What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-12-17 compared with 2025-09-05 · 70 added, 73 removed, 171 unchanged (46% of the section changed)

5 unchanged sentences

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 August 3, 2025 and July 28, 2024, respectively.

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.

6 unchanged sentences

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 Fo rm 10-K, and other SEC filings, which factors are incorporated by reference herein.

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:

44 unchanged sentences

and other factors that may be disclosed in our SEC filings or otherwise.

Moreover , we operate in an evolving environment, n ew 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.

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.

3 unchanged sentences

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 August 3, 2025, we operated 61 retail stores and three outlet stores.

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 Naked TM underwear, Fire Hose ® work pants, and No-Yank ® Tank, which reflect our position as the Modern, Self-Reliant American Lifestyle brand.

4 unchanged sentences

A summary of our financial results is as follows:

 Net sales decreased by 7.0% over the prior year second quarter to $131.7 million, and net sales in the first six months of fiscal 2025 decreased by 9.2% over the first six months of the prior year to $234.4 million;

 Net income of $1.3 million in fiscal 2025 second quarter compared to the prior year second quarter net loss of $2.0 million, and net loss in the first six months of fiscal 2025 of $14.0 million compared to a net loss in the first six months of fiscal 2024 of $9.8 million;

 Adjusted EBITDA increased to $12.0 million in fiscal 2025 second quarter compared to the prior year second quarter Adjusted EBITDA of $10.5 million, and adjusted EBITDA in the first six months of fiscal 2025 of $8.2 million compared to $12.3 million over the first six months of fiscal 2024.

• Net sales decreased by 9.6% over the prior year third quarter to $114.9 million, and net sales in the first nine months of fiscal 2025 decreased by 9.4% over the first nine months of the prior year to $349.3 million;

• Net loss of $10.1 million in fiscal 2025 third quarter compared to the prior year third quarter net loss of $28.2 million, and net loss in the first nine months of fiscal 2025 of $24.0 million compared to a net loss in the first nine months of fiscal 2024 of $38.1 million;

• Adjusted EBITDA increased to ($0.7) million in fiscal 2025 third quarter compared to the prior year third quarter Adjusted EBITDA of ($6.2) million, and Adjusted EBITDA in the first nine months of fiscal 2025 of $7.5 million compared to $6.1 million over the first nine months of fiscal 2024.

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.

1 unchanged sentence

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.

Our management’s discussion and analysis includes market sales metrics for our stores, website and catalog sales.

Market areas are determined by a third-party that divides the United States and Puerto Rico into 280 unique geographical areas.

Our store market sales metrics include sales from our stores, website and catalog.

Our non-store market sales metrics include sales from our website and catalog.

Economic Conditions

1 unchanged sentence

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

28 unchanged sentences

Three Months Ended

Six Months Ended

August 3, 2025

July 28, 2024

August 3, 2025

July 28, 2024

Nine Months Ended

November 2, 2025

October 27, 2024

November 2, 2025

October 27, 2024

(in thousands)

Cost of goods sold (excluding depreciation and amortization)

Cost of goods sold (excluding depreciation and

amortization)

Selling, general and administrative expenses

Restructuring expense

Operating income (loss)

Operating loss

Interest expense

Other (loss) income, net

Income (loss) before income taxes

Income tax (benefit) expense

Net income (loss)

Loss before income taxes

Income tax expense

Net income attributable to noncontrolling interest

Net income (loss) attributable to controlling interest

Net loss attributable to controlling interest

Percentage of Net sales:

Cost of goods sold (excluding depreciation

‎ and amortization)

Cost of goods sold (excluding depreciation and

amortization)

Selling, general and administrative expenses

Restructuring expense

Operating income (loss)

Operating loss

Interest expense

Other (loss) income, net

Income (loss) before income taxes

Income tax (benefit) expense

Net income (loss)

Loss before income taxes

Income tax expense

Net income attributable to noncontrolling interest

Net income (loss) attributable to controlling interest

Three Months Ended August 3, 2025 , Compared to Three Months Ended July 28, 2024

Net sales decreased $9.9 million, or 7.0%, to $131.7 million in the three months ended August 3, 2025 compared to $141.6 million in the three months ended July 28, 2024.

The decrease in net sales was primarily driven by decline in web traffic due to reduced promotional activity.

Gross profit decreased $2.0 million, or 2.7%, to $72.0 million in the three months ended August 3, 2025 compared to $74.0 million in the three months ended July 28, 2024.

As a percentage of net sales, gross margin increased to 54.7% in the three months ended August 3, 2025, compared to 52.3% of net sales in the three months ended July 28, 2024.

Net loss attributable to controlling interest

Three Months Ended November 2, 2025, Compared to Three Months Ended October 27, 2024

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 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.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $5.2 million, or 7.1%, to $68.8 million in the three months ended August 3, 2025 compared to $74.0 million in the three months ended July 28, 2024.

Selling, general and administrative expenses as a percentage of net sales remained decreased to 52.2% in the three months ended August 3, 2025, compared to 52.3% in the three months ended July 28, 2024.

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 tax benefit was $0.4 million in the three months ended August 3, 2025, compared to income tax benefit of $0.5 million in the three months ended July 28, 2024.

Net Income (Loss) Attributable to Controlling Interest

Net income attributable to controlling interest was $1.3 million, in the three months ended August 3, 2025 compared to net loss of $2.0 million in the three months ended July 28, 2024.

Six Months Ended August 3, 2025 , Compared to Six Months Ended July 28, 2024

Net sales decreased $23.9 million, or 9.2%, to $234.4 million in the six months ended August 3, 2025 compared to $258.3 million in the six months ended July 28, 2024.

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 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 decreased $10.2 million, or 7.6%, to $125.4 million in the six months ended August 3, 2025 compared to $135.6 million in the six months ended July 28, 2024.

As a percentage of net sales, gross margin increased to 53.5% of net sales in the six months ended August 3, 2025, compared to 52.5% of net sales in the six months ended July 28, 2024.

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.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $10.1 million, or 7.0%, to $134.5 million in the six months ended August 3, 2025 compared to $144.6 million in the six months ended July 28, 2024.

Selling, general and administrative expenses as a percentage of net sales increased to 57.4% in the six months ended August 3, 2025, compared to 56.0% in the six months ended July 28, 2024.

The increase in selling, general and administrative expense as a percentage of net sales was mainly driven by decrease in net sales.

Income tax expense was $0.8 million in the six months ended August 3, 2025, compared to income tax benefit of $2.6 million in the six months ended July 28, 2024.

The provision for second quarter of fiscal 2025 reflected a valuation allowance which was established against the net amount of deferred tax assets as well as pre-tax loss in the previous fiscal year.

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.

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 $14.0 million, in the six months ended August 3, 2025 compared to net loss of $9.9 million in the six months ended July 28, 2024.

Reconciliation of Net Income (Loss) to EBITDA and EBITDA to Adjusted EBITDA

The following table presents reconciliations of net income (loss) to EBITDA and EBITDA to Adjusted EBITDA, both of which are non-U.S.

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.

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.

1 unchanged sentence

Three Months Ended

Six Months Ended

August 3, 2025

July 28, 2024

August 3, 2025

July 28, 2024

Nine Months Ended

November 2, 2025

October 27, 2024

November 2, 2025

October 27, 2024

(in thousands)

Net income (loss)

Depreciation and amortization

2 unchanged sentences

Interest expense

Income tax (benefit) expense

Income tax expense

Long-term incentive expense

2 unchanged sentences

Adjusted EBITDA

As a result of the factors discussed above in the “Results of Operations” section, Adjusted EBITDA increased $1.5 million to $12.0 million in the three months ended August 3, 2025 compared to $10.5 million in the three months ended July 28, 2024.

As a percentage of net sales, Adjusted EBITDA increased to 9.1% of net sales in the three months August 3, 2025 compared to 7.4% of net sales in the three months ended July 28, 2024.

As a result of the factors discussed above in the “Results of Operations” section, Adjusted EBITDA decreased $4.1 million to $8.2 million in the six months ended August 3, 2025 compared to $12.3 million in the six months ended July 28, 2024.

As a percentage of net sales, Adjusted EBITDA decreased to 3.5% of net sales in the six months August 3, 2025 compared to 4.8% of net sales in the six months ended July 28, 2024.

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

2 unchanged sentences

The most significant components of our working capital are cash, inventory, accounts payable and other current liabilities.

At August 3, 2025, our net working capital was $56.9 million, including $5.7 million of cash and cash equivalents.

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.

4 unchanged sentences

A summary of operating, investing and financing activities is shown in the following table.

Six Months Ended

August 3, 2025

July 28, 2024

Nine Months Ended

November 2, 2025

October 27, 2024

(in thousands)

1 unchanged sentence

Net cash used in investing activities

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Increase (decrease) in cash and cash equivalents

1 unchanged sentence

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 six months ended August 3, 2025, net cash used in operating activities was $24.4 million, which primarily consisted of cash used in operating assets and liabilities of $27.0 million and a $14.0 million net loss for the six months ended August 3, 2025 partially offset by depreciation of $13.3 million.

The cash used in operating assets and liabilities of $27.0 million was primarily due to a $30.7 million decrease in accounts payable and an $18.5 million decrease in inventory.

For the six months ended July 28, 2024, net cash used in operating activities was $17.1 million, which primarily consisted of cash used in operating assets and liabilities of $21.9 million and an $9.8 million net loss for the six months ended July 28, 2024 partially offset by depreciation of $16.3 million.

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.

1 unchanged sentence

Investing activities consist primarily of capital expenditures related to investments in infrastructure, retail stores and information technology.

For the six months ended August 3, 2025 and July 28, 2024, net cash used in investing activities was $3.5 million and $3.1 million, respectively.

Net Cash Provided by (Used in) Financing Activities

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 six months ended August 3, 2025, net cash provided by financing activities was $30.3 million compared to net cash used in financing activities of $2.2 million for six months ended July 28, 2024.

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

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis