Duluth Holdings, Inc. saw net sales increase 1.6 percent to $245.6 million in the fourth quarter ended January 28, compared to $241.8 million in the prior-year corresponding period.

  • Direct-to-consumer net sales increased by 8.9 percent year-over-year (YoY) to $172.2 million in Q4, driven by higher conversion rates and greater penetration of mobile.
  • Mobile net sales grew 20.0 percent YoY for the fourth quarter and now represent the largest sales channel.
  • Retail store net sales decreased by 12.2 percent YoY to $73.4 million.
  • Women’s apparel net sales increased 12.4 percent YoY, with double-digit growth across both Duluth and AKHG brands, while men’s apparel net sales were flat to the prior-year period.

Gross profit decreased 4.4 percent to $118.4 million, or 48.2 percent of net sales, compared to $123.8 million, or 51.2 percent of net sales, in the corresponding prior-year period. The decrease in gross profit margin rate was said to be primarily due to a lower mix of full-price sales.

SG&A expenses decreased 3.8 percent to $108.8 million, compared to $113.2 million in the prior-year period. As a percentage of net sales, SG&A expenses decreased to 44.3 percent, compared to 46.8 percent in the corresponding prior-year period.

The decrease in SG&A expenses was said to be partially due to lower advertising costs and variable expenses primarily due to efficiencies across the fulfillment center network, partially offset by higher depreciation from strategic investments.

The effective tax rate related to controlling interest was 23 percent and 25 percent in the current period and the prior comparable period, respectively.

Net Income was $7.0 million, or 21 cents per diluted share in Q4, compared to $7.5 million, or 23 cents per diluted share, in the prior-year quarter.

Adjusted EBITDA increased to $21.1 million in Q4 compared to $20.6 million in the prior-year quarter.

Company President and CEO Sam Sato commented, “While fiscal 2023 was a challenging year as consumers remained selective in their discretionary spend, our fourth quarter was highlighted by growth in both the Duluth and AKHG brands driven by our women’s business which registered year-over-year growth of 12 percent. Our Black Friday sales were the strongest in our company’s history demonstrating the strength of our brands and demand for the innovative and problem-solving products we offer.

Full-Year Summary

  • Net sales of $646.7 million compared to $653.3 million in the prior year;
  • Net Loss of $9.4 million, or a loss of 28 cents per diluted share;
  • Adjusted EBITDA of $33.4 million; reflects 5.2 percent of net sales; and
  • Healthy inventory composition with 90 percent in current products and a 30 percent decrease in clearance items.

Balance Sheet and Liquidity
The company ended the quarter with a cash balance of approximately $32.2 million, net working capital of $78.5 million and no outstanding Duluth Trading bank debt.

Fiscal 2023 capital expenditures were $53.2 million, inclusive of $2.7 million of investments in software hosting implementation costs, which are included in Prepaid expenses & other current assets.

Sato concluded, “We remain steadfast on our commitment to the pillars outlined in the Big Dam Blueprint and I am extremely proud of the tremendous progress we have made on related key strategic initiatives. We went live with our new highly automated fulfillment center and are achieving our ramp-up plan to process up to 60 percent of all online orders and store replenishment volume through this facility. We also meaningfully advanced our sourcing and product innovation functions and expect benefits from this initiative to materialize in 2024 and continue to build over time. These foundational initiatives represent examples of significant enablers to future proof and scale long-term profitable growth.”

Fiscal 2024 Outlook

  • The company provided the following fiscal 2024 outlook;
  • Net sales in the range of $640 million to $660 million;
  • Adjusted EBITDA1 in the range of $39 million to $45 million;
  • EPS in the range of a loss of 22 cents to a loss of 7 cents per diluted share; and
  • Capital expenditures, inclusive of the software hosting implementation costs, of approximately $25 million.

Image courtesy Duluth Trading Company/American Hiking Society