Oct 27, 2026 earnings call — Sales growth and tariff-driven margin change
Sales increased approximately 13%, driven by broad brand strength and tariff-related margin benefits that lifted profitability this quarter.
Revenue $0.1B (est $0.1B) · EPS $1.76 (est $1.50)
Key quotes
"Sales increased approximately 13%, marking our second consecutive quarter of double-digit top line growth and an acceleration from the 12% gain we delivered in Q2."
"This quarter, our gross profit margin included recognition of approximately $2.5 million in IEEPA refunds and $3.5 million from sell-through of inventory in our free trade zone that had no incremental tariffs."
"so we probably spent between an extra $1 million to $2 million in digital marketing spend in this quarter."
Analyst Q&A 3
Gross margin, inventory and Western sales
Q (Janine Hoffman Stichter · BTIG): Analyst asked what drove third-quarter gross margin, where long-term gross margin might settle, inventory adequacy, and how the Western retail market is performing.
A: Margins came in better than expected due to stronger full-price selling and a higher DTC mix. Management said next year’s margins are still TBD because of product cost and freight pressures and possible tariff changes, but the long-term 40% gross margin target remains a useful modeling number. Inventory is down a bit though pairs are up; some areas need more stock so they are using expedited shipping and investing in raw materials to shorten lead times. They said Western retail, especially Durango and new Rocky Western product, is performing well with shelf-space gains.
"So TBD on next year's margins, but we think that long term, that target of 40% is still a good number to use for modeling purposes." — Thomas Robertson (CFO)
Q4 sales outlook and cost pressures
Q (Jonathan Komp · Baird): Analyst asked for color on fourth-quarter revenue growth by channel and whether strength is from sell-in or sell-through, and then asked about cost inflation, pricing plans for 2027, and operating leverage excluding tariff benefits.
A: Guidance of 10.5% for the year implies about an 8-ish percent sales increase in Q4, with retail growing slightly faster than wholesale but DTC facing a hard comparison from last year’s weather. They said sell-through looks strong—bookings and at-once business are healthy—but military contract manufacturing sales will drop by a couple of million in Q4. On costs, container pricing and oil remain pressures; tariffs could change the outlook, so they are in a wait-and-see mode and will use pricing as needed, and they expect to discuss 2027 details on the next call; the net tariff benefit of the year was about $13.5 million and will not recur.
"So the guidance for the year is at that 10.5% and so we -- that would imply kind of an 8-ish percent overall sales increase in the fourth quarter." — Thomas Robertson (CFO)
Sourcing variance and digital ad spending
Q (William Dezellem · Tieton Capital Management): Analyst asked how large the sourcing variances were that affected gross margin, and then asked for a full view of the increased digital advertising spend and whether that spend is incremental, across brands, and planned for Q4.
A: Sourcing variances were approximately high 6 figures. They shifted digital strategy to a CAC approach, spending about an extra $1 million to $2 million on digital marketing in the quarter and expect that to increase in Q4; the spend is mostly incremental though some dollars moved away from traditional marketing. They said digital lifts were broad across brands (commercial military was the one soft spot due to raw material constraints), and the digital programs can be turned off quickly if they stop performing.
"The sourcing variances were approximately high 6 figures." — Thomas Robertson (CFO)