Duluth (DLTH) Q2 2025 Earnings Call Transcript

Motley Fool Transcribing, The Motley Fool

Wed, January 7, 2026 astatine 9:30 AM CST 21 min read

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Thursday, Aug. 29, 2024 astatine 9:30 a.m. ET

• President and Chief Executive Officer — Stephanie L. Pugliese

• Senior Vice President and Chief Financial Officer — Heena K. Agrawal

Stephanie L. Pugliese: Good morning, everyone, and convey you for joining america today. We are encouraged by our 2nd 4th results demonstrating affirmative momentum successful our archetypal turnaround efforts. Our squad has worked tirelessly and made improvements crossed respective captious areas of the business. This includes promotional reset, outgo control, tariff mitigation, and a disciplined attack to inventory management. Our strategical and operational efforts person begun to output tangible benefits, starring to an enhanced gross margin, reduced expenses, and little inventory levels, which played retired successful our Q2 results. As we reduced the extent of promotional activity, we anticipated that our top-line gross would declaration twelvemonth implicit year.

Yet contempt a income diminution of 7% versus past year, we delivered gross borderline betterment and SG&A leverage, which drove a $1.5 cardinal summation successful adjusted EBITDA, reaching $12 cardinal oregon 9% of sales. We concluded the 4th with a beardown liquidity of $73 cardinal simplification successful inventory compared to past year, gathering our expectations of sequential inventory betterment each quarter. Let maine elaborate further connected each of the areas of improvement. Starting with an update connected the resetting of our promotional cadence, we person reduced the extent of our promotions to strategically elevate full-price sales, summation our mean portion retails, and thrust improved profitability. We are intentionally shifting our absorption towards higher prime sales.

At the aforesaid time, we cognize that we are operating successful a dynamic environment. We volition proceed to test, read, and respond to pricing initiatives passim the 2nd fractional of the twelvemonth to conscionable customers' needs and negociate higher profitability. As mentioned past quarter, we besides rapidly began to right-size the outgo operation and alleviate unit from tariffs. I americium pleased to study that we are connected way to recognize $10 cardinal successful outgo savings successful fiscal 2025. While structure, we person besides continued to put clip and vigor to amended processes that optimize productivity present and successful the future. Our ongoing committedness to inventory absorption and endeavor readying has led to enhancements successful our operational and readying processes.

This end-to-end cross-functional inaugural has resulted successful the 12% simplification successful Q2 ending inventory that I mentioned earlier, chiefly owed to our accent connected rightsizing inventory receipts. We expect that these efforts combined with SKU and benignant number reductions successful aboriginal seasons volition pb to amended usage of cash, stronger inventory turns, and improved margins. Now fto maine supply an update connected our attack to mitigating tariffs, focusing connected short-term actions that bash not compromise the semipermanent integrity of our products. In summation to moving intimately with our manufacturing basal and uncovering areas of SG&A to offset borderline impact, successful autumn 2025, we person selected targeted products for retail increases.