What changed in this filing

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Item 1. Financial Statements

2022-12-02 compared with 2022-09-02 · 129 added, 107 removed, 436 unchanged (35% of the section changed)

3 unchanged sentences

(Amounts in thousands)

July 31, 2022

October 30, 2022

January 30, 2022

October 31, 2021

Current Assets:

Cash and cash equivalents

Income tax receivable

Inventory, less reserves of $ 1,479 , $ 2,372 , and $ 1,439 , respectively

11 unchanged sentences

(Amounts in thousands)

July 31, 2022

October 30, 2022

January 30, 2022

October 31, 2021

LIABILITIES AND SHAREHOLDERS'

5 unchanged sentences

Current portion of finance lease liabilities

Current portion of Duluth long-term debt

Duluth line of credit

Current maturities of TRI long-term debt

2 unchanged sentences

Finance lease liabilities, less current maturities

Duluth long-term debt, less current maturities

TRI long-term debt, less current maturities

4 unchanged sentences

10,000 shares authorized;

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

‎ issued or outstanding as of October 30, 2022, January 30, 2022 and October 31, 2021

Common stock (Class A), no par value;

10,000 shares authorized;

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

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

and October 31, 2021

Common stock (Class B), no par value;

200,000 shares authorized;

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

30,167 shares issued and 30,055 shares outstanding as of October 30, 2022,

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

29,782 shares issued and 29,703 shares outstanding as of October 31, 2021

Treasury stock, at cost;

112 and 79 shares as of July 31, 2022 and

January 30, 2022, respectively

112 , 79 and 79 shares as of October 30, 2022,

‎ January 30, 2022 and October 31, 2021, respectively

Capital stock

11 unchanged sentences

Three Months Ended

Six Months Ended

July 31, 2022

August 1, 2021

July 31, 2022

August 1, 2021

Nine Months Ended

October 30, 2022

October 31, 2021

October 30, 2022

October 31, 2021

Cost of goods sold (excluding depreciation and amortization)

Selling, general and administrative expenses

Operating income

Operating (loss) income

Interest expense

Other income, net

Income before income taxes

Income tax expense

Other income (loss), net

(Loss) income before income taxes

Income tax (benefit) expense

Net (loss) income

Net loss attributable to noncontrolling interest

Net income attributable to controlling interest

Net (loss) income attributable to controlling interest

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

Weighted average shares of common stock outstanding

Net income per share attributable to controlling interest

Net (loss) income per share attributable to controlling interest

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

Weighted average shares and equivalents outstanding

Net income per share attributable to controlling interest

Net (loss) income per share attributable to controlling interest

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

DULUTH HOLDINGS INC.

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Comprehensive (Loss) Income

(Amounts in thousands)

Three Months Ended

Six Months Ended

July 31, 2022

August 1, 2021

July 31, 2022

August 1, 2021

Nine Months Ended

October 30, 2022

October 31, 2021

October 30, 2022

October 31, 2021

Net (loss) income

Other comprehensive income

3 unchanged sentences

Other comprehensive (loss) income

Comprehensive income

Comprehensive (loss) income

Comprehensive loss attributable to noncontrolling interest

5 unchanged sentences

(Amounts in thousands)

Six Months Ended July 31, 2022

Nine Months Ended October 30, 2022

Noncontrolling

3 unchanged sentences

shareholders'

income (loss)

Balance at January 30, 2022

12 unchanged sentences

Balance at July 31, 2022

Issuance of common stock

Stock-based compensation

Restricted stock forfeitures

Restricted stock surrendered for taxes

Other comprehensive income

Balance at October 30, 2022

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

2 unchanged sentences

(Amounts in thousands)

Six Months Ended August 1, 2021

Nine Months Ended October 31, 2021

Noncontrolling

18 unchanged sentences

Balance at August 1, 2021

Issuance of common stock

Stock-based compensation

Restricted stock forfeitures

Restricted stock surrendered for taxes

Other comprehensive loss

Net income (loss)

Balance at October 31, 2021

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

2 unchanged sentences

(Amounts in thousands)

Six Months Ended

July 31, 2022

August 1, 2021

Nine Months Ended

October 30, 2022

October 31, 2021

Cash flows from operating activities:

Net (loss) income

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

4 unchanged sentences

Changes in operating assets and liabilities:

Income taxes receivable

Prepaid expense & other current assets

18 unchanged sentences

Payments of tax withholding on vested restricted shares

Net cash used in financing activities

Decrease in cash, cash equivalents

Net cash provided by (used in) financing activities

Decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

30 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 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.

The three months of fiscal 2022 and fiscal 2021 represent the Company’s 13-week periods ended October 30, 2022 and October 31, 2021, respectively.

The accompanying condensed consolidated financial statements as of and for the three and nine months ended October 30, 2022 and October 31, 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 and six months ended July 31, 2022 and August 1, 2021.

GAAP have been condensed or omitted pursuant to such SEC rules and regulations as of and for the three and nine months ended October 30, 2022 and October 31, 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.

In March 2020, a novel strain of coronavirus (“COVID-19”) was declared a global pandemic by the World Health Organization.

This pandemic has negatively affected the U.S.

and global economies, disrupted global supply chains and financial markets, led to significant travel and transportation restrictions, including mandatory business closures and orders to shelter in place.

The ultimate impact of COVID-19 on our operational and financial performance still depends on future developments outside of our control.

Given the uncertainty, we cannot reasonably estimate the continued impact on our business and whether that impact will be different than what we have already experienced.

Impairment Analysis

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.

The Company records an inventory reserve for the anticipated loss associated with selling

As of October 30, 2022 and for the three and nine months ended, no triggering events or indicators of asset impairment were noted.

Inventory, consisting of purchased product, is valued at the lower of cost or net realizable value, under the first-in, first-out method.

The significant estimates used in inventory valuation are obsolescence (including excess and slow-moving inventory and lower of cost or market reserves) and estimates of inventory shrinkage.

Both estimates have calculations that require the Company to make assumptions and apply judgment regarding a number of factors, including market conditions, the selling environment, historical results and current inventory trends.

Inventory is adjusted periodically to reflect current market conditions, which requires management’s judgment that may significantly affect the ending inventory valuation, as well as gross margin.

The reserve for 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.

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

inventories below cost.

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.

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

October 30, 2022

January 30, 2022

12 unchanged sentences

The Company’s business is affected by the pattern of seasonality common to most apparel businesses.

Historically, the Company has recognized a significant portion of its revenue and operating profit in the fourth fiscal quarter of each year as a result of increased sales during the holiday season.

Historically, the Company has recognized a significant portion of its revenue and operating profit in the fourth fiscal quarter of each year due to increased sales during the holiday season.

Cash and Cash Equivalents

22 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

of Operations

July 31, 2022

August 1, 2021

July 31, 2022

August 1, 2021

October 30, 2022

October 31, 2021

October 30, 2022

October 31, 2021

(in thousands)

20 unchanged sentences

Other information related to leases were as follows:

Six Months Ended

July 31, 2022

August 1, 2021

Nine Months Ended

October 30, 2022

October 31, 2021

(in thousands)

3 unchanged sentences

Operating cash flows from operating leases

Right-of-use assets obtained in exchange for lease liabilities:

Finance leases

Operating leases

Weighted-average remaining lease term (in years):

4 unchanged sentences

Operating leases

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

Future minimum lease payments under the non-cancellable leases are as follows as of October 30, 2022:

(in thousands)

3 unchanged sentences

Lease liability

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

DEBT AND CREDIT AGREEMENT

Debt consists of the following:

July 31, 2022

October 30, 2022

January 30, 2022

3 unchanged sentences

TRI long-term debt

Duluth Line of credit

current maturities

Duluth long-term debt

TRI Holdings, LLC

2 unchanged sentences

See Note 6 “Variable Interest Entities” for further information.

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

TRI entered into a promissory note (“TRI Note”) with an original balance of $ 3.5 million.

17 unchanged sentences

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.

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of October 30, 2022 and for the nine 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

October 30, 2022

January 30, 2022

6 unchanged sentences

Total accrued expenses and other current liabilities

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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).

8 unchanged sentences

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

During the six months ended July 31, 2022, certain changes in the inputs did impact the fair value of the available-for-sale security.

During the nine months ended October 30, 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

October 30, 2022

(in thousands)

1 unchanged sentence

Corporate trust

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

January 30, 2022

4 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 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.

No other-than-temporary impairment was recorded in the unaudited condensed consolidated statements of operations for the nine months ended October 30, 2022 or October 31, 2021.

The following table presents future principal receipts related to the Company’s available-for-sale security by contractual maturity as of October 30, 2022.

(in thousands)

Within one year

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

After one year through five years

2 unchanged sentences

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

July 31, 2022

October 30, 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 July 31, 2022 and January 30, 2022.

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

The Company leases the Company’s headquarters in Mt.

3 unchanged sentences

The Company considers itself the primary beneficiary for TRI as the Company has both the power to direct the activities that most significantly impact the entity’s economic performance and is expected to receive benefits that are significant to TRI.

As the Company is the primary beneficiary, it consolidates TRI and the lease is eliminated in consolidation.

As the Company is the

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

primary beneficiary, it consolidates TRI and the lease is eliminated in consolidation.

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 July 31, 2022 and January 30, 2022:

July 31, 2022

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

October 30, 2022

January 30, 2022

6 unchanged sentences

Total liabilities and shareholders'

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

EARNINGS PER SHARE

5 unchanged sentences

Three Months Ended

Six Months Ended

July 31, 2022

August 1, 2021

July 31, 2022

August 1, 2021

Nine Months Ended

October 30, 2022

October 31, 2021

October 30, 2022

October 31, 2021

(in thousands, except per share data)

5 unchanged sentences

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 $ 0.7 million and $ 1.3 million for the three and six months ended July 31, 2022, respectively.

Total stock compensation expense associated with restricted stock recognized by the Company was $ 0.7 million and $ 2.0 million for the three and nine months ended October 30, 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 six months ended July 31, 2022 is as follows:

Outstanding at January 30, 2022

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.

A summary of the activity in the Company’s unvested restricted stock during the nine months ended October 30, 2022 is as follows:

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Outstanding at January 30, 2022

Outstanding at October 30, 2022

At October 30, 2022, the Company had unrecognized compensation expense of $ 5.7 million related to the restricted stock awards, which is expected to be recognized over a weighted average period of 2.5 years.

PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

July 31, 2022

October 30, 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

Nine Months Ended

October 30, 2022

October 31, 2021

October 30, 2022

October 31, 2021

(in thousands)

Direct-to-consumer

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Contract Assets and Liabilities

4 unchanged sentences

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

July 31, 2022

October 30, 2022

January 30, 2022

2 unchanged sentences

Contract liabilities

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Revenue from gift cards is recognized when the gift card is redeemed by the customer for merchandise or as a gift card breakage, an estimate of gift cards which will not be redeemed.

1 unchanged sentence

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 six months ended:

July 31, 2022

August 1, 2021

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

October 30, 2022

October 31, 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 21 % for the six months ended July 31, 2022 and 25 % for the six months ended August 1, 2021.

The effective tax rate related to controlling interest was 25 % and 26 % for the three and nine months ended October 30, 2022, respectively.

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.

10 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