What changed in this filing

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Item 1. Financial Statements

2023-12-01 compared with 2023-09-01 · 117 added, 106 removed, 445 unchanged (33% of the section changed)

3 unchanged sentences

(Amounts in thousands)

July 30, 2023

October 29, 2023

January 29, 2023

15 unchanged sentences

(Amounts in thousands)

July 30, 2023

October 29, 2023

January 29, 2023

6 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 July 30, 2023 and January 29, 2023

‎ issued or outstanding as of October 29, 2023 and January 29, 2023

Common stock (Class A), no par value;

10,000 shares authorized;

issued and outstanding as of July 30, 2023 and January 29, 2023

issued and outstanding as of October 29, 2023 and January 29, 2023

Common stock (Class B), no par value;

200,000 shares authorized;

31,371 shares issued and 31,217 shares outstanding as of July 30, 2023 and

31,264 shares issued and 31,110 shares outstanding as of October 29, 2023 and

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

Treasury stock, at cost;

154 and 112 shares as of July 30, 2023 and

154 and 112 shares as of October 29, 2023 and

‎ January 29, 2023, respectively

12 unchanged sentences

Three Months Ended

Six Months Ended

July 30, 2023

July 31, 2022

July 30, 2023

July 31, 2022

Nine Months Ended

October 29, 2023

October 30, 2022

October 29, 2023

October 30, 2022

Cost of goods sold (excluding depreciation and amortization)

Selling, general and administrative expenses

Operating (loss) income

Operating loss

Interest expense

Other income, net

(Loss) income before income taxes

Income tax (benefit) expense

Net (loss) income

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

Six Months Ended

July 30, 2023

July 31, 2022

July 30, 2023

July 31, 2022

Net (loss) income

Nine Months Ended

October 29, 2023

October 30, 2022

October 29, 2023

October 30, 2022

Other comprehensive income

3 unchanged sentences

Other comprehensive loss

Comprehensive (loss) income

Comprehensive loss

Comprehensive loss attributable to noncontrolling interest

Comprehensive (loss) income attributable

Comprehensive loss attributable

‎ to controlling interest

3 unchanged sentences

(Amounts in thousands)

Six Months Ended July 30, 2023

Nine Months Ended October 29, 2023

Noncontrolling

16 unchanged sentences

Other comprehensive loss

Net income (loss)

Balance at July 30, 2023

Issuance of common stock

Stock-based compensation

Restricted stock forfeitures

Restricted stock surrendered for taxes

Other comprehensive income

Balance at October 29, 2023

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

Nine Months Ended October 30, 2022

Noncontrolling

17 unchanged sentences

Balance at July 31, 2022

Issuance of common stock

Stock-based compensation

Restricted stock forfeitures

Restricted stock surrendered for taxes

Other comprehensive loss

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

July 30, 2023

July 31, 2022

Nine Months Ended

October 29, 2023

October 30, 2022

Cash flows from operating activities:

Net (loss) income

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

24 unchanged sentences

Payments of tax withholding on vested restricted shares

Net cash used in financing activities

Net cash provided by 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 2023 and fiscal 2022 represent the Company’s 13-week periods ended July 30, 2023 and July 31, 2022, respectively.

The accompanying condensed consolidated financial statements as of and for the three and six months ended July 30, 2023 and July 31, 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.

The three months of fiscal 2023 and fiscal 2022 represent the Company’s 13-week periods ended October 29, 2023 and October 30, 2022, respectively.

The accompanying condensed consolidated financial statements as of and for the three and nine months ended October 29, 2023 and October 30, 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 six months ended July 30, 2023 and July 31, 2022.

GAAP have been condensed or omitted pursuant to such SEC rules and regulations as of and for the three and nine months ended October 29, 2023 and October 30, 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 July 30, 2023 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 inventories below cost.

Inventory reserve for excess and obsolete items was $ 1.2 million as of July 30, 2023 and January 29, 2023.

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

As of October 29, 2023 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.

Due to the timing of the inventory counts, an insignificant retail inventory shrinkage reserve was outstanding as of July 30, 2023, compared to $ 0.6 million as of January 29, 2023.

DULUTH HOLDINGS INC.

2 unchanged sentences

Prepaid expenses and other assets consist of the following:

July 30, 2023

October 29, 2023

January 29, 2023

42 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

of Operations

July 30, 2023

July 31, 2022

July 30, 2023

July 31, 2022

October 29, 2023

October 30, 2022

October 29, 2023

October 30, 2022

(in thousands)

20 unchanged sentences

Other information related to leases were as follows:

Six Months Ended

July 30, 2023

July 31, 2022

Nine Months Ended

October 29, 2023

October 30, 2022

(in thousands)

11 unchanged sentences

Operating leases

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

Future minimum lease payments under the non-cancellable leases are as follows as of October 29, 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:

July 30, 2023

October 29, 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.

12 unchanged sentences

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

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

As of October 29, 2023 and for the nine months then ended, the Company was in compliance with all financial and non-financial covenants contained within the Credit Agreement and the First Amendment.

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

July 30, 2023

October 29, 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;

6 unchanged sentences

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

During the six months ended July 30, 2023, certain changes in the inputs did impact the fair value of the available-for-sale security.

During the nine months ended October 29, 2023, 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.

1 unchanged sentence

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:

July 30, 2023

October 29, 2023

(in thousands)

3 unchanged sentences

Corporate trust

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

January 29, 2023

6 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 30, 2023 or July 31, 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 July 30, 2023.

No other-than-temporary impairment was recorded in the unaudited condensed consolidated statements of operations for the nine months ended October 29, 2023 or October 30, 2022 .

The following table presents future principal receipts related to the Company’s available-for-sale security by contractual maturity as of October 29, 2023.

(in thousands)

4 unchanged sentences

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

July 30, 2023

October 29, 2023

January 29, 2023

9 unchanged sentences

(a) the power to direct the VIE activities that most significantly impact economic performance;

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 30, 2023 and January 29, 2023.

and (b) the obligation to absorb the VIE losses and the right to receive benefits that are significant to

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

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.

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

July 30, 2023

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

October 29, 2023

January 29, 2023

6 unchanged sentences

Total liabilities and shareholders'

(LOSS) EARNINGS PER SHARE

LOSS PER SHARE

Earnings per share is computed under the provisions of ASC 260 , Earnings Per Share .

4 unchanged sentences

Three Months Ended

Six Months Ended

July 30, 2023

July 31, 2022

July 30, 2023

July 31, 2022

Nine Months Ended

October 29, 2023

October 30, 2022

October 29, 2023

October 30, 2022

(in thousands, except per share data)

Numerator - net (loss) income attributable to

Numerator - net loss 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 and 0.4 million shares of unvested restricted stock for the three and six months ended July 30, 2023, respectively, because their inclusion would be anti-dilutive due to a net loss.

The computation of diluted (loss) earnings per share excluded ( 0.1 ) million 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.

Loss per share (Class A and Class B)

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The computation of diluted loss per share excluded 0.1 million and 0.5 million shares of unvested restricted stock for the three and nine months ended October 29, 2023, respectively, because their inclusion would be anti-dilutive due to a net loss.

The computation of diluted loss per share excluded ( 0.1 ) million and 0.2 million shares of unvested restricted stock for the three and nine months ended October 30, 2022, respectively, because the inclusion of dilutive potential common shares outstanding 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 $ 1.3 million and $ 2.3 million for the three and six months ended July 30, 2023, respectively.

Total stock compensation expense associated with restricted stock recognized by the Company was $ 1.0 million and $ 3.3 million for the three and nine months ended October 29, 2023, 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 29, 2023 is as follows:

Outstanding at January 29, 2023

Outstanding at October 29, 2023

At October 29, 2023, the Company had unrecognized compensation expense of $ 8.0 million related to the restricted stock awards, which is expected to be recognized over a weighted average period of 2.4 years.

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Outstanding at January 29, 2023

Outstanding at July 30, 2023

At July 30, 2023, the Company had unrecognized compensation expense of $ 10.0 million related to the restricted stock awards, which is expected to be recognized over a weighted average period of 2.6 years.

PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

July 30, 2023

October 29, 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

Six Months Ended

July 30, 2023

July 31, 2022

July 30, 2023

July 31, 2022

Nine Months Ended

October 29, 2023

October 30, 2022

October 29, 2023

October 30, 2022

(in thousands)

6 unchanged sentences

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

July 30, 2023

October 29, 2023

January 29, 2023

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 30, 2023

July 31, 2022

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

October 29, 2023

October 30, 2022

(in thousands)

4 unchanged sentences

Balance as of end of period

For the six months ended July 30, 2023, the Company has utilized the discrete effective tax rate method as allowed by Accounting Standards Codification ("ASC") 740-270-30-18, Income Taxes – Interim Reporting to calculate its interim tax provision.

The discrete method treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis.

The Company believes that, at this time, the use of this discrete method is more appropriate than the annual effective tax rate method.

The effective tax rate related to controlling interest was 22 % for the six months ended July 30, 2023 and 21 % for the six months ended July 31, 2022.

The provision for income taxes for the interim period is based on an estimate of the annual effective tax rate adjusted to reflect the impact of discrete items.

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 23 % and 26 % for the nine months ended October 29, 2023 and 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.

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

RECENT ACCOUNTING PRONOUNCEMENTS

9 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