MOUNT HOREB, Wis., June 01, 2023 (GLOBE NEWSWIRE) Duluth Holdings Inc. (dba, Duluth Trading Company) (“Duluth Trading” or the “Company”) (NASDAQ: DLTH), a lifestyle brand of men’s and women’s workwear, casual wear, outdoor apparel and accessories, today announced its financial results for the fiscal first quarter ended April 30, 2023.

Highlights for the First Quarter Ended April 30, 2023

• Net sales increase 0.7% to $123.8 million compared to $122.9 million in the prior year first quarter
• Women’s business continues strong momentum with net sales growth of 14.4% over prior year first quarter
• AKHG sub-brand net sales increase 42.5% compared to prior period first quarter
• Inventories are well managed, down 4.8% compared to prior period first quarter and down 6.4% compared to year-end
• Adjusted EBITDA¹ of $5.3 million

¹See Reconciliation of net loss to EBITDA and EBITDA to Adjusted EBITDA in the accompanying financial tables.

Management Commentary

President and CEO Sam Sato commented, “While consumers remain selective in their discretionary spend, we are meeting their demands with much improved in-stock positions and higher sell-through rates than last year. As planned, our inventory balance is below prior year and on track to meet our goals for the year. We are also excited to see progress that is on-track for our strategic investment in a new automated fulfillment center in Adairsville, GA. The facility will go live in the third quarter and handle over half of our direct order volume in the near-term. Our investments in the supply chain and fulfillment automation set the foundation to enable extended growth into new channels, brands and customer adjacencies.”

Sato concluded, “Customers are responding well to our Spring & Summer collections featuring functional styles for outdoor work and play for those that take on life with their own two hands. Rooted in ruggedness, our Duluth garden, landscaping and planting assortment continues to build on its multi-year success, expanding in both size and breadth across apparel and gear for both Men and Women. The Women’s Heirloom collection of garden shirts, overalls, aprons and vests have been a cornerstone to this year’s offering and have exceeded our expectations setting the stage for many years of future growth for this anchor category. Our Men’s business experienced a significant improvement in trend from the prior quarter with growth that was down slightly to last year. Supported by the great momentum in garden, coupled with the AKHG Women’s assortment, our Women’s business overall grew 14% in the first quarter fueling total company net sales growth of 0.7%.”

Operating Results for the First Quarter Ended April 30, 2023

Net sales increased 0.7% to $123.8 million, compared to $122.9 million in the same period a year ago. Direct-to-consumer net sales increased by 2.3% to $79.5 million driven by a higher conversion rate. Retail store net sales decreased by 2.1% to $44.3 million due to lower store traffic, which was partially offset by strong conversion rates.

Gross profit decreased to $65.7 million, or 53.0% of net sales, compared to $67.1 million, or 54.6% of net sales, in the corresponding prior year period. The decrease in gross profit margin rate was primarily due to a lower product margin rate, which was partially offset by expensing $3.9 million of expedited freight during the first quarter of 2022 compared to $0.1 million during the current quarter, impacting the quarter-over-quarter margin rate variance by 3.1%.

Selling, general and administrative expenses increased 3.2% to $70.2 million, compared to $68.0 million in the same period a year ago. As a percentage of net sales, selling, general and administrative expenses increased to 56.7%, compared to 55.3% in the corresponding prior year period.

The increase in selling, general and administrative expense was partially due to higher occupancy costs from the new automated Southeast fulfillment center, coupled with increased amortization of software hosting implementation costs from continued capital investments.

The effective tax rate related to controlling interest was 27% in the current period compared to 25% prior year period.

Balance Sheet and Liquidity

The Company ended the quarter with a cash balance of $9.2 million, net working capital of $88.7 million, and no outstanding balance on the Duluth Trading $200 million revolving line of credit.

End of period inventory of $145.0 million represented a 4.8% decrease compared to prior period first quarter and down 6.4% compared to year-end.

Reaffirmed Fiscal 2023 Outlook

The Company’s reaffirmed fiscal 2023 outlook is as follows:

• Net sales in the range of $645 million to $660 million
• Adjusted EBITDA¹ in the range of $47 million to $49 million
• EPS in the range of $0.02 to $0.08 per diluted share
• Capital expenditures, inclusive of software hosting implementation costs, of approximately $55 million

¹See Reconciliation of forecasted net income to forecasted EBITDA and forecasted EBITDA to forecasted Adjusted EBITDA in the accompanying financial tables.

About Duluth Trading

Duluth Trading is a lifestyle brand for the Modern, Self-Reliant American. Based in Mount Horeb, Wisconsin, we offer high quality, solution-based casual wear, workwear and accessories for men and women who lead a hands-on lifestyle and who value a job well-done. We provide our customers an engaging and entertaining experience. Our marketing incorporates humor and storytelling that conveys the uniqueness of our products in a distinctive, fun way, and are available through our content-rich website, catalogs, and “store like no other” retail locations. We are committed to outstanding customer service backed by our “No Bull Guarantee” - if it’s not right, we’ll fix it. 

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