Duluth Holdings (DLTH) Stock Soars 55% After Swing to $1.3M Profit, Gross Margin Hits 54.7%
Strong Profitability and Margin Expansion Fuel 55% Stock Surge
Shares of Duluth Holdings (DLTH) leapt 55.08% to $3.66 intraday after the company reported second-quarter financial results that delivered a dramatic swing back to profitability. Net income reached $1.3 million, reversing a loss of $2 million from the prior-year period. The gross margin expanded sharply to 54.7%—up from 52.3% last year—showcasing successful execution on the company’s promotional reset and sourcing initiatives.
Q2 Results Show Progress: Profit Turnaround and Lower Expenses
The key headline from Q2 is a move from red ink to black. Diluted earnings per share were $0.04, while adjusted EPS (excluding restructuring and tax valuation charges) came in at $0.03. This marks a notable turnaround for Duluth, which struggled in 2024.
Selling, general and administrative (SG&A) expenses fell $5.2 million (down 7.1%) to $68.8 million. Not only did this lower costs overall, but SG&A as a percentage of sales declined slightly from 52.3% to 52.2%, with savings coming from outbound shipping leverage and cuts in personnel and depreciation.
Sales Dip but Margins Strengthen; Retail Stores Shine
Total net sales declined 7% year over year to $131.7 million. This dip was mainly driven by a 13.7% fall in direct-to-consumer sales (now $79.1 million), attributed to lighter traffic, though this was partially offset by larger average orders. On the other hand, retail store net sales rose 5.3% to $52.6 million as brick-and-mortar locations benefited from higher spend per transaction.
Inventory discipline was evident, with levels down $20.7 million (12.2%) from a year earlier, easing balance sheet pressures and helping cash flow.
| Q2 2025 | Q2 2024 | % Change | |
|---|---|---|---|
| Net Income ($M) | 1.3 | (2.0) | — |
| Gross Margin | 54.7% | 52.3% | +2.4 pts |
| Net Sales ($M) | 131.7 | 141.6 | -7.0% |
| Direct-to-Consumer Sales ($M) | 79.1 | 91.7 | -13.7% |
| Retail Store Sales ($M) | 52.6 | 50.0 | +5.3% |
| SG&A Expense ($M) | 68.8 | 74.0 | -7.1% |
| Inventory ($M) | 148.1 | 168.7 | -12.2% |
Liquidity Stays Strong as Company Maintains Guidance
Duluth ended the quarter with $5.7 million in cash and $73.3 million in net liquidity. Working capital stood at $56.9 million, while debt drawn on the company’s $100 million credit facility was $32.5 million. Despite pressures from lower sales, these figures reflect improved financial flexibility and inventory control.
Leadership Remains Cautious but Optimistic Ahead of Peak Season
CEO Stephanie Pugliese emphasized ongoing turnaround progress, citing promotional discipline, expense management, and inventory control as major wins. "While pleased with our Q2 results, we acknowledge the significant work ahead... As we approach our peak selling season, our focus remains on simplifying the business, reducing expenses, and delivering on our promise to consumers with excellence."
Key Takeaway: Cost Controls and Margin Gains Drive Momentum
DLTH’s huge one-day jump is all about showing real progress in operational execution and profitability—even as revenue dipped. Margin improvement, reduced expenses, and improved liquidity present a healthier company poised for the important holiday and winter seasons. While there is still ground to cover, today’s numbers suggest that Duluth Trading’s efforts are gaining traction with investors and customers alike.
With Q2’s financial discipline and margin gains, will Duluth maintain momentum into the peak selling season? The company’s continued focus on inventory and expenses may be the difference between a successful turnaround and a short-lived bounce. Investors should watch next quarter closely as the company moves further along its comeback trail.
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