Duluth Holdings Reports Q2 Fiscal 2024 Earnings

Intellectia.AI2024-08-29

Illustration by Intellectia.AI

Duluth Holdings Reports Q2 Fiscal 2024 Earnings

Mount Horeb, Wis., Aug. 29, 2024 -- Duluth Holdings Inc., operating as Duluth Trading Company (NASDAQ: DLTH), has announced its financial results for the fiscal second quarter ending July 28, 2024.

Key Financial Metrics

Metrics	Q2 2024	Q2 2023	QoQ Change	YoY Change
Net Sales ($ million)	$141.6	$139.1	+1.8%	+1.8%
Net Loss ($ million)	$3.7	$2.0	Not Provided	Not Provided
Adjusted Net Loss ($ m)	$0.6	N/A	N/A	N/A
EPS (diluted)	($0.11)	N/A	N/A	N/A
Adjusted EPS	($0.02)	N/A	N/A	N/A
Adjusted EBITDA ($ m)	$10.6	$8.6	Not Provided	+23.3%

Interpretation: Duluth Trading saw a modest increase in net sales and a slight improvement in EBITDA, reflecting benefits from product development and sourcing initiatives.

Revenue Performance by Segment

Segment	Q2 2024 ($ million)	Q2 2023 ($ million)	Change (% YoY)
Direct-to-Consumer Sales	$91.7	N/A	+5.6%
Retail Store Sales	$49.9	N/A	-4.4%

Interpretation: The direct-to-consumer segment performed well, driven by higher site conversions. However, retail store sales declined due to slower store traffic despite strong conversion rates.

Key Developments and Operational Highlights

Gross margin expanded by 90 basis points to 52.3%, benefiting from product and sourcing initiatives.
Strong financial position with no debt and approximately $210 million of liquidity.
Successful launch and performance of new products such as Dry on the Fly, Armachillo, and DuluthFlex Fire Hose Sweat Management.
Progress on fulfillment center network optimization, including phase two execution and productivity improvements, particularly highlighted by the near-fully automated Adairsville, Georgia facility.
Engaging customer event: The successful underwear trade-up event increased traffic and sales, with 40% of trade-ups from female shoppers.

Management Commentary

President and CEO, Sam Sato, noted the return to top-line growth and margin expansion, citing the effectiveness of product innovations and customer engagement initiatives. He highlighted improved traffic and transactions and expressed optimism for upcoming product lineups and expanded size assortments. Sato also pointed to the strategic benefits realized from investments in the Adairsville fulfillment center, which significantly enhanced operational efficiency.

Dividends and Share Repurchase Program

No specific announcements regarding dividends or share repurchase programs were made in the earnings release.

Forward Guidance

Reaffirmed Fiscal 2024 Outlook (excluding restructuring expenses and sales tax expense accrual):
Net sales of approximately $640 million
Adjusted EPS of approximately ($0.22) per diluted share
Adjusted EBITDA of approximately $39 million
Capital expenditures of approximately $25 million

Stock Price Movement

Following the earnings release, Duluth Holdings' stock experienced a decline of 3.1%.

Conclusion

Duluth Holdings made notable progress in the second quarter of fiscal 2024, with product innovations and strategic initiatives contributing to revenue growth and improved margins. While retail traffic remains a challenge, the company's strong financial position and forward-looking strategies provide a solid foundation for future performance. Investors will be watching closely to see how Duluth navigates the remainder of the fiscal year.