Duluth Holdings Inc. Reports Decline in Q3 Financial Performance with Increased Net Loss

Duluth Holdings Inc. reported a decline in financial performance for the third quarter of fiscal 2024, ending October 27, 2024. The company recorded net sales of $127.1 million, an 8.1% decrease from $138.2 million in the same period last year. For the first nine months of the fiscal year, net sales also fell by 3.9% to $385.4 million compared to $401.1 million in the prior year. The company experienced a net loss of $28.5 million for the quarter, significantly higher than the $10.5 million loss reported in the third quarter of fiscal 2023. The nine-month net loss reached $40.1 million, compared to a loss of $16.4 million in the same period last year.

The decrease in sales was attributed to lower web conversion rates and reduced store traffic. Store market sales dropped by 9.3% to $88.7 million, while non-store sales decreased by 9.8% to $37.1 million. Despite the decline in sales, the gross profit margin improved to 52.3% from 50.2% in the previous year, primarily due to effective sourcing initiatives. However, selling, general, and administrative expenses rose by 1.2% to $82.9 million, leading to an increase in the expense ratio relative to net sales.

Duluth Holdings has undertaken strategic restructuring efforts, incurring $6.2 million in restructuring expenses during the quarter. This restructuring is part of a broader initiative to enhance operational efficiency and improve margins. The company also established a valuation allowance of $10.1 million against deferred tax assets, reflecting ongoing challenges in achieving profitability. The total liabilities increased to $348.0 million as of October 27, 2024, compared to $268.3 million at the beginning of the fiscal year, driven by a significant rise in trade accounts payable and the establishment of a line of credit totaling $44 million.

Operationally, Duluth Holdings continues to expand its retail presence, operating 62 retail stores and three outlet stores as of the end of the reporting period. The company is focusing on optimizing its logistics and fulfillment network, with planned capital expenditures of approximately $23 million for fiscal 2024. Despite the current challenges, management remains optimistic about future performance, citing potential improvements in sales and operational efficiency as key areas of focus moving forward. The company anticipates that cash flow from operations, combined with its credit facility, will be sufficient to meet working capital needs and support growth initiatives in the near term.