Duluth (US:DLTH)2020-03-19 19:28Financial Data and Key Metrics Changes - For Q4 2019, net sales were reported at $259.6 million, a 4% increase from $250.5 million in the previous year, with a comparable 13-week sales growth of 7% [12][11] - Fourth quarter EPS increased to $0.75 from $0.64 last year, including a benefit of approximately $0.02 from one-time tax credits [12] - Adjusted EBITDA rose to $39.9 million, up 13.7% from $35.1 million last year, indicating successful execution of plans to improve customer service and manage expenses [14] - Gross margin rate increased by 40 basis points compared to last year, resulting in a gross profit of $137 million [18] Business Line Data and Key Metrics Changes - Direct product sales increased by 1.5% on a 13-week basis, while shipping revenues surged by 42% to $4.7 million [15] - Store sales grew by 15.5%, driven by new stores opened in 2018 and 2019 [15] - The women's business outperformed the men's business, with a growth rate of 12% for the quarter, while men's business grew by 5% [20] Market Data and Key Metrics Changes - New customer growth was up 20% in 2019, with approximately 40% of this growth coming from retail stores [8] - Direct sales growth in markets with a store outpaced non-store markets, with established markets seeing direct growth in the low-teens [17] Company Strategy and Development Direction - The company is taking a conservative approach to spending and is reviewing store opening plans due to the COVID-19 pandemic [7][5] - The focus remains on optimizing the current fleet of 62 stores and enhancing store productivity through targeted promotions and localized product assortments [9] - Investments in technology and infrastructure are ongoing, with plans for customer-facing enhancements and improved analytics for marketing strategies [30][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented challenges posed by the COVID-19 pandemic and the fluid nature of the situation [4] - The company has suspended financial guidance due to uncertainty in consumer spending and is focusing on expense control and liquidity [33][35] - Despite current challenges, management remains confident in the long-term value of investments made over the past few years [11] Other Important Information - Inventory at year-end increased by 51% to $148 million, primarily due to higher sales plans from over 12 months earlier [26] - Capital expenditures for 2019 were $31 million, down 42% from the prior year, reflecting a strategic decision to open fewer stores [29] Q&A Session Summary Question: Can you provide insight into inventory levels excluding early receipts? - Management indicated that roughly a third of the inventory increase was related to pulling in receipts for spring and summer earlier [37] Question: Could SG&A dollars potentially decrease in the coming year? - Management confirmed that there is enough control within the expense structure to maintain spending levels, with the possibility of SG&A being flat [38] Question: What are the expected benefits and timing of new systems for customer enhancement? - Management detailed ongoing upgrades to the POS system for a seamless customer experience and improvements in merchandise lifecycle planning [40][43] Question: Can you walk through the balance sheet and available liquidity? - Management highlighted that inventory levels are higher than ideal but manageable, with a $130 million line of credit available for funding [45][48] Question: What is the current cash burn rate and how long can the company sustain operations? - Management expressed confidence in liquidity over the short term, with plans to take further action if economic impacts persist [50][51] Question: Is there potential for flexibility in lease payments given current circumstances? - Management stated that the occupancy cost structure is favorable and does not foresee the need to request accommodations on existing leases [53]