What changed in this filing

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Item 1. Financial Statements

2023-06-02 compared with 2022-12-02 · 94 added, 152 removed, 413 unchanged (37% of the section changed)

3 unchanged sentences

(Amounts in thousands)

October 30, 2022

April 30, 2023

January 29, 2023

October 31, 2021

Current Assets:

Cash and cash equivalents

Income tax receivable

Inventory, less reserves of $ 1,929 and $ 1,837 , respectively

Prepaid expenses & other current assets

Prepaid catalog costs

Total current assets

4 unchanged sentences

Other assets, net

Deferred tax assets

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

2 unchanged sentences

(Amounts in thousands)

October 30, 2022

April 30, 2023

January 29, 2023

October 31, 2021

LIABILITIES AND SHAREHOLDERS'

5 unchanged sentences

Current portion of finance lease liabilities

Duluth line of credit

Current maturities of TRI long-term debt

8 unchanged sentences

10,000 shares authorized;

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

issued or outstanding as of April 30, 2023 and January 29, 2023

Common stock (Class A), no par value;

10,000 shares authorized;

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

and October 31, 2021

3,364 shares issued and outstanding as of April 30, 2023 and January 29, 2023

Common stock (Class B), no par value;

200,000 shares authorized;

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

31,264 shares issued and 31,110 shares outstanding as of April 30, 2023,

30,191 shares issued and 30,079 shares outstanding as of January 29, 2023

Treasury stock, at cost;

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

‎ January 30, 2022 and October 31, 2021, respectively

154 and 112 shares as of April 30, 2023 and

January 29, 2023, respectively

Capital stock

11 unchanged sentences

Three Months Ended

Nine Months Ended

October 30, 2022

October 31, 2021

October 30, 2022

October 31, 2021

April 30, 2023

Cost of goods sold (excluding depreciation and amortization)

Selling, general and administrative expenses

Operating (loss) income

Operating loss

Interest expense

Other income (loss), net

(Loss) income before income taxes

Income tax (benefit) expense

Net (loss) income

Other income, net

Loss before income taxes

Income tax benefit

Net loss attributable to noncontrolling interest

Net (loss) income attributable to controlling interest

Net loss 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

Net loss 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 loss 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

Nine Months Ended

October 30, 2022

October 31, 2021

October 30, 2022

October 31, 2021

Net (loss) income

April 30, 2023

Other comprehensive income

Securities available-for sale:

Unrealized security (loss) income arising during the period

Income tax (benefit) expense

Other comprehensive (loss) income

Comprehensive (loss) income

Unrealized security loss arising during the period

Income tax benefit

Other comprehensive loss

Comprehensive loss

Comprehensive loss attributable to noncontrolling interest

Comprehensive income attributable

Comprehensive loss attributable

‎ to controlling interest

3 unchanged sentences

(Amounts in thousands)

Nine Months Ended October 30, 2022

Three Months Ended April 30, 2023

Noncontrolling

10 unchanged sentences

Other comprehensive loss

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

Issuance of common stock

Stock-based compensation

Restricted stock forfeitures

Restricted stock surrendered for taxes

Other comprehensive income

Balance at October 30, 2022

Balance at April 30, 2023

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

2 unchanged sentences

(Amounts in thousands)

Nine Months Ended October 31, 2021

Three Months Ended May 1, 2022

Noncontrolling

9 unchanged sentences

Other comprehensive income

Net income (loss)

Balance at May 1, 2022

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

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)

Nine Months Ended

October 30, 2022

October 31, 2021

Three Months Ended

April 30, 2023

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

5 unchanged sentences

Noncash lease impacts

Net cash (used in) provided by operating activities

Net cash used in operating activities

Cash flows from investing activities:

6 unchanged sentences

Payments on line of credit

Payments on delayed draw term loan

Payments on TRI long term debt

1 unchanged sentence

Payments of tax withholding on vested restricted shares

Net cash provided by (used in) financing activities

Net cash used in financing activities

Decrease in cash and cash equivalents

31 unchanged sentences

Fiscal 2022 was a 52-week period and ended on January 29, 2023.

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.

The three months of fiscal 2023 and fiscal 2022 represent the Company’s 13-week periods ended April 30, 2023 and May 1, 2022, respectively.

The accompanying condensed consolidated financial statements as of and for the three months ended April 30, 2023 and May 1, 2022 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 nine months ended October 30, 2022 and October 31, 2021.

GAAP have been condensed or omitted pursuant to such SEC rules and regulations as of and for the three months ended April 30, 2023 and May 1, 2022.

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 29, 2023.

Impairment Analysis

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

As of April 30, 2023 and for the three 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.

8 unchanged sentences

Prepaid expenses and other assets consist of the following:

October 30, 2022

April 30, 2023

January 29, 2023

16 unchanged sentences

Amounts receivable from credit card issuers are typically converted to cash within 2 to 4 days of the original sales transaction and are considered to be cash equivalents.

Reclassifications

Certain reclassifications have been made to the 2022 financial statements in order to conform to 2023 presentation.

The Company reclassified $ 4.2 million and ($ 4.2 ) million from Property, Plant & Equipment and Prepaid Expenses, respectively, in the prior period.

There were no changes to previously reported shareholders'

equity, statement of cash flows or net income (loss) as a result of the reclassifications.

Significant Accounting Policies

19 unchanged sentences

Three Months Ended

Nine Months Ended

of Operations

October 30, 2022

October 31, 2021

October 30, 2022

October 31, 2021

April 30, 2023

(in thousands)

20 unchanged sentences

Other information related to leases were as follows:

Nine Months Ended

October 30, 2022

October 31, 2021

Three Months Ended

April 30, 2023

(in thousands)

4 unchanged sentences

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

Finance leases

Operating leases

5 unchanged sentences

Operating leases

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

Future minimum lease payments under the non-cancellable leases are as follows as of April 30, 2023:

(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:

October 30, 2022

April 30, 2023

January 29, 2023

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.

2 unchanged sentences

Credit Agreement

On May 17, 2018, the Company entered into a credit agreement (the “Credit Agreement”) which provided for borrowing availability of up to $ 80.0 million in revolving credit and associated swing line (the “Revolver”) and borrowing availability of up to $ 50.0 million in a delayed draw term loan (“DDTL”), for a total credit facility of $ 130.0 million.

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.

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

The interest rate applicable to the Revolver or DDTL was a fixed rate for a one-, two-, three- or six-month interest period equal to LIBOR (with a 1 % floor) for such interest period plus a margin of 225 to 300 basis points, based upon the Company’s rent adjusted leverage ratio.

The interest rate applicable to the Incremental DDTL was also a fixed rate over the aforementioned interest periods equal to LIBOR (with a 1 % floor) for such interest period plus a margin of 275 to 350 basis points.

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 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.

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

The 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 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;

The 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 Credit Agreement.

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

The First Amendment amends the 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;

1 unchanged sentence

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

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.

As of April 30, 2023 and for the three months then ended, the Company was in compliance with all financial and non-financial covenants contained within the Credit Agreement and the First Amendment.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

October 30, 2022

April 30, 2023

January 29, 2023

10 unchanged sentences

Level 1 – Quoted prices in active markets for identical assets or liabilities.

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;

2 unchanged sentences

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s assets and liabilities measured at fair value are categorized as Level 1 or Level 3 instruments.

The fair value of the Company’s money market account is obtained from real-time quotes for transactions in active exchange markets involving identical assets (Level 1).

The fair value of the Company’s available-for-sale security was valued based on a discounted cash flow method (Level 3), which incorporates the U.S.

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

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.

During fiscal 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 judgement and, therefore, cannot be determined with precision.

Changes in assumptions could significantly affect the estimates.

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:

October 30, 2022

The amortized cost and fair value of the Company’s money market account and available-for-sale security and the corresponding amount of gross unrealized gains and losses recognized in accumulated other comprehensive income are as follows:

April 30, 2023

(in thousands)

Level 1 security:

Money market funds

Level 3 security:

Corporate trust

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

January 29, 2023

1 unchanged sentence

Level 1 security:

Money market funds

Level 3 security:

Corporate trust

1 unchanged sentence

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 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.

No other-than-temporary impairment was recorded in the unaudited condensed consolidated statements of operations for the three months ended April 30, 2023 or May 1, 2022 .

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents future principal receipts related to the Company’s available-for-sale security by contractual maturity as of April 30, 2023.

(in thousands)

4 unchanged sentences

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

October 30, 2022

April 30, 2023

January 29, 2023

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 October 30, 2022 and January 30, 2022.

The Company has determined that it was the primary beneficiary of one variable interest entity (“VIE”) as of April 30, 2023 and January 29, 2023.

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

As the Company is the 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.

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 October 30, 2022 and January 30, 2022:

October 30, 2022

The condensed consolidated balance sheets include the following amounts as a result of the consolidation of TRI as of April 30, 2023 and January 29, 2023:

April 30, 2023

January 29, 2023

13 unchanged sentences

Three Months Ended

Nine Months Ended

October 30, 2022

October 31, 2021

October 30, 2022

October 31, 2021

April 30, 2023

(in thousands, except per share data)

Numerator - net income attributable to

Numerator - net loss attributable to

‎ controlling interest

3 unchanged sentences

Earnings per share (Class A and Class B)

The computation of diluted (loss) earnings per share excluded 0.3 million and 0.2 million shares of unvested restricted stock for the three months ended April 30, 2023 and May 1, 2022, respectively because their inclusion would be anti-dilutive due to a net loss.

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 $ 2.0 million for the three and nine months ended October 30, 2022, respectively.

Total stock compensation expense associated with restricted stock recognized by the Company was $ 1.0 million and $ 0.6 million for the three months ended April 30, 2023 and May 1, 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 nine months ended October 30, 2022 is as follows:

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

A summary of the activity in the Company’s unvested restricted stock during the three months ended April 30, 2023 is as follows:

Outstanding at January 29, 2023

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.

Outstanding at April 30, 2023

At April 30, 2023, the Company had unrecognized compensation expense of $ 10.9 million related to the restricted stock awards, which is expected to be recognized over a weighted average period of 2.9 years.

PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

October 30, 2022

April 30, 2023

January 29, 2023

13 unchanged sentences

Sales tax collected from customers and remitted to taxing authorities is excluded from revenue and is included in accrued expenses.

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Sales disaggregated based upon sales channel is presented below.

Three Months Ended

Nine Months Ended

October 30, 2022

October 31, 2021

October 30, 2022

October 31, 2021

April 30, 2023

(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:

October 30, 2022

April 30, 2023

January 29, 2023

6 unchanged sentences

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

April 30, 2023

(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 % and 26 % for the three and nine months ended October 30, 2022, respectively.

The effective tax rate related to controlling interest was 27 % and 25 % for the three months ended April 30, 2023 and May 1, 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.

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

RECENT ACCOUNTING PRONOUNCEMENTS

6 unchanged sentences

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.

The Company expects to adopt ASU 2016-13 on January 30, 2023, the first day of the Company’s first quarter for the fiscal year ending January 28, 2024, the Company’s fiscal year 2023.

The Company is evaluating the impact adopting ASU 2016-13 will have on the Company’s consolidated financial statements.

The Company adopted ASU 2016-13 on January 30, 2023, the first day of the Company’s first quarter for the fiscal year ending January 28, 2024, the Company’s fiscal year 2023.

The adoption of the standard did not have a material impact on the Company’s consolidated financial results.

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