjusted EPS, and Forecasted Adjusted EBITDA. See attached table “Reconciliation of Net Income (Loss) to EBITDA and EBITDA to Adjusted EBITDA,” for a reconciliation of net income (loss) to EBITDA and EBITDA to Adjusted EBITDA and “Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) and EPS to Adjusted EPS” for a reconciliation of net income (loss) to adjusted net income (loss) and EPS to adjusted EPS for the three and six months ended August 2, 2026 and August 3, 2025. Also see attached table “Reconciliation of Forecasted Net Income (Loss) to Forecasted EBITDA and Forecasted EBITDA to Forecasted Adjusted EBITDA” for a reconciliation of forecasted Adjusted EBITDA for Fiscal 2026. Adjusted EBITDA is a metric used by management and frequently used by the financial community, which provides insight into an organization’s operating trends and facilitates comparisons between peer companies, since interest, taxes, depreciation and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA excludes certain other items, which include significant non-cash items, and other charges or benefits resulting from transactions or events that are highly variable, significant in size, and that we do not believe are indicative of ongoing or future business operations. Adjusted Net Income (Loss) and Adjusted EPS are metrics used by management and frequently used by the financial community, which provides insight into the effectiveness of our business strategies and to compare our performance against that of peer companies. Adjusted Net Income (Loss) and Adjusted EPS exclude restructuring expenses and impairment expenses that are not comparable from period to period. The Company provides this information to investors to assist in comparisons of past, present and future operating results and to assist in highlighting the results of on-going operations. While the Company’s management believes that non-GAAP measurements are useful supplemental information, such adjusted results are not intended to replace the Company’s GAAP financial results and should be read in conjunction with those GAAP results. Forward-Looking Statements This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts included in this press release, including statements concerning Duluth Trading’s plans, objectives, goals, beliefs, business strategies, future events, business conditions, its results of operations, financial position and its business outlook, business trends and certain other information herein, including statements under the heading “Fiscal 2026 Outlook” are forward-looking statements. You can identify forward-looking statements by the use of words such as “may,” ”might,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “believe,” “estimate,” “project,” “target,” “predict,” “intend,” “future,” “budget,” “goals,” “potential,” “continue,” “design,” “objective,” “forecasted,” “would” and other similar expressions. The forward-looking statements are not historical facts, and are based upon Duluth Trading’s current expectations, beliefs, estimates, and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond Duluth Trading’s control. Duluth Trading’s expectations, beliefs and projections are expressed in good faith, and Duluth Trading believes there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates, and projections will be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements, including, among others, the risks, uncertainties, and factors set forth under Part 1, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC on March 20, 2026 and other factors as may be periodically described in Duluth Trading’s subsequent filings with the SEC. These risks and uncertainties include, but are not limited to, the following: the impact of inflation and measures to control inflation on our results of operations; the prolonged effects of economic uncertainties on store and website traffic; the susceptibility of the price and availability of our merchandise to international trade conditions including tariffs; changes in U.S. and non-U.S. laws affecting the importation and taxation of goods, including imposition of unilateral tariffs on imported goods; our ability to secure the personal and/or financial information of our customers and employees; disruptions to our distribution network, supply chains and operations; failure to effectively manage inventory levels; our ability to maintain and enhance a strong brand and sub-brand image; adapting to declines in consumer confidence, inflation and decreases in consumer spending; disruptions to our e-commerce platform; our ability to meet customer delivery time expectations; our ability to properly allocate inventory throughout our distribution network to fulfill customer demand; our failure to meet our debt covenant ratios; natural disasters, unusually adverse weather conditions, boycotts, prolonged public health crises, epidemics or pandemics and unanticipated events; generating adequate cash from our existing stores and direct sales to support our growth; the impact of changes in corporate tax regulations and sales tax; identifying and responding to new and changing customer preferences; the success of the locations in which our stores are located; effectively relying on sources for merchandise located in foreign markets; transportation delays and interruptions, including port congestion; our inability to timely and effectively obtain shipments of products from our suppliers and deliver merchandise to our customers; the inability to maintain the performance of our maturing store portfolio; our inability to deploy marketing tactics and commit adequate resources to support marketing in order to retain and attract new customers; our ability to successfully open new stores; effectively adapting to new challenges associated with our expansion into new geographic markets; competing effectively in an environment of intense competition or elevated promotions; our ability to adapt to significant changes in sales due to the seasonality of our business; price reductions or inventory shortages resulting from failure to purchase the appropriate amount of inventory in advance of the season in which it will be sold; the potential for further increases in price and lack of availability of raw materials; our dependence on third-party vendors to provide us with sufficient quantities of merchandise at acceptable prices; failure of our vendors and their manufacturing sources to use acceptable labor or other practices; our dependence upon key executive management or our inability to hire or retain the talent required for our business; increases in costs of fuel or other energy, transportation or utility costs and in the costs of labor and employment; failure of our information technology systems to support our current and growing business, before and after our planned upgrades; disruptions in our supply chain and fulfillment centers; our inability to protect our trademarks or other intellectual property rights; infringement on the intellectual property of third parties; acts of war, terrorism or civil unrest; the impact of governmental laws and regulations and the outcomes of legal proceedings; failure to comply with data privacy regulation; our ability to comply with the security standards for the credit card industry; our failure to maintain adequate internal controls over our financial and management systems; acquisition, disposition, and development risks; and other factors that may be disclosed in our SEC filings or otherwise. Forward-looking statements speak only as of the date the statements are made. Duluth Trading assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances or other changes affecting forward-looking information except to the extent required by applicable securities laws. Investor Contacts:Heena AgrawalSenior Vice President and Chief Financial Officer Chris SteffesSenior Director of Financial Planning and Analysis Email: [email protected] (Tables Follow) __________________________ (1) Represents debt of the variable interest entity, TRI Holdings, LLC, that is consolidated in accordance with ASC 810, Consolidation. Duluth Holdings Inc. is not the guarantor nor the obligor of this debt. __________________________ (1) The income tax effects of adjustments are calculated using the Company’s estimated 23% tax rate A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/bee05309-9d69-4426-8889-86a226ba28a5

Interested in Duluth Holdings Inc.? Here are five stocks we like better. Profitability improved despite lower sales: Second-quarter net sales fell 7.8% to $121.4 million as Duluth reduced promotions and clearance activity, but adjusted EBITDA rose to $27 million. Gross margin excluding tariff refunds expanded to 59.6%, up 490 basis points year over year. Inventory and cash flow strengthened: Inventory declined 15.5% to $125.2 million, clearance inventory fell sharply, and the company ended the quarter with $26.8 million in cash and no debt on its lending facility. Free cash flow improved by $41 million to $13 million. Full-year outlook was raised: Duluth maintained its $540 million-$560 million sales guidance but increased adjusted EBITDA guidance to $38 million-$42 million, including a $16.3 million tariff refund. Management plans to increase marketing investment ahead of the holiday season while continuing its shift toward a smaller core-product assortment. The Technicals are Still Bullish for These 3 Small Caps Duluth (NASDAQ:DLTH) reported second-quarter fiscal 2026 results marked by improved profitability, stronger cash flow and lower inventory, while net sales declined as the workwear retailer continued its promotional reset and reduced clearance activity. President and Chief Executive Officer Stephanie Pugliese said the company’s operating priorities during the quarter included improving profitability, controlling inventory, reducing promotional reliance and using marketing to build brand awareness. Duluth completed what Pugliese described as a deliberate cleanup of clearance inventory while shifting its merchandising strategy toward a more focused lineup of core products. → Boarding Call: EHang Secures First-Mover Altitude Duluth Holdings Stock is Providing Opportunity “We have moved away from a broad assortment, discount-heavy approach toward a hero core product strategy,” Pugliese said. “By reducing the total number of SKUs and focusing our buys on proven winners, we have created a leaner, more agile inventory position.” Second-quarter net sales totaled $121.4 million, down 7.8% from the prior-year period. Excluding wholesale, net sales decreased 5.4%. Chief Financial Officer Heena Agrawal said the sales decline reflected the company’s continuing promotional reset and the annualization of price increases implemented in 2025. → Medtronic’s Stars Are Aligning for a Price Recovery Direct-to-consumer sales excluding wholesale were $69.5 million, down 7.6%. The company said lower conversion was partially offset by a 2.4% increase in average order value and a 10% increase in website traffic, supported by higher marketing investment. Mobile sales penetration rose 90 basis points. Duluth’s 66 retail stores generated $51.3 million in sales, a 2.4% decline. Lower traffic and conversion affected store results, though improved inventory availability and a 6% gain in average order value partially offset those pressures. Retail sales were flat for the first half of the fiscal year, according to the company. → Dutch Bros Sell-Off Creates a Growth Opportunity Men’s product sales increased 0.5%, supported by demand for first-layer products and woven bottoms including DuluthFlex Fire Hose and Double Flex denim. Women’s product sales fell 15%, which management attributed largely to SKU rationalization and reduced clearance sales. AKHG sales declined 26% as the company exited low-margin categories including swimwear. Pugliese told analysts that AKHG remains a relatively small portion of Duluth’s overall assortment and is not a significant drag on the company’s broader core men’s and women’s apparel business. She said Duluth is rebuilding the brand around selected core products, including Stone Run pants. Duluth reported net income of $18.4 million, an improvement of $17.1 million from a year earlier. Reported and adjusted diluted earnings per share were $0.50, including $16.3 million in tariff refunds received during the quarter, which contributed $0.44 per share. Gross margin expanded 1,810 basis points to 72.8% of sales, including the tariff refunds. Excluding those refunds, gross margin was 59.6%, up 490 basis points year over year. Agrawal said the underlying improvement was driven by higher average unit retail prices, reduced promotional activity and savings from direct-to-factory sourcing, partly offset by higher fuel prices and carrier surcharges. Adjusted EBITDA was $27 million, compared with $12 million in the second quarter of the prior year. Excluding tariff refunds, adjusted EBITDA was $10.7 million, or 8.8% of sales. Selling, general and administrative expenses rose 1.1% to $69.5 million. Advertising represented 10.9% of sales, up 200 basis points as Duluth invested in awareness-building efforts. The company also cited higher fuel costs and transportation surcharges, while noting savings from fulfillment-center consolidation and store labor efficiencies. Ending inventory was $125.2 million, down $22.9 million, or 15.5%, from a year earlier. Current products represented 85.4% of inventory, while clearance goods accounted for 14.6%, compared with 22.2% in clearance goods during the prior-year quarter. Clearance inventory dollars declined 43.1%, and clearance units fell 46.6%. Agrawal said inventory improvement has continued for five straight quarters, aided by enterprise planning and SKU rationalization. Prioritizing inventory at the company’s Adairsville hub and retail stores improved in-stock levels by more than 600 basis points. The company ended the quarter with $26.8 million in cash and cash equivalents and no debt outstanding on its asset-based lending facility, compared with $32.5 million in facility debt a year earlier. Net liquidity was approximately $96.1 million. Free cash flow through the end of the second quarter was $13 million, an improvement of $41 million from the comparable prior-year period. Duluth also said its supply-chain consolidation has reduced its fulfillment footprint from four centers to two over the past two years. The automated Adairsville facility processed 75% of total units in the quarter, up 230 basis points from a year earlier, while overall network variable cost per unit declined by nearly 25%. Pugliese said Duluth is increasing full-funnel marketing investment during the third quarter to build demand before the holiday season. Planned activity includes connected television, college football broadcasts, premium audio integrations and search initiatives. The company will feature its Fire Hose collection during linear and connected-TV coverage of upcoming college football matchups. The company also cited positive early results from its mid-July Amazon wholesale launch, saying sales have accelerated consistently on a week-over-week basis. Duluth is investing in artificial-intelligence capabilities across paid and organic media, as well as customer insights from its Duluth Diehards pilot. Customer metrics showed some improvement, according to Pugliese. Average order value and sales per customer improved in the second quarter, first-half retention rates increased, net promoter score rose 11%, and reactivation campaigns brought back 9% more lapsed buyers than in the prior-year quarter. Duluth reaffirmed full-year net sales guidance of $540 million to $560 million. The company expects second-half sales performance to range from down 2% to up 2%, with third-quarter sales still affected by comparisons with prior-year clearance events that generated lower-margin revenue. Management expects each quarter in the second half to improve sequentially, with the fourth quarter stronger than the third quarter. The company raised its full-year adjusted EBITDA outlook to a range of $38 million to $42 million from prior guidance of $28 million to $32 million. The revised outlook includes the $16.3 million tariff-refund gain, partly offset by growth investments and higher fuel expenses. Duluth maintained its capital expenditure guidance of approximately $12 million. Duluth Holdings Inc operates as a specialty retailer of workwear, outdoor apparel and accessories for men and women under the Duluth Trading Co name. The company's product line includes work pants, durable outerwear, performance-based shirts, base layers and specialized gear such as tool belts and backpacks. Duluth Trading Co focuses on combining practical functionality with style, targeting tradespeople, outdoor enthusiasts and anyone in need of rugged, long-lasting clothing. Since its founding in 1989, Duluth Trading Co has grown from a regional catalog business into a national retail chain. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Duluth Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for September 2026.

This article first appeared on GuruFocus. Net Sales: $121.4 million, down 7.8% year over year. Gross Margin: Expanded by 1,810 basis points to 72.8% of net sales, including tariff refunds; excluding refunds, underlying gross margin was 59.6%, up 490 basis points. Net Income: Improved by $17.1 million to $18.4 million. Diluted EPS: Reported and adjusted EPS of $0.50, including $0.44 per share from tariff refunds. Adjusted EBITDA: $27 million, up from $12 million in Q2 of last year; excluding tariff refunds, adjusted EBITDA was $10.7 million, or 8.8% of sales. Direct-to-Consumer Net Sales (ex-wholesale): $69.5 million, down 7.6%. Retail Store Net Sales: $1.3 million, down 2.4% from 66 stores. Men's Product Sales: Increased 0.5%. Women's Product Sales: Declined 15%. AKHG Brand Sales: Declined 26%. SG&A Expenses: $69.5 million, up 1.1% year over year, deleveraging by 510 basis points to 57.3% of sales. Inventory: $125.2 million, down 15.5% year over year; clearance inventory down 43.1%. Free Cash Flow: $13 million by the end of the second quarter, an improvement of $41 million year over year. Cash and Liquidity: Cash and cash equivalents of $26.8 million with zero debt on its ABL facility; net liquidity of approximately $96.1 million. Full-Year Adjusted EBITDA Guidance: Raised to $38 million to $42 million, up from prior outlook of $28 million to $32 million. Full-Year Net Sales Guidance: Reaffirmed at $540 million to $560 million. Warning! GuruFocus has detected 2 Warning Sign with DLTH. Is DLTH fairly valued? Test your thesis with our free DCF calculator. Release Date: September 03, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Duluth Holdings Inc (NASDAQ:DLTH) delivered another quarter of improved profitability and free cash flow, marking five consecutive quarters of year-over-year gains in net income margin and free cash flow. Operational gross margin expanded by nearly 500 basis points year-over-year, driven by a successful promotional reset and reduced reliance on deep discounts. Clearance inventory was reduced by 43% year-over-year, leading to a healthier inventory mix with 85.4% in current products and improved in-stock levels by over 600 basis points. The company generated strong free cash flow of $13 million in the first half, a $41 million improvement, and ended the quarter with zero debt on its asset-based lending facility. Early results from the Amazon wholesale launch are positive, with consistent week-over-week acceleration in sales, and core products like Firehose and Buck Naked underwear continue to outperform. Customer engagement metrics improved, including a 9% increase in reengaged last buyers, higher retention rates, and an 11% rise in net promoter score. Net sales declined 7.8% in Q2 to $121.4 million, impacted by the promotional reset and annualized price increases, with direct-to-consumer sales down 7.6%. Women's product sales declined 15% due to strategic SKU rationalization and reduced clearance sales, while AKHG brand sales fell 26% after exiting low-margin categories. SG&A expenses deleveraged by 510 basis points to 57.3% of sales, driven by increased advertising investments and higher fuel and carrier surcharge costs. The company expects Q3 sales to moderate as it laps prior year clearance events that generated low-margin revenue, with a projected sales range of minus 2% to plus 2% for the second half. Transportation costs remain a headwind, with fuel price increases and carrier surcharges partially offsetting margin gains. The total customer base has contracted as promotions were reset, and the company is still investing in rebuilding customer file health. Q: Can you spell out the guidance expectations for the third quarter and why it takes a step back, particularly regarding the drag from the Alaskan Hard Gear business?A: Stephanie Pugliese (CEO) explained that Alaskan Hard Gear is a relatively small part of the overall assortment. The business had suffered from over-assortment and over-SKU issues, but they have pulled it back to its core essence, focusing on products like Stone Run Pants. Heena Agrawal (CFO) added that Q3 trends are expected to be better than Q2, but they are not repeating some of the clearance events from last year. Clearance inventory is down over 40% in both dollars and units, which will moderate Q3 expectations, though the trend will still be an improvement over Q2. Q: Is the third quarter worse than the minus 2% to plus 2% range for the second half, and what drives the inflection in the fourth quarter?A: Heena Agrawal (CFO) clarified that every quarter improves versus the prior quarter, with Q3 better than Q2 and Q4 better than Q3, which gets them to the minus 2% to plus 2% range for the second half. Q4 will be better because there will be more evenness versus last year regarding promotions, pricing impact, marketing impact, and inventory situation. Q: Would you expect the recovery to be led by the online channel, particularly as you lap the clearance activity?A: Heena Agrawal (CFO) confirmed that they expect improvement in both channels, but the improvement is expected to be greater in the online channel versus the retail channel, especially in Q4. Q: On inventory turns, which are still below two on a trailing four-quarter basis, what is the opportunity embedded in getting more efficient in turns?A: Stephanie Pugliese (CEO) stated that they see long-term opportunity in improving inventory turns and continuing to rationalize SKUs. However, they are also focused on maintaining a "never-out" inventory position for core products to satisfy customer demand at the time of need. The strategy involves tightening sell-throughs on non-core products while ensuring an always-in-stock position on core items. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Duluth Holdings (DLTH) came out with quarterly earnings of $0.06 per share, beating the Zacks Consensus Estimate of a loss of $0.05 per share. This compares to earnings of $0.03 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +220.00%. A quarter ago, it was expected that this clothing and tools supplier would post a loss of $0.45 per share when it actually produced a loss of $0.2, delivering a surprise of +55.56%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Duluth Holdings, which belongs to the Zacks Textile - Apparel industry, posted revenues of $121.39 million for the quarter ended July 2026, surpassing the Zacks Consensus Estimate by 1.92%. This compares to year-ago revenues of $131.72 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Duluth Holdings shares have added about 74% since the beginning of the year versus the S&P 500's gain of 12%. While Duluth Holdings has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Duluth Holdings was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.29 on $113.9 million in revenues for the coming quarter and -$0.26 on $549.6 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Textile - Apparel is currently in the top 33% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. LuxExperience B.V. - Sponsored ADR (LUXE), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on September 16. This company is expected to post quarterly loss of $0.11 per share in its upcoming report, which represents a year-over-year change of +66.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. LuxExperience B.V. - Sponsored ADR's revenues are expected to be $727.39 million, up 9.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Duluth Holdings Inc. (DLTH) : Free Stock Analysis Report LuxExperience B.V. - Sponsored ADR (LUXE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Successfully completed the 'Seal the Foundation' phase, transitioning from fixing structural inefficiencies to framing a scalable growth structure. Achieved nearly 500 basis points of operational gross margin improvement by reducing reliance on deep, site-wide discounts and clearance events. Executed a fundamental merchandising shift toward a 'hero core' product strategy, resulting in a 43% reduction in clearance inventory. Reported a contraction in the total customer base as a direct result of resetting promotions to restore brand equity and price integrity. Observed improving customer health metrics, including an 11% increase in Net Promoter Score and a 9% rise in re-engaged 'lapsed' customers. Leveraged a leaner operating model and consolidated fulfillment network to drive five consecutive quarters of net income margin and free cash flow gains. Anticipate third-quarter sales will be tempered by lapping high-volume, low-margin clearance events from the prior year. Planning to accelerate upper-funnel marketing investments in Q3 to prime demand for the peak holiday season and capture early transitional shoppers. Allocating tariff refund proceeds toward enhancing the customer experience, AI-driven search visibility, and store-level service capabilities. Targeting the 'Raise the Roof' phase in 12 to 18 months, which focuses on expanding store potential and wholesale opportunities like the Amazon pilot. Projecting second-half sales performance between -2% and +2%, with sequential improvement expected in each quarter as promotional comparisons normalize. Received $16.3 million in tariff refunds during Q2, which contributed $0.44 to diluted earnings per share. Reduced total inventory by 15.5% year-over-year through aggressive SKU rationalization and improved enterprise planning. Closed the Salt Lake City fulfillment center as part of a logistics consolidation that reduced network variable costs per unit by nearly 25%. Identified rising fuel expenses and carrier surcharges as persistent headwinds impacting shipping and variable cost productivity. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management explained that Q3 faces a headwind from not repeating last year's heavy clearance events, which generated volume but hurt margins. Alaskan Hardgear is described as a small portion of the assortment that is being rebuilt around core 'hero' products after previous over-assortment. Despite the year-over-year headwind, management expects the Q3 sales trend to be an improvement over Q2. The Q4 recovery is expected to be driven by more even year-over-year comparisons in promotional activity and the impact of increased marketing. Improvement is anticipated across both retail and online channels, though the online channel is expected to see a greater relative gain. Management acknowledges long-term opportunity to improve inventory turns through continued SKU rationalization. The strategy prioritizes maintaining a 'never out' in-stock position for core products to satisfy customer demand at the time of need.

Afya (AFYA) came out with quarterly earnings of $0.45 per share, missing the Zacks Consensus Estimate of $0.46 per share. This compares to earnings of $0.4 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -2.17%. A quarter ago, it was expected that this medical education company would post earnings of $0.62 per share when it actually produced earnings of $0.56, delivering a surprise of -9.68%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Afya, which belongs to the Zacks Schools industry, posted revenues of $192.36 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.25%. This compares to year-ago revenues of $162.27 million. The company has not been able to beat consensus revenue estimates over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Afya shares have lost about 10.8% since the beginning of the year versus the S&P 500's gain of 13.2%. While Afya has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Afya was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.41 on $196.33 million in revenues for the coming quarter and $1.90 on $781.56 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Schools is currently in the top 43% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the broader Zacks Consumer Discretionary sector, Duluth Holdings (DLTH), has yet to report results for the quarter ended July 2026. This clothing and tools supplier is expected to post quarterly loss of $0.05 per share in its upcoming report, which represents a year-over-year change of -266.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Duluth Holdings' revenues are expected to be $119.1 million, down 9.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Afya Limited (AFYA) : Free Stock Analysis Report Duluth Holdings Inc. (DLTH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Cintas Corporation CTAS reported fourth-quarter fiscal 2026 earnings of $1.29 per share, which beat the Zacks Consensus Estimate of $1.24 by 4%. The bottom line increased 18.3% from the year-ago quarter figure. Revenues of $2.91 billion surpassed the consensus estimate of $2.88 billion by 1% and rose 8.9% year over year.The top line was driven by 8.4% organic revenue growth, reflecting solid demand across its route-based businesses. Record gross margins also stood out as a key highlight in the quarter. The company has two reportable segments, Uniform Rental and Facility Services and First Aid and Safety Services. Other businesses, like Uniform Direct Sale and Fire Protection Services, are included in All Other. Quarterly sales data are briefly discussed below.Cintas’ Uniform Rental and Facility Services segment generated revenues of $2.20 billion, up 8.2% year over year from $2.03 billion. Segment operating income rose to $529.5 million from $465.1 million, reflecting steady demand and operating leverage.The First Aid and Safety Services segment delivered revenues of $368.1 million, increasing 13.5% from $324.4 million in the prior-year quarter. Operating income climbed to $98.6 million from $76.7 million, supported by strong demand for safety and compliance solutions.Revenues from the All Other segment totaled $339.4 million, up 8.6% from $312.6 million a year ago. Segment operating income increased to $59 million from $55.7 million. Cintas Corporation price-consensus-eps-surprise-chart | Cintas Corporation Quote Cintas’ cost of sales (comprising costs related to uniform rental and facility services and others) increased 6.2% year over year to $1.42 billion. Cintas reported gross profit of $1.48 billion, up 11.6% year over year. Gross margin improved 130 basis points to 51%, marking a record high.Selling and administrative expenses totaled $793.2 million, up 8.9% from the year-ago quarter figure. Despite this increase, operating income rose 12.7% to $673 million.Operating margin was 23.2%, up from 22.4% in the prior-year quarter, helped by higher sales. Net income increased 14% to $511 million, with a tax rate of 21.2%. Exiting fiscal 2026, Cintas had cash and cash equivalents of $289 million compared with $264 million at the end of fiscal 2025. Long-term debt was about $1.43 billion compared with $2.42 billion at the end of fiscal 2025. In fiscal 2026, it generated net cash of $2.28 billion from operating activities, up 5.1% from the year-ago period. Capital expenditures in the same period totaled $395.1 million, down 3.4% year over year.The company repurchased shares worth $952.1 million compared with $934.8 million in the previous fiscal year. Dividend payments totaled $701.5 million, up 14.7% year over year. For fiscal 2027, the company expects revenues to be in the range of $12.10-$12.25 billion. Adjusted earnings per share are projected in the range of $5.36-$5.50. The guidance excludes any expected impacts associated with the pending UniFirst acquisition.Management expects net interest expense of approximately $105 million and an effective tax rate of 20.2% for the year. The outlook assumes stable foreign exchange rates and excludes contributions from acquisitions. The company currently carries a Zacks Rank #2 (Buy).  Some other top-ranked stocks from the same space are discussed below:Duluth Holdings DLTH presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Duluth’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 107.5%.  In the past 60 days, the Zacks Consensus Estimate for DLTH’s fiscal 2027 bottom line has increased 45.8%.Columbia Sportswear COLM presently carries a Zacks Rank of 2. Columbia Sportswear’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 44.1%. In the past 60 days, the Zacks Consensus Estimate for COLM’s 2026 earnings has increased 3.8%.Vince Holding VNCE currently carries a Zacks Rank of 2. Vince Holding’s earnings topped the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 635.7%. In the past 60 days, the Zacks Consensus Estimate for VNCE’s fiscal 2027 earnings has increased 59.5%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cintas Corporation (CTAS) : Free Stock Analysis Report Columbia Sportswear Company (COLM) : Free Stock Analysis Report Vince Holding Corp. (VNCE) : Free Stock Analysis Report Duluth Holdings Inc. (DLTH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Duluth Holdings Inc. DLTH used its first quarter of fiscal 2026 earnings call to argue that the company’s turnaround is moving from emergency repair to a more durable margin and cash discipline story. Management kept the sales outlook intact while lifting its profitability target.The call mattered because the revenue decline was not treated as a sign of weakening execution. Instead, executives framed it as the tradeoff for restoring price integrity, cutting promotions and improving the quality of sales. President and chief executive officer Stephanie Pugliese said the company’s recent strategic pivot is centered on serving core customers, restoring profitability and improving operational execution. She tied the quarter’s gross margin expansion, lower inventory and stronger liquidity to that reset.Senior vice president and chief financial officer Heena Agrawal reinforced that message by describing the quarter as evidence of a healthier margin profile and more structural profitability. She said Duluth is now prioritizing brand equity and long-term value over low-profitability volume.That framing helps explain why management spent more time defending the earnings quality than the top line. Revenues fell 4% year over year to $98.6 million, surpassing the Zacks Consensus Estimate of 95 million by 3.67%. The company reported first-quarter loss of 20 cents per share, narrower than the Zacks Consensus Estimate of a loss of 45 cents, delivering a surprise of 55.56%. Duluth Holdings Inc. price-consensus-eps-surprise-chart | Duluth Holdings Inc. Quote Agrawal said the company is affirming its fiscal 2026 net sales guidance range of $540 million to $560 million, even as it raised adjusted EBITDA guidance to $28 million to $32 million from $26 million to $30 million. The updated outlook reflects confidence that margin gains and cost savings are running ahead of plan.Management also reaffirmed first-half sales guidance for a decline of 6% to 10%. Agrawal said that range still reflects the decision not to repeat a wholesale order from the prior year, which created a 230-basis point headwind.For the back half of fiscal 2026, executives said revenues should stabilize as the company laps last year’s pricing actions and the promotional reset. That was one of the clearest forward-looking messages on the call and a key support for the unchanged sales view. Pugliese said the company is reshaping marketing toward upper-funnel brand building rather than lower-funnel, promotion-driven spending. She pointed to campaigns around Buck Naked, Max Gluteus and women’s gardening categories as evidence that Duluth can drive engagement without leaning as heavily on discounts.She also said the customer file has contracted over several years, but the spending quality has improved. Sales per customer rose 10% year over year, and management said that the gain was broad-based across age, income and gender groups.The company’s core collections represented about two-thirds of sales and grew 7% from a year earlier, according to Pugliese. That detail sharpened management’s argument that Duluth wants to concentrate capital and messaging around higher-margin hero products rather than chase volume across a wider assortment. Agrawal said inventory ended the quarter at $132.4 million, down $43.7 million, or 24.8%, from a year earlier. She described that as the fourth straight quarter of year-over-year improvement, supported by tighter planning, SKU rationalization and better receipt timing.Gross margin rose 540 basis points to 57.4%. Management attributed the increase to reduced promotional activity, pricing actions and direct-to-factory sourcing benefits that more than offset tariff costs.Selling, general and administrative expenses fell $3.4 million to $61.8 million. Agrawal said efficiencies across the fulfillment network and lower personnel costs helped drive the decline, while net liquidity improved to about $100 million. A William Blair analyst pressed management on what is embedded in the full-year margin outlook. Agrawal answered that the company had originally targeted about 100 basis points of full-year gross margin expansion, but first-quarter performance is now tracking ahead of that pace and supports the higher adjusted EBITDA range.The same analyst also asked how Duluth Holdings plans to rebuild customer engagement without relying on promotions. Pugliese said the company is shifting marketing dollars toward brand awareness and reactivating higher-value existing customers, a channel she said costs about one-third as much as acquiring new ones.The final notable Q&A exchange focused on the $2.7 million impairment charge. Agrawal clarified that it was tied to the Salt Lake City fulfillment center that the company closed earlier this year, giving investors more detail on a charge that affected adjusted comparisons. The tone coming out of the call was measured but firmer than in earlier turnaround updates. Management repeatedly emphasized discipline, price integrity and operating efficiency rather than a rapid return to revenue growth.That leaves Duluth Holdings’ near-term story centered on execution. The company is presenting itself as leaner, more selective on promotions and more focused on core customers, with the second half set up as the test of whether margin repair can coexist with steadier sales. DLTH carries a Zacks Rank #3 (Hold), alongside Value Score A, Growth Score A, Momentum Score D and VGM Score A. Under the Zacks framework, those A-level Value, Growth and VGM readings point to favorable style characteristics, while the D Momentum score signals weaker near-term price trend support. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks hereThe same framework also says the most favorable combinations typically pair a Zacks Rank #1 or 2 (Buy) with A or B Style Scores. With DLTH at a Zacks Rank #3, the style profile is constructive but more balanced, and that rank can change as earnings estimate revisions adjust after the quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Duluth Holdings Inc. (DLTH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research