Duluth narrows losses as margin expansion offsets sales decline

Duluth Holdings (NASDAQ:DLTH) reported financial results for the first quarter of fiscal 2026, ended May 3, 2026, highlighting significant progress in operational efficiency despite a challenging retail environment.

The company narrowed its net loss to $10 million, compared to a net loss of $15.3 million in the same period last year.

Adjusted earnings per share were ($0.20), while adjusted EBITDA increased to $2.6 million.

Net sales for the quarter reached $98.6 million, a 4% decrease from the prior-year period.

This top-line pressure was primarily driven by an 8.7% decline in direct-to-consumer sales.

However, the company’s retail footprint demonstrated resilience, with in-store sales growing 3.3%.

Management emphasized the strength of the company’s margin strategy, with gross margin expanding by 540 basis points to 57.4%.

This improvement reflects the success of ongoing initiatives to optimize inventory levels and enhance pricing power.

Inventory management remained a key focus throughout the quarter, with total inventory levels declining 24.8% year-over-year to $43.7 million, contributing to a healthy balance sheet with approximately $99.5 million in net liquidity.

Looking ahead, the company reaffirmed its fiscal 2026 net sales guidance of $540 million to $560 million.

Reflecting confidence in its operational turnaround and margin structure, the company raised its full-year adjusted EBITDA guidance to a range of $28 million to $32 million.