Duluth Holdings Inc

Duluth Holdings Inc. reported its second-quarter fiscal 2026 results, highlighting a successful 'Seal the Foundation' phase that improved operational gross margin by nearly 500 basis points and reduced clearance inventory by 43%. The company received $16.3 million in tariff refunds, contributing $0.44 to diluted earnings per share, and cut total inventory by 15.5% year-over-year. Management projects second-half sales between -2% and +2%, with Q3 tempered by lapping last year's clearance events and Q4 expected to improve on more even promotional comparisons. The company also closed its Salt Lake City fulfillment center, reducing network variable costs per unit by nearly 25%, while rising fuel expenses and carrier surcharges remain headwinds.

Duluth Trading Co. highlighted its latest collection of cooling clothing, UPF apparel, and moisture-managing gear designed for extreme heat, humidity, and unpredictable weather. The collections feature Armachillo® technology with microscopic jade minerals for a cool-to-the-touch feel and Dry on the Fly® quick-drying fabrics for active days, with prices ranging from $29.95 to $119.95. Ricker Schlecht, Senior Vice President of Product Development, said the apparel is built for real-world use across job sites, gardens, trails, and travel. The announcement comes as NOAA reports the first six months of 2026 were the third-hottest January-through-June period in the 177-year global climate record, driving consumer interest in performance fabrics that wick moisture, dry quickly, and provide UPF sun protection.

Duluth Trading Co. achieved its fourth consecutive quarter of year-over-year inventory gains in Q1, with total inventory down 25% year-over-year, according to SVP and CFO Heena Agrawal during a June 8 earnings call. Rightsizing buys and clearing excess stock helped lower spring and summer seasonal inventory by 42%. The company has been intentionally narrowing its assortment and buying smarter to focus on core high-margin hero product lines. In-stock levels at stores improved by 900 basis points, supported by inventory allocation prioritizing its automated fulfillment center in Adairsville, Georgia, and its stores. The retailer has also begun using Amazon's fulfillment capabilities for orders made on Amazon's marketplace.