Duluth Holdings Inc. Announces First Quarter 2024 Financial Results

MOUNT HOREB, Wis., May 30, 2024 (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 28, 2024.

Summary of the First Quarter Ended April 28, 2024

• Net sales of $116.7 million compared to $123.8 million in the prior year first quarter
• Quarter-end inventory composition healthy, down 5.9% compared to prior year first quarter
• Net loss of $7.9 million and Adjusted EBITDA¹ of $1.8 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, “Despite some key quarter wins, we are not satisfied with our first quarter results which fell short of our internal expectations. Our top-line quarter performance, at a decline of 5.7%, was hampered by challenging traffic and a sub-par in-stock position following stronger than expected unit selling late in the fourth quarter. We took swift action to improve our in-stock position in core items, which improved throughout the quarter and into the second quarter to date.

On a lighter note, during the quarter we furthered our emotional connection and awareness with both existing and new customers with the launch of a successful underwear trade up event, which drove a store traffic increase of 50% on the day of the event with more than one third of the trade ups coming from women. We also launched our #showusyourbibs social media campaign which garnered tremendous buzz and supported continued growth in women’s-only buyers.” Sato concluded, “I am pleased with the progress we’re making against our longer-term strategic initiatives. Our focus for 2024 remains on accelerating the operational improvements of the strategic roadmap, expanding our pipeline of new and innovative products, optimizing our marketing mix, improving gross profit margin rates, and controlling what we can control by prudently managing expenses and inventories.”

Operating Results for the First Quarter Ended April 28, 2024

Net sales decreased 5.7% to $116.7 million, compared to $123.8 million in the same period a year ago. Direct to-consumer net sales decreased by 5.1% to $75.4 million primarily driven by a decline in site visits compared to the prior year. Retail store net sales decreased by 6.8% to $41.2 million due to slower store traffic, partially offset by strong conversion rates.

Gross profit decreased to $61.6 million, or 52.8% of net sales, compared to $65.7 million, or 53.0% of net sales, in the corresponding prior year period. While new product cost came in better than expected, we are seeing a delay in impact to gross margin rate as we sell through older, higher cost inventory.

Selling, general and administrative expenses increased 0.6% to $70.6 million, compared to $70.2 million in the same period a year ago. As a percentage of net sales, selling, general and administrative expenses deleveraged to 60.5%, compared to 56.7% in the corresponding prior year period mainly driven by higher fixed costs and depreciation from foundational strategic investments, partially offset by efficiencies across logistics and the fulfillment center network.

Balance Sheet and Liquidity

The Company ended the quarter with $6.8 million of cash and cash equivalents, net working capital of $75.9 million, $11.0 million outstanding on the Duluth Trading $200 million revolving line of credit and $195.8 million of liquidity.

Updated Fiscal 2024 Outlook

The Company is updating its fiscal 2024 outlook as follows:

• Net sales of approximately $640 million
• Adjusted EBITDA¹ of approximately $39 million
• EPS of approximately ($0.22) per diluted share
• Capital expenditures, inclusive of software hosting implementation costs, of approximately $25 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. 

(Tables Follow)