Duluth Holdings Stock Soars 52% on Surprise Q2 Profit
Margin expansion and cost controls fuel return to profitability, overshadowing a 7% decline in quarterly revenue.
Shares of Duluth Holdings Inc. (NASDAQ: DLTH) surged more than 50% to a six-month high after the workwear and apparel retailer , signaling that its strategic turnaround efforts are gaining traction.
The company announced a net income of $1.3 million, or $0.03 per share on an adjusted basis, for the quarter. This marks a significant reversal from the $2.0 million loss reported in the same period last year and handily beat analyst estimates. The return to profitability was achieved despite a 7% year-over-year decline in net sales to $131.7 million.
The positive earnings were driven by a notable improvement in the company's gross margin, which expanded by 240 basis points to 54.7%. According to company statements, the margin growth was a direct result of a disciplined promotional reset, effective expense management, and improved inventory control, which saw levels drop 12.2% from the prior year. This performance comes , suggesting investors are rewarding the operational improvements.
A closer look at sales figures reveals a mixed channel performance. While retail store sales climbed 5.3% to $52.6 million, the direct-to-consumer segment saw sales fall 13.7% to $79.1 million. In the company's their focus on gross margin dollars as the primary measure of success for their promotional strategy.
President and CEO Stephanie Pugliese stated, “We are encouraged by our second-quarter results, reflecting positive momentum in our turnaround efforts.” Despite the progress, Pugliese acknowledged “significant work ahead,” including mitigating an anticipated $15 million tariff impact in the second half of the year. Duluth maintained its full-year fiscal 2025 guidance, projecting adjusted EBITDA between $20 million and $25 million, implying management's confidence in continued operational strength.