Duluth Holdings Inc. (dba, Duluth Trading Company) reported that net sales decreased 1.8 percent to $241.3 million for the fiscal fourth quarter ended February 2, compared to $245.6 million in the prior-year fourth quarter.

  • Direct-to-consumer net sales increased by 0.4 percent to $172.9 million compared to the prior-year fourth quarter driven by greater penetration of mobile.
  • Retail store net sales decreased by 6.9 percent to $68.4 million.

Gross profit decreased 10.1 percent to $106.5 million, or 44.1 percent of net sales, compared to $118.4 million, or 48.2 percent of net sales, in the corresponding prior-year period. The decrease in gross profit margin rate was primarily due to steeper discounting coupled with a lower mix of full price sales.

Selling, general and administrative expenses increased 1.5 percent to $110.7 million. Excluding $3.0 million of software impairment costs, selling, general and administrative expenses decreased 1.3 percent to $107.7 million compared to $109.1 million in the same period a year ago.

As a percentage of net sales, selling, general and administrative expenses increased to 45.9 percent, compared to 44.4 percent in the corresponding prior-year period. The increase in selling, general and administrative expenses was primarily driven by $3.0 million of software impairment costs.

The effective tax rate related to controlling interest was 0 percent and 23 percent in the current period and prior comparable period, respectively.

“Delays in processing at our legacy fulfillment center adversely affected our ability to meet our fourth quarter expectations, driven by record-breaking order volume during Black Friday week and Cyber Monday,” explained Sam Sato, CEO. “To fulfill the backlog of orders and preserve higher quality sales for the remainder of the quarter we adjusted our promotional depth and frequency lower.”

Fiscal Year Summary

  • Net sales of $626.6 million compared to $646.7 million in the prior year.
  • Net loss of $43.6 million and adjusted net loss1 of $23.6 million, compared to net loss of $9.9 million in the prior year.
  • Adjusted net loss of $23.6 million excludes $7.7 million of restructuring expense, $11.8 million valuation allowance on deferred tax assets and $3.0 million of software impairment.
  • EPS loss of $1.31 and Adjusted EPS of 71 cents per share.
  • Adjusted EBITDA of $14.6 million; reflects 2.3 percent of net sales.

Balance Sheet and Liquidity
The company ended the year with a cash balance of approximately $3.3 million, net working capital of $63.1 million and no outstanding Duluth Trading bank debt.

Fiscal 2024 capital expenditures were $17.4 million, inclusive of investments in software hosting implementation costs, which are included in Prepaid expenses & other current assets on the company’s Consolidated Balance Sheets.

“While total inventory increased compared to last year, the higher unit velocity between Black Friday and Cyber Monday and our pack-and-hold strategy reduced fall/winter seasonal and clearance inventory since the start of the quarter.

Fiscal 2025 Outlook
The company provided the following fiscal 2025 outlook:

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

“Looking ahead, we will expand our Duluth Women’s Heirloom and Garden collection, and introduce Men’s Backyard for Him, which will feature an assortment of new products, including a collaboration with Leinenkugels for all his favorite backyard activities. We are also introducing new Armachillo cooling technology products, including Men’s Flex pants and Double-flex denim,” Sato shared.

“Our key Marketing and Brand Tent Pole moments will be centered on the Gardens Gone Wild campaign and our 3rd Underwear TradeUp event with 360º media support. Additionally, we will have Always On Product Stories, Social-Only campaigns, and in-store activations.”

Sato concluded, “As the management team looks ahead to 2025, it remains committed to building upon the progress of our strategic initiatives, including making meaningful structural improvements combined with a sharp focus on improving operational execution.”

Image courtesy Duluth Holdings Inc.