Duluth Holdings (NASDAQ: DLTH) Q3 2025 loss shrinks as margin improves
Duluth Holdings Inc. reported softer demand but better profitability for the quarter ended November 2, 2025. Net sales declined
Selling, general and administrative expenses fell
For the first nine months, net sales decreased
Positive
- None.
Negative
- None.
Insights
Sales fell as promotions eased, but margins, costs and liquidity all improved, sharply reducing Duluth’s losses.
Duluth Holdings saw Q3 net sales drop
On the cost side, selling, general and administrative expenses fell
For the first nine months, net sales declined
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF |
For the transition period from _______ to _______
Commission File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
|
|
|
|
(Address of principal executive offices) |
(Zip Code) |
( |
(Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer |
☐ |
Accelerated Filer |
☐ |
☑ |
Smaller Reporting Company |
||
|
|
Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares outstanding of the Registrant’s Class A common stock, no par value, as of December 15, 2025, was
The number of shares outstanding of the Registrant’s Class B common stock, no par value, as of December 15, 2025, was
Table of Contents
DULUTH HOLDINGS INC.
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED November 2, 2025
INDEX
|
Part I—Financial Information |
Page |
Item 1. |
Financial Statements |
3 |
|
Condensed Consolidated Balance Sheets as of November 2, 2025 and February 2, 2025 (Unaudited) |
4 |
|
Condensed Consolidated Statements of Operations for the three and nine months ended November 2, 2025 and October 27, 2024 (Unaudited) |
5 |
|
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended November 2, 2025 and October 27, 2024 (Unaudited) |
6 |
|
Condensed Consolidated Statement of Shareholders’ Equity for the three and nine months ended November 2, 2025 (Unaudited) |
7 |
|
Condensed Consolidated Statement of Shareholders’ Equity for the three and nine months ended October 27, 2024 (Unaudited) |
8 |
|
Condensed Consolidated Statements of Cash Flows for the nine months ended November 2, 2025 and October 27, 2024 (Unaudited) |
9 |
|
Notes to Condensed Consolidated Financial Statements (Unaudited) |
10 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
29 |
Item 4. |
Controls and Procedures |
29 |
|
Part II—Other Information |
|
Item 1. |
Legal Proceedings |
29 |
Item 1A. |
Risk Factors |
29 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
29 |
Item 5. |
Other Information |
30 |
Item 6. |
Exhibits |
31 |
|
|
|
Signatures |
|
32 |
2
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DULUTH HOLDINGS INC.
Condensed Consolidated Balance Sheets - Assets
(Unaudited)
(Amounts in thousands)
|
|
November 2, 2025 |
|
|
February 2, 2025 |
|
||
ASSETS |
|
|
|
|
|
|
||
Current Assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Receivables |
|
|
|
|
|
|
||
Income tax receivable |
|
|
|
|
|
— |
|
|
Inventory, less reserves of $ |
|
|
|
|
|
|
||
Prepaid expenses & other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Property and equipment, net |
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
|
|
|
|
|
||
Finance lease right-of-use assets, net |
|
|
|
|
|
|
||
Available-for-sale security |
|
|
|
|
|
|
||
Other assets, net |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Table of Contents
DULUTH HOLDINGS INC.
Condensed Consolidated Balance Sheets – Liabilities and Shareholders’ Equity
(Unaudited)
(Amounts in thousands)
|
|
November 2, 2025 |
|
|
February 2, 2025 |
|
||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Trade accounts payable |
|
$ |
|
|
$ |
|
||
Accrued expenses and other current liabilities |
|
|
|
|
|
|
||
Income taxes payable |
|
|
|
|
|
|
||
Current portion of operating lease liabilities |
|
|
|
|
|
|
||
Current portion of finance lease liabilities |
|
|
|
|
|
|
||
Line of credit |
|
|
|
|
|
|
||
Current maturities of TRI long-term debt |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Operating lease liabilities, less current maturities |
|
|
|
|
|
|
||
Finance lease liabilities, less current maturities |
|
|
|
|
|
|
||
TRI long-term debt, less current maturities |
|
|
|
|
|
|
||
Deferred tax liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
Shareholders' equity: |
|
|
|
|
|
|
||
Preferred stock, no par value; |
|
|
|
|
|
|
||
Common stock (Class A), no par value; |
|
|
|
|
|
|
||
Common stock (Class B), no par value; |
|
|
|
|
|
|
||
Treasury stock, at cost; |
|
|
( |
) |
|
|
( |
) |
Capital stock |
|
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
|
||
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Total shareholders' equity of Duluth Holdings Inc. |
|
|
|
|
|
|
||
Noncontrolling interest |
|
|
( |
) |
|
|
( |
) |
Total shareholders' equity |
|
|
|
|
|
|
||
Total liabilities and shareholders' equity |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Table of Contents
DULUTH HOLDINGS INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except per share figures)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of goods sold (excluding depreciation and amortization) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restructuring expense |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Operating loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (loss) income, net |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Loss before income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Less: Net income attributable to noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss attributable to controlling interest |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Basic earnings per share (Class A and Class B): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares of common stock outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss per share attributable to controlling |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted earnings per share (Class A and Class B): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares and equivalents outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss per share attributable to controlling |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Table of Contents
DULUTH HOLDINGS INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(Amounts in thousands)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securities available-for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized security gain arising during the period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax expense |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Comprehensive loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Comprehensive income attributable to noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Comprehensive loss attributable to controlling |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Table of Contents
DULUTH HOLDINGS INC.
Condensed Consolidated Statement of Shareholders’ Equity
(Unaudited)
(Amounts in thousands)
|
|
Nine Months Ended November 2, 2025 |
|
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Noncontrolling |
|
|
|
|
|||||||
|
|
Capital stock |
|
|
|
|
|
other |
|
|
interest in |
|
|
Total |
|
|||||||||||||
|
|
|
|
|
Treasury |
|
|
Retained |
|
|
comprehensive |
|
|
variable interest |
|
|
shareholders' |
|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
stock |
|
|
earnings |
|
|
(loss) income |
|
|
entity |
|
|
equity |
|
|||||||
Balance at February 2, 2025 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Issuance of common stock |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Stock-based compensation |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Restricted stock forfeitures |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Restricted stock surrendered for |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net (loss) income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Balance at May 4, 2025 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Issuance of common stock |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Stock-based compensation |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Restricted stock forfeitures |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Restricted stock surrendered for |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Balance at August 3, 2025 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Issuance of common stock |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Stock-based compensation |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Restricted stock forfeitures |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Restricted stock surrendered for taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net (loss) income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Balance at November 2, 2025 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
Table of Contents
DULUTH HOLDINGS INC.
Condensed Consolidated Statement of Shareholders’ Equity
(Unaudited)
(Amounts in thousands)
|
|
Nine Months Ended October 27, 2024 |
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Noncontrolling |
|
|
|
|
|||||||
|
|
Capital stock |
|
|
|
|
|
other |
|
|
interest in |
|
|
Total |
|
|||||||||||||
|
|
|
|
|
Treasury |
|
|
Retained |
|
|
comprehensive |
|
|
variable interest |
|
|
shareholders' |
|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
stock |
|
|
earnings |
|
|
loss |
|
|
entity |
|
|
equity |
|
|||||||
Balance at January 28, 2024 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Issuance of common stock |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Stock-based compensation |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Restricted stock forfeitures |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Restricted stock surrendered for |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Net (loss) income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Balance at April 28, 2024 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Issuance of common stock |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Stock-based compensation |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Restricted stock forfeitures |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Restricted stock surrendered for |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net loss (income) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Balance at July 28, 2024 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Issuance of common stock |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Stock-based compensation |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Restricted stock forfeitures |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Restricted stock surrendered for taxes |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net (loss) income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Balance at October 27, 2024 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
Table of Contents
DULUTH HOLDINGS INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
|
|
Nine Months Ended |
|
|||||
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Stock based compensation |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Loss on disposal of property and equipment |
|
|
|
|
|
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Receivables |
|
|
( |
) |
|
|
|
|
Income taxes receivable |
|
|
( |
) |
|
|
|
|
Inventory |
|
|
( |
) |
|
|
( |
) |
Prepaid expense & other current assets |
|
|
( |
) |
|
|
( |
) |
Software hosting implementation costs, net |
|
|
( |
) |
|
|
( |
) |
Trade accounts payable |
|
|
|
|
|
|
||
Income taxes payable |
|
|
( |
) |
|
|
— |
|
Accrued expenses and deferred rent obligations |
|
|
( |
) |
|
|
|
|
Other assets |
|
|
( |
) |
|
|
( |
) |
Noncash lease impacts |
|
|
|
|
|
|
||
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Principal receipts from available-for-sale security |
|
|
|
|
|
|
||
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Proceeds from line of credit |
|
|
|
|
|
|
||
Payments on line of credit |
|
|
( |
) |
|
|
— |
|
Payments on TRI long term debt |
|
|
( |
) |
|
|
( |
) |
Payments on finance lease obligations |
|
|
( |
) |
|
|
( |
) |
Payments of tax withholding on vested restricted shares |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
|
||
Net cash provided by financing activities |
|
|
|
|
|
|
||
Increase (decrease) in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Interest paid |
|
$ |
|
|
$ |
|
||
Income taxes paid |
|
$ |
— |
|
|
$ |
|
|
Supplemental disclosure of non-cash information: |
|
|
|
|
|
|
||
Unpaid liability to acquire property and equipment |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
9
Table of Contents
DULUTH HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
A. Nature of Operations
Duluth Holdings Inc. (“Duluth Trading” or the “Company”), a Wisconsin corporation, is a lifestyle brand of men’s and women’s casual wear, workwear and accessories sold primarily through the Company’s own omnichannel platform. The Company’s products are marketed under the Duluth Trading name, with the majority of products being exclusively developed and sold as Duluth Trading branded merchandise.
The Company identifies its operating segments according to how its business activities are managed and evaluated. The Company continues to report
The Company has
B. Basis of Presentation
The condensed consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). The Company consolidates TRI Holdings, LLC (“TRI”) as a variable interest entity (see Note 6 “Variable Interest Entity” for further information). All significant intercompany balances and transactions have been eliminated in consolidation.
The Company’s fiscal year ends on the Sunday nearest to January 31 of the following year. Fiscal 2025 is a 52-week period and ends on
The accompanying condensed consolidated financial statements as of and for the three and nine months ended November 2, 2025 and October 27, 2024 have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of the Company, include all adjustments (which are normal and recurring in nature) necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such SEC rules and regulations as of and for the three and nine months ended November 2, 2025 and October 27, 2024. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s annual report on Form 10-K for the fiscal year ended February 2, 2025.
C. Inventory
Inventory consists of finished goods stated at the lower of cost or net realizable value, with cost determined using the first-in, first-out valuation method. The Company records an inventory reserve for the anticipated loss associated with selling inventories below cost. Inventory reserve for excess and obsolete items was $
10
Table of Contents
DULUTH HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
D. Prepaid Expenses and Other Assets
Prepaid expenses and other assets consist of the following:
|
|
November 2, 2025 |
|
|
February 2, 2025 |
|
||
(in thousands) |
|
|
|
|
|
|
||
Prepaid expenses & other current assets |
|
|
|
|
|
|
||
Pending returns inventory, net |
|
$ |
|
|
$ |
|
||
Current software hosting implementation costs, net |
|
|
|
|
|
|
||
Other prepaid expenses |
|
|
|
|
|
|
||
Prepaid expenses & other current assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Other assets, net |
|
|
|
|
|
|
||
Intangible assets, net |
|
$ |
|
|
$ |
|
||
Non-current software hosting implementation costs |
|
|
|
|
|
|
||
Other assets, net |
|
|
|
|
|
|
||
Other assets, net |
|
$ |
|
|
$ |
|
||
E. Seasonality of Business
The Company’s business is affected by the pattern of seasonality common to most apparel businesses. Historically, the Company has recognized a significant portion of its revenue and operating profit in the fourth fiscal quarter of each year due to increased sales during the holiday season.
F. Cash and Cash Equivalents
The Company considers short-term investments with original maturities of three months or less when purchased to be cash equivalents. Amounts receivable from credit card issuers are typically converted to cash within
G. Significant Accounting Policies
There have been no significant changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended February 2, 2025.
2. LEASES
Based on the criteria set forth in ASC Topic 842, Leases (“ASC 842”), the Company recognizes right-of-use (ROU) assets and lease liabilities related to leases on the Company’s consolidated balance sheets. The Company determines if an arrangement is, or contains, a lease at inception. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities reflect the obligation to make lease payments arising from the lease. At any given time during the lease term, the lease liability represents the present value of the remaining lease payments and the ROU asset is measured at the amount of the lease liability, adjusted for pre-paid rent, unamortized initial direct costs and the remaining balance of lease incentives received. Both the lease ROU asset and liability are reduced to
The Company leases retail space under non-cancelable lease agreements, which expire on various dates through 2036. Substantially all of these arrangements are store leases. Store leases generally have initial lease terms ranging from
When calculating the lease liability on a discounted basis, the Company applies its estimated discount. The Company bases this discount on a collateralized interest rate as well as publicly available data for instruments with similar characteristics.
In addition to rent payments, leases for retail space contain payments for real estate taxes, insurance costs, common area maintenance, and utilities that are not fixed. The Company accounts for these costs as variable payments and does not include such costs as a lease component.
11
Table of Contents
DULUTH HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
The expense components of the Company’s leases reflected on the Company’s consolidated statement of operations were as follows:
|
|
Consolidated Statement |
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
of Operations |
|
November 2, 2025 |
|
|
October 27, 2024 |
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Finance lease expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of right-of- |
|
Selling, general and |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest on lease liabilities |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total finance lease expense |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Operating lease expense |
|
Selling, general and |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Amortization of build-to- |
|
Selling, general and |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Variable lease expense |
|
Selling, general and |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease expense |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other information related to leases were as follows:
|
|
Nine Months Ended |
|
|||||
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
||
(in thousands) |
|
|
|
|
|
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
||
Financing cash flows from finance leases |
|
$ |
|
|
$ |
|
||
Operating cash flows from finance leases |
|
$ |
|
|
$ |
|
||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Right-of-use assets obtained in exchange for lease liabilities: |
|
|
|
|
|
|
||
Operating leases |
|
$ |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
||
Weighted-average remaining lease term (in years): |
|
|
|
|
|
|
||
Finance leases |
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Weighted-average discount rate: |
|
|
|
|
|
|
||
Finance leases |
|
|
% |
|
|
% |
||
Operating leases |
|
|
% |
|
|
% |
||
Future minimum lease payments under the non-cancellable leases are as follows as of November 2, 2025:
Fiscal year |
|
Finance |
|
|
Operating |
|
||
(in thousands) |
|
|
|
|
|
|
||
2025 (remainder of fiscal year) |
|
$ |
|
|
$ |
|
||
2026 |
|
|
|
|
|
|
||
2027 |
|
|
|
|
|
|
||
2028 |
|
|
|
|
|
|
||
2029 |
|
|
|
|
|
|
||
Thereafter |
|
|
|
|
|
|
||
Total future minimum lease payments |
|
$ |
|
|
$ |
|
||
Less – Discount |
|
|
( |
) |
|
|
( |
) |
Lease liability |
|
$ |
|
|
$ |
|
||
12
Table of Contents
DULUTH HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
3. DEBT AND CREDIT AGREEMENT
Debt consists of the following:
|
|
November 2, 2025 |
|
|
February 2, 2025 |
|
||
(in thousands) |
|
|
|
|
|
|
||
TRI Senior Secured Note |
|
$ |
|
|
$ |
|
||
TRI Note |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Less: current maturities |
|
|
|
|
|
|
||
TRI long-term debt |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Duluth Line of credit |
|
$ |
|
|
$ |
|
||
Less: current maturities |
|
|
|
|
|
|
||
Duluth long-term debt |
|
$ |
|
|
$ |
|
||
TRI Holdings, LLC
TRI entered into a senior secured note (“TRI Senior Secured Note”) with an original balance of $
TRI entered into a promissory note (“TRI Note”) with an original balance of $
While the above notes are consolidated in accordance with ASC Topic 810, Consolidation, the Company is not the guarantor nor obligor of these notes.
Credit Agreement
On May 14, 2021, the Company entered into a credit agreement (the “Credit Agreement”), which was treated as a modification for accounting purposes. The Credit Agreement originally matured on
On July 8, 2022, the Company entered into the First Amendment to the Credit Agreement (the “First Amendment”), which was treated as a modification for accounting purposes. The First Amendment amended the Credit Agreement in order to (i) increase the revolving commitment from $
On January 31, 2025 the Company entered into the Second Amendment to the Credit Agreement (the “Second Amendment”). The Second Amendment amended the Credit Agreement, in part, to (i) decrease the revolving commitment from $
13
Table of Contents
DULUTH HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
capital expenditure expectations and resulted in fee savings. The Credit Agreement was extinguished on April 28, 2025, resulting in a write down of $
On April 28, 2025, the Company entered into a new credit agreement (the “New Credit Agreement”) among the Company, certain financial institutions as Lenders thereto, and BMO Bank N.A., as Administrative Agent, a Swing Line Lender and a Letter of Credit Issuer. The Credit Agreement provides for borrowings of up to $
Under the New Credit Agreement, (i) each Secured Overnight Financing Rate (“SOFR”) loan will bear interest on the outstanding principal amount at a rate per annum equal to adjusted term SOFR plus
The Company is also permitted to voluntarily prepay the New Credit Agreement in whole or in part at any time, where borrowings bearing interest based on the base rate may be prepaid at any time without penalty and borrowings bearing interest based on SOFR may be prepaid, subject to payment of usual and customary breakage and redeployment costs. The revolver will mature on
The new $
On July 16, 2025, the Company entered into the First Amendment to the New Credit Agreement, pursuant to which all revolving credit loans advanced or prepaid pursuant to such Sweep to Loan Arrangement shall bear interest based on the Base Rate.
4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following:
|
|
November 2, 2025 |
|
|
February 2, 2025 |
|
||
(in thousands) |
|
|
|
|
|
|
||
Salaries and benefits |
|
$ |
|
|
$ |
|
||
Deferred revenue |
|
|
|
|
|
|
||
Freight |
|
|
|
|
|
|
||
Product returns |
|
|
|
|
|
|
||
Unpaid purchases of property & equipment |
|
|
|
|
|
|
||
Accrued advertising |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total accrued expenses and other current liabilities |
|
$ |
|
|
$ |
|
||
14
Table of Contents
DULUTH HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
5. FAIR VALUE
ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., an exit price). The exit price is based on the amount that the holder of the asset or liability would receive or need to pay in an actual transaction (or in a hypothetical transaction if an actual transaction does not exist) at the measurement date. ASC 820 describes a fair value hierarchy based on three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last unobservable, as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Company’s assets and liabilities measured at fair value are categorized as Level 3 instruments. The fair value of the Company’s available-for-sale security was valued based on a discounted cash flow method (Level 3), which incorporates the U.S. Treasury yield curve, credit information and an estimate of future cash flows. During the nine months ended November 2, 2025, certain changes in the inputs did impact the fair value of the available-for-sale security. The calculated fair value is based on estimates that are subjective in nature and involve uncertainties and matters of significant judgement and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
The amortized cost and fair value of the Company’s available-for-sale security and the corresponding amount of gross unrealized gains and losses recognized in accumulated other comprehensive income are as follows:
|
|
November 2, 2025 |
|
|||||||||||||
|
|
Cost or |
|
|
Gross |
|
|
Gross |
|
|
|
|
||||
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Estimated |
|
||||
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Fair Value |
|
||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Level 3 security: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate trust |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
February 2, 2025 |
|
|||||||||||||
|
|
Cost or |
|
|
Gross |
|
|
Gross |
|
|
|
|
||||
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Estimated |
|
||||
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Fair Value |
|
||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Level 3 security: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate trust |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
||
The Company does not intend to sell the available-for-sale-security in the near term and does not believe that it will be required to sell the security. The Company reviews its securities on a quarterly basis to monitor its exposure to other-than-temporary impairment.
15
Table of Contents
DULUTH HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
The following table presents future principal receipts related to the Company’s available-for-sale security by contractual maturity as of November 2, 2025.
|
|
Amortized |
|
|
Estimated |
|
||
|
|
Cost |
|
|
Fair Value |
|
||
(in thousands) |
|
|
|
|
|
|
||
Within one year |
|
$ |
|
|
$ |
|
||
After one year through five years |
|
|
|
|
|
|
||
After five years through ten years |
|
|
|
|
|
|
||
After ten years |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
The carrying values and fair values of other financial instruments in the Consolidated Balance Sheets are as follows:
|
|
November 2, 2025 |
|
|
February 2, 2025 |
|
||||||||||
|
|
Carrying Amount |
|
|
Fair Value |
|
|
Carrying Amount |
|
|
Fair Value |
|
||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
TRI Long-term debt, including short-term portion |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The above long-term debt, including short-term portion is attributable to the consolidation of TRI in accordance with ASC Topic 810, Consolidation. The fair value was also based on a discounted cash flow method (Level 3) based on credit information and an estimate of future cash flows.
6. VARIABLE INTEREST ENTITY
Based upon the criteria set forth in ASC 810, Consolidation, the Company consolidates variable interest entities (“VIEs”) in which it has a controlling financial interest and is therefore deemed the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance; and (b) the obligation to absorb the VIE losses and the right to receive benefits that are significant to the VIE. The Company has determined that it was the primary beneficiary of
The Company leases the Company’s headquarters in Mt. Horeb, Wisconsin from TRI. In conjunction with the lease, the Company invested $
The condensed consolidated balance sheets include the following amounts as a result of the consolidation of TRI as of November 2, 2025 and February 2, 2025:
|
|
November 2, 2025 |
|
|
February 2, 2025 |
|
||
(in thousands) |
|
|
|
|
|
|
||
Cash |
|
$ |
|
|
$ |
|
||
Property and equipment, net |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Other current liabilities |
|
$ |
|
|
$ |
|
||
Current maturities of long-term debt |
|
|
|
|
|
|
||
TRI long-term debt |
|
|
|
|
|
|
||
Noncontrolling interest in VIE |
|
|
( |
) |
|
|
( |
) |
Total liabilities and shareholders' equity |
|
$ |
|
|
$ |
|
||
7. LOSS PER SHARE
16
Table of Contents
DULUTH HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Earnings per share is computed under the provisions of ASC 260, Earnings Per Share. Basic earnings per share is based on the weighted average number of common shares outstanding for the period. Diluted earnings per share is based on the weighted average number of common shares plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding restricted stock and are considered only for dilutive earnings per share unless considered anti-dilutive.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
||||
(in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator - net income (loss) attributable to |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator - weighted average shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive shares |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings (loss) per share (Class A and Class B) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The computation of diluted loss per share excluded
The computation of diluted loss per share excluded
8. STOCK-BASED COMPENSATION
The Company accounts for its stock-based compensation plan in accordance with ASC 718, Stock Compensation, which requires the Company to measure all share-based payments at grant date fair value and recognize the cost over the requisite service period of the award.
Total stock compensation expense associated with restricted stock recognized by the Company was $
A summary of the activity in the Company’s unvested restricted stock during the nine months ended November 2, 2025 is as follows:
|
|
|
|
|
Weighted |
|
||
|
|
|
|
|
average |
|
||
|
|
|
|
|
fair value |
|
||
|
|
Shares |
|
|
per share |
|
||
Outstanding at February 2, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding at November 2, 2025 |
|
|
|
|
$ |
|
||
At November 2, 2025, the Company had unrecognized compensation expense of $
17
Table of Contents
DULUTH HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
9. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
|
|
November 2, 2025 |
|
|
February 2, 2025 |
|
||
(in thousands) |
|
|
|
|
|
|
||
Land and land improvements |
|
$ |
|
|
$ |
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Buildings |
|
|
|
|
|
|
||
Vehicles |
|
|
|
|
|
|
||
Warehouse equipment |
|
|
|
|
|
|
||
Office equipment and furniture |
|
|
|
|
|
|
||
Computer equipment |
|
|
|
|
|
|
||
Software |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
Property and equipment, net |
|
$ |
|
|
$ |
|
||
10. REVENUE
The Company’s revenue primarily consists of the sale of apparel, footwear and hard goods. Revenue for merchandise that is shipped to our customers from our distribution centers and stores is recognized upon shipment. Store revenue is recognized at the point of sale, net of returns, and excludes taxes. Shipping and processing revenue generated from customer orders are included as a component of net sales and shipping and processing expense, including handling expense, is included as a component of selling, general and administrative expenses. Sales tax collected from customers and remitted to taxing authorities is excluded from revenue and is included in accrued expenses.
Sales disaggregated based upon sales channel is presented below.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Direct-to-consumer |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Stores |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Contract Assets and Liabilities
The Company’s contract assets primarily consist of the right of return for amounts of inventory to be returned that is expected to be resold and is recorded in Prepaid expenses and other current assets on the Company’s consolidated balance sheets. The Company’s contract liabilities primarily consist of gift card liabilities and are recorded in Accrued expenses and other current liabilities under deferred revenue (see Note 4 “Accrued Expenses and Other Current Liabilities”) on the Company’s consolidated balance sheets. Upon issuance of a gift card, a liability is established for its cash value. The gift card liability is relieved and revenues on gift cards are recorded at the time of redemption by the customer.
Contract assets and liabilities on the Company’s consolidated balance sheets are presented in the following table:
|
|
November 2, 2025 |
|
|
February 2, 2025 |
|
||
(in thousands) |
|
|
|
|
|
|
||
Contract assets |
|
$ |
|
|
$ |
|
||
Contract liabilities |
|
$ |
|
|
$ |
|
||
Revenue from gift cards is recognized when the gift card is redeemed by the customer for merchandise or as a gift card breakage, an estimate of gift cards which will not be redeemed. The Company does not record breakage revenue when escheat liability to the relevant jurisdictions exists. Gift card breakage is recorded within Net sales on the Company’s consolidated
18
Table of Contents
DULUTH HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
statement of operations.
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
||
(in thousands) |
|
|
|
|
|
|
||
Balance as of beginning of period |
|
$ |
|
|
$ |
|
||
Gift cards sold |
|
|
|
|
|
|
||
Gift cards redeemed |
|
|
( |
) |
|
|
( |
) |
Gift card breakage |
|
|
( |
) |
|
|
( |
) |
Balance as of end of period |
|
$ |
|
|
$ |
|
||
11. INCOME TAXES
The Company’s provision for income taxes during the interim reporting periods has historically been calculated by applying an estimate of the annual effective tax rate for the full year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. The effective tax rate related to controlling interest was (
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the United States which permanently extends select expiring provisions of the Tax Cuts and Jobs Act. We have considered the impact of the OBBBA on the Company’s annual effective tax rate. The changes did not have a significant impact to the annual effective tax rate. However, the enactment of the OBBBA introduced several significant tax law modifications that, while not affecting the annual effective tax rate, do have other implications for the Company. The OBBBA makes permanent key elements of the 2017 Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing pursuant to IRC 174, and ability to deduct interest expense pursuant to IRC 163(j). The Company is currently evaluating the future impact of OBBBA on its financial position, results of operations and cash flows.
19
Table of Contents
DULUTH HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
12. SEGMENT REPORTING
As of November 2, 2025 and October 27, 2024, we had
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
||||
|
|
(13 weeks) |
|
|
(13 weeks) |
|
|
(39 weeks) |
|
|
(39 weeks) |
|
||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross margin |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outbound shipping expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Advertising expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Variable expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Overhead expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restructuring Expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (loss) income, net |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Loss before income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Less: Net income attributable to noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss attributable to controlling interest |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
13. RESTRUCTURING
On June 4, 2025, as a result of right-sizing the expense structure of the Company, the Company voluntarily underwent a reduction in force.
On July 12, 2024 (the “Effective Date”), as a result of the phase two analysis of the fulfillment center network, the Company voluntarily entered into a lease amendment for one of its legacy fulfillment center leases in Dubuque, Iowa. The amended lease accelerated the lease expiration date from September 30, 2030 to
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Early contract termination expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Lease remeasurement expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accelerated depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Employee termination benefit expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other restructuring expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total restructuring expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
20
Table of Contents
DULUTH HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
14. RECENT ACCOUNTING PRONOUNCEMENTS
Recent Accounting Pronouncements Not Yet Adopted
Income Taxes – Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes: Improvements to Income Tax Disclosures.” This ASU improves the transparency of income tax disclosures by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation and (ii) income taxes paid disaggregated by jurisdiction. This new guidance will be effective for annual periods beginning after December 15, 2024, and early adoption is permitted. Management is currently evaluating the effects this guidance will have on its consolidated financial statements.
Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures.” This ASU requires that each interim and annual reporting period an entity disclose more information about the components of certain expense captions that is currently disclosed in the financial statements. This update is effective for annual reporting periods beginning after December 15, 2027. Early adoption is permitted. Management is currently evaluating the effects this guidance will have on its consolidated financial statements.
21
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with the financial statements and related notes of Duluth Holdings Inc. included in Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended February 2, 2025 (“2024 Form 10-K”).
The Company’s fiscal year ends on the Sunday nearest to January 31 of the following year. Fiscal 2025 is a 52-week period and ends on February 1, 2026. Fiscal 2024 was a 53-week period and ended on February 2, 2025. The three months of fiscal 2025 and fiscal 2024 represent our 13-week periods ended November 2, 2025 and October 27, 2024, respectively.
Unless the context indicates otherwise, the terms the “Company,” “Duluth,” “Duluth Trading,” “we,” “our,” or “us” are used to refer to Duluth Holdings Inc.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. All statements other than statements of historical or current facts included in this Quarterly Report on Form 10-Q are forward-looking statements. Forward looking statements refer to our current expectations and projections relating to our financial condition, results of operations, plans, objectives, strategies, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “could,” “estimate,” “expect,” “project,” “plan,” “potential,” “intend,” “believe,” “may,” “might,” “will,” “objective,” “should,” “would,” “can have,” “likely,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected earnings, revenue, costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth initiatives, or strategies are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that could cause performance or actual results to differ materially from those expressed in the forward-looking statements, including the risks and uncertainties described under Part I, Item 1A “Risk Factors,” in our 2024 Form 10-K, and other SEC filings, which factors are incorporated by reference herein. These risks and uncertainties include, but are not limited to, the following: the impact of inflation and measures to control inflation on our results of operations; the prolonged effects of economic uncertainties on store and website traffic; the susceptibility of the price and availability of our merchandise to international trade conditions, including tariffs; changes in U.S. and non-U.S. laws affecting the importation and taxation of goods, including imposition of unilateral tariffs on imported goods; our ability to secure the personal and/or financial information of our customers and employees; disruptions to our distribution network, supply chains and operations; failure to effectively manage inventory levels; our ability to maintain and enhance a strong brand and sub-brand image; adapting to declines in consumer confidence, inflation and decreases in consumer spending; disruptions to our e-commerce platform; our ability to meet customer delivery time expectations; our ability to properly allocate inventory throughout our distribution network to fulfill customer demand; our failure to meet our debt covenant ratios; natural disasters, unusually adverse weather conditions, boycotts, prolonged public health crises, epidemics or pandemics and unanticipated events; generating adequate cash from our existing stores and direct sales to support our growth; the impact of changes in corporate tax regulations and sales tax; identifying and responding to new and changing customer preferences; the success of the locations in which our stores are located; effectively relying on sources for merchandise located in foreign markets; transportation delays and interruptions, including port congestion; our 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 our maturing store portfolio; our inability to deploy marketing tactics to strengthen brand awareness and attract new customers in a cost effective manner; our ability to successfully open new stores; effectively adapting to new challenges associated with our expansion into new geographic markets; competing effectively in an environment of intense competition or elevated promotions; 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; the potential for further increases in price and lack of availability of raw materials; our dependence on third-party vendors to provide us with sufficient quantities of merchandise at acceptable prices; failure of our vendors and their manufacturing sources to use acceptable labor or other practices; our dependence upon key executive management or our inability to hire or retain the talent required for our business; 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; disruptions in our supply chain and fulfillment centers; our inability to protect our trademarks or other intellectual property rights; infringement on the intellectual property of third parties; acts of war, terrorism or civil unrest; the impact of governmental laws and regulations and the outcomes of legal proceedings; failure to comply with data privacy regulations; our ability to comply with the security standards for the credit card industry; our failure to maintain adequate internal controls over our financial and management systems; acquisition, disposition, and development risks; and other factors that may be disclosed in our SEC filings or otherwise.
22
Table of Contents
Moreover, we operate in an evolving environment, new risk factors and uncertainties emerge from time to time and it is not possible for management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. We qualify all of our forward-looking statements by these cautionary statements.
We undertake no obligation to update or revise these forward-looking statements, except as required under the federal securities laws.
Overview
We are a lifestyle brand of men’s and women’s casual wear, workwear and accessories sold primarily through our own omnichannel platform. We offer products nationwide through our website and catalog. In 2010, we initiated our omnichannel platform with the opening of our first store. Since then, we have expanded our retail presence, and as of November 2, 2025, we operated 63 retail stores and three outlet stores.
We offer a comprehensive line of innovative, durable and functional products, such as our Longtail T® shirts, Buck NakedTM underwear, Fire Hose® work pants, and No-Yank® Tank, which reflect our position as the Modern, Self-Reliant American Lifestyle brand. Our brand has a heritage in workwear that transcends tradesmen and appeals to a broad demographic for everyday and on-the-job use.
From our heritage as a catalog for those working in the building trades, Duluth Trading has become a widely recognized brand and proprietary line of innovative and functional apparel and gear. Over the last decade, we have created strong brand awareness, built a loyal customer base and generated sales momentum. We have done so by sticking to our roots of “there’s gotta be a better way” and through our relentless focus on providing our customers with quality, functional products.
A summary of our financial results is as follows:
See the “Reconciliation of Net Income (Loss) to EBITDA and EBITDA to Adjusted EBITDA” section for a reconciliation of our net income (loss) to EBITDA and EBITDA to Adjusted EBITDA, both of which are non-U.S. GAAP financial measures. See also the information under the heading “Adjusted EBITDA” in the section “How We Assess the Performance of Our Business” for our definition of Adjusted EBITDA.
Economic Conditions
The macroeconomic environment is experiencing inflation, tariff and recessionary concerns and general uncertainty regarding the future economic environment and therefore we cannot predict the ultimate impact of these economic conditions on our operational and financial performance. Given the uncertainty, we cannot reasonably estimate store traffic patterns and the prolonged impact on overall consumer demand. However, we expect that our operations will continue to be impacted by these macroeconomic headwinds, including tariffs, which may increase our merchandise costs, affect merchandise availability, and impact our financial performance.
How We Assess the Performance of Our Business
In assessing the performance of our business, we consider a variety of financial and operating measures that affect our operating results.
23
Table of Contents
Net Sales
Net sales reflect our sale of merchandise plus shipping and handling revenue collected from our customers, less returns and discounts. Direct-to-consumer sales are recognized upon shipment of the product and store sales are recognized at the point of sale.
Gross Profit
Gross profit is equal to our net sales less cost of goods sold. Gross profit as a percentage of our net sales is referred to as gross margin. Cost of goods sold includes the direct cost of purchased merchandise; inventory shrinkage; inventory adjustments due to obsolescence, including excess and slow-moving inventory and lower of cost and net realizable reserves; inbound freight; and freight from our distribution centers to our retail stores. The primary drivers of the costs of individual goods are raw material costs. Depreciation and amortization are excluded from gross profit. We expect gross profit to increase to the extent that we successfully grow our net sales. Our gross profit may not be comparable to other retailers, as we do not include distribution network and store occupancy expenses in calculating gross profit, but instead we include them in selling, general and administrative expenses.
Selling, General and Administrative Expenses
Selling, general and administrative expenses include all operating costs not included in cost of goods sold. These expenses include all payroll and payroll-related expenses and occupancy expenses related to our stores and to our operations at our headquarters, including utilities, depreciation and amortization and distribution network expenses. They also include marketing expense, which primarily includes digital and television advertising, catalog production, mailing and print advertising costs, as well as all logistics costs associated with shipping product to our customers, consulting and software expenses and professional services fees. Selling, general and administrative expenses as a percentage of net sales is usually higher in lower-volume quarters and lower in higher-volume quarters because a portion of the costs are relatively fixed.
Adjusted EBITDA
We believe Adjusted EBITDA is a useful measure of operating performance, as it provides a clearer picture of operating results by excluding the effects of financing and investing activities by eliminating the effects of interest and depreciation costs and eliminating expenses that are not reflective of underlying business performance. We use Adjusted EBITDA to facilitate a comparison of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business.
We define Adjusted EBITDA as consolidated net income before depreciation and amortization, interest expense and provision for income taxes adjusted for the impact of certain items, including non-cash, restructuring expenses and other items we do not consider representative of our ongoing operating performance. We believe Adjusted EBITDA is less susceptible to variances in actual performance resulting from depreciation, amortization and other items. We also use Adjusted EBITDA as one of the key financial metrics in determining bonus compensation for our employees. This non-GAAP measure may not be comparable to similarly titled measures used by other companies.
24
Table of Contents
Results of Operations
The following table summarizes our unaudited consolidated results of operations for the periods indicated, both in dollars and as a percentage of net sales.
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
||||||||||||
|
|
November 2, 2025 |
|
October 27, 2024 |
|
November 2, 2025 |
|
October 27, 2024 |
||||||||||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales |
|
$ |
114,871 |
|
|
|
$ |
127,056 |
|
|
|
$ |
349,291 |
|
|
|
$ |
385,359 |
|
|
Cost of goods sold (excluding depreciation and |
|
|
53,025 |
|
|
|
|
60,645 |
|
|
|
|
162,071 |
|
|
|
|
183,328 |
|
|
Gross profit |
|
|
61,846 |
|
|
|
|
66,411 |
|
|
|
|
187,220 |
|
|
|
|
202,031 |
|
|
Selling, general and administrative expenses |
|
|
70,680 |
|
|
|
|
82,311 |
|
|
|
|
205,154 |
|
|
|
|
226,903 |
|
|
Restructuring expense |
|
|
— |
|
|
|
|
6,152 |
|
|
|
|
850 |
|
|
|
|
7,748 |
|
|
Operating loss |
|
|
(8,834 |
) |
|
|
|
(22,052 |
) |
|
|
|
(18,784 |
) |
|
|
|
(32,620 |
) |
|
Interest expense |
|
|
1,231 |
|
|
|
|
1,251 |
|
|
|
|
4,181 |
|
|
|
|
3,232 |
|
|
Other (loss) income, net |
|
|
(2 |
) |
|
|
|
6 |
|
|
|
|
(245 |
) |
|
|
|
167 |
|
|
Loss before income taxes |
|
|
(10,067 |
) |
|
|
|
(23,297 |
) |
|
|
|
(23,210 |
) |
|
|
|
(35,685 |
) |
|
Income tax expense |
|
|
— |
|
|
|
|
4,919 |
|
|
|
|
828 |
|
|
|
|
2,366 |
|
|
Net loss |
|
|
(10,067 |
) |
|
|
|
(28,216 |
) |
|
|
|
(24,038 |
) |
|
|
|
(38,051 |
) |
|
Less: Net income attributable to noncontrolling interest |
|
|
34 |
|
|
|
|
15 |
|
|
|
|
95 |
|
|
|
|
34 |
|
|
Net loss attributable to controlling interest |
|
$ |
(10,101 |
) |
|
|
$ |
(28,231 |
) |
|
|
$ |
(24,133 |
) |
|
|
$ |
(38,085 |
) |
|
Percentage of Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales |
|
|
100.0 |
|
% |
|
|
100.0 |
|
% |
|
|
100.0 |
|
% |
|
|
100.0 |
|
% |
Cost of goods sold (excluding depreciation and |
|
|
46.2 |
|
% |
|
|
47.7 |
|
% |
|
|
46.4 |
|
% |
|
|
47.6 |
|
% |
Gross margin |
|
|
53.8 |
|
% |
|
|
52.3 |
|
% |
|
|
53.6 |
|
% |
|
|
52.4 |
|
% |
Selling, general and administrative expenses |
|
|
61.5 |
|
% |
|
|
64.8 |
|
% |
|
|
58.7 |
|
% |
|
|
58.9 |
|
% |
Restructuring expense |
|
|
- |
|
% |
|
|
4.8 |
|
% |
|
|
0.2 |
|
% |
|
|
2.0 |
|
% |
Operating loss |
|
|
(7.7 |
) |
% |
|
|
(17.4 |
) |
% |
|
|
(5.4 |
) |
% |
|
|
(8.5 |
) |
% |
Interest expense |
|
|
1.1 |
|
% |
|
|
1.0 |
|
% |
|
|
1.2 |
|
% |
|
|
0.8 |
|
% |
Other (loss) income, net |
|
|
— |
|
% |
|
|
— |
|
% |
|
|
(0.1 |
) |
% |
|
|
— |
|
% |
Loss before income taxes |
|
|
(8.8 |
) |
% |
|
|
(18.3 |
) |
% |
|
|
(6.6 |
) |
% |
|
|
(9.3 |
) |
% |
Income tax expense |
|
|
- |
|
% |
|
|
3.9 |
|
% |
|
|
0.2 |
|
% |
|
|
0.6 |
|
% |
Net loss |
|
|
(8.8 |
) |
% |
|
|
(22.2 |
) |
% |
|
|
(6.9 |
) |
% |
|
|
(9.9 |
) |
% |
Less: Net income attributable to noncontrolling interest |
|
|
— |
|
% |
|
|
— |
|
% |
|
|
— |
|
% |
|
|
— |
|
% |
Net loss attributable to controlling interest |
|
|
(8.8 |
) |
% |
|
|
(22.2 |
) |
% |
|
|
(6.9 |
) |
% |
|
|
(9.9 |
) |
% |
Three Months Ended November 2, 2025, Compared to Three Months Ended October 27, 2024
Net Sales
Net sales decreased $12.2 million, or 9.6%, to $114.9 million in the three months ended November 2, 2025 compared to $127.1 million in the three months ended October 27, 2024. The decrease in net sales was primarily driven by declines in web traffic due to reduced promotional activity.
Gross Profit
Gross profit decreased $4.6 million, or 6.9%, to $61.8 million in the three months ended November 2, 2025 compared to $66.4 million in the three months ended October 27, 2024. The decrease in gross profit was partially driven by the $3 million impact of tariffs. As a percentage of net sales, gross margin increased to 53.8% in the three months ended November 2, 2025, compared to 52.3% of net sales in the three months ended October 27, 2024. The increase in gross margin rate was primarily driven by an increase in average unit retail sales from reduced promotional activity coupled with an improvement in product costs from our direct to factory sourcing initiative.
25
Table of Contents
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $11.6 million, or 14.1%, to $70.1 million in the three months ended November 2, 2025 compared to $82.3 million in the three months ended October 27, 2024. Selling, general and administrative expenses as a percentage of net sales decreased to 61.5% in the three months ended November 2, 2025, compared to 64.8% in the three months ended October 27, 2024.
The decrease in selling, general and administrative expense as a percentage of net sales was mainly driven by leverage on outbound shipping costs due to higher average order values coupled with a reduction in personnel and depreciation expenses.
Income Taxes
Income tax expense was $0.0 million in the three months ended November 2, 2025, compared to income tax expense of $4.9 million in the three months ended October 27, 2024. The change was primarily driven by the valuation allowance established in the third quarter of 2024.
Net Loss Attributable to Controlling Interest
Net loss attributable to controlling interest was $10.1 million, in the three months ended November 2, 2025 compared to net loss of $28.2 million in the three months ended October 27, 2024.
Nine Months Ended November 2, 2025, Compared to Nine Months Ended October 27, 2024
Net Sales
Net sales decreased $36.1 million, or 9.4%, to $349.3 million in the nine months ended November 2, 2025 compared to $385.4 million in the nine months ended October 27, 2024. The decrease in net sales was primarily driven by decline in web traffic due to reduced promotional activity.
Gross Profit
Gross profit decreased $14.8 million, or 7.3%, to $187.2 million in the nine months ended November 2, 2025 compared to $202.0 million in the nine months ended October 27, 2024. As a percentage of net sales, gross margin increased to 53.6% of net sales in the nine months ended November 2, 2025, compared to 52.4% of net sales in the nine months ended October 27, 2024. The increase in gross margin rate was primarily driven by an increase in average unit retail sales from reduced promotional activity coupled with an improvement in product costs from our direct to factory sourcing initiative.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $21.7 million, or 9.6%, to $205.1 million in the nine months ended November 2, 2025 compared to $226.9 million in the nine months ended October 27, 2024. Selling, general and administrative expenses as a percentage of net sales decreased to 58.7% in the nine months ended November 2, 2025, compared to 58.9% in the nine months ended October 27, 2024.
The decrease in selling, general and administrative expense as a percentage of net sales was mainly driven by leverage on outbound shipping costs due to higher average order values coupled with a reduction in personnel and depreciation expenses.
Income Taxes
Income tax expense was $0.8 million in the nine months ended November 2, 2025, compared to income tax expense of $2.4 million in the nine months ended October 27, 2024. The provision for third quarter of fiscal 2024 and fiscal 2025 reflected a valuation allowance which was established against the net amount of deferred tax assets as well as a pre-tax loss in the previous fiscal year.
Net Loss Attributable to Controlling Interest
Net loss attributable to controlling interest was $24.1 million, in the nine months ended November 2, 2025 compared to net loss of $38.1 million in the nine months ended October 27, 2024.
26
Table of Contents
Reconciliation of Net Loss to EBITDA and EBITDA to Adjusted EBITDA
The following table presents reconciliations of net loss to EBITDA and EBITDA to Adjusted EBITDA, both of which are non-U.S. GAAP financial measures, for the periods indicated below. See the above section titled “How We Assess the Performance of Our Business,” for our definition of Adjusted EBITDA.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
(10,067 |
) |
|
$ |
(28,216 |
) |
|
$ |
(24,038 |
) |
|
$ |
(38,051 |
) |
Depreciation and amortization |
|
|
6,234 |
|
|
|
7,284 |
|
|
|
19,528 |
|
|
|
23,581 |
|
Amortization of internal-use software hosting |
|
|
|
|
|
|
|
|
|
|
|
|
||||
subscription implementation costs |
|
|
1,252 |
|
|
|
1,394 |
|
|
|
3,492 |
|
|
|
3,856 |
|
Interest expense |
|
|
1,231 |
|
|
|
1,251 |
|
|
|
4,181 |
|
|
|
3,232 |
|
Income tax expense |
|
|
— |
|
|
|
4,919 |
|
|
|
828 |
|
|
|
2,366 |
|
EBITDA |
|
$ |
(1,350 |
) |
|
$ |
(13,368 |
) |
|
$ |
3,991 |
|
|
$ |
(5,016 |
) |
Long-term incentive expense |
|
|
612 |
|
|
|
969 |
|
|
|
2,078 |
|
|
|
3,352 |
|
Impairment expense |
|
|
— |
|
|
|
— |
|
|
|
549 |
|
|
|
— |
|
Restructuring expense |
|
|
— |
|
|
|
6,152 |
|
|
|
850 |
|
|
|
7,748 |
|
Adjusted EBITDA |
|
$ |
(738 |
) |
|
$ |
(6,247 |
) |
|
$ |
7,468 |
|
|
$ |
6,084 |
|
As a result of the factors discussed above in the “Results of Operations” section, Adjusted EBITDA increased $5.5 million to ($0.7) million in the three months ended November 2, 2025 compared to ($6.2) million in the three months ended October 27, 2024. As a percentage of net sales, Adjusted EBITDA increased to (0.6%) of net sales in the three months November 2, 2025 compared to (4.9%) of net sales in the three months ended October 27, 2024.
As a result of the factors discussed above in the “Results of Operations” section, Adjusted EBITDA increased $1.4 million to $7.5 million in the nine months ended November 2, 2025 compared to $6.1 million in the nine months ended October 27, 2024. As a percentage of net sales, Adjusted EBITDA increased to 2.1% of net sales in the nine months ended November 2, 2025 compared to 1.6% of net sales in the nine months ended October 27, 2024.
Liquidity and Capital Resources
General
Our business relies on cash from operating activities and a credit facility as our primary sources of liquidity. Our primary cash needs have been for inventory, marketing and advertising, payroll, store leases, and capital expenditures associated with infrastructure and information technology. The most significant components of our working capital are cash, inventory, accounts payable and other current liabilities. At November 2, 2025, our net working capital was $51.1 million, including $8.2 million of cash and cash equivalents.
We expect to spend approximately $17.0 million in fiscal 2025 on capital expenditures, inclusive of software hosting implementation costs, primarily due to investments in two new stores and information technology. Due to the seasonality of our business, the fourth quarter typically has the most significant impact on our amount of cash from operating activities. We also use cash in our investing activities for capital expenditures throughout all four quarters of our fiscal year.
We believe that our cash flow from operating activities and the availability of cash under our credit facility will be sufficient to cover working capital requirements and anticipated capital expenditures for the foreseeable future.
Cash Flow Analysis
A summary of operating, investing and financing activities is shown in the following table.
|
|
Nine Months Ended |
|
|||||
|
|
November 2, 2025 |
|
|
October 27, 2024 |
|
||
(in thousands) |
|
|
|
|
|
|
||
Net cash used in operating activities |
|
$ |
(31,115 |
) |
|
$ |
(58,125 |
) |
Net cash used in investing activities |
|
|
(5,672 |
) |
|
|
(5,666 |
) |
Net cash provided by financing activities |
|
|
41,624 |
|
|
|
40,969 |
|
Increase (decrease) in cash and cash equivalents |
|
$ |
4,837 |
|
|
$ |
(22,822 |
) |
27
Table of Contents
Net Cash Used in Operating Activities
Operating activities consist primarily of net loss adjusted for non-cash items that include depreciation and amortization, stock-based compensation and the effect of changes in operating assets and liabilities.
For the nine months ended November 2, 2025, net cash used in operating activities was $31.1 million, which primarily consisted of cash used in operating assets and liabilities of $30.2 million and a $24.0 million net loss for the nine months ended November 2, 2025 partially offset by depreciation of $19.5 million. The cash used in operating assets and liabilities of $30.2 million was primarily due to a $25.7 million decrease in inventory.
For the nine months ended October 27, 2024, net cash used in operating activities was $58.1 million, which primarily consisted of cash used in operating assets and liabilities of $49.4 million and a $38.1 million net loss for the nine months ended October 27, 2024 partially offset by depreciation of $24.7 million. The cash used in operating assets and liabilities of $49.4 million was primarily due to a $105.7 million increase in inventory, partially offset by a $53.2 million increase in trade accounts payable.
Net Cash Used in Investing Activities
Investing activities consist primarily of capital expenditures related to investments in infrastructure, retail stores and information technology.
For the nine months ended November 2, 2025 and October 27, 2024, net cash used in investing activities was $5.7 million.
Net Cash Provided by Financing Activities
Financing activities consist primarily of borrowings and payments related to our revolving line of credit as well as payments on finance lease obligations.
For the nine months ended November 2, 2025, net cash provided by financing activities was $41.6 million compared to net cash provided by financing activities of $41.0 million for nine months ended October 27, 2024.
Contractual Obligations
There have been no significant changes to our contractual obligations as described in our Annual Report on Form 10-K for the fiscal year ended February 2, 2025.
Off-Balance Sheet Arrangements
We are not a party to any material off-balance sheet arrangements.
Critical Accounting Policies and Critical Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as the related disclosures of contingent assets and liabilities at the date of the financial statements. We evaluate our accounting policies, estimates, and judgments on an on-going basis. We base our estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions and such differences could be material to the consolidated financial statements.
As of the date of this filing, there were no significant changes to any of the critical accounting policies and estimates described in our 2024 Form 10-K.
Recent Accounting Pronouncements
See Note 14 “Recent Accounting Pronouncements,” of Notes to Condensed Consolidated Financial Statements included in Part 1, Item 1, of this quarterly report on Form 10-Q for information regarding recent accounting pronouncements.
28
Table of Contents
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no significant changes in the market risks described in our 2024 Form 10-K. See Note 3 “Debt and Credit Agreement,” of Notes to Condensed Consolidated Financial Statements included in Part 1, Item 1, of this quarterly report on Form 10-Q, for disclosure on our interest rate related to borrowings under our credit agreement.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Section 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires management of an issuer subject to the Exchange Act to evaluate, with the participation of the issuer’s principal executive and principal financial officers, or persons performing similar functions, the effectiveness of the issuer’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act), as of the end of each fiscal quarter. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(d) and 15d-15(d) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are subject to certain legal proceedings and claims in the ordinary course of business. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, financial condition, operating results or cash flows. We establish reserves for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable.
Item 1A. Risk Factors
We operate in a rapidly changing environment that involves a number of risks that may have a material adverse effect on our business, financial condition and results of operations. For a detailed discussion of the risks that affect our business, please refer to the section entitled “Risk Factors” in our 2024 Form 10-K, or other SEC filings. There have been no material changes to our risk factors as previously disclosed in our fiscal 2024 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
We did not sell any equity securities during the quarter ended November 2, 2025, which were not registered under the Securities Act.
The following table contains information regarding shares acquired by us during the quarter, which consisted solely of shares acquired from employees in lieu of amounts required to satisfy minimum tax withholding requirements upon the vesting of the employees’ restricted stock during the three months ended November 2, 2025.
|
|
|
|
|
|
|
|
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 |
|
||||
August 3, 2025 - August 31, 2025 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
September 1, 2025 - October 5, 2025 |
|
|
122 |
|
|
|
3.79 |
|
|
|
— |
|
|
|
— |
|
October 6, 2025 - November 2, 2025 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
|
122 |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
29
Table of Contents
Item 5. Other Information
During the three months ended November 2, 2025, no director or Section 16 officer of the Company
30
Table of Contents
Item 6. Exhibits
EXHIBIT INDEX
Exhibit No. |
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10.1 |
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Amendment No. 2 to Credit Agreement, dated as of October 1, 2025, among Duluth Holdings Inc., certain financial institutions as Lenders thereto, and BMO Bank N.A., as Administrative Agent, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 1, 2025. |
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31.1 |
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Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act, as amended.* |
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31.2 |
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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.* |
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32.1 |
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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.* |
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32.2 |
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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.* |
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101.INS |
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XBRL Instance Document** |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents** |
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104 |
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The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended November 2, 2025 has been formatted in Inline XBRL (Inline Extensible Business Reporting Language and contained in Exhibits 101). |
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Indicates a management contract or compensation plan or arrangement |
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Filed herewith |
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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.” |
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Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Date: December 17, 2025 |
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DULUTH HOLDINGS INC. |
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/s/ Heena Agrawal |
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Heena Agrawal |
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Senior Vice President, Chief Financial Officer |
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(On behalf of the Registrant and as Principal Financial Officer and Interim Principal Accounting Officer) |
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