• Duluth Holdings Inc. Announces First Quarter 2022 Financial Results

    Источник: Nasdaq GlobeNewswire / 02 июн 2022 05:45:00   America/Chicago

    Net Sales of $122.9 million

    Gross Margin increases 470 basis points to 54.6%

    Launches new Duluth by Duluth Trading Co. logo and Rebrands Alaskan Hardgear as AKHG

    Reaffirmed Fiscal 2022 outlook for Net Sales, EPS and Adjusted EBITDA

    MOUNT HOREB, Wis., June 02, 2022 (GLOBE NEWSWIRE) -- Duluth Holdings Inc. (dba, Duluth Trading Company) (“Duluth Trading” or the “Company”) (NASDAQ: DLTH), a lifestyle brand of men’s and women’s workwear, casual wear, outdoor apparel and accessories, today announced its financial results for the fiscal first quarter ended May 1, 2022.

    Highlights for the First Quarter Ended May 1, 2022

    • Net sales of $122.9 million compared to $133.4 million in the prior year first quarter
    • Gross margin improved 470 basis points to 54.6% compared to 49.9% in the prior year first quarter
    • Net loss of ($1.3) million, or ($0.04) per diluted share, compared to net income of $0.5 million, or $0.02 per diluted share in the prior year first quarter; excluding the $3.9 million carryover of freight costs, net income would have been $1.6 million, or $0.05 per diluted share
    • Adjusted EBITDA1 of $7.9 million, reflects 6.4% of net sales

    1See Reconciliation of net (loss) income to EBITDA and EBITDA to Adjusted EBITDA in the accompanying financial tables.

    Management Commentary

    President and CEO, Sam Sato commented, “Our first quarter results demonstrate our continued operational effectiveness in the face of an uneven macro environment. With our inventories in a healthy position at quarter end and digital marketing tactics that draw on elevated data analytics, we are meeting the needs of our customers and executing our strategies for long-term brand growth. The efficiency of our omnichannel model is producing a consistently strong gross profit margin, which for Q1 was 54.6%, an increase of 470 basis points over last year.”

    “We are excited to bring our evolving portfolio of brands to life with the launch of Duluth by Duluth Trading Co. and our rebranding of Alaskan Hardgear as AKHG, which is now expanded to include Women’s. Both brands stand behind our commitment to product innovation and long-standing quality. Duluth is our core workwear brand, while AKHG serves our customer’s desires to be active in the outdoors and equips them for the adventures they are taking on. We’re pleased with the customer response to our new brand positioning and expect the momentum to continue building,” Sato concluded.

    Operating Results for the First Quarter Ended May 1, 2022

    Net sales decreased 7.9% to $122.9 million, compared to $133.4 million in the same period a year ago. Retail store net sales increased slightly by 0.4% to $45.2 million. Direct-to-consumer net sales decreased by 12.1% to $77.7 million compared to the first quarter last year primarily due to heavier clearance sales, coupled with continued supply chain disruptions during the prior year. Direct-to-consumer net sales decreased 18.8% and 22.9% in fiscal February and March, respectively, as compared to the prior year, but April ended strong with direct-to-consumer net sales increasing 10.8% as our inventory position continues to improve.

    Net sales in store markets decreased 5.4% to $85.1 million, compared to $89.9 million in the same period a year ago. Net sales in non-store markets decreased by 12.5%, to $36.8 million driven by less clearance sales due to managing with an improved inventory system during the current quarter.

    Gross profit increased 0.8% to $67.1 million, or 54.6% of net sales, compared to $66.5 million, or 49.9% of net sales, in the corresponding prior year period. Absent the $3.9 million carryover of expedited freight costs that were expensed during the current quarter, our first quarter gross profit margin would have been approximately 58%. The increase in gross profit rate was driven by less clearance sales due to improved inventory position.

    Selling, general and administrative expenses increased 5.2% to $68.0 million, compared to $64.6 million in the same period a year ago. As a percentage of net sales, selling, general and administrative expenses increased to 55.3%, compared to 48.5% in the corresponding prior year period.

    The increase in selling, general and administrative expense was primarily due to investments in new headcount, as well as increased brand development expense to support the launch of Duluth by Duluth Trading Co. and rebrand of Alaskan Hardgear as AKHG.

    The effective tax rate related to controlling interest was 25% compared to 16% in the corresponding prior year period. The effective tax rate in the prior year was impacted by changes to certain discrete items.

    Balance Sheet and Liquidity

    The Company ended the quarter with a cash balance of $40.4 million, an inventory balance of $152.2 million, net working capital of $106.0 million, and no outstanding Duluth Trading bank debt.

    Fiscal 2022 Outlook

    The Company’s fiscal 2022 outlook is as follows:

    • Net sales in the range of $730 million to $755 million
    • Adjusted EBITDA in the range of $84 million to $88 million1
    • EPS in the range of $0.93 to $1.02 per diluted share
    • Capital expenditures, inclusive of software hosting implementation costs, of approximately $40 million

    1See Reconciliation of forecasted net income to forecasted EBITDA and forecasted EBITDA to forecasted Adjusted EBITDA in the accompanying financial tables.

    Conference Call Information

    A conference call and audio webcast with analysts and investors will be held on Thursday, June 2, 2022 at 9:30 am Eastern Time, to discuss the results and answer questions.

    • Live conference call: 844-875-6915 (domestic) or 412-317-6711 (international)
    • Conference call replay available through June 9, 2022: 877-344-7529 (domestic) or 412-317-0088 (international)
    • Replay access code: 6696956
    • Live and archived webcast: ir.duluthtrading.com        

    Investors can pre-register for the earnings conference call to expedite their entry into the call and avoid waiting for a live operator. To pre-register for the call, please visit https://dpregister.com/6696956 and enter your contact information. You will then be issued a personalized phone number and pin to dial into the live conference call. Investors can pre-register any time prior to the start of the conference call.

    About Duluth Trading

    Duluth Trading is a lifestyle brand for the Modern, Self-Reliant American. Based in Mount Horeb, Wisconsin, we offer high quality, solution-based casual wear, workwear and accessories for men and women who lead a hands-on lifestyle and who value a job well-done. We provide our customers an engaging and entertaining experience. Our marketing incorporates humor and storytelling that conveys the uniqueness of our products in a distinctive, fun way, and are available through our content-rich website, catalogs, and “store like no other” retail locations. We are committed to outstanding customer service backed by our “No Bull Guarantee” - if it’s not right, we’ll fix it. Visit our website at http://www.duluthtrading.com.

    Non-GAAP Measurements

    Management believes that non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Within this release, including the tables attached hereto, reference is made to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). See attached Table “Reconciliation of Net Income (Loss) to EBITDA and EBITDA to Adjusted EBITDA,” for a reconciliation of net income (loss) to EBITDA and EBITDA to Adjusted EBITDA for the three months ended May 1, 2022, versus the three months ended May 2, 2021.

    Adjusted EBITDA is a metric used by management and frequently used by the financial community, which provides insight into an organization’s operating trends and facilitates comparisons between peer companies, since interest, taxes, depreciation and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA excludes certain items that are unusual in nature or not comparable from period to period.

    The Company provides this information to investors to assist in comparisons of past, present and future operating results and to assist in highlighting the results of on-going operations. While the Company’s management believes that non-GAAP measurements are useful supplemental information, such adjusted results are not intended to replace the Company’s GAAP financial results and should be read in conjunction with those GAAP results.

    Forward-Looking Statements

    This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts included in this press release, including statements concerning Duluth Trading's plans, objectives, goals, beliefs, business strategies, future events, business conditions, its results of operations, financial position and its business outlook, business trends and certain other information herein, including statements under the heading “Fiscal 2022 Outlook” are forward-looking statements. You can identify forward-looking statements by the use of words such as “may,” ”might,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “believe,” “estimate,” “project,” “target,” “predict,” “intend,” “future,” “budget,” “goals,” “potential,” “continue,” “design,” “objective,” “forecasted,” “would” and other similar expressions. The forward-looking statements are not historical facts, and are based upon Duluth Trading's current expectations, beliefs, estimates, and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond Duluth Trading's control. Duluth Trading's expectations, beliefs and projections are expressed in good faith, and Duluth Trading believes there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs, estimates, and projections will be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements, including, among others, the risks, uncertainties, and factors set forth under Part 1, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC on March 25, 2022 and other factors as may be periodically described in Duluth Trading’s subsequent filings with the SEC. These risks and uncertainties include, but are not limited to, the following: the prolonged effects of COVID-19 on store traffic and disruptions to our distribution network, supply chains and operations; our ability to maintain and enhance a strong brand image; effectively adapting to new challenges associated with our expansion into new geographic markets; generating adequate cash from our existing stores to support our growth; effectively relying on sources for merchandise located in foreign markets; transportation delays and interruptions, including port congestion; inability to timely and effectively obtain shipments of products from our suppliers and deliver merchandise to our customers; the inability to maintain the performance of a maturing store portfolio; the impact of changes in corporate tax regulations; identifying and responding to new and changing customer preferences; the success of the locations in which our stores are located; our ability to attract and retain customers in the various retail venues and locations in which our stores are located; competing effectively in an environment of intense competition; our ability to adapt to significant changes in sales due to the seasonality of our business; price reductions or inventory shortages resulting from failure to purchase the appropriate amount of inventory in advance of the season in which it will be sold in global market constraints; increases in costs of fuel or other energy, transportation or utility costs and in the costs of labor and employment; failure of our information technology systems to support our current and growing business, before and after our planned upgrades; and other factors that may be disclosed in our SEC filings or otherwise. Forward-looking statements speak only as of the date the statements are made. Duluth Trading assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances or other changes affecting forward-looking information except to the extent required by applicable securities laws.

    (Tables Follow)


    DULUTH HOLDINGS INC.
    Condensed Consolidated Balance Sheets
    (Unaudited)
    (Amounts in thousands)

           
      May 1, 2022 January 30, 2022
           
    ASSETS      
    Current Assets:      
    Cash and cash equivalents $40,370  $77,051 
    Receivables  5,097   5,455 
    Income tax receivable      
    Inventory, net  152,244   122,672 
    Prepaid expenses & other current assets  16,422   17,333 
    Prepaid catalog costs     10 
    Total current assets  214,133   222,521 
    Property and equipment, net  108,283   110,078 
    Operating lease right-of-use assets  118,414   120,911 
    Finance lease right-of-use assets, net  49,402   50,133 
    Available-for-sale security  6,066   6,554 
    Other assets, net  6,495   5,353 
    Total assets $502,793  $515,550 
    LIABILITIES AND SHAREHOLDERS' EQUITY      
    Current liabilities:      
    Trade accounts payable $54,523  $45,402 
    Accrued expenses and other current liabilities  32,214   47,504 
    Income taxes payable  4,782   6,814 
    Current portion of operating lease liabilities  13,191   12,882 
    Current portion of finance lease liabilities  2,730   2,701 
    Current portion of Duluth long-term debt      
    Current maturities of TRI long-term debt1  711   693 
    Total current liabilities  108,151   115,996 
    Operating lease liabilities, less current maturities  104,448   107,094 
    Finance lease liabilities, less current maturities  39,574   40,267 
    Duluth long-term debt, less current maturities      
    TRI long-term debt, less current maturities1  26,440   26,608 
    Deferred tax liabilities  2,791   2,867 
    Total liabilities  281,404   292,832 
    Commitments and contingencies      
    Shareholders' equity:      
    Treasury stock  (1,457)  (1,002)
    Capital stock  96,299   95,515 
    Retained earnings  129,575   130,868 
    Accumulated other comprehensive income, net  153   489 
    Total shareholders' equity of Duluth Holdings Inc.  224,570   225,870 
    Noncontrolling interest  (3,181)  (3,152)
    Total shareholders' equity  221,389   222,718 
    Total liabilities and shareholders' equity $502,793  $515,550 

    1Represents debt of the variable interest entity, TRI Holdings, LLC, that is consolidated in accordance with ASC 810, Consolidation. Duluth Holdings Inc. is not the guarantor nor the obligor of this debt.


    DULUTH HOLDING INC.
    Consolidated Statements of Operations
    (Unaudited)
    (Amounts in thousands, except per share figures)

           
      Three Months Ended
      May 1, 2022 May 2, 2021
    Net sales $122,904  $133,419 
    Cost of goods sold (excluding depreciation and amortization)  55,841   66,876 
    Gross profit  67,063   66,543 
    Selling, general and administrative expenses  67,994   64,648 
    Operating (loss) income  (931)  1,895 
    Interest expense  876   1,308 
    Other income, net  46   16 
    (Loss) income before income taxes  (1,761)  603 
    Income tax (benefit) expense  (438)  105 
    Net (loss) income  (1,323)  498 
    Less: Net loss attributable to noncontrolling interest  (29)  (46)
    Net (loss) income attributable to controlling interest $(1,294) $544 
    Basic (loss) earnings per share (Class A and Class B):      
    Weighted average shares of common stock outstanding  32,714   32,540 
    Net (loss) income per share attributable to controlling interest $(0.04) $0.02 
    Diluted (loss) earnings per share (Class A and Class B):      
    Weighted average shares and equivalents outstanding  32,714   32,720 
    Net (loss) income per share attributable to controlling interest $(0.04) $0.02 


    DULUTH HOLDINGS INC.
    Consolidated Statements of Cash Flows
    (Unaudited)
    (Amounts in thousands)

           
      Three Months Ended
      May 1, 2022 May 2, 2021
    Cash flows from operating activities:      
    Net (loss) income $(1,323) $498 
    Adjustments to reconcile net (loss) income to net cash used in operating activities:      
    Depreciation and amortization  7,520   7,274 
    Stock based compensation  618   371 
    Deferred income taxes  37   (16)
    Loss on disposal of property and equipment  26   51 
    Changes in operating assets and liabilities:      
    Receivables  358   262 
    Inventory  (29,572)  4,867 
    Prepaid expense & other current assets  746   (595)
    Software hosting implementation costs, net  (1,007)  (132)
    Deferred catalog costs  10   212 
    Trade accounts payable  10,362   5,991 
    Income taxes payable  (2,032)  104 
    Accrued expenses and deferred rent obligations  (17,500)  (6,330)
    Other assets  (11)  (33)
    Noncash lease impacts  51   (101)
    Net cash (used in) provided by operating activities  (31,717)  12,423 
    Cash flows from investing activities:      
    Purchases of property and equipment  (3,885)  (2,033)
    Principal receipts from available-for-sale security  39   35 
    Proceeds from disposals  3   24 
    Net cash used in investing activities  (3,843)  (1,974)
    Cash flows from financing activities:      
    Payments on delayed draw term loan     (30,625)
    Payments on TRI long term debt  (168)  (151)
    Payments on finance lease obligations  (664)  (615)
    Payments of tax withholding on vested restricted shares  (455)  (358)
    Other  166   133 
    Net cash used in financing activities  (1,121)  (31,616)
    Decrease in cash, cash equivalents  (36,681)  (21,167)
    Cash and cash equivalents at beginning of period  77,051   47,221 
    Cash and cash equivalents at end of period $40,370  $26,054 
    Supplemental disclosure of cash flow information:      
    Interest paid $876  $1,348 
    Income taxes paid $1,610  $ 
    Supplemental disclosure of non-cash information:      
    Unpaid liability to acquire property and equipment $4,121  $962 


    DULUTH HOLDINGS INC.
    Reconciliation of Net Income (Loss) to EBITDA and EBITDA to Adjusted EBITDA
    For the Fiscal Quarter Ended May 1, 2022
    (Unaudited)
    (Amounts in thousands)

           
      Three Months Ended
      May 1, 2022 May 2, 2021
    (in thousands)      
    Net (loss) income $(1,323) $498
    Depreciation and amortization  7,520   7,274
    Amortization of internal-use software hosting subscription implementation costs  633   
    Interest expense  876   1,308
    Income tax (benefit) expense  (438)  105
    EBITDA $7,268  $9,185
    Stock based compensation  618   371
    Adjusted EBITDA $7,886  $9,556


    DULUTH HOLDINGS INC.
    Reconciliation of Forecasted Net Income to Forecasted EBITDA and Forecasted EBITDA to Forecasted Adjusted EBITDA
    For the Fiscal Year Ending January 29, 2023
    (Unaudited)
    (Amounts in thousands)

           
      Low High
    Forecasted      
    Net income $30,800 $33,500
    Depreciation and amortization  32,200  32,600
    Amortization of internal-use software hosting subscription implementation costs  3,000  3,200
    Interest expense  4,750  4,450
    Income tax expense  10,250  11,150
    EBITDA $81,000 $84,900
    Stock based compensation  3,000  3,100
    Adjusted EBITDA $84,000 $88,000

     

    Photos accompanying this announcement are available at:

    https://www.globenewswire.com/NewsRoom/AttachmentNg/adae3add-d45b-4ec0-b3e8-7f181fd173e6

    https://www.globenewswire.com/NewsRoom/AttachmentNg/9a4e13b0-c681-4b97-92c3-707ac2cebb1b


    Investor Contacts:
    ICR, Inc.
    (646) 277-1200
    DuluthIR@icrinc.com

    Primary Logo

    Duluth by Duluth Trading Co.

    Duluth by Duluth Trading Co.
    AKHG by Duluth Trading Co.

    AKHG by Duluth Trading Co.
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