Lakeland Revenue Jumps 36% in Fiscal Q2

Key Points

• Revenue rose 36% year over year to $52.5 million in Q2 FY2026, driven by a 113% jump in Fire Services product sales.

• Gross margin declined to 35.9%, reflecting supply chain costs and less favorable regional and product mix.

• Full-year adjusted EBITDA guidance was lowered, with management citing ongoing tariff and macroeconomic risks.

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Lakeland Industries (NASDAQ:LAKE), a leading maker of industrial protective clothing and personal protective equipment (PPE), reported its second quarter fiscal 2026 results on September 9, 2025. The company posted record revenue, with Fire Services products accounting for nearly half of total sales and significant growth in major markets like the U.S. and Europe. While the quarter featured improved earnings and cost-saving efforts, margin pressures and lower sales in Latin America led management to trim its full-year financial forecast. Overall, the period reflected strong top-line performance, but also highlighted ongoing challenges tied to tariffs, supply chain costs, and market mix.

About Lakeland Industries and Key Business Drivers

Lakeland Industries produces a range of protective clothing products. Its offerings span from disposable garments for light industrial use to specialized chemical suits and advanced fire services apparel. The business serves clients in sectors such as petrochemical, utilities, government agencies, and first responders.

The company's recent strategy has focused on expanding its product mix—especially high-performance and fire-related PPE—and on broadening its global footprint through acquisitions. The ability to innovate and meet evolving safety standards, maintain a strong distribution network, and adapt to regulatory demands are all key factors that affect its success and position in the market.

Second Quarter Results: Revenue, Margins, and Product Progress

This quarter, Lakeland achieved record revenue of $52.5 million, reflecting a 36% increase over the second quarter of fiscal 2025. Fire Services products, such as firefighter gear and boots, led the way with $25.6 million in sales, more than double the prior year and now comprising nearly half of total revenue. The growth included a substantial $3.1 million boot order shipped to the Italian Ministry of Interior via the Jolly Scarpe line, signaling an ability to win large government contracts.

Geographically, sales surged in both the U.S. and Europe—U.S. revenue increased 78% and Europe net sales rose 113% compared to the second quarter of fiscal 2025. However, Latin America sales dropped 42%, mainly due to delayed orders caused by tariff uncertainties and currency issues. Management stated this region remains a focus for future recovery but cautioned that challenges will persist in the second half of the year.

Gross margin fell to 35.9% in the second quarter of fiscal 2026, a decrease from 39.6 % in the same quarter last year but was an improvement from the prior quarter. The decline was linked to higher supply chain costs, tariffs, and a greater sales mix from regions and products with lower margins, specifically increased orders of Jolly fire boots and weaker results from Latin America. Organic gross margin, which excludes acquisitions, also slipped to 38.6% from 41.0% (non-GAAP).

Operating expenses grew by 15% to $19.3 million, reflecting costs associated with recent acquisitions. However, the company reported lower acquisition and restructuring fees, plus it began to benefit from cost-saving initiatives. The period included a $3.6 million lease impairment charge related to the Monterrey, Mexico facility. Despite these pressures, net income was positive at $0.8 million, compared to a loss of $1.4 million in the prior year.

Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization, excluding foreign exchange impact) climbed 89% to $5.1 million, with improved margins supported by higher revenue and some sequential recovery in product-level profitability. The adjusted EBITDA margin reached 9.6%, compared to 6.9% in the second quarter of fiscal 2025.

Cash and cash equivalents were $17.7 million, with working capital higher year to date from inventory builds ahead of new orders and tariff exposure. Inventory stood at $90.2 million. To support liquidity, Lakeland completed a $6.1 million sale and partial leaseback of its Decatur, Alabama warehouse after the quarter, with proceeds going toward reducing short-term debt. The period also saw closures of facilities in England and Arkansas as part of ongoing cost-saving and operational efficiency programs, aiming for a total of $4 million annualized OpEx savings already underway and a further $3 million targeted for the second half of the year.

The company introduced new product innovations such as the Pacific traditional fire helmet featuring the "Halo Flex" suspension system—a technology designed for comfort and enhanced safety. Operational improvements focused on inventory optimization, product integration, and further alignment with regulatory requirements, particularly to meet upcoming tender cycles in the U.S. and EMEA (Europe, Middle East, and Africa).

Financial Outlook and What to Watch Ahead

Management lowered its outlook for the fiscal year, now projecting revenue toward the low end of the $210–$220 million range and adjusted EBITDA (excluding foreign exchange) at $20–$24 million—down from previous guidance of $24–$29 million. The revision was attributed to ongoing tariff issues, higher supply chain costs, and continued delays in Latin America. The company emphasized that it will continue to monitor the global tariff environment and adjust through pricing, operational efficiencies, and further diversification of its supply chain.

In the quarters ahead, investors should keep an eye on the timing and strength of Latin America’s recovery and execution of cost-saving programs. The potential for new tender wins in the U.S. and Europe, especially for Fire Services gear, may drive performance, but management noted that orders from these cycles—and associated regulatory changes—may take until late in the fiscal year or into next year to materialize. The degree to which Lakeland can sustain gross margin improvement and work through operational headwinds will be essential for its medium-term performance. The company paid a quarterly dividend of $0.03 per share on August 22, 2025.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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