Executive Summary

Q2 top line and EPS missed consensus as tariff-induced shipment pauses and channel mix weighed on results; revenue was $131.9M vs $138.1M consensus and adjusted EPS was $(0.50) vs $(0.14) consensus, while gross margin held at 38.6% on favorable mix and pricing discipline . Revenue Consensus Mean: $138.11M*; EPS Normalized Consensus Mean: $(0.135)*. Actual: Revenue $131.86M; Adj. EPS $(0.50) .
Management cited an unusual, transient tariff shock—temporary 145% China tariffs and “Liberation Day” policy shifts—triggering uniform price actions and shipment delays (≈$30M shifted/delayed), with cadence normalizing early Q3; some orders slip into 2026 .
Liquidity remains strong at ~$96.9M, cash from operations YTD was $26.1M, and net debt/Adj. EBITDA improved to 3.5x; TTM Adjusted EBITDA was $50.7M, and net debt fell ~$18M YTD .
No formal guidance reinstated given visibility limits; dividend maintained at $0.0425 per share (payable Nov 14, 2025). Management highlighted cost actions (> $14M annualized), sourcing shift to enable ~80% production outside China by year-end, and increased unsolicited M&A inbound as potential second-half catalysts .

What Went Well and What Went Wrong

What Went Well
- Gross margin held at 38.6% YoY (50.8M vs 54.6M prior year) despite revenue pressure, driven by favorable product mix and pricing actions .
- International segment delivered growth (+12.4% YoY to $12.5M; +6.6% ex-FX), with traction in Europe and e-commerce, and Project Concord on track to improve second-half profitability .
- Cost discipline and liquidity: SG&A fell 2.1% YoY; liquidity ~$96.9M; TTM Adj. EBITDA $50.7M; net debt/Adj. EBITDA 3.5x (improved from March) .
- Quote: “Adjusted EBITDA was consistent with the last quarter…cost efficiency actions…over $14,000,000 on an annualized basis” .
What Went Wrong
- Revenue fell 6.9% YoY to $131.9M as tariff volatility (temporary 145% China tariffs, Liberation Day changes) caused shipment halts and delays, acutely impacting e-commerce and club channels .
- U.S. segment declined 8.6% YoY; distribution inefficiencies (WMS transition, DC migration) and lower absorption raised distribution costs; some warehouse club sales bypassed warehouses, worsening ratios .
- Larger GAAP loss from a $33.2M non-cash goodwill impairment; adjusted operating income down to $0.9M vs $5.6M prior year .
- Analysts flagged lack of guidance; management cited poor visibility and pricing pass-through timing into Q3 as reasons not to guide .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($M)	$215.2	$140.1	$131.9
Gross Margin %	37.7%	36.1%	38.6%
GAAP Diluted EPS	$0.41	$(0.19)	$(1.83)
Adjusted Diluted EPS	$0.55	$(0.25)	$(0.50)
Adjusted Income from Operations ($M)	$20.2	$(0.9)	$0.9
TTM Adjusted EBITDA ($M)	$55.4	$51.0	$50.7
Liquidity ($M)	$111.7	$89.6	$96.9

Estimates vs Actuals (Q2 2025)	Consensus	Actual
Revenue ($M)	$138.11*	$131.86
EPS (Normalized)	$(0.135)*	$(0.50)

Values retrieved from S&P Global*

Segment Net Sales (YoY)

Segment	Q2 2024 ($M)	Q2 2025 ($M)	YoY %
U.S.	$130.50	$119.32	(8.6%)
International	$11.16	$12.55	12.4%
Total	$141.67	$131.86	(6.9%)

Selected KPIs and Cash/Liquidity

KPI	Q1 2025	Q2 2025
Cash from Operations YTD ($M)	—	$26.06
Net Debt/Adj. EBITDA (x)	3.6x (Mar)	3.5x (Jun)
Net Debt Reduction YTD ($M)	—	$18
Liquidity ($M)	$89.6	$96.9

Non-GAAP reconciliations are provided in company materials .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Full-year financial guidance	FY 2025	None provided (Q1)	None; to reevaluate next quarter	Maintained
Dividend per share	Quarterly	$0.0425 (declared Mar 11, 2025)	$0.0425 payable Nov 14, 2025	Maintained
Sourcing mix	2025 Exit Rate	Target majority outside China by YE25	“On track for capability to move 80% outside China by YE”	Raised specificity
DC relocation (MD)	Go-live	Operational by Q2 2026	On schedule; inefficiencies until go-live	Maintained timing

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
Tariffs & Sourcing Diversification	Accelerating shift out of China; majority by YE25; Mexico ramp; benefits if China tariffs rise	Temporary 145% China tariffs/Liberation Day caused shipment pauses; pricing implemented; cadence normalized starting Q3; targeting ~80% outside China by YE	Near-term disruption; medium-term de-risking improving
Pricing & Elasticity	Price hikes 6–16% effective mid-May; low historical elasticity at low ASPs	Price increases implemented uniformly; limited Q2 impact; expect shelf pricing in Q3; elasticity risk higher on large tabletop sets	Pricing flow-through building in H2
Channel Mix (Club, E-comm, Dollar)	Q4 e-comm strong; Dollar General Dolly program expansion	Club/e-comm pressured by shipment delays; Dollar General under-shipped in Q2 but expected to ship in Q3; program “continues to expand”	Short-term dip; recovery expected Q3
International / Project Concord	Turnaround underway; Europe/Amazon improved margins; breakeven by 2026, $5M 2025 improvement target	Intl sales +12.4% YoY; inventory write-down from Concord; cost actions mostly benefit H2	Improving; H2 profit inflection emphasis
Warehouse/DC Transition	New Hagerstown DC; capex ~$10M; incentives ~$13M; go-live 2026	WMS/DC transition adds near-term inefficiencies; 2026 go-live on schedule	Temporary headwind; long-term efficiency
Liquidity/Leverage	YE24 liquidity $111.7M; Adj. EBITDA $55.4M	Liquidity ~$96.9M; Net debt/Adj. EBITDA 3.5x; OCFF YTD $26.1M	Stable to improving leverage
M&A Pipeline	Active pipeline; disciplined approach; valuation discounts	“Meaningful pickup in unsolicited inbound interest”; evaluating opportunities	Optionality increasing

Management Commentary

“We view the extreme conditions in the second quarter to be largely mitigated as of today…a notable portion of the revenue impact from our second quarter [is] not indicative of the rest of the year.” — CEO Robert Kay .
“Adjusted EBITDA was consistent with the last quarter…cost efficiency actions…over $14,000,000 on an annualized basis.” — CEO Robert Kay .
“Liquidity was approximately $97,000,000…Adjusted EBITDA to net debt ratio…3.5x, an improvement from…March.” — CFO Laurence Winoker .
“There’s about $30,000,000 plus [of sales] related to [shipment delays and pauses].” — CEO Robert Kay .
“We’ve thought about [guidance]. We don’t see clear visibility…we will reevaluate that for next quarter.” — CEO Robert Kay .

Q&A Highlights

Shipment delays magnitude and timing: ~“$30M plus” of revenue shifted/delayed from Q2; most disruption past; some ship dates slide within H2, with risk into Jan 2026 for certain programs .
Guidance stance: Despite tariff clarity improving, management declined reinstating guidance due to still-poor visibility and pending price pass-through effects; reconsidering for next quarter .
Pricing cadence and elasticity: Price increases largely implemented; limited Q2 P&L impact; shelf pricing hits in Q3; historically low elasticity on low-ticket items (e.g., can openers), higher sensitivity on larger tabletop sets .
Dollar General / Dolly: Q2 under-ship tied to tariff disruptions; program expanding, with shipments expected in Q3; discussions to add additional brands at Dollar General ongoing .
Distribution costs: Higher distribution cost ratios from lower volume absorption, WMS implementation, and DC transition; warehouse club direct import mix also distorted metrics .

Estimates Context

Revenue: Missed by ~$6.25M (Actual: $131.86M vs $138.11M consensus*). EPS (Normalized): Missed by ~$0.37 (Actual: $(0.50) vs $(0.135) consensus*). Values retrieved from S&P Global*
Implications: Street likely reduces H2 revenue cadence modestly to reflect some pushed programs and slower club/e-comm normalization, while raising gross margin trajectory on confirmed pricing flow-through and mix stability. Adjusted operating income expectations likely shift into H2 with DC/WMS inefficiencies and Concord cost benefits timing .

Key Takeaways for Investors

The quarter’s miss was predominantly tariff/disruption-driven rather than demand destruction; shipments and pricing cadence are normalizing into Q3, setting up a cleaner H2 compare .
Gross margin resilience at 38.6% and cost takeouts (> $14M annualized) provide downside protection as price increases roll through shelves in Q3 .
International momentum and Project Concord actions pivot H2 profitability higher; watch for Europe/Amazon and APAC contributions and Concord milestones .
Liquidity remains solid with YTD OCFF of $26.1M and leverage improving to 3.5x net debt/Adj. EBITDA; dividend maintained, signaling confidence .
Sourcing diversification toward ~80% outside China by YE reduces future tariff volatility; near-term DC/WMS inefficiencies are transitory with 2026 go-live .
Potential M&A optionality rising with increased inbound interest—could be a catalyst if accretive and strategically aligned .
Near-term trading lens: stock likely sensitive to signs of Q3 shipment catch-up, pricing flow-through, and any reinstatement of guidance next quarter; medium-term thesis hinges on execution of sourcing shift, Concord, and DC transition to structurally improve margins and cash flow .

Citations:

Q2 2025 press release and 8-K:
Q2 2025 call transcript:
Q1 2025 8-K/Transcript:
Q4 2024 press release/Transcript:

Values retrieved from S&P Global*: Revenue Consensus Mean (Q2 2025), EPS Normalized Consensus Mean (Q2 2025), Primary EPS Consensus Mean (Q2 2025), Primary EPS/Revenue # of Estimates, Target Price consensus.

LIFETIME BRANDS, INC (LCUT)·Q2 2025 Earnings Summary