Shares of Solo Brands, Inc. SBDS have gained 1.2% since the company reported its earnings for the quarter ended June 30, 2026, outperforming the S&P 500 index’s 0.6% decline over the same time frame. Over the past month, however, the stock has declined 11.1% against the S&P 500’s 2.2% growth.
Solo Brands reported second-quarter 2026 adjusted net income of $1.52 per share, up from 2 cents per share in the prior-year quarter.
Net sales of $88.5 million denoted a 4.1% decline from $92.3 million a year earlier, primarily reflecting lower direct-to-consumer (“DTC”) sales at Solo Stove and Chubbies, partly offset by higher Watersports retail and international sales.
The company incurred a net loss attributable to Solo Brands of $4.4 million, narrower from a loss of $13.5 million a year ago. Adjusted net income was $3.9 million compared with essentially break-even results in the prior-year quarter.
Other Key Business Metrics
Gross profit decreased to $53 million from $56.6 million, while gross margin contracted to 59.9% from 61.3%. Adjusted gross margin edged up to 61.8% from 61.7%. Operating expenses fell 25.5% to $49.5 million, while SG&A expenses declined 10.6% to $42.6 million. Adjusted EBITDA increased 28.6% to $13.5 million from $10.5 million, with the adjusted EBITDA margin expanding to 15.3% from 11.4%.
Segment performance was mixed. Solo Stove sales fell 14.7% to $32.7 million, and Chubbies sales declined 8.6% to $40.6 million. Watersports sales jumped 59.2% to $15.1 million, benefiting from an expanded partnership with a key retail customer. International sales increased 46% year over year to $9.8 million.
Management Commentary
CEO John Larson said that April and May started strongly, but DTC demand softened in June as consumers remained selective with discretionary spending. Management said those softer trends continued through July. Despite the sales pressure, Larson highlighted progress in profitability, cash generation and expense discipline. New product launches represented nearly half of Solo Stove's second-quarter DTC sales, while the company is pursuing growth through product innovation, higher-return channels and international expansion.
Management also highlighted expansion outside the United States, including new distribution agreements across Europe, the U.K. and parts of APAC. The company said international growth may be uneven as new partners are added, but views the opportunity as substantial.
Factors Influencing the Headline Numbers
Lower DTC demand weighed on consolidated sales, while Watersports retail growth and international expansion provided partial offsets. Gross margin was pressured by channel and product mix and a $1.4 million raw-material inventory write-off tied to the closure of Oru's Mexico manufacturing facility. These pressures were partly offset by tariff refunds, including approximately $2.4 million of prior-period IEEPA tariff refunds recorded as reductions to cost of sales.
Profitability benefited from cost reductions. Lower employee compensation, distribution costs and disciplined marketing spending helped reduce SG&A, while restructuring, contract termination and impairment charges declined to $1.9 million from $10.3 million.
Balance Sheet and Cash Flow Update
Cash and cash equivalents increased to $35.4 million as of June 30, 2026, from $20 million as of Dec. 31, 2025. The company had no outstanding borrowings under its revolving credit facility at the second-quarter end.
Total assets decreased to $343 million from $360.3 million.
Long-term debt, net, increased to $245 million from $240.3 million, while the current portion of long-term debt rose to $4.2 million from $1.8 million. Total equity declined to $42.3 million from $51.4 million at Dec. 31, 2025.
For the six months ended June 30, 2026, Solo Brands generated $20 million in net cash from operating activities compared with $64.3 million used in operating activities in the prior-year period.
Guidance
Solo Brands reaffirmed its full-year 2026 outlook, calling for net sales of $280-$310 million and adjusted EBITDA of $24-$30 million. The forecast assumes continued uneven demand, ongoing tariff effects and benefits from payroll reductions and restructuring initiatives.
Other Developments
During the quarter, Solo Brands began reporting Watersports as a separate operating segment. The company also continued restructuring its distribution network, including closing a U.S. distribution center and Oru's manufacturing facility in Mexico and transitioning Oru fulfillment to its primary Texas distribution facility. The actions are expected to reduce Solo Brands' U.S. distribution footprint from five facilities in 2025 to one beginning in the fourth quarter.
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Solo Brands, Inc. (SBDS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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