What changed in this filing

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Item 1. Financial Statements

2022-09-02 compared with 2022-06-03 · 119 added, 60 removed, 424 unchanged (30% of the section changed)

3 unchanged sentences

(Amounts in thousands)

July 31, 2022

January 30, 2022

14 unchanged sentences

(Amounts in thousands)

July 31, 2022

January 30, 2022

18 unchanged sentences

10,000 shares authorized;

issued or outstanding as of May 1, 2022 and January 30, 2022

issued or outstanding as of July 31, 2022 and January 30, 2022

Common stock (Class A), no par value;

10,000 shares authorized;

3,364 shares issued and outstanding as of May 1, 2022 and January 30, 2022

3,364 shares issued and outstanding as of July 31, 2022 and January 30, 2022

Common stock (Class B), no par value;

200,000 shares authorized;

30,077 shares issued and 29,965 shares outstanding as of May 1, 2022 and

30,089 shares issued and 29,977 shares outstanding as of July 31, 2022 and

29,786 shares issued and 29,707 shares outstanding as of January 30, 2022

Treasury stock, at cost;

112 and 79 shares as of May 1, 2022 and

112 and 79 shares as of July 31, 2022 and

January 30, 2022, respectively

12 unchanged sentences

Three Months Ended

Six Months Ended

July 31, 2022

August 1, 2021

July 31, 2022

August 1, 2021

Cost of goods sold (excluding depreciation and amortization)

Selling, general and administrative expenses

Operating (loss) income

Operating income

Interest expense

Other income, net

(Loss) income before income taxes

Income tax (benefit) expense

Net (loss) income

Income before income taxes

Income tax expense

Net loss attributable to noncontrolling interest

Net (loss) income attributable to controlling interest

Basic (loss) earnings per share (Class A and Class B):

Net income attributable to controlling interest

Basic earnings per share (Class A and Class B):

Weighted average shares of common stock outstanding

Net (loss) income per share attributable to controlling interest

Diluted (loss) earnings per share (Class A and Class B):

Net income per share attributable to controlling interest

Diluted earnings per share (Class A and Class B):

Weighted average shares and equivalents outstanding

Net (loss) income per share attributable to controlling interest

Net income per share attributable to controlling interest

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

Three Months Ended

Net (loss) income

Six Months Ended

July 31, 2022

August 1, 2021

July 31, 2022

August 1, 2021

Other comprehensive income

3 unchanged sentences

Other comprehensive (loss) income

Comprehensive (loss) income

Comprehensive income

Comprehensive loss attributable to noncontrolling interest

Comprehensive (loss) income attributable

Comprehensive income attributable

‎ to controlling interest

3 unchanged sentences

(Amounts in thousands)

Three Months Ended May 1, 2022

Six Months Ended July 31, 2022

Noncontrolling

10 unchanged sentences

Balance at May 1, 2022

Issuance of common stock

Stock-based compensation

Restricted stock forfeitures

Restricted stock surrendered for taxes

Other comprehensive loss

Net income (loss)

Balance at July 31, 2022

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(Amounts in thousands)

Three Months Ended May 2, 2021

Six Months Ended August 1, 2021

Noncontrolling

11 unchanged sentences

Balance at May 2, 2021

Issuance of common stock

Stock-based compensation

Restricted stock forfeitures

Restricted stock surrendered for taxes

Other comprehensive income

Net income (loss)

Balance at August 1, 2021

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(Amounts in thousands)

Three Months Ended

Six Months Ended

July 31, 2022

August 1, 2021

Cash flows from operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization

17 unchanged sentences

Cash flows from financing activities:

Proceeds from line of credit

Payments on line of credit

Payments on delayed draw term loan

36 unchanged sentences

Fiscal 2021 was a 52-week period and ended on January 30, 2022.

The three months of fiscal 2022 and fiscal 2021 represent the Company’s 13-week periods ended May 1, 2022 and May 2, 2021, respectively.

The accompanying condensed consolidated financial statements as of and for the three months ended May 1, 2022 and May 2, 2021 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.

The three months of fiscal 2022 and fiscal 2021 represent the Company’s 13-week periods ended July 31, 2022 and August 1, 2021, respectively.

The accompanying condensed consolidated financial statements as of and for the three and six months ended July 31, 2022 and August 1, 2021 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 months ended May 1, 2022 and May 2, 2021.

GAAP have been condensed or omitted pursuant to such SEC rules and regulations as of and for the three and six months ended July 31, 2022 and August 1, 2021.

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 January 30, 2022.

5 unchanged sentences

Impairment Analysis

As of May 1, 2022 and for the three months ended, no triggering events or indicators of asset impairment were noted.

As of July 31, 2022 and for the three and six months ended, no triggering events or indicators of asset impairment were noted.

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.

3 unchanged sentences

inventories below cost.

Inventory reserve for excess and obsolete items was $ 2.0 million and $ 2.4 million as of May 1, 2022 and January 30, 2022, respectively .

Inventory reserve for excess and obsolete items was $ 2.3 million and $ 1.0 million as of July 31, 2022 and January 30, 2022, respectively .

The reserve for retail inventory shrinkage is adjusted to reflect the trend of historical physical inventory count results.

The Company performs its retail store physical inventory counts in July and the difference between actual and estimated shrinkage, recorded in Cost of goods sold, may cause fluctuations in second fiscal quarter results.

Due to the timing of the inventory counts, an insignificant retail inventory shrinkage reserve was outstanding as of July 31, 2022, compared to $ 1.4 million as of January 30, 2022.

Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:

July 31, 2022

January 30, 2022

37 unchanged sentences

Three Months Ended

Six Months Ended

of Operations

July 31, 2022

August 1, 2021

July 31, 2022

August 1, 2021

(in thousands)

20 unchanged sentences

Other information related to leases were as follows:

Three Months Ended

Six Months Ended

July 31, 2022

August 1, 2021

(in thousands)

9 unchanged sentences

Operating leases

Future minimum lease payments under the non-cancellable leases are as follows as of May 1, 2022:

Future minimum lease payments under the non-cancellable leases are as follows as of July 31, 2022:

(in thousands)

5 unchanged sentences

Debt consists of the following:

July 31, 2022

January 30, 2022

15 unchanged sentences

On April 30, 2020, the Credit Agreement was amended to include an incremental DDTL of $ 20.5 million (the “Incremental DDTL”) that was available to draw upon before March 31, 2021, and matured on April 29, 2021 , for a total credit facility of $ 150.5 million.

As of and for the fiscal year ended January 31, 2021, no amount of the Incremental DDTL was funded.

The loan covenants were also amended to allow for greater flexibility during the Company’s peak borrowing periods in fiscal 2020.

2 unchanged sentences

On May 14, 2021, the Company terminated the Credit Agreement, and entered into a new credit agreement (the “New Credit Agreement”), which was treated as a modification for accounting purposes.

The New Credit Agreement matures on May 14, 2026 and provides for borrowings of up to $ 150.0 million that are available under a revolving senior credit facility, with a $ 5.0 million sublimit for issuance of standby letters of credit, as well as a $ 10.0 million sublimit for swing line loans.

At the Company’s option, the interest rate applicable to the revolving senior credit facility will be a floating rate equal to:

The New Credit Agreement originally matured on May 14, 2026 and provided for borrowings of up to $ 150.0 million that were available under a revolving senior credit facility, with a $ 5.0 million sublimit for issuance of standby letters of credit, as well as a $ 10.0 million sublimit for swing line loans.

At the Company’s option, the interest rate applicable to the revolving senior credit facility was a floating rate equal to:

(i) the Bloomberg Short-Term Bank Yield Index rate (“BSBY”) plus the applicable rate of 1.25 % to 2.00 % determined based on the Company’s rent adjusted leverage ratio, or (ii) the base rate plus the applicable rate of 0.25 % to 1.00 % based on the Company’s rent adjusted leverage ratio.

The New Credit Agreement is secured by essentially all Company assets and requires the Company to maintain compliance with certain financial and non-financial covenants, including a maximum rent adjusted leverage ratio and a minimum fixed charge coverage ratio as defined in the New Credit Agreement.

As of May 1, 2022 and for the three months then ended, the Company was in compliance with all financial and non-financial covenants contained within the New Credit Agreement.

The New Credit Agreement was secured by essentially all Company assets and requires the Company to maintain compliance with certain financial and non-financial covenants, including a maximum rent adjusted leverage ratio and a minimum fixed charge coverage ratio as defined in the New Credit Agreement.

On July 8, 2022, the Company entered into the First Amendment to the New Credit Agreement (the “First Amendment”), which was treated as a modification for accounting purposes.

The First Amendment amends the New Credit Agreement in order to (i) increase the revolving commitment from $ 150 million to $ 200 million;

(ii) extend the maturity date from May 14, 2026 to July 8, 2027;

(iii) amend the pricing index to replace BSBY with the Term Secured Overnight Financing Rate;

and (iv) to reduce the commitment fee in some instances.

As of July 31, 2022 and for the six months then ended, the Company was in compliance with all financial and non-financial covenants contained within the New Credit Agreement and the First Amendment.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

July 31, 2022

January 30, 2022

3 unchanged sentences

Product returns

Catalog costs

Unpaid purchases of property & equipment

1 unchanged sentence

Total accrued expenses and other current liabilities

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

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

pay in an actual transaction (or in a hypothetical transaction if an actual transaction does not exist) at the measurement date.

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:

6 unchanged sentences

Treasury yield curve, credit information and an estimate of future cash flows.

During the three months ended May 1, 2022, certain changes in the inputs did impact the fair value of the available-for-sale security.

During the six months ended July 31, 2022, 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 judgment and, therefore, cannot be determined with precision.

1 unchanged sentence

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:

July 31, 2022

(in thousands)

7 unchanged sentences

The Company reviews its securities on a quarterly basis to monitor its exposure to other-than-temporary impairment.

No other-than-temporary impairment was recorded in the unaudited condensed consolidated statements of operations for the three months ended May 1, 2022 or May 2, 2021.

The following table presents future principal receipts related to the Company’s available-for-sale security by contractual maturity as of May 1, 2022.

No other-than-temporary impairment was recorded in the unaudited condensed consolidated statements of operations for the six months ended July 31, 2022 or August 1, 2021.

The following table presents future principal receipts related to the Company’s available-for-sale security by contractual maturity as of July 31, 2022.

(in thousands)

Within one year

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

After one year through five years

1 unchanged sentence

After ten years

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The carrying values and fair values of other financial instruments in the Consolidated Balance Sheets are as follows:

July 31, 2022

January 30, 2022

10 unchanged sentences

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 one variable interest entity (“VIE”) as of May 1, 2022 and January 30, 2022.

The Company has determined that it was the primary beneficiary of one variable interest entity (“VIE”) as of July 31, 2022 and January 30, 2022.

The Company leases the Company’s headquarters in Mt.

5 unchanged sentences

The Company does not consolidate the trust as the Company is not the primary beneficiary.

The condensed consolidated balance sheets include the following amounts as a result of the consolidation of TRI as of May 1, 2022 and January 30, 2022:

The condensed consolidated balance sheets include the following amounts as a result of the consolidation of TRI as of July 31, 2022 and January 30, 2022:

July 31, 2022

January 30, 2022

6 unchanged sentences

Total liabilities and shareholders'

(LOSS) EARNINGS PER SHARE

(Loss) earnings per share is computed under the provisions of ASC 260 , Earnings Per Share .

Basic (loss) earnings per share is based on the weighted average number of common shares outstanding for the period.

Diluted (loss) 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 (loss) earnings per share unless considered anti-dilutive.

The reconciliation of the numerator and denominator of the basic and diluted (loss) earnings per share calculation is as follows:

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

EARNINGS PER SHARE

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.

The reconciliation of the numerator and denominator of the basic and diluted earnings per share calculation is as follows:

Three Months Ended

Six Months Ended

July 31, 2022

August 1, 2021

July 31, 2022

August 1, 2021

(in thousands, except per share data)

Numerator - net (loss) income attributable to

Numerator - net income attributable to

‎ controlling interest

2 unchanged sentences

Dilutive shares

(Loss) earnings per share (Class A and Class B)

The computation of diluted (loss) earnings per share excluded 0.2 million shares of unvested restricted stock for the three months ended May 1, 2022 because their inclusion would be anti-dilutive due to a net loss.

Earnings per share (Class A and Class B)

The computation of diluted earnings per share excluded ( 0.1 ) million shares of unvested restricted stock for the three months ended July 31, 2022, because the inclusion of dilutive potential common shares outstanding would be anti-dilutive.

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 $ 0.6 million and $ 0.4 million for the three months ended May 1, 2022 and May 2, 2021, respectively.

Total stock compensation expense associated with restricted stock recognized by the Company was $ 0.7 million and $ 1.3 million for the three and six months ended July 31, 2022, respectively.

The Company’s total stock compensation expense is included in selling, general and administrative expenses on the Condensed Consolidated Statements of Operations.

A summary of the activity in the Company’s unvested restricted stock during the three months ended May 1, 2022 is as follows:

A summary of the activity in the Company’s unvested restricted stock during the six months ended July 31, 2022 is as follows:

Outstanding at January 30, 2022

Outstanding at May 1, 2022

At May 1, 2022, the Company had unrecognized compensation expense of $ 6.6 million related to the restricted stock awards, which is expected to be recognized over a weighted average period of 3.0 years.

Outstanding at July 31, 2022

At July 31, 2022, the Company had unrecognized compensation expense of $ 5.9 million related to the restricted stock awards, which is expected to be recognized over a weighted average period of 2.8 years.

DULUTH HOLDINGS INC.

2 unchanged sentences

Property and equipment consist of the following:

July 31, 2022

January 30, 2022

15 unchanged sentences

Three Months Ended

Six Months Ended

July 31, 2022

August 1, 2021

July 31, 2022

August 1, 2021

(in thousands)

6 unchanged sentences

Contract assets and liabilities on the Company’s consolidated balance sheets are presented in the following table:

July 31, 2022

January 30, 2022

7 unchanged sentences

Gift card breakage is recorded within Net sales on the Company’s consolidated statement of operations.

The following table provides the reconciliation of the contract liability related to gift cards for the three months ended:

The following table provides the reconciliation of the contract liability related to gift cards for the six months ended:

July 31, 2022

August 1, 2021

(in thousands)

6 unchanged sentences

Management judgment is required in projecting ordinary income to estimate the Company’s annual effective tax rate.

The effective tax rate related to controlling interest was 25 % for the three months ended May 1, 2022 and 16 % for the three months ended May 2, 2021.

The effective tax rate related to controlling interest was 21 % for the six months ended July 31, 2022 and 25 % for the six months ended August 1, 2021.

The income from TRI was excluded from the calculation of the Company’s effective tax rate, as TRI is a limited liability company and not subject to income taxes.

5 unchanged sentences

On November 15, 2019, the FASB issued ASU No.

2019-10 “Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815, and Leases (Topic 842),” (ASU 2019-10”), which provides framework to stagger effective dates for future major accounting standards and amends the effective dates for certain major new accounting standards to give implementation relief to certain types of entities.

2019-10 “Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815, and Leases (Topic 842),” (ASU 2019-10”), which provides a framework to stagger effective dates for future major accounting standards and amends the effective dates for certain major new accounting standards to give implementation relief to certain types of entities.

ASU 2019-10 amends the effective dates for ASU 2016-13 for smaller reporting companies with fiscal years beginning after December 15, 2022, and interim periods within those years.

2 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 1. Financial Statements