What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-03-17 compared with 2022-03-25 · 43 added, 50 removed, 472 unchanged (16% of the section changed)

3 unchanged sentences

Duluth Trading is a lifestyle brand of men’s and women’s casual wear, workwear and accessories primarily sold through our own omnichannel platform.

We offer products nationwide through our website and catalog.

We offer products nationwide through our website.

In 2010, we initiated our omnichannel platform with the opening of our first store.

11 unchanged sentences

From what began as an idea aimed at those working in the building trades, Duluth Trading has become a widely recognized brand and proprietary line of innovative and functional apparel and gear.

We have created strong brand awareness, built a loyal customer base and generated robust sales momentum.

We have created strong brand awareness and built a loyal customer base.

We believe the foundation of our success is our culture of “poking average in the eye” by seeing things for what they could be and should be and finding a way to make them exactly that, and we like to do it all with a big, toothy grin.

Our Growth Strategies

The Company has completed a comprehensive review of current operations, logistics networks, marketing and technology capabilities, and unique brands and products.

In 2021, the Company completed a comprehensive review of current operations, logistics networks, marketing and technology capabilities, and unique brands and products.

The Company formulated the “Big Dam Blueprint”, which management believes will unlock the Company’s full potential for long-term, sustainable grow growth.

3 unchanged sentences

 Evolve the Company’s multi-brand platform as a new pathway to grow the business.

Create unique brand positions, across men’s and women’s, for Duluth, Alaskan Hardgear, Buck Naked, and Best Made to address customer needs for various occasions including work, outdoor recreation, casual lifestyle, and first layer.

Create unique brand positions, across men’s and women’s, for Duluth, AKHG and Buck Naked to address customer needs for various occasions including work, outdoor recreation, casual lifestyle, and first layer.

Invest in the evolution of the Duluth Trading platform to enable the integration of new brands, expand our offerings and broaden our customer base.

9 unchanged sentences

Retail Store Environment

Our retail stores are designed to bring our brand to life by creating a unique and entertaining experience, including engaging sales associates, a compelling and complete product assortment, custom made fixtures to fit our brand, free wireless Internet and complimentary coffee and water.

We also showcase unique attractions at each retail store that celebrate the heritage of the local area, such as the tool museum in our Mt.

25 unchanged sentences

We advertise on cable and broadcast television networks to build brand awareness for both men’s and women’s products and to reach a large, national audience.

These advertisements feature both our animated characters and female models, and are intended to be humorous, irreverent and quirky in order to grab the viewer’s attention, while highlighting the particularly innovative, solution-based features of our core products and the Duluth Trading name.

These advertisements feature both our animated characters and female models, and are intended to be humorous, irreverent and quirky in order to grab the viewer’s

attention, while highlighting the particularly innovative, solution-based features of our core products and the Duluth Trading name.

 Social Media .

2 unchanged sentences

Our catalogs are an important part of our heritage and represent a tangible vehicle for our authentic and humorous storytelling.

Our catalogs serve as an important customer acquisition tool by driving visits to our website and retail stores.

Customer Service

10 unchanged sentences

We have built strong, long-term relationships with our vendors.

In fiscal 2021, 53% of our purchases came from our largest supplier, an agent partner in Hong Kong who manages multiple factories across Asia, including Cambodia, China, Indonesia and Vietnam.

In fiscal 2022, 56% of our purchases came from our largest supplier, an agent partner in Hong Kong who manages multiple factories across Asia and Latin America, including Vietnam, Indonesia, Cambodia, Bangladesh, Pakistan, China, Mexico and Egypt.

We believe sourcing inventory through these agents allows us to leverage the agents’ purchasing power with multiple factories, as well as transportation and logistics capabilities, allowing our internal team to focus on our core competencies of product development, storytelling and serving customers, rather than factory and mill management or logistics.

2 unchanged sentences

All of our products are produced according to our specifications, and we require all of our manufacturers to adhere to strict regulatory compliance and standards of conduct.

We seek to ensure the consistent quality by employing Duluth Trading-certified factory auditors to selectively examine pre-production samples, conduct periodic site visits to certain of our vendors’ production facilities and inspect inbound shipments at our distribution centers.

Distribution Centers

We operate distribution centers located in Belleville, Wisconsin, Dubuque, Iowa and Salt Lake City, Utah.

Fulfillment Centers

We operate fulfillment centers located in Belleville, Wisconsin, Dubuque, Iowa and Salt Lake City, Utah.

We also have a fulfillment center in Adairsville, Georgia with operations scheduled to begin in fiscal 2023.

The approximate square footage of each facility is included in Item 2 of Part I of this report.

12 unchanged sentences

The “Duluth Trading Co” trade name and trademark is used both in the United States and internationally and is material to our business.

Trademarks that are important in identifying

and distinguishing our products and services are Alaskan Hardgear ® , Armachillo ® , Ballroom ® , Cab Commander ® , Crouch Gusset ® , Dry on the Fly ® , Duluth Trading Co ® , Duluthflex ® , Fire Hose ® , Longtail T ® , No Polo Shirt ® , No Yank ® and Wild Boar Mocs ® .

Trademarks that are important in identifying and distinguishing our products and services are Alaskan Hardgear ® , Armachillo ® , Ballroom ® , Cab Commander ® , Crouch Gusset ® , Dry on the Fly ® , Duluth Trading Co ® , Duluthflex ® , Fire Hose ® , Longtail T ® , No Polo Shirt ® , No Yank ® and Wild Boar Mocs ® .

Our rights to some of these trademarks may be limited to select markets.

16 unchanged sentences

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are made available free of charge on or through our website at www.duluthtrading.com under the “Investors” tab as soon as reasonably practicable after such reports are filed with, or furnished to the SEC.

Additional Information

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 Company has focused on protecting the health and safety of our employees, customers and suppliers, working with our customers, landlords, suppliers and vendors to minimize potential disruptions and supporting our community, while managing our business in these unprecedented times.

All retail stores were temporarily closed beginning March 20, 2020 and began re-opening the first week of May through the third week of June.

All of our retail stores are open, but prolonged COVID-19 safety concerns has continued to impact store traffic.

The ultimate impact of COVID-19 on our operational and financial performance still depends on future developments outside of our control, including the duration and spread of the pandemic and related actions taken by federal, state and local government officials, international governments to prevent disease spread, and the availability, safety and efficiency of a vaccine.

We continue to actively evaluate all federal, state and local regulations to ensure compliance with store operations.

Certain factors may have a material adverse effect on our business, financial condition and results of operations.

19 unchanged sentences

These risks could have a material adverse effect on our brand as well as our results of operations and financial condition.

Our business depends on our ability to maintain strong brands.

Our business depends on our ability to maintain strong brands and sub brands.

We may not be able to maintain and enhance the Duluth Trading brands if we receive unfavorable complaints, negative publicity or otherwise fail to live up to consumers’ expectations, which could materially adversely affect our business, results of operations and growth prospects.

14 unchanged sentences

Failure to properly supervise the operation and maintain the consistency of the customer experience in those retail stores could result in loss of customers and potentially harm future net sales prospects.

The success of our direct-to-consumer channel depends on customers’ use of our digital platform, including our website, and response to catalogs and digital marketing;

The success of our direct-to-consumer channel depends on customers’ use of our digital platform, including our website, and response to digital marketing;

if our overall marketing strategies are not successful, including our maintenance of a robust customer list and ability to effectively customize our marketing efforts based on understanding customers preferences, our business and results of operations could be materially adversely affected.

The level of customer traffic and volume of customer purchases through our direct-to-consumer channel is substantially dependent on our ability to provide a content-rich and user-friendly website, widely distributed and informative catalogs, a fun, easy and hassle-free customer experience and reliable delivery of our products.

The level of customer traffic and volume of customer purchases through our direct-to-consumer channel is substantially dependent on our ability to provide a content-rich and user-friendly website, a fun, easy and hassle-free customer experience and reliable delivery of our products.

If we are unable to maintain and increase customers’ use of our e-commerce platform, including our website, and the volume of purchases decline, our business and results of operations could be adversely affected.

Customer response to our digital marketing and catalogs is substantially dependent on merchandise assortment, merchandise availability and creative presentation, as well as the selection of customers to whom our digital marketing is directed and our catalogs are sent.

Customer response to our digital marketing is substantially dependent on merchandise assortment, merchandise availability and creative presentation, as well as the selection of customers to whom our digital marketing is directed and our catalogs are sent.

Our maintenance of a robust customer list, which we believe includes desirable demographic characteristics for the products we offer, has also been a key component of our overall strategy.

If the performance of our website, catalogs and email declines, or if our overall marketing strategy is not successful, our business, results of operations and stock price could be adversely affected.

If the performance of our website and email declines, or if our overall marketing strategy is not successful, our business, results of operations and stock price could be adversely affected.

If we fail to acquire new customers, or fail to do so in a cost-effective manner, we may not be able to increase net revenue or profit per active customer.

13 unchanged sentences

As e-commerce and social networking continue to rapidly evolve, we must continue to establish relationships with these channels and may be unable to develop or maintain these relationships on acceptable terms.

Additionally, digital advertising costs may continue to rise and as our usage of these channels expands, such costs may impact

our ability to acquire new customers in a cost-effective manner.

If the level of usage of these channels by our customer base does not grow as expected, we may suffer a decline in customer growth or net sales.

Additionally, digital advertising costs may continue to rise and as our usage of these channels expands, such costs may impact our ability to acquire new customers in a cost-effective manner.

If the level of usage of these channels by our customer base

does not grow as expected, we may suffer a decline in customer growth or net sales.

A significant decrease in the level of usage or customer growth would have a material adverse effect on our business, financial condition and operating results.

12 unchanged sentences

Operational Risks

The Coronavirus pandemic may continue to adversely affect our business operations, store traffic, employee availability, financial condition, liquidity, and cash flow for an extended period of time.

The outbreak of the Coronavirus (“COVID-19”) continues to affect our business operations and it is impossible to predict the effect and ultimate impact of the COVID-19 pandemic.

As the pandemic continues, consumer fear about becoming ill with the virus and recommendations and/or mandates from federal, state and local authorities to avoid large gatherings of people or self-quarantine may increase, which may adversely affect traffic to our stores, result in further reduced store hours or result in store closures.

Reductions in customer visits to, and spending at, our stores caused by COVID-19 would result in further loss of retail store sales and profits and other material adverse effects.

The extent of the impact of COVID-19 on our business, financial results, liquidity and cash flows will depend largely on future developments, including the efficacy of the vaccine related to current and future variants of the virus, new information that may emerge concerning the severity and action taken to contain or prevent further spread within the U.S.

and the related impact on consumer confidence and spending, all of which are highly uncertain and cannot be predicted.

These and other potential impacts of COVID-19, could therefore materially and adversely affect our business, financial condition and results of operations.

Economic uncertainties may continue to adversely affect our business operations, store traffic, employee availability, financial condition, liquidity, and cash flow for an extended period of time.

The ongoing economic uncertainty following the pandemic of the Coronavirus (“COVID-19”) continues to affect our business operations and it is impossible to predict the effect and ultimate impact of ongoing economic uncertainties.

Business activities continue to face economic uncertainties, including but not limited to increased inflation and interest rates, the prolonged COVID-19 pandemic, and global chain constraints.

The economic uncertainties may continue for an extended period and have adversely impacted, and may continue to impact, our business.

As inflationary periods continue, consumer fear may adversely affect traffic to our stores.

Reductions in customer visits to, and spending at, our stores caused by economic uncertainties would result in further loss of retail store sales and profits and other material adverse effects.

The extent of the impact on our business, financial results, liquidity and cash flows will depend largely on future developments, all of which are highly uncertain and cannot be predicted.

These and other potential impacts of economic uncertainties could therefore materially and adversely affect our business, financial condition and results of operations.

We rely on sources for merchandise located in foreign markets, and our business may therefore be adversely affected by legal, regulatory, economic and political risks associated with international trade and those markets.

3 unchanged sentences

 changes in U.S.

laws (or changes in the enforcement of those laws) affecting the importation and taxation of goods, including disallowance of tax deductions for imported merchandise, imposition of unilateral tariffs on imported goods, duties, quotas, enhanced security measures at U.S.

laws (or changes in the enforcement of those laws) affecting the importation and taxation of goods, including disallowance of tax deductions for imported merchandise, imposition of unilateral

tariffs on imported goods, duties, quotas, enhanced security measures at U.S.

ports or imposition of new legislation relating to import quotas;

13 unchanged sentences

We cannot control all of the various factors that might affect timely and effective procurement of supplies of product from our third-party suppliers and delivery of merchandise to our customers.

A majority of the products that we purchase must be shipped to our distribution centers in Wisconsin and Iowa.

While our reliance on a limited number of distribution centers provides certain efficiencies, it also makes us more vulnerable to natural disasters, weather-related disruptions, accidents, system failures, public health pandemics, such as the ongoing COVID-19 pandemic or other unforeseen causes that could delay or impair our ability to fulfill customer orders and/or ship merchandise to our stores, which could adversely affect sales.

A majority of the products that we purchase must be shipped to our fulfillment centers in Wisconsin, Iowa and Utah.

While our reliance on a limited number of fulfillment centers provides certain efficiencies, it also makes us more vulnerable to natural disasters, weather-related disruptions, accidents, system failures, public health pandemics, or other unforeseen causes that could delay or impair our ability to fulfill customer orders and/or ship merchandise to our stores, which could adversely affect sales.

Our ability to mitigate the adverse impacts of these events depends in part upon the effectiveness of our disaster preparedness and response planning, as well as our business continuity planning.

Our use of imports also makes us vulnerable to risks associated with products manufactured abroad, including, among other things, risks of damage, destruction or confiscation of products while in transit to a distribution center or at points of export or import, organized labor strikes and work stoppages, transportation and other delays in shipments, including as a result of heightened security screening and inspection processes or other port-of-entry limitations or restrictions in the United States, unexpected or significant port congestion, lack of freight availability and freight cost increases.

Our use of imports also makes us vulnerable to risks associated with products manufactured abroad, including, among other things, risks of damage, destruction or confiscation of products while in transit to a fulfillment center or at points of export or import, organized labor strikes and work stoppages, transportation and other delays in shipments, including as a result of heightened security screening and inspection processes or other port-of-entry limitations or restrictions in the United States, unexpected or significant port congestion, lack of freight availability and freight cost increases.

In addition, if we experience a shortage of a popular item, we may be required to arrange for additional quantities of the item, if available, to be delivered through airfreight, which is significantly more expensive than standard shipping by sea.

7 unchanged sentences

We expect further declines in shipping and handling revenues as compared to prior years.

Further declines in shipping and handling revenues may have a material adverse effect on our gross profit and gross profit margin, as

well as our Adjusted EBITDA to the extent there are not commensurate declines, or if there are increases, in our shipping and handling expense.

Further declines in shipping and handling revenues may have a material adverse effect on our gross profit and gross profit margin, as well as our Adjusted EBITDA to the extent there are not commensurate declines, or if there are increases, in our shipping and handling expense.

We rely on third-party service providers, such as UPS and the United States Postal Service (“USPS”), to deliver products purchased through our direct-to-consumer channel to our customers and our business could be negatively impacted by disruptions in the operations of these third-party service providers.

19 unchanged sentences

Both the increased cost and lower availability of merchandise, raw materials, fuel and labor may have an adverse impact on our cash flow and working capital needs as well as those of our suppliers.

We rely upon third-party land-based and air freight carriers for merchandise shipments from our distribution centers to customers and our retail stores.

We rely upon third-party land-based and air freight carriers for merchandise shipments from our fulfillment centers to customers and our retail stores.

Accordingly, we are subject to the risks, including labor disputes, union organizing activity, inclement weather and increased transportation costs, associated with such carriers’ ability to provide delivery services to meet outbound shipping needs.

In addition, if the cost of fuel rises, the cost to deliver merchandise from distribution centers to customers and our retail stores may rise and, although some of these costs are paid by our customers, such costs could have an adverse impact on our profitability.

In addition, if the cost of fuel rises, the cost to deliver merchandise from fulfillment centers to customers and our retail stores may rise and, although some of these costs are paid by our customers, such costs could have an adverse impact on our profitability.

Failure to procure suppliers of products from our third-party suppliers and deliver merchandise to customers and our retail stores in a timely, effective and economically viable manner could damage our reputation and adversely affect our business.

171 unchanged sentences

Our Class A common stock has ten votes per share, and our Class B common stock has one vote per share.

Given the greater number of votes per share attributed to our Class A common stock, our Executive Chairman and Chief Executive Officer, Stephen L.

Given the greater number of votes per share attributed to our Class A common stock, our Chairman, Stephen L.

Schlecht, who is our only Class A shareholder, beneficially owns shares representing more than 50% of the voting power of our outstanding capital stock.

13 unchanged sentences

 that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

Although we have a majority of independent directors on our board even though we will are a controlled company, there is no guarantee that we will not take advantage of this exemption in the future.

Although we have a majority of independent directors on our board, we are a controlled company.

As such, there is no guarantee that we will not take advantage of this exemption in the future.

Accordingly, as long as we are a controlled company, holders of our Class B common stock may not have the same protections afforded to shareholders of companies that are subject to all of the NASDAQ corporate governance requirements.

26 unchanged sentences

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NASDAQ Global Select Market and other applicable securities rules and regulations.

Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources.

Compliance with these rules and regulations increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources.

The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and results of operations.

2 unchanged sentences

As a result, management’s attention may be diverted from other business concerns, which could materially adversely affect our business and results of operations.

We will need to hire additional employees or engage outside consultants to comply with these requirements, which will increase our costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming.

12 unchanged sentences

 establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by shareholders at annual or special shareholder meetings.

These provisions may frustrate or prevent any attempts by our shareholders to replace or remove our current management by making it more difficult for shareholders to replace members of our board of directors, which is responsible for appointing the members of our management.

the members of our management.

In addition, because we are incorporated in Wisconsin, the Wisconsin control share acquisition statute and Wisconsin’s “business combination” provisions would apply and limit the ability of an acquiring person to engage in certain transactions or to exercise full voting power of acquired shares under certain circumstances.

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-K

Item 1. Business