How did DLTH's revenue and expenses trend in Q4 2025 compared to previous quarters?

Duluth Holdings Inc. (DLTH) experienced a decline in revenue and an increase in expenses in Q4 2025 compared to the previous quarter (Q3 2025):

1. Revenue Trend: DLTH's net sales decreased by 1.8% in Q4 2024, amounting to $241.3 million. This decline in revenue can be attributed to various factors, including:
   • Processing delays at the legacy fulfillment center, which affected order fulfillment and customer satisfaction.
   • Reduced foot traffic and lower average order value (AOV) in retail stores, leading to a 6.9% decline in retail sales.
   • Unusually warmer weather impacting sales of fall/winter goods, which affected the second half of the quarter.
2. Expense Trend: The total expenses in Q4 2025 are not available. However, the Q3 2025 expenses provide insights into the trend. SG&A expenses increased by 1.5% to $110.7 million in Q4 2024. Excluding the $3 million software impairment charges, adjusted SG&A decreased by 1.3% to $107.7 million compared to $109.1 million in the same period a year ago. This indicates a slight decrease in certain operational expenses despite the overall increase.
3. Gross Margin Impact: The gross margin contracted by 410 basis points in Q4 2024, primarily due to an 8.9% decline in average unit retail prices (AUR) as the company drove unit sales and reduced inventory levels. However, the company continued to realize improved product costs through direct-to-factory sourcing initiatives.
4. Financial Position: Despite the challenges, DLTH finished the quarter with higher quality inventory, no debt, and $103 million in liquidity. This financial stability provides the company with the flexibility to manage the business and invest in strategic initiatives for future growth.

In conclusion, DLTH faced revenue decline and expense increase pressures in Q4 2025 due to various internal and external factors. However, the company's proactive measures to improve operational efficiency, manage expenses, and maintain financial flexibility are indicative of its commitment to long-term sustainability.