Duluth (DLTH) - 2026 Q1 - Quarterly Report

Financial Performance - Net sales decreased by $14.0 million, or 12.0$102.7 million in the first quarter of fiscal 2025 compared to $116.7 million in the same period of fiscal 2024[119]. - Gross profit decreased by$8.3 million, or 13.4%, to $53.4 million, with gross margin decreasing to 52.0$15.3 million, compared to a net loss of $7.9 million in the prior year[111]. - Adjusted EBITDA decreased to ($3.8) million in the first quarter of fiscal 2025, down from $1.8 million in the same period of fiscal 2024[111]. - Net loss attributable to controlling interest was$15.3 million for the three months ended May 4, 2025, compared to a net loss of $7.9 million for the same period in 2024[125]. - Adjusted EBITDA decreased by$5.6 million to $(3.8) million in the three months ended May 4, 2025, compared to$1.8 million in the same period of 2024, representing a decrease to (3.7%) of net sales from 1.6%[127]. Sales Breakdown - Store market net sales decreased by $6.4 million, or 8.2$71.6 million, while non-store market net sales decreased by $5.5 million, or 16.5$28.0 million in the same period[120]. - The decrease in net sales was primarily driven by a decline in web traffic due to slower promotional activity[119]. Expenses and Cash Flow - Selling, general and administrative expenses decreased by $4.9 million, or 6.9$65.7 million, but as a percentage of net sales, it increased to 64.0% from 60.5%[122]. - Net cash used in operating activities was $56.5 million for the three months ended May 4, 2025, compared to$33.7 million for the same period in 2024[134]. - Cash used in operating assets and liabilities was $50.3 million for the three months ended May 4, 2025, primarily due to a$28.2 million decrease in accounts payable and a $9.6 million increase in inventory[134]. - Income tax expense was$1.3 million for the three months ended May 4, 2025, compared to an income tax benefit of $2.1 million for the same period in 2024[124]. - Net cash used in investing activities was$1.3 million for the three months ended May 4, 2025, compared to $1.5 million for the same period in 2024[136]. Capital Expenditures and Financing - The company expects to spend approximately$17.0 million on capital expenditures in fiscal 2025, primarily for logistics optimization and information technology[129]. - Net cash provided by financing activities was $63.0 million for the three months ended May 4, 2025, compared to$9.8 million for the same period in 2024[137]. - The company believes that cash flow from operating activities and available cash under the credit facility will be sufficient to cover working capital requirements and anticipated capital expenditures for the foreseeable future[130]. Operational Overview - The company operated 62 retail stores and three outlet stores as of May 4, 2025, reflecting ongoing expansion efforts[103]. - The macroeconomic environment is experiencing inflation and recessionary concerns, impacting store traffic and consumer demand[108]. - The company continues to focus on direct-to-factory sourcing initiatives to improve product costs despite challenges in gross margin[121].