Duluth Holdings Inc.

Good day and welcome to the Duluth Holdings first quarter 2026 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Chris Steffens. Please go ahead.

Thank you and welcome to today's call to discuss Duluth Trading's first quarter financial results. Our earnings release, which was issued this morning, is available on our investor relations website at ir.duluthtrading.com under news releases. I'm here today with Stephanie Pugliese, President and Chief Executive Officer, and Hina Agarwal, Senior Vice President and Chief Financial Officer. On today's call, management will provide prepared remarks and then open the call for questions. Before we begin, I would like to remind you that the comments on today's call will include forward-looking statements, which can be identified by the use of words such as estimate, anticipate, expect, and similar phrases. Forward-looking statements by their nature involve estimates, projections, goals, forecasts, and assumptions, and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statement. Such risks and uncertainties include, but are not limited to, those that are described in our most recent annual report on Form 10-K and other SEC filings as applicable. These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. And with that, I will turn the call over to Stephanie.

Good morning, everyone. and thank you for joining us to discuss our first quarter fiscal 2026 results. I am pleased with our strong first quarter performance. Over the past several quarters, we have committed ourselves to a rigorous strategic pivot, one centered squarely on serving our customers and restoring profitability through focusing on what makes our product special, resetting promotional cadence, driving operational excellence, and expense control. The deliberate actions we took throughout the past year and into the first quarter directly led to an enhanced gross margin, reduced inventory levels, improved overall profitability, and stronger net liquidity. We are a leaner, more efficient business that now prioritizes brand equity and long-term value over short-term volume with low profitability. Coming off of a successful fourth quarter, we continued to tighten both the frequency and depth of our promotional cadence in Q1. We reduced our total global promotional days by over 50%. We also reduced our depth of discount by 700 basis points, allowing full price sales to grow by almost 14% and our average unit retail by 17% year over year. All of these actions resulted in a gross margin expansion of over 500 basis points to 57.4% of net sales. While our intentional pullback on promotions led to improved profitability, in the near term, it has created a decline in top-line revenues. This impact is more acutely felt in our direct channel, which declined by 6%, excluding wholesale. Retail, on the other hand, recorded another positive quarter, with store net sales increasing 3% year-over-year, driven by higher average order values in our comp stores and the addition of the two new stores that opened in fall of last year. Overall this quarter, sales actualized at 98.6 million, a decline of 4% to last year, and an improvement in the trend line from prior quarters. Turning toward marketing, our initiatives in Q1 served as an accelerator to brand awareness and consideration. The introduction of our newest campaign for folks who work their butts off, along with the launch of our Max Gluteus creative campaign, is resonating with our core audience. This creative asset was highly successful, surpassing our previous underwear trade-up events, and it catalyzed positive year-over-year sales growth for our Men's Buck Naked collection. Given this success, we have an extended plan for the folks who work their butts off campaign. We will expand this messaging platform across other legendary product lines, such as Firehose, and utilize it as a sign-off across podcasts, video, and social channels. What also made Q1 uniquely effective was our ability to put two strong category messages out in the market simultaneously. While men's leaned into Max Gluteus, our women's digital channels deployed the dibs on the bibs campaign. This approach drove consumer engagement and elevated brand consideration. Another example of this was our vibrant poppy print launch across the funnel, which created an immediate halo for our entire gardening category. In addition to brand awareness and consideration, the full funnel marketing approach impacted traffic in the quarter. February was expectedly tough as we went up against last year's big dam clearance event. However, traffic trends improved into March and April, an encouraging signal given that we were simultaneously annualizing strategic price increases and lower promotional dates. We know that our most important assets are our customers. As previously shared, our total customer base has experienced some contraction over the last several years. Improving our customer base through marketing spend allocation and other initiatives is showing proof points that reflect a more resilient, higher yielding demographic profile. The quality of our revenue has strengthened. Sales per customer increased by 10% year over year, and this spending growth was uniform across age, income, and gender segments. Most importantly, our Q1 net promoter score increased 16% over last year, reflecting the hard work the team has done to improve operations and keep our promises to our customers, delivering the experience and products that they have come to expect from Duluth. And great product is at the heart of everything we do. Our core collections represented approximately two-thirds of our overall sales and grew 7% compared to the prior year. Our customers are consistently voting yes for high-quality, solution-based apparel that justifies a premium price point. Standing out this quarter was our women's garden collection, centered on our heirloom gardening bibs. This year, we also introduced a new version of our short overalls and our garden dress, both of which have contributed to sales and a healthy gross margin. On the men's side, Buck Naked was a strong performer and our no-quit utility shirt was a new addition to our workwear collection with both long and short sleeve options. Look for them in our upcoming Father's Day ads. We have also continued to operate with discipline throughout the business, and our progress on the bottom line is a result of those efforts. In Q1, we successfully captured variable expense leverage. Efficiencies across our fulfillment center network paired with a reduction in corporate personnel expenses allowed us to lower SG&A by more than $3 million, or 5%. Our turnaround is taking hold as planned. We are focused on core product, and lead with our solution-based apparel in all of our messaging and customer outreach. Our SKUs have been reduced by over 20%, allowing the focus product to shine. Our brand and product messaging is resonating with existing and new customers, and we continue to invest more in upper funnel marketing and reduce our reliance on promotional last-click spend. Our stores are well-stocked and serving our customers well. Margin is expanding as we reduce promotions. Costs are controlled, and financially, we are in a solid position. We have successfully right-sized our balance sheet, ending the first quarter with total inventory down 25%, or $44 million, compared to the prior year. As we look forward to the remainder of fiscal 2026, we are maintaining a disciplined, strategic roadmap We are pleased with how far we've come, and we know that we still have important work to do. This year, we will transition from fixing the balance sheet to strengthening the team, processes, and investments that will drive sustainable growth in the long term. And our customers are at the center of our efforts. Our primary focus is to strengthen our customer file and solidify our position as the official outfitter of doers. Through continued investment to drive traffic and balance our marketing spend, we are investing in future customer file growth and spending less in lower funnel promotional spend. We are continuing our rigorous skew rationalization and improving sell-throughs by ordering the right amount of inventory. By intentionally narrowing our assortment and buying smarter, we ensure that our capital and floor space are hyper-focused on the core high margin hero product lines that resonate most deeply with our self-reliant audience. And we clarify the message for repeat and new customers around our brand attributes and solution-based product. In closing, Q1 was a validation of our strategic discipline. We protected our margins, streamlined our operations, dramatically improved our inventory health, and strengthened our net liquidity to approximately $100 million. We are a leaner, more agile business, and I have the utmost confidence that our talented team will continue to drive sustainable long-term value for our shareholders. We look forward to sharing more information about our future plans at our investor presentation later today. With that, I'll pass it over to our CFO, Hina Agarwal, to discuss our Q1 financials and 2026 outlook in more detail.