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DULUTH HOLDINGS INC. (DLTH)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 results underperformed due to fulfillment delays at the legacy Belleville center: Net sales $241.3M (-1.8% YoY), GAAP EPS -$0.17, Adjusted EPS -$0.04, Adjusted EBITDA $8.5M .
  • Wall Street consensus missed: Revenue $252.9M* vs actual $241.3M; EPS $0.11* vs actual -$0.04 — both misses, driven by operational constraints and a deliberate pullback in promotions to preserve sales quality .
  • FY 2025 outlook introduced: Net sales $570–$595M, Adjusted EBITDA $20–$25M, Capex ≈$20M; management expects ≈300 bps gross margin expansion and up to 200 bps SG&A deleverage as initiatives scale .
  • Leadership transition announced: CEO Sam Sato retiring April 25, 2025; Founder/Chairman Stephen L. Schlecht to assume day-to-day leadership while CEO search proceeds — a near-term narrative catalyst .

What Went Well and What Went Wrong

What Went Well

  • “Record sales during Black Friday week and Cyber Monday,” supported by mobile penetration; DTC net sales rose 0.4%, showing channel health despite constraints .
  • Logistics modernization is scaling: Adairsville facility processed >60% of total volume at cost per unit 66% lower than legacy sites, with Dubuque closure driving ≈$5M annual SG&A savings .
  • Product roadmap and sourcing: Direct-to-factory sourcing is reducing product costs and enabling faster innovation; pipeline includes Armachillo expansions, Backyard collaboration with Leinenkugel’s, and AKHG upgrades (Alpine Flex, Wanderwear) .

What Went Wrong

  • Fulfillment bottlenecks at Belleville during peak demand created order backlogs, forcing reduced promotional depth/frequency that constrained top-line growth .
  • Gross margin contracted 410 bps YoY to 44.1% on lower AUR (-8.9%) and reduced mix of full-price sales; Adjusted EBITDA fell to $8.5M vs $20.9M prior year .
  • Inventory rose 32% YoY to $166.5M, with clearance at 10%; while quality improved, elevated levels add execution risk into FY25 normalization plans .

Financial Results

Quarterly P&L progression (oldest → newest)

MetricQ2 2025Q3 2025Q4 2025
Net Sales ($USD Millions)$141.6 $127.1 $241.3
Gross Margin (%)52.3% 52.3% 44.1%
SG&A (% of Sales)53.9% reported; 52.2% ex one-time 65.2% 45.9% reported; 44.6% ex impairment
Adjusted EBITDA ($USD Millions)$10.6 -$6.8 $8.5
GAAP EPS ($)-$0.11 -$0.85 -$0.17
Adjusted EPS ($)-$0.02 -$0.41 -$0.04

Q4 vs Prior Year and Estimates

MetricQ4 2024Q4 2025Change YoYConsensusSurprise
Revenue ($USD Millions)$245.6 $241.3 -1.8% $252.9*-$11.6M (miss)
GAAP EPS ($)$0.21 -$0.17 -$0.38 ——
Adjusted EPS ($)—-$0.04 —$0.11*-$0.15 (miss)

Values with asterisk (*) retrieved from S&P Global.

Segment Breakdown (Q4 2025)

SegmentNet Sales ($USD Millions)YoY Change
Direct-to-Consumer$172.9 +0.4%
Retail Stores$68.4 -6.9%

KPIs and Operating Metrics

KPIQ4 2025Commentary
Mobile Share of Site Visits~70% Mobile-first strategy remains a growth driver
Mobile Share of Digital Sales58% Mobile sales +4% YoY; conversion +50 bps
Site Conversion Change+30 bps QoQ Supported AOV +3%
Gross Profit ($USD Millions)$106.5 44.1% of net sales
Inventory ($USD Millions)$166.5 +32% YoY; 90% core/current
Clearance Mix (%)10% Improved vs prior year
Liquidity ($USD Millions)$103.3 No bank debt outstanding

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY 2025—$570–$595M New
Adjusted EBITDAFY 2025—$20–$25M New
Capital ExpendituresFY 2025—≈$20M (incl. software hosting) New
Gross MarginFY 2025—≈+300 bps expansion (drivers: direct sourcing, targeted promos, inventory control) New
SG&A LeverageFY 2025—Deleverage up to 200 bps (shipping/fulfillment savings offset by overhead) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2025)Trend
Fulfillment & LogisticsPhase 2 network optimization; Adairsville variable CPU 65–73% lower than legacy; Dubuque closure for ≈$5M annual savings Belleville backlog post-Black Friday; optimized unit distribution across network; Adairsville >60% volume, 66% lower CPU Improving structurally; short-term disruption
Promotions & Price IntegrityClearance elevated; flexibility to remain competitive; adjusted EPS guidance excludes one-offs Reduced promotional depth/frequency to protect sales quality and margin flow-through Tightening promotions; margin focus
Mobile/OmnichannelMobile visits ~70%, sales ~57%; conversion above industry; omnichannel customers shop 2x as often Mobile ~70% visits, 58% digital sales; +4% mobile sales; conversion +50 bps Strengthening
Retail Portfolio25% of stores up for renewal by 2026; higher hurdle rates; 2 new stores planned 65-store fleet, 2 new stores in H2’25; remodel/relocate/exit approach remains Rationalizing; selective growth
Product InnovationArmachillo, Dry on the Fly, AKHG growth, new collaborations (Yellowstone, Busch, Hamm’s) Expanded Armachillo; Backyard for Him (Leinenkugel’s); AKHG Alpine Flex, Wanderwear; Heirloom/Garden expansion Robust pipeline
Macro/WeatherUnseasonably warm weather hurt fall/winter sales Less emphasized; focus shifted to operational execution External headwinds easing
Regulatory/AccountingSales tax accrual and review in prior quarters Prior-period sales tax accounting correction (immaterial revisions) disclosed Largely resolved

Management Commentary

  • “Our fourth quarter results fell short of expectations due to processing delays at our legacy fulfillment center... we subsequently reduced promotional depth and frequency to address the order backlog and maintain sales quality.” — Sam Sato .
  • “Adairsville... now processing more than 60% of total volume at a cost per unit that is 66% lower than that of our legacy facilities.” — Sam Sato .
  • “We anticipate approximately 300 basis points of gross margin expansion... increased direct sourcing from factories, less frequent and more targeted promotions and improved inventory control.” — Heena Agrawal .
  • “We finished 2024 in a strong financial position, debt-free with positive cash and $103 million in liquidity.” — Sam Sato .

Q&A Highlights

  • No Q&A session was held on the Q4 2025 call; prepared remarks only .

Estimates Context

  • Consensus vs actual: Revenue $252.9M* vs $241.3M (miss); EPS $0.11* vs -$0.04 (miss). Management cited order-processing delays and deliberate promotion pullback as drivers behind the shortfalls .
  • FY25 expectations signal margin recovery despite lower sales guidance, implying potential upward revisions to EBITDA as execution improves; near-term estimate cuts likely for revenue/EPS given Q4 miss and lower sales range .

Values marked with asterisk (*) retrieved from S&P Global.

Consensus Detail (Q4 2025)

MetricConsensusActual
Revenue ($USD Millions)$252.9*$241.3
EPS ($)$0.11*-$0.04 (Adjusted)
EPS # of Estimates3*—
Revenue # of Estimates3*—

Key Takeaways for Investors

  • Q4 miss driven by a discrete fulfillment disruption; structural logistics advantages (Adairsville, network optimization) remain intact and are scaling .
  • FY25 guide focuses on quality of sales and margin recapture (≈+300 bps GM) with constrained top line ($570–$595M); watch promo discipline and inventory normalization in 2H .
  • SG&A savings (≈$5M annual) from Dubuque exit and shipping/fulfillment efficiencies should improve flow-through despite planned deleverage; monitor overhead vs scale .
  • Mobile/omnichannel continues to strengthen conversion and engagement; DTC resilience suggests channel mix supportive of margin focus .
  • Leadership transition introduces execution risk but also potential strategic continuity under Founder-led interim structure; near-term narrative catalyst around CEO search progress .
  • Near-term: expect estimate cuts and heightened focus on fulfillment KPIs; medium-term: margin recovery thesis hinges on sourcing, logistics, and disciplined promotions converting to EBITDA growth .
  • Stock narrative sensitive to evidence of operational remediation (on-time fulfillment, reduced backlog), inventory turns, and Q2/Q3 cadence vs FY25 targets .