Duluth Holdings, Inc. widened its loss in the first quarter ended May 4 as sales dropped 12.0 percent. The casual apparel and workwear brand reiterated its guidance for the year.

Operating Results | First Quarter ended May 4, 2025
Net sales decreased 12.0 percent to $102.7 million, compared to $116.7 million in the same period a year ago. Direct-to-consumer net sales decreased by 17.1 percent to $62.6 million, primarily driven by lower site traffic compared to the prior year, partially offset by a higher average order value. Retail store net sales decreased by 2.6 percent to $40.2 million due to slower store traffic.

Gross profit margin rate decreased 80 basis points to 52.0 percent, compared to 52.8 percent in the corresponding prior year, primarily driven by higher clearance penetration, partially offset by improvements in product costs resulting from its direct-to-factory sourcing initiative. Gross profit decreased to $53.4 million, compared to $61.6 million in the corresponding prior year.

Selling, general and administrative (SG&A) expenses decreased 6.9 percent to $65.7 million, compared to $70.6 million in the same period a year ago. As a percentage of net sales, SG&A expenses deleveraged to 64.0 percent, compared to 60.5 percent in the corresponding prior-year period, primarily driven by a decrease in net sales.

Net loss of $15.3 million, or 45 cents a share, and adjusted net loss of $10.8 million, or 32 cents, compared to a net loss of $7.9 million, or 24 cents, in the prior year first quarter. Adjusted net loss of $10.8 million excludes $4.1 million related to additions to a valuation allowance on a deferred tax asset and impairment expenses of $0.4 million, net of tax

Adjusted EBITDA decreased $5.6 million from the prior year to ($3.8) million, representing (3.7 percent) of net sales.

Management Commentary
On April 2, Duluth appointed Stephanie Pugliese as CEO, effective May 5. She succeeded Sam Soto, who retired from the company. Pugliese was president and CEO from February 2015 to August 2019 and has been with the brand for 11 years. Most recently, she served as president of the Americas for Under Armour.

Pugliese said in the quarterly release, “I am honored to return to Duluth, bringing my unwavering belief in this brand and its potential. Duluth Trading is loved for its high-quality, problem-solving products anchored on authentic, humorous, hard-working, and humble brand attributes.”

Pugliese added, “Our operating performance over the past few years has been challenging as business complexity has increased. To capture the full potential of the brand and drive shareholder value, I am taking decisive actions to simplify the business and focus on the key areas of brand awareness, solution-based products and product innovation, and customer service. I will be conducting an in-depth review of our brand and product portfolio as we look to reinvigorate the Duluth brand.”

“I am committed to leveraging the foundational work on product sourcing, fulfillment center network optimization and store portfolio rationalization, as well as streamlining our expense base across the organization. I strongly believe that business simplification and a focus on Duluth Trading’s core strengths will create shareholder value and return the company to profitable growth over time,“ concluded Pugliese.

Balance Sheet and Liquidity
The company ended the quarter with $8.6 million in cash and cash equivalents, net working capital of $54.2 million, $64.0 million outstanding debt on the Duluth Trading $100 million revolving line of credit and $44.6 million in liquidity.

Fiscal 2025 Outlook
The company is maintaining its previously issued fiscal 2025 financial guidance at this time. The outlook calls for:

  • Net sales in the range of $570 million to $595 million.
  • Adjusted EBITDA in the range of $20 million to $25 million.
  • Capital expenditures, inclusive of software hosting implementation costs, of approximately $20 million.

 Image courtesy Duluth Trading Company