Joe Hendrickson Duluth Holdings' (NASDAQ:DLTH) 2Q24 was not very surprising from a results perspective, but the markets liked the quarter, with the stock reaping almost 30% in the few days after the release. This seems normal for a company with significant operational leverage, in which small tweaks to sales and margins make a big difference in profitability. From an operational standpoint, I still do not see improvement in what, I believe, are Duluth's key operational problems: assortment and inventory man ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________ FORM 10-Q _________________________________________ þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 28, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 001-37641 __________________________________ ...

Duluth Holdings Inc. (NASDAQ:DLTH) Q2 2024 Earnings Conference Call August 29, 2024 9:30 AM ET Company Participants Nitza McKee - Investor Relations Sam Sato - President & Chief Executive Officer Heena Agrawal - Senior Vice President & Chief Financial Officer Conference Call Participants Janine Stichter - BTIG Jonathan Komp - Baird Dylan Carden - William Blair Operator Good morning, and welcome to the Duluth Holdings Inc. Second Quarter 2024 Conference Call. [Operator Instructions]. Please note this event i ...

Exhibit 99.1 Duluth Holdings Inc. Announces Second Quarter 2024 Financial Results Year-over-year net sales growth of 1.8% to $141.6 million Benefiting from our product and sourcing initiatives, gross margin expands 90 basis points to 52.3% Strong financial position with no debt and approximately $210 million of liquidity Reaf irmed Fiscal 2024 outlook excluding restructuring expense and sales tax expense accrual MOUNT HOREB, WI – August 29, 2024 – Duluth Holdings Inc. (dba, Duluth Trading Company) ("Duluth ...

Core Viewpoint - Duluth Holdings reported a quarterly loss of $0.02 per share, outperforming the Zacks Consensus Estimate of a loss of $0.12, indicating an earnings surprise of 83.33% [1] - The company generated revenues of $141.62 million for the quarter ended July 2024, exceeding the Zacks Consensus Estimate by 7.04% [2] Financial Performance - The loss per share of $0.02 compares favorably to a loss of $0.06 per share a year ago, showing improvement [1] - Year-over-year revenue increased from $139.1 million to $141.62 million, reflecting a positive growth trend [2] Market Position - Duluth Holdings shares have declined approximately 40% since the beginning of the year, contrasting with the S&P 500's gain of 17.2% [3] - The company has surpassed consensus EPS estimates only once in the last four quarters [2] Future Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.23, with expected revenues of $139 million, and for the current fiscal year, the estimate is -$0.23 on revenues of $639.5 million [7] - The Zacks Industry Rank places the Textile - Apparel sector in the bottom 30% of over 250 Zacks industries, which may impact stock performance [8] Estimate Revisions - The trend for estimate revisions for Duluth Holdings is mixed, leading to a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market [6] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions [5]

Core Viewpoint - Duluth Holdings Inc. reported a year-over-year net sales growth of 1.8% to $141.6 million for the second quarter of fiscal 2024, while also expanding its gross margin and maintaining a strong financial position with no debt and approximately $210 million in liquidity [1][2][13]. Financial Performance - Net sales increased by 1.8% to $141.6 million compared to $139.1 million in the same period last year [6]. - The company reported a net loss of $3.7 million, with an adjusted net loss of $0.6 million, which excludes $1.6 million in restructuring expenses and a $2.4 million non-recurring sales tax expense accrual [2][10]. - Adjusted EBITDA rose by $2.0 million to $10.6 million, representing 7.5% of net sales [2][29]. - Earnings per diluted share were reported at ($0.11), with an adjusted EPS of ($0.02) [2][32]. Operational Highlights - The company experienced a 5.6% increase in direct-to-consumer net sales, totaling $91.7 million, driven by higher site conversion rates, while retail store net sales decreased by 4.4% to $49.9 million due to slower store traffic [6][8]. - Gross profit increased to $74.0 million, or 52.3% of net sales, up 90 basis points from the previous year, attributed to sourcing initiatives [7]. - Selling, general and administrative expenses rose by 4.6% to $76.3 million, including a $2.4 million non-recurring sales tax expense [8]. Strategic Initiatives - The company is in phase two of its fulfillment center network plan, which aims to maximize productivity and capacity, with a successful automated fulfillment center in Adairsville, Georgia, processing 58% of total company volume [5][12]. - Duluth Trading has expanded its product offerings, including new lines such as Duluth Reserve and Bullpen 3D, and successfully hosted a trade-up event that increased customer engagement and sales [4][3]. Financial Outlook - The company reaffirmed its fiscal 2024 outlook, projecting net sales of approximately $640 million, an adjusted EPS of approximately ($0.22), and adjusted EBITDA of around $39 million [14].

MOUNT HOREB, Wis., Aug. 15, 2024 (GLOBE NEWSWIRE) -- Duluth Holdings Inc. (dba, Duluth Trading Company) ("Duluth Trading") (NASDAQ: DLTH), a lifestyle brand of men's and women's casual wear, workwear and accessories, today announced that it will report second quarter 2024 financial results before market on Thursday, August 29, 2024. A conference call and audio webcast with analysts and investors will be held on Thursday, August 29, 2024 at 9:30 am Eastern Time, to discuss the results and answer questions. L ...

[PART I—Financial Information](index=3&type=section&id=Part%20I—Financial%20Information) This part presents unaudited financial statements, management's discussion, market risk, and internal controls [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Duluth Holdings Inc.'s unaudited condensed consolidated financial statements and detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific dates | Metric | April 28, 2024 (in thousands) | January 28, 2024 (in thousands) | | :------------------------------------------ | :------------------------------ | :------------------------------ | | Total Assets | $471,383 | $490,453 | | Total Liabilities | $256,080 | $268,279 | | Total Shareholders' Equity | $215,303 | $222,174 | | Cash and cash equivalents | $6,799 | $32,157 | | Inventory, net | $136,434 | $125,757 | | Duluth line of credit | $11,000 | $— | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, including net sales, gross profit, operating loss, and net loss | Metric | Three Months Ended April 28, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | | :------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Net sales | $116,684 | $123,759 | | Gross profit | $61,624 | $65,651 | | Operating loss | $(8,971) | $(4,549) | | Net loss attributable to controlling interest | $(7,873) | $(3,869) | | Basic/Diluted earnings per share | $(0.24) | $(0.12) | [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income) This section details the company's comprehensive loss, including net loss and other comprehensive income items | Metric | Three Months Ended April 28, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | | :------------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Net loss | $(7,865) | $(3,877) | | Unrealized security loss arising during the period | $(140) | $(79) | | Comprehensive loss attributable to controlling interest | $(7,978) | $(3,928) | [Condensed Consolidated Statement of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Shareholders%27%20Equity) This section presents changes in shareholders' equity, including retained earnings and accumulated comprehensive loss | Metric | January 28, 2024 (in thousands) | April 28, 2024 (in thousands) | | :------------------------------------------ | :------------------------------ | :------------------------------ | | Total shareholders' equity | $222,174 | $215,303 | | Retained earnings | $123,816 | $115,943 | | Accumulated other comprehensive loss | $(427) | $(532) | - The decrease in retained earnings is primarily due to a net loss of **$7,873 thousand** for the period[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports cash inflows and outflows from operating, investing, and financing activities | Metric | Three Months Ended April 28, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | | :------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Net cash used in operating activities | $(33,666) | $(13,973) | | Net cash used in investing activities | $(1,477) | $(21,348) | | Net cash provided by (used in) financing activities | $9,785 | $(1,017) | | Decrease in cash and cash equivalents | $(25,358) | $(36,338) | | Cash and cash equivalents at end of period | $6,799 | $9,210 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section provides detailed explanations of accounting policies, significant estimates, and financial information [1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION](index=10&type=section&id=1.%20NATURE%20OF%20OPERATIONS%20AND%20BASIS%20OF%20PRESENTATION) This note describes the company's business, reporting structure, and fundamental principles of financial statement preparation [A. Nature of Operations](index=10&type=section&id=A.%20Nature%20of%20Operations) This section details Duluth Holdings Inc.'s business as a lifestyle brand, its omnichannel sales, and stock structure - Duluth Holdings Inc. is a lifestyle brand of men's and women's casual wear, workwear, and accessories, primarily sold through its omnichannel platform under the Duluth Trading name[31](index=31&type=chunk) - The Company reports one reportable external segment[32](index=32&type=chunk) - The Company has Class A common stock (ten votes per share) and Class B common stock (one vote per share), with Class B trading on NASDAQ Global Select Market under 'DLTH'[33](index=33&type=chunk) [B. Basis of Presentation](index=10&type=section&id=B.%20Basis%20of%20Presentation) This section outlines the accounting standards, consolidation principles, fiscal periods, and unaudited nature of interim statements - Condensed consolidated financial statements are prepared in accordance with U.S. GAAP and consolidate TRI Holdings, LLC as a variable interest entity[34](index=34&type=chunk) - Fiscal 2024 is a 53-week period ending February 2, 2025; Fiscal 2023 was a 52-week period ending January 28, 2024[35](index=35&type=chunk) - Interim financial statements are unaudited and include normal and recurring adjustments[36](index=36&type=chunk) [C. Impairment Analysis](index=10&type=section&id=C.%20Impairment%20Analysis) This section confirms no triggering events or indicators of asset impairment were identified during the reporting period - No triggering events or indicators of asset impairment were noted as of April 28, 2024, and for the three months ended[37](index=37&type=chunk) [D. Inventory](index=10&type=section&id=D.%20Inventory) This section details the valuation methods for inventory, including FIFO, and the significant estimates involved in its assessment - Inventory is valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method[38](index=38&type=chunk) - Significant estimates in inventory valuation include obsolescence (excess, slow-moving, lower of cost or market reserves) and shrinkage, requiring management judgment[38](index=38&type=chunk) - Retail store physical inventory counts are performed in July, potentially causing fluctuations in second fiscal quarter results[39](index=39&type=chunk) [E. Prepaid Expenses and Other Assets](index=11&type=section&id=E.%20Prepaid%20Expenses%20and%20Other%20Assets) This section provides a breakdown of prepaid expenses and other assets, including goodwill, intangible assets, and software costs | Category | April 28, 2024 (in thousands) | January 28, 2024 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------ | | Prepaid expenses & other current assets | $17,537 | $16,488 | | Other assets, net | $9,629 | $9,020 | - Other assets, net, include goodwill (**$402 thousand**), intangible assets (**$428 thousand**), and non-current software hosting implementation costs (**$7,403 thousand**) as of April 28, 2024[41](index=41&type=chunk) [F. Seasonality of Business](index=11&type=section&id=F.%20Seasonality%20of%20Business) This section explains the seasonal nature of the company's business, with significant revenue and profit in the fourth quarter - The Company's business is seasonal, with a significant portion of revenue and operating profit recognized in the fourth fiscal quarter due to increased holiday sales[42](index=42&type=chunk) [G. Cash and Cash Equivalents](index=11&type=section&id=G.%20Cash%20and%20Cash%20Equivalents) This section defines cash equivalents, including short-term investments and amounts receivable from credit card issuers - Cash equivalents include short-term investments with original maturities of three months or less and amounts receivable from credit card issuers, typically converted to cash within 2 to 4 days[43](index=43&type=chunk) [H. Significant Accounting Policies](index=11&type=section&id=H.%20Significant%20Accounting%20Policies) This section confirms no significant changes to the company's accounting policies since its last annual report - There have been no significant changes to the Company's significant accounting policies as described in its Annual Report on Form 10-K for the year ended January 28, 2024[44](index=44&type=chunk) [2. LEASES](index=12&type=section&id=2.%20LEASES) This note details the company's lease accounting, including right-of-use assets, lease liabilities, and associated expenses - The Company recognizes right-of-use (ROU) assets and lease liabilities for non-cancelable retail space leases, which expire on various dates through 2036[47](index=47&type=chunk)[48](index=48&type=chunk) | Metric | Three Months Ended April 28, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | | :----------------------- | :----------------------------------------------- | :----------------------------------------------- | | Total finance lease expense | $1,247 | $1,278 | | Operating lease expense | $5,093 | $5,050 | | Variable lease expense | $2,922 | $2,914 | | Total lease expense | $9,583 | $9,563 | | Metric | April 28, 2024 | | :-------------------------------- | :------------- | | Weighted-average remaining lease term (Finance leases) | 10 years | | Weighted-average remaining lease term (Operating leases) | 7 years | | Weighted-average discount rate (Finance leases) | 4.5% | | Weighted-average discount rate (Operating leases) | 4.2% | [3. DEBT AND CREDIT AGREEMENT](index=14&type=section&id=3.%20DEBT%20AND%20CREDIT%20AGREEMENT) This note outlines the company's debt obligations, including notes and credit facilities, and compliance with related covenants | Debt Type | April 28, 2024 (in thousands) | January 28, 2024 (in thousands) | | :-------------------------- | :------------------------------ | :------------------------------ | | TRI Senior Secured Note | $22,300 | $22,488 | | TRI Note | $3,500 | $3,500 | | Duluth Line of credit | $11,000 | $— | | Total Debt (before current maturities) | $36,800 | $25,988 | - The TRI Senior Secured Note has an interest rate of **4.95%** and matures on October 15, 2038[54](index=54&type=chunk) - The Credit Agreement, amended in July 2022, provides a **$200.0 million** revolving senior credit facility maturing on July 8, 2027, with interest rates tied to the Term Secured Overnight Financing Rate[57](index=57&type=chunk) - As of April 28, 2024, the Company was in compliance with all financial and non-financial covenants of the Credit Agreement[58](index=58&type=chunk) [4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=15&type=section&id=4.%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) This note provides a breakdown of accrued expenses and other current liabilities, including deferred revenue and product returns | Category | April 28, 2024 (in thousands) | January 28, 2024 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------ | | Total accrued expenses and other current liabilities | $26,366 | $30,930 | | Deferred revenue | $8,105 | $9,579 | | Product returns | $4,448 | $5,541 | | Salaries and benefits | $3,864 | $2,692 | [5. FAIR VALUE](index=15&type=section&id=5.%20FAIR%20VALUE) This note categorizes assets and liabilities measured at fair value and details changes in unrealized losses on certain securities - The Company's assets and liabilities measured at fair value are categorized as Level 1 (money market funds) or Level 3 (available-for-sale security, corporate trust, and TRI long-term debt)[64](index=64&type=chunk)[69](index=69&type=chunk) | Security | April 28, 2024 Fair Value (in thousands) | January 28, 2024 Fair Value (in thousands) | | :---------------- | :--------------------------------------- | :--------------------------------------- | | Corporate trust | $4,798 | $4,986 | | TRI Long-term debt | $22,627 | $23,554 | - Gross unrealized losses on the corporate trust (available-for-sale security) increased from **$(570) thousand** to **$(710) thousand**[65](index=65&type=chunk)[67](index=67&type=chunk) [6. VARIABLE INTEREST ENTITY](index=16&type=section&id=6.%20VARIABLE%20INTEREST%20ENTITY) This note explains the consolidation of TRI Holdings, LLC as a variable interest entity and its purpose related to company headquarters - The Company consolidates TRI Holdings, LLC as a variable interest entity (VIE) because it is the primary beneficiary, having the power to direct TRI's activities and the obligation/right to absorb/receive significant benefits[70](index=70&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) - TRI's primary purpose is to own the real property for the Company's headquarters in Mt. Horeb, Wisconsin, which the Company leases[73](index=73&type=chunk) | TRI Consolidated Metric | April 28, 2024 (in thousands) | January 28, 2024 (in thousands) | | :-------------------------------- | :------------------------------ | :------------------------------ | | Total assets | $22,801 | $22,958 | | TRI long-term debt | $24,933 | $25,141 | [7. LOSS PER SHARE](index=17&type=section&id=7.%20LOSS%20PER%20SHARE) This note presents the calculation of basic and diluted loss per share, including net loss and weighted average shares outstanding | Metric | Three Months Ended April 28, 2024 | Three Months Ended April 30, 2023 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss attributable to controlling interest | $(7,873) thousand | $(3,869) thousand | | Basic/Diluted loss per share | $(0.24) | $(0.12) | | Weighted average shares outstanding | 33,087 thousand | 32,865 thousand | - **0.3 million** unvested restricted stock shares were excluded from diluted loss per share calculation as their inclusion would be anti-dilutive due to the net loss[75](index=75&type=chunk) [8. STOCK-BASED COMPENSATION](index=18&type=section&id=8.%20STOCK-BASED%20COMPENSATION) This note details stock-based compensation expense, unrecognized compensation, and outstanding unvested restricted shares | Metric | Three Months Ended April 28, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | | :-------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Stock compensation expense | $1,372 | $990 | - As of April 28, 2024, unrecognized compensation expense related to restricted stock awards was **$8.7 million**, expected to be recognized over a weighted average period of **3.0 years**[78](index=78&type=chunk) - **1,868,895** unvested restricted shares were outstanding at April 28, 2024[78](index=78&type=chunk) [9. PROPERTY AND EQUIPMENT](index=18&type=section&id=9.%20PROPERTY%20AND%20EQUIPMENT) This note provides a breakdown of property and equipment, including net values, accumulated depreciation, and construction in progress | Metric | April 28, 2024 (in thousands) | January 28, 2024 (in thousands) | | :-------------------------- | :------------------------------ | :------------------------------ | | Property and equipment, net | $126,526 | $132,718 | | Accumulated depreciation and amortization | $(145,340) | $(140,551) | | Construction in progress | $1,615 | $3,781 | [10. REVENUE](index=18&type=section&id=10.%20REVENUE) This note describes revenue recognition policies for merchandise sales and details contract assets, liabilities, and gift card activity - Revenue from merchandise sales is recognized upon shipment for direct-to-consumer orders and at the point of sale for store sales[80](index=80&type=chunk) | Sales Channel | Three Months Ended April 28, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | | :-------------------- | :----------------------------------------------- | :----------------------------------------------- | | Direct-to-consumer | $75,444 | $79,502 | | Stores | $41,240 | $44,257 | | Total Net Sales | $116,684 | $123,759 | | Contract Item | April 28, 2024 (in thousands) | January 28, 2024 (in thousands) | | :------------------ | :------------------------------ | :------------------------------ | | Contract assets | $2,108 | $2,373 | | Contract liabilities | $8,105 | $9,579 | - Gift card liabilities decreased from **$9,579 thousand** at the beginning of the period to **$8,105 thousand** at the end, with **$2,222 thousand** sold and **$3,635 thousand** redeemed[85](index=85&type=chunk) [11. INCOME TAXES](index=19&type=section&id=11.%20INCOME%20TAXES) This note explains the company's interim tax provision method, effective tax rates, and exclusions for certain entities - The Company uses the discrete effective tax rate method for its interim tax provision[86](index=86&type=chunk) | Metric | Three Months Ended April 28, 2024 | Three Months Ended April 30, 2023 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Effective tax rate | 21% | 27% | - Income from TRI is excluded from the effective tax rate calculation as TRI is a limited liability company not subject to income taxes[88](index=88&type=chunk) [12. RECENT ACCOUNTING PRONOUNCEMENTS](index=20&type=section&id=12.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) This note summarizes recently adopted and not yet adopted accounting pronouncements and their impact on the company's financial statements [Recently Adopted Accounting Pronouncements](index=20&type=section&id=Recently%20Adopted%20Accounting%20Pronouncements) This section details the adoption of ASU 2016-13 (CECL) and its immaterial impact on consolidated financial results - The Company adopted ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326)" (CECL), on January 30, 2023, with no material impact on its consolidated financial results[89](index=89&type=chunk) [Recent Accounting Pronouncements Not Yet Adopted](index=20&type=section&id=Recent%20Accounting%20Pronouncements%20Not%20Yet%20Adopted) This section lists accounting pronouncements currently under evaluation for future adoption, including segment reporting and income tax disclosures - Management is evaluating the effects of ASU 2023-07 (Segment Reporting, effective for annual periods beginning after Dec 15, 2023) and ASU 2023-09 (Income Tax Disclosures, effective for annual periods beginning after Dec 15, 2024)[90](index=90&type=chunk)[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, operational results, liquidity, and critical accounting policies [Overview](index=22&type=section&id=Overview) This section provides a general description of Duluth Holdings Inc.'s business model, retail presence, and a summary of key financial results - Duluth Holdings Inc. is a lifestyle brand of men's and women's casual wear, workwear, and accessories sold primarily through its omnichannel platform, operating **62 retail stores** and **three outlet stores** as of April 28, 2024[100](index=100&type=chunk) Q1 Fiscal 2024 Financial Summary | Metric | Q1 Fiscal 2024 | Q1 Fiscal 2023 | | :-------------------------------- | :------------- | :------------- | | Net sales | $116.7 million | $123.8 million | | Net loss | $(7.9) million | $(3.9) million | | Adjusted EBITDA | $1.8 million | $5.3 million | [Economic Conditions](index=22&type=section&id=Economic%20Conditions) This section discusses the macroeconomic environment, including inflation, recessionary concerns, and their potential impact on consumer demand - The macroeconomic environment is experiencing inflation, recessionary concerns, and general uncertainty, making it difficult to predict the ultimate impact on operational and financial performance, including store traffic and overall consumer demand[105](index=105&type=chunk) [How We Assess the Performance of Our Business](index=22&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) This section explains the key financial metrics and non-GAAP measures used by management to evaluate the company's business performance [Net Sales](index=22&type=section&id=Net%20Sales) This section defines net sales, including merchandise sales, shipping revenue, and the timing of revenue recognition - Net sales include merchandise sales plus shipping and handling revenue collected from customers, less returns and discounts[107](index=107&type=chunk) - Direct-to-consumer sales are recognized upon shipment, and store sales are recognized at the point of sale[107](index=107&type=chunk) [Gross Profit](index=22&type=section&id=Gross%20Profit) This section defines gross profit and gross margin, detailing the components included in the cost of goods sold - Gross profit is net sales less cost of goods sold, with gross margin as a percentage of net sales[108](index=108&type=chunk) - Cost of goods sold includes direct merchandise cost, inventory shrinkage, inventory adjustments, inbound freight, and freight from distribution centers to retail stores, excluding depreciation and amortization[108](index=108&type=chunk)[109](index=109&type=chunk) [Selling, General and Administrative Expenses](index=23&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) This section describes the components of SG&A expenses and explains their typical relationship to net sales in different quarters - SG&A expenses include all operating costs not in cost of goods sold, such as payroll, occupancy, distribution network, marketing, logistics, consulting, and professional services[110](index=110&type=chunk) - SG&A as a percentage of net sales is typically higher in lower-volume quarters due to a portion of costs being relatively fixed[110](index=110&type=chunk) [Adjusted EBITDA](index=23&type=section&id=Adjusted%20EBITDA) This section defines Adjusted EBITDA as a non-GAAP measure, explaining its calculation and purpose for performance assessment - Adjusted EBITDA is a non-GAAP measure defined as consolidated net income before depreciation and amortization, interest expense, and provision for income taxes, adjusted for certain non-cash and other items not representative of ongoing operating performance[112](index=112&type=chunk) - It is used to provide a clearer picture of operating results, facilitate period-to-period comparisons, and as a key financial metric for employee bonus compensation[111](index=111&type=chunk)[112](index=112&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance, comparing current and prior period results for key metrics [Three Months Ended April 28, 2024, Compared to Three Months Ended April 30, 2023](index=24&type=section&id=Three%20Months%20Ended%20April%2028,%202024,%20Compared%20to%20Three%20Months%20Ended%20April%2030,%202023) This section presents a comparative summary of key financial metrics for the three-month periods, highlighting changes in performance | Metric | Apr 28, 2024 (in thousands) | Apr 30, 2023 (in thousands) | % of Net Sales (2024) | % of Net Sales (2023) | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------- | :-------------------- | | Net sales | $116,684 | $123,759 | 100.0% | 100.0% | | Cost of goods sold | $55,060 | $58,108 | 47.2% | 47.0% | | Gross profit | $61,624 | $65,651 | 52.8% | 53.0% | | SG&A expenses | $70,595 | $70,200 | 60.5% | 56.7% | | Operating loss | $(8,971) | $(4,549) | (7.7)% | (3.7)% | | Net loss attributable to controlling interest | $(7,873) | $(3,869) | (6.7)% | (3.1)% | [Net Sales](index=24&type=section&id=Net%20Sales_Results) This section analyzes the decrease in net sales, attributing it to challenging traffic and lower in-stock positions across channels - Net sales decreased by **$7.1 million**, or **5.7%**, to **$116.7 million** for the three months ended April 28, 2024, compared to the prior year, attributed to challenging traffic and a lower in-stock position[116](index=116&type=chunk) - Store market net sales decreased by **8.6%** to **$78.1 million**, and non-store market net sales decreased by **10.2%** to **$33.6 million**[117](index=117&type=chunk) [Gross Profit](index=24&type=section&id=Gross%20Profit_Results) This section examines the decrease in gross profit and the slight decline in gross margin rate due to inventory sell-through - Gross profit decreased by **$4.0 million**, or **6.1%**, to **$61.6 million**, with gross margin slightly decreasing to **52.8%** of net sales[118](index=118&type=chunk) - The slight decrease in gross margin rate is due to selling through older, higher-cost inventory, despite better-than-expected new product costs[118](index=118&type=chunk) [Selling, General and Administrative Expenses](index=24&type=section&id=Selling,%20General%20and%20Administrative%20Expenses_Results) This section analyzes the increase in SG&A expenses, primarily driven by higher fixed costs and depreciation from strategic investments - SG&A expenses increased by **$0.4 million**, or **0.6%**, to **$70.6 million**, and as a percentage of net sales, increased to **60.5%** from **56.7%**[119](index=119&type=chunk) - The increase was mainly driven by higher fixed costs and depreciation from foundational strategic investments, partially offset by efficiencies across logistics and the fulfillment center network[120](index=120&type=chunk) [Income Taxes](index=24&type=section&id=Income%20Taxes_Results) This section discusses the income tax benefit and the decrease in the effective tax rate for the reporting period - Income tax benefit was **$2.1 million** for the three months ended April 28, 2024, compared to **$1.5 million** in the prior year[121](index=121&type=chunk) - The effective tax rate related to controlling interest decreased from **27%** to **21%**[121](index=121&type=chunk) [Net Loss Attributable to Controlling Interest](index=24&type=section&id=Net%20Loss%20Attributable%20to%20Controlling%20Interest_Results) This section highlights the increase in net loss attributable to controlling interest for the three months ended April 28, 2024 - Net loss attributable to controlling interest increased to **$7.9 million** for the three months ended April 28, 2024, from **$3.9 million** in the prior year[122](index=122&type=chunk) [Reconciliation of Net Loss to EBITDA and EBITDA to Adjusted EBITDA](index=24&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20EBITDA%20and%20EBITDA%20to%20Adjusted%20EBITDA) This section provides a reconciliation of net loss to EBITDA and Adjusted EBITDA, detailing adjustments for non-cash and other items | Metric | Three Months Ended April 28, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | | :---------------------------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net loss | $(7,865) | $(3,877) | | Depreciation and amortization | $8,251 | $7,413 | | Amortization of internal-use software hosting subscription implementation costs | $1,170 | $1,270 | | Interest expense | $993 | $934 | | Income tax benefit | $(2,083) | $(1,458) | | **EBITDA** | **$466** | **$4,282** | | Stock based compensation | $1,372 | $990 | | **Adjusted EBITDA** | **$1,838** | **$5,272** | - Adjusted EBITDA decreased by **$3.4 million** to **$1.8 million** (**1.6%** of net sales) for the three months ended April 28, 2024, compared to **$5.3 million** (**4.3%** of net sales) in the prior year[125](index=125&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources of liquidity, working capital, anticipated capital expenditures, and sufficiency of funds [General](index=25&type=section&id=General) This section outlines the company's primary liquidity sources, working capital, and projected capital expenditures for fiscal 2024 - The Company's primary sources of liquidity are cash from operating activities and a credit facility, used for inventory, marketing, payroll, store leases, and capital expenditures[126](index=126&type=chunk) - Net working capital was **$75.9 million**, including **$6.8 million** of cash and cash equivalents, as of April 28, 2024[126](index=126&type=chunk) - Anticipated capital expenditures for fiscal 2024 are approximately **$25.0 million**, primarily for logistics optimization and information technology[127](index=127&type=chunk) - Management believes current liquidity sources will be sufficient to cover working capital and anticipated capital expenditures for the foreseeable future[128](index=128&type=chunk) [Cash Flow Analysis](index=25&type=section&id=Cash%20Flow%20Analysis) This section provides a summary of cash flows from operating, investing, and financing activities, and the overall change in cash | Activity | Three Months Ended April 28, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | | :------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Net cash used in operating activities | $(33,666) | $(13,973) | | Net cash used in investing activities | $(1,477) | $(21,348) | | Net cash provided by (used in) financing activities | $9,785 | $(1,017) | | Decrease in cash and cash equivalents | $(25,358) | $(36,338) | [Net Cash Used in Operating Activities](index=25&type=section&id=Net%20Cash%20Used%20in%20Operating%20Activities) This section analyzes the increase in net cash used in operating activities, primarily due to changes in inventory and payables - Net cash used in operating activities increased to **$33.7 million** for the three months ended April 28, 2024, from **$14.0 million** in the prior year[132](index=132&type=chunk)[133](index=133&type=chunk) - This was primarily due to a **$10.7 million** increase in inventory and a **$13.2 million** decrease in trade accounts payable[132](index=132&type=chunk) [Net Cash Used in Investing Activities](index=26&type=section&id=Net%20Cash%20Used%20in%20Investing%20Activities) This section discusses the significant decrease in net cash used in investing activities, reflecting lower capital expenditures - Net cash used in investing activities decreased significantly to **$1.5 million** for the three months ended April 28, 2024, from **$21.3 million** in the prior year, reflecting lower capital expenditures[135](index=135&type=chunk) [Net Cash Provided by (Used in) Financing Activities](index=26&type=section&id=Net%20Cash%20Provided%20by%20%28Used%20in%29%20Financing%20Activities) This section explains the shift to net cash provided by financing activities, driven by net borrowings under the credit line - Net cash provided by financing activities was **$9.8 million** for the three months ended April 28, 2024, a shift from **$1.0 million** used in the prior year[136](index=136&type=chunk)[137](index=137&type=chunk) - This change was primarily driven by **$11.0 million** in net borrowings under the revolving line of credit[136](index=136&type=chunk) [Contractual Obligations](index=26&type=section&id=Contractual%20Obligations) This section confirms no significant changes to the company's contractual obligations since its last annual report - There have been no significant changes to the Company's contractual obligations as described in its Annual Report on Form 10-K for the fiscal year ended January 28, 2024[138](index=138&type=chunk) [Off-Balance Sheet Arrangements](index=26&type=section&id=Off-Balance%20Sheet%20Arrangements) This section states that the company is not a party to any material off-balance sheet arrangements - The Company is not a party to any material off-balance sheet arrangements[139](index=139&type=chunk) [Critical Accounting Policies and Critical Accounting Estimates](index=26&type=section&id=Critical%20Accounting%20Policies%20and%20Critical%20Accounting%20Estimates) This section highlights the role of management estimates in financial reporting and confirms no significant changes to critical policies - The preparation of financial statements requires management to make estimates and assumptions based on historical experience and other reasonable factors[140](index=140&type=chunk) - No significant changes to critical accounting policies and estimates were reported since the 2023 Form 10-K[141](index=141&type=chunk) [Recent Accounting Pronouncements](index=26&type=section&id=Recent%20Accounting%20Pronouncements_MD&A) This section directs readers to Note 12 for information regarding recent accounting pronouncements and their potential impact - For information regarding recent accounting pronouncements, refer to Note 12 of the Notes to Condensed Consolidated Financial Statements[142](index=142&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section confirms no significant changes in market risks since the last annual report and refers to Note 3 for interest rate risk details - No significant changes in market risks have occurred since the 2023 Form 10-K[143](index=143&type=chunk) - Information on interest rate risk related to credit agreement borrowings is disclosed in Note 3[143](index=143&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of disclosure controls and internal control over financial reporting, including material weaknesses and remediation [Evaluation of Disclosure Controls and Procedures](index=26&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section concludes that disclosure controls were not effective due to a material weakness, yet financial statements are fairly presented - The CEO and CFO concluded that disclosure controls and procedures were not effective as of April 28, 2024, due to a material weakness in internal control over financial reporting[144](index=144&type=chunk) - Despite the material weakness, management concluded that the condensed consolidated financial statements fairly present the financial position, results of operations, and cash flows in conformity with U.S. GAAP[144](index=144&type=chunk)[145](index=145&type=chunk) [Material Weakness](index=27&type=section&id=Material%20Weakness) This section identifies a material weakness in internal control over financial reporting related to general ledger account mapping - A material weakness was identified in internal control over financial reporting, specifically related to control deficiencies in effective risk assessment for mapping general ledger accounts to the consolidated financial statements[147](index=147&type=chunk) - This resulted in manual controls in the financial reporting process that were not designed to sufficiently mitigate the risk of incorrect presentation[147](index=147&type=chunk) [Remediation Plans](index=27&type=section&id=Remediation%20Plans) This section outlines management's actions to simplify mapping, perform risk assessment, and implement new controls to address the weakness - Management has simplified the general ledger account mapping process, performed a thorough risk assessment, and designed and implemented new process-level controls[148](index=148&type=chunk) - The material weakness cannot be considered fully remediated until these controls operate for a sufficient period and are tested effectively[148](index=148&type=chunk) [Changes in Internal Control Over Financial Reporting](index=27&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section confirms ongoing remediation efforts for the material weakness and notes no other material changes in internal control - The Company is taking appropriate actions to remediate the identified material weakness in internal control over financial reporting[149](index=149&type=chunk) - Except for these remediation efforts, there were no other changes in internal control over financial reporting during the quarter that materially affected or are reasonably likely to materially affect it[149](index=149&type=chunk) [PART II—Other Information](index=29&type=section&id=Part%20II—Other%20Information) This part includes information on legal proceedings, risk factors, equity sales, other disclosures, and a list of exhibits [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms the company is subject to ordinary legal proceedings but none are expected to materially affect its financial position - The Company is subject to certain legal proceedings and claims in the ordinary course of business[150](index=150&type=chunk) - No current legal proceedings are believed to have a material adverse effect on the Company's business, financial condition, operating results, or cash flows[150](index=150&type=chunk) - Reserves are established for specific legal matters when an unfavorable outcome is probable and the loss is reasonably estimable[150](index=150&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) This section states there have been no material changes to the risk factors previously disclosed in the company's fiscal 2023 annual report - There have been no material changes to the risk factors as previously disclosed in the Company's fiscal 2023 Annual Report on Form 10-K[151](index=151&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered equity sales and details shares acquired from employees for tax withholding on vested restricted stock - The Company did not sell any equity securities during the quarter ended April 28, 2024, which were not registered under the Securities Act[152](index=152&type=chunk) Shares Acquired from Employees for Tax Withholding | Period | Total number of shares purchased | Average price paid per share | | :----------------------------------- | :------------------------------- | :--------------------------- | | January 29, 2024 - February 25, 2024 | 24,617 | $4.90 | | February 26, 2024 - March 31, 2024 | 159,404 | $4.60 | | April 1, 2024 - April 28, 2024 | 16,677 | $4.90 | | **Total** | **200,698** | **$4.67** | - Shares were acquired from employees to satisfy minimum tax withholding requirements upon the vesting of their restricted stock[152](index=152&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) This section confirms no directors or Section 16 officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No director or Section 16 officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended April 28, 2024[155](index=155&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including incentive plans, certifications, and XBRL-related documents - Exhibits include the Amended and Restated Annual Incentive Plan, certifications of the CEO and Interim CFO (pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350), and various XBRL taxonomy documents[158](index=158&type=chunk) - XBRL-related information is deemed "furnished" and not "filed" in accordance with Regulation S-T[160](index=160&type=chunk) [Signatures](index=30&type=section&id=Signatures) This section confirms the report was duly signed on May 31, 2024, by the Chief Financial Officer and Chief Accounting Officer - The report was signed on May 31, 2024, by Heena Agrawal (Senior Vice President, Chief Financial Officer) and Michael Murphy (Vice President, Chief Accounting Officer and Treasury)[163](index=163&type=chunk)

Duluth Holdings Inc. (NASDAQ:DLTH) Q1 2024 Earnings Conference Call May 30, 2024 9:30 AM ET Company Participants Nitza McKee - Senior Associate Sam Sato - President & Chief Executive Officer Heena Agrawal - Senior Vice President & Chief Financial Officer Conference Call Participants Operator Good morning, everyone and welcome to the Duluth Holdings Incorporated First Quarter 2024 Conference Call. [Operator Instructions] Also note today's event is being recorded. At this time, I'd like to turn the floor over ...

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Duluth Holdings Inc. reported Q1 2024 net sales of $116.7 million, a net loss of $7.9 million, and Adjusted EBITDA of $1.8 million, while management noted a 5.7% top-line decline and ongoing strategic initiatives [First Quarter 2024 Highlights](index=1&type=section&id=First%20Quarter%202024%20Highlights) Duluth Holdings Inc. announced its Q1 2024 financial results, reporting net sales of $116.7 million, a net loss of $7.9 million, and Adjusted EBITDA of $1.8 million, highlighting healthy inventory and strong liquidity First Quarter 2024 Key Financial Highlights | Metric | Amount | | :----------------- | :------------- | | Net sales | $116.7 million | | Net loss | $7.9 million | | Adjusted EBITDA | $1.8 million | | Liquidity | $196 million | | Inventory composition | 93% current products | | Inventory change YoY | Down 5.9% | [Management Commentary](index=1&type=section&id=Management%20Commentary) President and CEO Sam Sato expressed dissatisfaction with Q1 results, noting a 5.7% decline in top-line performance due to challenging traffic and inventory issues, while highlighting successful marketing events and ongoing strategic initiatives - Top-line performance declined **5.7%** due to challenging traffic and sub-par in-stock position[3](index=3&type=chunk) - Successful marketing initiatives included an underwear trade-up event, which drove a **50% increase in store traffic** on the day of the event, and a showusyourbibs social media campaign[4](index=4&type=chunk) - Strategic focus for 2024 includes accelerating operational improvements, expanding new products, optimizing marketing mix, improving gross profit margin rates, and prudently managing expenses and inventories[6](index=6&type=chunk) [First Quarter 2024 Financial Performance](index=2&type=section&id=First%20Quarter%202024%20Financial%20Performance) The company's Q1 2024 operating results showed a 5.7% net sales decrease, gross profit decline with slight margin compression, and increased SG&A expenses, while maintaining $195.8 million in liquidity [Operating Results](index=2&type=section&id=Operating%20Results) The company experienced a 5.7% decrease in net sales, driven by declines in both direct-to-consumer and retail channels, with gross profit decreasing and SG&A expenses increasing, leading to deleveraging as a percentage of net sales [Net Sales](index=2&type=section&id=Net%20Sales) Net sales decreased by 5.7% to $116.7 million, with direct-to-consumer sales falling 5.1% due to fewer site visits and retail store sales decreasing 6.8% due to slower traffic, despite strong conversion rates Net Sales Performance (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | | :---------------------- | :------------ | :------------ | :------- | | Total Net Sales | $116.7 million | $123.8 million | -5.7% | | Direct-to-consumer sales | $75.4 million | | -5.1% | | Retail store sales | $41.2 million | | -6.8% | - Direct-to-consumer net sales decline primarily driven by a decline in site visits[6](index=6&type=chunk) - Retail store net sales decline due to slower store traffic, partially offset by strong conversion rates[6](index=6&type=chunk) [Gross Profit](index=2&type=section&id=Gross%20Profit) Gross profit decreased to $61.6 million, with the gross margin rate slightly down to 52.8% from 53.0% in the prior year, attributed to a delay in the positive impact of better new product costs due to selling through older, higher-cost inventory Gross Profit Performance (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :---------------- | :------------ | :------------ | | Gross Profit | $61.6 million | $65.7 million | | Gross Margin Rate | 52.8% | 53.0% | - Delay in impact to gross margin rate as the company sells through older, higher-cost inventory, despite new product costs coming in better than expected[7](index=7&type=chunk) [Selling, General and Administrative Expenses (SG&A)](index=2&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses%20%28SG%26A%29) SG&A expenses increased by 0.6% to $70.6 million, deleveraging to 60.5% of net sales from 56.7% in the prior year, primarily due to higher fixed costs and depreciation from strategic investments, partially offset by logistics efficiencies SG&A Expenses (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | | :-------------------------------- | :------------ | :------------ | :------- | | SG&A Expenses | $70.6 million | $70.2 million | +0.6% | | SG&A as % of Net Sales | 60.5% | 56.7% | +3.8 pp | - Deleveraging mainly driven by higher fixed costs and depreciation from foundational strategic investments, partially offset by efficiencies across logistics and the fulfillment center network[8](index=8&type=chunk) [Balance Sheet and Liquidity](index=2&type=section&id=Balance%20Sheet%20and%20Liquidity) Duluth Holdings Inc. ended Q1 2024 with $6.8 million in cash, $75.9 million in net working capital, and $11.0 million outstanding on its revolving line of credit, resulting in $195.8 million of total liquidity Balance Sheet and Liquidity (as of April 28, 2024) | Metric | Amount | | :-------------------------------- | :------------- | | Cash and cash equivalents | $6.8 million | | Net working capital | $75.9 million | | Revolving line of credit outstanding | $11.0 million | | Total liquidity | $195.8 million | [Fiscal 2024 Outlook](index=2&type=section&id=Fiscal%202024%20Outlook) The company updated its fiscal 2024 outlook, forecasting net sales of approximately $640 million, Adjusted EBITDA of approximately $39 million, and an EPS of approximately ($0.22) per diluted share, with capital expenditures projected around $25 million Updated Fiscal 2024 Outlook | Metric | Forecasted Amount | | :----------------------- | :---------------- | | Net sales | ~$640 million | | Adjusted EBITDA | ~$39 million | | EPS (diluted) | ~($0.22) per share | | Capital expenditures | ~$25 million | [Company Information & Disclosures](index=2&type=section&id=Company%20Information%20%26%20Disclosures) This section provides details on the Q1 2024 conference call, an overview of Duluth Trading's brand and business model, explanations of non-GAAP financial measures, and important forward-looking statement disclaimers [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) Duluth Holdings Inc. scheduled a conference call and audio webcast for May 30, 2024, to discuss Q1 results, providing details for live access, replay, and pre-registration - A conference call and audio webcast with analysts and investors was scheduled for Thursday, May 30, 2024, at **9:30 am Eastern Time**[10](index=10&type=chunk) - Live conference call numbers, replay access (through June 7, 2024), and webcast link (ir.duluthtrading.com) were provided[11](index=11&type=chunk) - Investors could pre-register for the call to expedite entry[12](index=12&type=chunk) [About Duluth Trading](index=3&type=section&id=About%20Duluth%20Trading) Duluth Trading is a lifestyle brand based in Mount Horeb, Wisconsin, offering high-quality, solution-based casual wear, workwear, and accessories for men and women, emphasizing an engaging customer experience through its website, catalogs, and retail stores, backed by a "No Bull Guarantee" - Duluth Trading is a lifestyle brand for the Modern, Self-Reliant American, offering high quality, solution-based casual wear, workwear and accessories for men and women[13](index=13&type=chunk) - Products are available through a content-rich website, catalogs, and retail locations, with marketing incorporating humor and storytelling[13](index=13&type=chunk) - The company is committed to outstanding customer service backed by its "No Bull Guarantee"[13](index=13&type=chunk) [Non-GAAP Measurements](index=3&type=section&id=Non-GAAP%20Measurements) The company uses non-GAAP financial measures, specifically Adjusted EBITDA, to provide additional meaningful comparisons and insights into operating trends, presenting it as supplemental information, not a replacement for GAAP results - Management uses non-GAAP financial measures, such as Adjusted EBITDA, to provide additional meaningful comparisons between current and prior operating periods[14](index=14&type=chunk) - Adjusted EBITDA provides insight into operating trends and facilitates comparisons between peer companies by excluding interest, taxes, depreciation, amortization, and certain unusual or non-comparable items[15](index=15&type=chunk) - Non-GAAP measurements are useful supplemental information but are not intended to replace GAAP financial results and should be read in conjunction with them[16](index=16&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding Duluth Trading's plans, objectives, and future financial performance, including the Fiscal 2024 Outlook, which are subject to various risks and uncertainties as detailed in SEC filings, with no obligation to update these statements - The press release includes forward-looking statements concerning Duluth Trading's plans, objectives, goals, beliefs, business strategies, future events, business conditions, results of operations, financial position, and business outlook, including the "Updated Fiscal 2024 Outlook"[17](index=17&type=chunk) - Forward-looking statements are based on current expectations, beliefs, estimates, and projections, but are subject to inherent uncertainties and risks that could cause actual results to differ materially[17](index=17&type=chunk) - Key risks include the impact of inflation, economic uncertainties, disruptions to supply chains, ability to maintain brand image, changes in consumer confidence, competition, and various operational and external factors detailed in SEC filings[17](index=17&type=chunk) [Investor Contacts](index=5&type=section&id=Investor%20Contacts) Contact information for investor relations is provided, with Tom Filandro of ICR, Inc. listed as the primary contact - Investor contact: Tom Filandro, ICR, Inc. (**646) 277-1200**, DuluthIR@icrinc.com[19](index=19&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents the condensed consolidated balance sheets, statements of operations, cash flows, and reconciliations of net loss to EBITDA and Adjusted EBITDA for both Q1 2024 and the fiscal year 2024 outlook [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets of $471.4 million as of April 28, 2024, a decrease from $490.5 million at January 28, 2024, with current assets decreasing primarily due to a significant drop in cash and cash equivalents, while inventory increased QoQ and total liabilities decreased Condensed Consolidated Balance Sheets (Amounts in thousands) | Metric | April 28, 2024 | January 28, 2024 | April 30, 2023 | | :-------------------------------- | :------------- | :--------------- | :------------- | | **ASSETS** | | | | | Cash and cash equivalents | $6,799 | $32,157 | $9,210 | | Inventory, net | $136,434 | $125,757 | $144,969 | | Total current assets | $171,426 | $180,974 | $176,534 | | Total assets | $471,383 | $490,453 | $488,399 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | | Duluth line of credit | $11,000 | $— | $— | | Total current liabilities | $95,524 | $102,449 | $87,852 | | Total liabilities | $256,080 | $268,279 | $264,285 | | Total shareholders' equity | $215,303 | $222,174 | $224,114 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 2024, Duluth Holdings Inc. reported a net loss of $7.9 million, significantly wider than the $3.9 million net loss in the prior year, driven by a 5.7% decrease in net sales and a deleveraging of SG&A expenses, leading to an operating loss of $9.0 million and diluted EPS of ($0.24) Consolidated Statements of Operations (Amounts in thousands, except per share figures) | Metric | Three Months Ended April 28, 2024 | Three Months Ended April 30, 2023 | | :-------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net sales | $116,684 | $123,759 | | Gross profit | $61,624 | $65,651 | | Selling, general and administrative expenses | $70,595 | $70,200 | | Operating loss | $(8,971) | $(4,549) | | Net loss | $(7,865) | $(3,877) | | Net loss per diluted share | $(0.24) | $(0.12) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2024, net cash used in operating activities increased significantly to $33.7 million from $14.0 million in the prior year, primarily due to changes in inventory and receivables, while net cash used in investing activities decreased substantially due to lower purchases of property and equipment, and financing activities provided $9.8 million, mainly from line of credit proceeds, resulting in an overall cash decrease of $25.4 million Consolidated Statements of Cash Flows (Amounts in thousands) | Metric | Three Months Ended April 28, 2024 | Three Months Ended April 30, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(33,666) | $(13,973) | | Net cash used in investing activities | $(1,477) | $(21,348) | | Net cash provided by (used in) financing activities | $9,785 | $(1,017) | | Decrease in cash and cash equivalents | $(25,358) | $(36,338) | | Cash and cash equivalents at end of period | $6,799 | $9,210 | [Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (Q1 2024)](index=9&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20EBITDA%20and%20Adjusted%20EBITDA%20%28Q1%202024%29) For Q1 2024, EBITDA was $0.5 million, a significant decrease from $4.3 million in the prior year, and Adjusted EBITDA also saw a substantial decline to $1.8 million from $5.3 million, primarily reflecting the increased net loss Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (Amounts in thousands) | Metric | Three Months Ended April 28, 2024 | Three Months Ended April 30, 2023 | | :---------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(7,865) | $(3,877) | | EBITDA | $466 | $4,282 | | Adjusted EBITDA | $1,838 | $5,272 | [Reconciliation of Forecasted Net Loss to EBITDA and Adjusted EBITDA (FY 2024)](index=9&type=section&id=Reconciliation%20of%20Forecasted%20Net%20Loss%20to%20EBITDA%20and%20Adjusted%20EBITDA%20%28FY%202024%29) For the fiscal year ending February 2, 2025, the company forecasts a net loss of $7.4 million, with an estimated EBITDA of $34.8 million and Adjusted EBITDA of $39.0 million Reconciliation of Forecasted Net Loss to EBITDA and Adjusted EBITDA (Amounts in thousands) | Metric | Forecasted FY Ending Feb 2, 2025 | | :---------------------------- | :------------------------------- | | Net loss | $(7,400) | | EBITDA | $34,750 | | Adjusted EBITDA | $39,000 |