Superior Group's Q2 2025: Navigating Tariff Challenges and Contradictory Revenue Signals

Tariff impact and mitigation strategies, sales and revenue expectations, inventory levels and stockout avoidance, employment trends and demand are the key contradictions discussed in Superior Group of Companies' latest 2025Q2 earnings call.



Revenue Growth and Market Share Expansion:
- Superior Group of Companies reported a 9% year-over-year increase in consolidated revenue for the second quarter of 2025.
- The Branded Products segment saw a significant 14% growth during the quarter.
- This growth was driven by market share gains, negotiating cost relief with vendors, and leveraging a diverse supply base to provide customers with compelling value despite economic uncertainties.

Strategic Cost Management and Profitability:
- Superior Group achieved net income per diluted share of $0.10 for the second quarter, showing strong sequential improvement from the first quarter and an increase from $0.04 per diluted share in the second quarter of last year.
- The improvement was due to better top-line results, a healthy gross margin, and driving a slight improvement in SG&A as a percent of sales.
- The company launched an initiative to reduce budgeted expenses during the second quarter, which contributed to improved profitability.

Impact of Tariffs and Inventory Strategy:
- Despite tariff pressures, the company managed to keep its gross margin stable, with health care apparel gross margin experiencing a decrease due to higher tariff costs.
- Strategic inventory buys and leveraging long-term supplier relationships mitigated some tariff impacts.
- The company encouraged early ordering, particularly for merchandise already in the U.S., to help manage these challenges.

Contact Center Challenges and Pipeline Opportunities:
- The contact center business saw a 3% decline in revenues, impacted by customer downsizing and attrition.
- The company's contact center pipeline was at a record high, suggesting opportunities for future growth.
- The slow pace of new customer acquisition was noted, but the company is working diligently to close opportunities as quickly as possible, with some expected to impact the fourth quarter and beyond.