Duluth (DLTH) - 2025 Q3 - Quarterly Report

Financial Performance - Net sales decreased by 8.1% year-over-year in Q3 fiscal 2024 to $127.1 million, and decreased by 3.9$385.4 million for the first nine months of fiscal 2024 [108]. - Net loss for Q3 fiscal 2024 was $28.5 million, compared to a net loss of$10.5 million in Q3 fiscal 2023, with a total net loss of $40.1 million for the first nine months of fiscal 2024 compared to$16.4 million in the same period last year [108]. - Adjusted EBITDA for Q3 fiscal 2024 decreased to ($6.8) million from ($1.6) million in Q3 fiscal 2023, and for the first nine months of fiscal 2024, it decreased to $5.7 million from$12.3 million [108]. - The operating loss for Q3 fiscal 2024 was $22.6 million, compared to an operating loss of$12.4 million in Q3 fiscal 2023, with a total operating loss of $35.4 million for the first nine months of fiscal 2024 compared to$18.4 million in the same period last year [118]. - Net loss attributable to controlling interest was $28.5 million for the three months ended October 27, 2024, compared to a net loss of$10.5 million for the same period in 2023 [126]. - For the nine months ended October 27, 2024, net sales decreased by $15.7 million, or 3.9$385.4 million compared to $401.1 million for the same period in 2023 [128]. - Net loss attributable to controlling interest for the nine months ended October 27, 2024, was$40.2 million, compared to a net loss of $16.3 million for the same period in 2023 [136]. Expenses and Costs - Selling, general and administrative expenses increased to$82.9 million in Q3 fiscal 2024 from $81.8 million in Q3 fiscal 2023, and totaled$229.7 million for the first nine months of fiscal 2024 compared to $225.0 million in the prior year [118]. - Selling, general and administrative expenses increased by$1.0 million, or 1.2%, to $82.9 million, with expenses as a percentage of net sales rising to 65.2$6.2 million in Q3 fiscal 2024, indicating ongoing adjustments within the company [118]. - Income tax expense was $4.7 million for the three months ended October 27, 2024, compared to an income tax benefit of$3.1 million for the same period in 2023 [125]. Cash Flow and Investments - Net cash used in operating activities was $58.1 million for the nine months ended October 27, 2024, primarily due to a$105.7 million increase in inventory [146]. - Net cash used in investing activities for the nine months ended October 27, 2024, was $5.7 million, a decrease from$39.8 million for the same period in 2023 [149]. - Net cash used in financing activities for the nine months ended October 27, 2024, was $41.0 million, compared to$33.5 million in the prior year [150]. - The company expects to spend approximately $23.0 million on capital expenditures in fiscal 2024, focusing on logistics optimization and information technology [141]. Market and Operational Context - The macroeconomic environment is characterized by inflation and recessionary concerns, impacting store traffic and consumer demand [111]. - The company anticipates challenges in maintaining inventory levels and adapting to changing consumer preferences amid economic uncertainties [111]. - The company operated 62 retail stores and three outlet stores as of October 27, 2024, reflecting its ongoing expansion strategy [105]. - The company continues to focus on innovative product offerings, including Longtail T shirts and Buck Naked underwear, to enhance brand appeal and customer loyalty [106]. Accounting and Compliance - There have been no significant changes to contractual obligations as described in the Annual Report on Form 10-K for the fiscal year ended January 28, 2024 [151]. - The company is not a party to any material off-balance sheet arrangements [152]. - There have been no significant changes in critical accounting policies and estimates as described in the 2023 Form 10-K [154]. - There have been no significant changes in market risks as described in the 2023 Form 10-K [156].