Duluth Holdings Inc. Announces Third Quarter 2024 Financial Results

Core Insights - Duluth Trading Company reported a net sales of $127.1 million for the third quarter ended October 27, 2024, a decrease of 8.1% compared to $138.2 million in the same period last year [2][5] - The company experienced a net loss of $28.5 million, with an adjusted net loss of $13.8 million, which excludes restructuring expenses and a valuation allowance on deferred tax assets [2][10] - Gross margin improved by 210 basis points to 52.3%, driven by successful sourcing initiatives, although gross profit decreased to $66.4 million from $69.4 million year-over-year [6][2] - Selling, general and administrative expenses increased by 1.2% to $82.9 million, leading to a deleveraging effect as a percentage of net sales [7][2] - The company ended the quarter with approximately $165 million in liquidity, including $9.3 million in cash and cash equivalents [11][2] Financial Performance - Direct-to-consumer net sales fell by 8.3% to $79.8 million, primarily due to lower site conversion rates, while retail store net sales decreased by 7.8% to $47.2 million [5][2] - Adjusted EBITDA decreased by $5.2 million from the prior year to $(6.8) million [2][24] - The company expects net sales for fiscal 2024 to be approximately $640 million, with a projected gross margin reduction of about 125 basis points compared to the previous year [12][2] Management Commentary - The CEO noted that the third quarter performance was impacted by an uncertain macro environment and unseasonably warm weather, but there was growth in average order value and digital traffic [4][2] - The company is focused on improving inventory management and operational performance, with plans to enhance assortment and inventory management through strategic initiatives [4][2] - The fulfillment center in Adairsville, Georgia, processed over 65% of total network volume, significantly reducing costs and improving delivery times [9][2] Restructuring and Cost Management - The company incurred restructuring expenses of $6.2 million during the third quarter, related to lease amendments aimed at reducing overhead costs [10][2] - The exit from a legacy facility is projected to save approximately $1.2 million in overhead expenses during the fourth quarter [10][2] - The company is implementing phase two of its fulfillment center network plan to maximize productivity and capacity [8][2]