On May 30, 2024, Duluth Holdings Inc (DLTH, Financial) released its 8-K filing announcing its financial results for the fiscal first quarter ended April 28, 2024. Duluth Holdings Inc, an apparel brand in the United States, offers a variety of shirts, pants, and casual wear for men and women under several brands including Alaskan Hardgear, Armachillo, Ballroom, and Duluth Trading Co.
Performance Overview
Duluth Holdings Inc (DLTH, Financial) reported net sales of $116.7 million for the first quarter of 2024, a 5.7% decrease compared to $123.8 million in the same period last year. This decline was primarily driven by a 5.1% drop in direct-to-consumer net sales to $75.4 million and a 6.8% decrease in retail store net sales to $41.2 million. The company attributed the decline to challenging traffic and a sub-par in-stock position following stronger-than-expected unit selling late in the fourth quarter.
Financial Achievements and Challenges
Despite the decline in net sales, Duluth Holdings Inc (DLTH, Financial) maintained a strong financial condition with $196 million of liquidity. The company ended the quarter with $6.8 million in cash and cash equivalents and $11.0 million outstanding on its $200 million revolving line of credit.
Gross profit for the quarter decreased to $61.6 million, or 52.8% of net sales, compared to $65.7 million, or 53.0% of net sales, in the prior year period. The decrease in gross profit was due to the delay in the impact on gross margin rate as the company sold through older, higher-cost inventory.
Income Statement Highlights
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Net Sales | $116.7 million | $123.8 million |
| Gross Profit | $61.6 million | $65.7 million |
| Operating Loss | $(9.0) million | $(4.5) million |
| Net Loss | $(7.9) million | $(3.9) million |
| EPS | $(0.24) | $(0.12) |
Balance Sheet and Cash Flow
As of April 28, 2024, Duluth Holdings Inc (DLTH, Financial) reported total assets of $471.4 million, compared to $490.5 million as of January 28, 2024. The company’s net working capital stood at $75.9 million. The decrease in cash and cash equivalents from $32.2 million at the beginning of the period to $6.8 million at the end of the period was primarily due to net cash used in operating activities amounting to $33.7 million.
Management Commentary
"Despite some key quarter wins, we are not satisfied with our first quarter results which fell short of our internal expectations. Our top-line quarter performance, at a decline of 5.7%, was hampered by challenging traffic and a sub-par in-stock position following stronger than expected unit selling late in the fourth quarter," said President and CEO, Sam Sato.
Sato further added, "I am pleased with the progress we’re making against our longer-term strategic initiatives. Our focus for 2024 remains on accelerating the operational improvements of the strategic roadmap, expanding our pipeline of new and innovative products, optimizing our marketing mix, improving gross profit margin rates, and controlling what we can control by prudently managing expenses and inventories."
Updated Fiscal 2024 Outlook
Duluth Holdings Inc (DLTH, Financial) updated its fiscal 2024 outlook, reflecting adjustments in net sales, EPS, and Adjusted EBITDA. The company remains committed to its strategic initiatives and operational improvements to drive future growth.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Duluth Holdings Inc for further details.
