Duluth Holdings Inc 10-Q for FY2024 Q2

Duluth Holdings Inc. (DLTH)

10-Q 2023-09-01 For: 2023-07-30

Added on April 06, 2026

About this 10-Q

Duluth Holdings Inc filed this 10-Q on September 1, 2023, covering the quarter ended July 30, 2023 (FY2024 Q2).

Headline figures

Quarter ended July 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $139.1M; down 1.7% from $141.51M a year earlier
Net loss: $2M; compared with net income of $2.37M a year earlier
Diluted EPS: -$0.06; compared with $0.07 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

	99
Wisconsin	39-1564801
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

201 East Front Street Mount Horeb, Wisconsin	53572
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class B Common Stock, No Par Value	DLTH	NASDAQ Global Select Market


Large Accelerated Filer	o	Accelerated Filer	þ
Non-accelerated Filer	o	Smaller Reporting Company	þ
		Emerging Growth Company	o



	Part I—Financial Information	Page
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of July 30, 2023 and January 30, 2022 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the three and six months ended July 30, 2023 and July 31, 2022 (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended July 30, 2023 and July 31, 2022 (Unaudited)	6
	Condensed Consolidated Statement of Shareholders’ Equity for the six months ended July, 2023 (Unaudited)	7
	Condensed Consolidated Statement of Shareholders’ Equity for the six months ended July 31, 2022 (Unaudited)	8
	Condensed Consolidated Statements of Cash Flows for the six months ended July 30, 2023 and July 31, 2022 (Unaudited)	9
	Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
	Part II—Other Information
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 6.	Exhibits	29

Signatures		30


	July 30, 2023		January 29, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	11,148	$	45,548
Receivables		5,758		6,041
Income tax receivable		140		—
Inventory, less reserves of $1,182 and $1,837, respectively		157,126		154,922
Prepaid expenses & other current assets		17,665		15,154
Total current assets		191,837		221,665
Property and equipment, net		125,970		112,564
Operating lease right-of-use assets		126,132		131,753
Finance lease right-of-use assets, net		45,742		47,206
Available-for-sale security		5,254		5,539
Other assets, net		7,853		8,727
Deferred tax assets		353		—
Total assets	$	503,141	$	527,454


þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	July 30, 2023		January 29, 2023
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable	$	59,259	$	56,547
Accrued expenses and other current liabilities		28,215		40,815
Income taxes payable		—		1,761
Current portion of operating lease liabilities		15,993		15,571
Current portion of finance lease liabilities		2,964		2,842
Current maturities of TRI long-term debt		807		768
Total current liabilities		107,238		118,304
Operating lease liabilities, less current maturities		110,999		117,366
Finance lease liabilities, less current maturities		35,906		37,425
TRI long-term debt, less current maturities		25,538		25,913
Deferred tax liabilities		—		1,249
Total liabilities		279,681		300,257
Shareholders' equity:
Preferred stock, no par value; 10,000 shares authorized; no shares issued or outstanding as of July 30, 2023 and January 29, 2023		—		—
Common stock (Class A), no par value; 10,000 shares authorized; 3,364 shares issued and outstanding as of July 30, 2023 and January 29, 2023		—		—
Common stock (Class B), no par value; 200,000 shares authorized; 31,371 shares issued and 31,217 shares outstanding as of July 30, 2023 and 30,191 shares issued and 30,079 shares outstanding as of January 29, 2023		—		—
Treasury stock, at cost; 154 and 112 shares as of July 30, 2023 and January 29, 2023, respectively		(1,733)		(1,459)
Capital stock		101,415		98,842
Retained earnings		127,299		133,172
Accumulated other comprehensive loss		(295)		(148)
Total shareholders' equity of Duluth Holdings Inc.		226,686		230,407
Noncontrolling interest		(3,226)		(3,210)
Total shareholders' equity		223,460		227,197
Total liabilities and shareholders' equity	$	503,141	$	527,454


	Three Months Ended				Six Months Ended
	July 30, 2023		July 31, 2022		July 30, 2023		July 31, 2022
Net sales	$	139,099	$	141,511	$	262,858	$	264,415
Cost of goods sold (excluding depreciation and amortization)		67,616		65,903		125,724		121,744
Gross profit		71,483		75,608		137,134		142,671
Selling, general and administrative expenses		72,926		71,739		143,126		139,733
Operating (loss) income		(1,443)		3,869		(5,992)		2,938
Interest expense		880		879		1,814		1,755
Other income, net		109		78		257		124
(Loss) income before income taxes		(2,214)		3,068		(7,549)		1,307
Income tax (benefit) expense		(202)		727		(1,660)		289
Net (loss) income		(2,012)		2,341		(5,889)		1,018
Less: Net loss attributable to noncontrolling interest		(8)		(27)		(16)		(56)
Net (loss) income attributable to controlling interest	$	(2,004)	$	2,368	$	(5,873)	$	1,074
Basic earnings per share (Class A and Class B):
Weighted average shares of common stock outstanding		32,952		32,766		32,912		32,732
Net (loss) income per share attributable to controlling interest	$	(0.06)	$	0.07	$	(0.18)	$	0.03
Diluted earnings per share (Class A and Class B):
Weighted average shares and equivalents outstanding		32,952		32,766		32,912		32,910
Net (loss) income per share attributable to controlling interest	$	(0.06)	$	0.07	$	(0.18)	$	0.03


	Six Months Ended July 30, 2023
								Accumulated		Noncontrolling
	Capital stock							other		interest in		Total
				Treasury		Retained		comprehensive		variable interest		shareholders'
	Shares	Amount		stock		earnings		income (loss)		entity		equity
Balance at January 29, 2023	33,443	$	98,842	$	(1,459)	$	133,172	$	(148)	$	(3,210)	$	227,197
Issuance of common stock	1,081		136		—		—		—		—		136
Stock-based compensation	—		990		—		—		—		—		990
Restricted stock forfeitures	(9)		—		—		—		—		—		—
Restricted stock surrendered for taxes	(41)		—		(273)		—		—		—		(273)
Other comprehensive loss	—		—		—		—		(59)		—		(59)
Net loss	—		—		—		(3,869)		—		(8)		(3,877)
Balance at April 30, 2023	34,474	$	99,968	$	(1,732)	$	129,303	$	(207)	$	(3,218)	$	224,114
Issuance of common stock	111		153		—		—		—		—		153
Stock-based compensation	—		1,294		—		—		—		—		1,294
Restricted stock forfeitures	(4)		—		—		—		—		—		—
Restricted stock surrendered for taxes	—		—		(1)		—		—		—		(1)
Other comprehensive loss	—		—		—		—		(88)		—		(88)
Net income (loss)	—		—		—		(2,004)		—		(8)		(2,012)
Balance at July 30, 2023	34,581	$	101,415	$	(1,733)	$	127,299	$	(295)	$	(3,226)	$	223,460


	Six Months Ended July 31, 2022
								Accumulated		Noncontrolling
	Capital stock							other		interest in		Total
				Treasury		Retained		comprehensive		variable interest		shareholders'
	Shares	Amount		stock		earnings		income		entity		equity
Balance at January 30, 2022	33,071	$	95,515	$	(1,002)	$	130,868	$	489	$	(3,152)	$	222,718
Issuance of common stock	292		166		—		—		—		—		166
Stock-based compensation	—		618		—		—		—		—		618
Restricted stock forfeitures	(1)		—		—		—		—		—		—
Restricted stock surrendered for taxes	(33)		—		(455)		—		—		—		(455)
Other comprehensive income	—		—		—		—		(336)		—		(336)
Net loss	—		—		—		(1,294)		—		(29)		(1,323)
Balance at May 1, 2022	33,329	$	96,299	$	(1,457)	$	129,575	$	153	$	(3,181)	$	221,389
Issuance of common stock	56		147		—		—		—		—		147
Stock-based compensation	—		656		—		—		—		—		656
Restricted stock forfeitures	(44)		—		—		—		—		—		—
Restricted stock surrendered for taxes	—		—		(1)		—		—		—		(1)
Other comprehensive income	—		—		—		—		(151)		—		(151)
Net income (loss)	—		—		—		2,368		—		(27)		2,341
Balance at July 31, 2022	33,341	$	97,102	$	(1,458)	$	131,943	$	2	$	(3,208)	$	224,381


	July 30, 2023		January 29, 2023
(in thousands)
Prepaid expenses & other current assets
Pending returns inventory, net	$	1,878	$	2,373
Current software hosting implementation costs, net		2,679		3,074
Other prepaid expenses		13,108		9,707
Prepaid expenses & other current assets	$	17,665	$	15,154

Other assets, net
Goodwill	$	402	$	402
Intangible assets, net		441		450
Non-current software hosting implementation costs		5,358		6,148
Other assets, net		1,652		1,727
Other assets, net	$	7,853	$	8,727


	Consolidated Statement	Three Months Ended				Six Months Ended
	of Operations	July 30, 2023		July 31, 2022		July 30, 2023		July 31, 2022
(in thousands)
Finance lease expenses
Amortization of right-of-use ‎assets	Selling, general and ‎administrative expenses	$	840	$	840	$	1,680	$	1,680
Interest on lease liabilities	Interest expense		431		459		869		925
Total finance lease expense		$	1,271	$	1,299	$	2,549	$	2,605
Operating lease expense	Selling, general and ‎administrative expenses	$	5,051	$	4,717	$	10,101	$	9,106
Amortization of build-to-suit ‎leases capital contribution	Selling, general and ‎administrative expenses		321		321		642		642
Variable lease expense	Selling, general and ‎administrative expenses		2,559		2,473		5,473		4,445
Total lease expense		$	9,202	$	8,810	$	18,765	$	16,798


Fiscal year	Finance		Operating
(in thousands)
2023 (remainder of fiscal year)	$	2,285	$	10,504
2024		4,736		20,612
2025		5,099		19,888
2026		3,993		19,034
2027		3,993		17,785
Thereafter		29,231		61,200
Total future minimum lease payments	$	49,337	$	149,023
Less – Discount		(10,467)		(22,031)
Lease liability	$	38,870	$	126,992


	July 30, 2023
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
(in thousands)
Level 1 security:
Money market funds	$	4,054	$	—	$	—	$	4,054

Level 3 security:
Corporate trust	$	5,649	$	—	$	(395)	$	5,254


	Six Months Ended
	July 30, 2023		July 31, 2022
Cash flows from operating activities:
Net (loss) income	$	(5,889)	$	1,018
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		14,868		15,374
Stock based compensation		2,284		1,274
Deferred income taxes		(1,553)		27
Loss on disposal of property and equipment		16		23
Changes in operating assets and liabilities:
Receivables		283		(309)
Income taxes receivable		(140)		—
Inventory		(2,204)		(41,827)
Prepaid expense & other current assets		(1,351)		86
Software hosting implementation costs, net		(370)		(529)
Deferred catalog costs		—		(25)
Trade accounts payable		2,716		9,549
Income taxes payable		(1,761)		(6,231)
Accrued expenses and deferred rent obligations		(7,343)		(18,974)
Other assets		(20)		(519)
Noncash lease impacts		(785)		(75)
Net cash used in operating activities		(1,249)		(41,138)
Cash flows from investing activities:
Purchases of property and equipment		(31,483)		(18,814)
Principal receipts from available-for-sale security		88		79
Proceeds from disposals		—		8
Net cash used in investing activities		(31,395)		(18,727)
Cash flows from financing activities:
Proceeds from line of credit		10,000		—
Payments on line of credit		(10,000)		—
Payments on TRI long term debt		(373)		(338)
Payments on finance lease obligations		(1,397)		(1,336)
Payments of tax withholding on vested restricted shares		(274)		(456)
Other		288		313
Net cash used in financing activities		(1,756)		(1,817)
Decrease in cash and cash equivalents		(34,400)		(61,682)
Cash and cash equivalents at beginning of period		45,548		77,051
Cash and cash equivalents at end of period	$	11,148	$	15,369
Supplemental disclosure of cash flow information:


	July 30, 2023		January 29, 2023
(in thousands)
Salaries and benefits	$	2,401	$	2,404
Deferred revenue		7,828		10,249
Freight		3,651		7,193
Product returns		3,959		5,168
Unpaid purchases of property & equipment		560		6,271
Accrued advertising		1,730		2,020
Other		8,086		7,510
Total accrued expenses and other current liabilities	$	28,215	$	40,815


	Amortized		Estimated
	Cost		Fair Value
(in thousands)
Within one year	$	190	$	164
After one year through five years		1,263		1,134
After five years through ten years		1,910		1,780
After ten years		2,286		2,176
Total	$	5,649	$	5,254


		Weighted
		average
		fair value
	Shares	per share
Outstanding at January 29, 2023	618,772	$	12.05
Granted	1,155,145		6.51
Vested	(161,732)		12.24
Forfeited	(13,179)		11.05
Outstanding at July 30, 2023	1,599,006	$	8.29


	July 30, 2023				January 29, 2023
		Carrying Amount		Fair Value		Carrying Amount		Fair Value
(in thousands)
TRI Long-term debt, including short-term portion	$	26,345	$	24,782	$	26,681	$	26,172

Selling, general and administrative expenses	52.4	%	50.7	%	54.4	%	52.8	%
Operating (loss) income	(1.0)	%	2.7	%	(2.3)	%	1.1	%
Interest expense	0.6	%	0.6	%	0.7	%	0.7	%
Other income, net	-	%	-	%	-	%	-	%
(Loss) income before income taxes	(1.6)	%	2.2	%	(2.9)	%	0.5	%
Income tax (benefit) expense	(0.1)	%	0.5	%	(0.6)	%	0.1	%
Net (loss) income	(1.4)	%	1.7	%	(2.2)	%	0.4	%
Less: Net loss attributable to noncontrolling interest	-	%	-	%	-	%	-	%
Net (loss) income attributable to controlling interest	(1.4)	%	1.7	%	(2.2)	%	0.4	%


				Total number	Approximate dollar
				of shares purchased	value of shares that
	Total number			as part of publicly	may yet to be
	of shares	Average price		announced plans	purchased under the
Period	purchased	paid per share		or programs	plans or programs
May 1, 2023 - May 28, 2023	198	$	5.69	—	$	—
May 29, 2023 - July 2, 2023	366		6.16	—		—
July 3, 2023 - July 30, 2023	—		—	—		—
Total	564	$	6.00	—	$	—


Exhibit No.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act, as amended.*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended.*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended July 30, 2023 has been formatted in Inline XBRL (Inline Extensible Business Reporting Language and contained in Exhibits 101).


*	Filed herewith
**	In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be “furnished” and not “filed.”


Date: September 1, 2023
	DULUTH HOLDINGS INC. ‎(Registrant)
		/s/ David Loretta
		David Loretta
		Senior Vice President and Chief Financial Officer
		(On behalf of the Registrant and as Principal Financial Officer)


		/s/ Michael Murphy
		Michael Murphy
		Vice President and Chief Accounting Officer
		(On behalf of the Registrant and as Principal Accounting Officer)



	/s/ Sam Sato
Name:	Sam Sato
Title:	Chief Executive Officer
Date:	September 1, 2023