What changed in this filing

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Item 1. Financial Statements

2024-12-06 compared with 2024-08-30 · 123 added, 91 removed, 487 unchanged (31% of the section changed)

3 unchanged sentences

(Amounts in thousands)

July 28, 2024

October 27, 2024

January 28, 2024

15 unchanged sentences

(Amounts in thousands)

July 28, 2024

October 27, 2024

January 28, 2024

11 unchanged sentences

TRI long-term debt, less current maturities

Deferred tax liabilities

Total liabilities

2 unchanged sentences

10,000 shares authorized;

‎ issued or outstanding as of July 28, 2024 and January 28, 2024

‎ issued or outstanding as of October 27, 2024 and January 28, 2024

Common stock (Class A), no par value;

10,000 shares authorized;

issued and outstanding as of July 28, 2024 and January 28, 2024

issued and outstanding as of October 27, 2024 and January 28, 2024

Common stock (Class B), no par value;

200,000 shares authorized;

31,979 shares issued and 31,715 shares outstanding as of July 28, 2024 and

32,072 shares issued and 31,807 shares outstanding as of October 27, 2024 and

31,178 shares issued and 31,023 shares outstanding as of January 28, 2024

Treasury stock, at cost;

264 and 155 shares as of July 28, 2024 and

265 and 155 shares as of October 27, 2024 and

‎ January 28, 2024, respectively

11 unchanged sentences

Three Months Ended

Six Months Ended

July 28, 2024

July 30, 2023

July 28, 2024

July 30, 2023

Nine Months Ended

October 27, 2024

October 29, 2023

October 27, 2024

October 29, 2023

Cost of goods sold (excluding depreciation and amortization)

5 unchanged sentences

Loss before income taxes

Income tax benefit

Income tax expense (benefit)

Net income (loss) attributable to noncontrolling interest

11 unchanged sentences

Three Months Ended

Six Months Ended

July 28, 2024

July 30, 2023

July 28, 2024

July 30, 2023

Nine Months Ended

October 27, 2024

October 29, 2023

October 27, 2024

October 29, 2023

Other comprehensive loss

11 unchanged sentences

(Amounts in thousands)

Six Months Ended July 28, 2024

Nine Months Ended October 27, 2024

Noncontrolling

19 unchanged sentences

Balance at July 28, 2024

Issuance of common stock

Stock-based compensation

Restricted stock forfeitures

Restricted stock surrendered for taxes

Other comprehensive income

Net (loss) income

Balance at October 27, 2024

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

Nine Months Ended October 29, 2023

Noncontrolling

16 unchanged sentences

Balance at July 30, 2023

Issuance of common stock

Stock-based compensation

Restricted stock forfeitures

Restricted stock surrendered for taxes

Other comprehensive loss

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 28, 2024

July 30, 2023

Nine Months Ended

October 27, 2024

October 29, 2023

Cash flows from operating activities:

18 unchanged sentences

Cash flows from financing activities:

Proceeds from line of credit

Payments on line of credit

Net borrowings on line of credit

Payments on TRI long term debt

1 unchanged sentence

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 2023 was a 52-week period and ended on January 28, 2024.

The three months of fiscal 2024 and fiscal 2023 represent the Company’s 13-week periods ended July 28, 2024 and July 30, 2023, respectively.

The accompanying condensed consolidated financial statements as of and for the three and six months ended July 28, 2024 and July 30, 2023 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 2024 and fiscal 2023 represent the Company’s 13-week periods ended October 27, 2024 and October 29, 2023, respectively.

The accompanying condensed consolidated financial statements as of and for the three and nine months ended October 27, 2024 and October 29, 2023 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 28, 2024 and July 30, 2023.

GAAP have been condensed or omitted pursuant to such SEC rules and regulations as of and for the three and nine months ended October 27, 2024 and October 29, 2023.

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 28, 2024.

1 unchanged sentence

The Company records an inventory reserve for the anticipated loss associated with selling inventories below cost.

Inventory reserve for excess and obsolete items was $ 1.0 million and $ 1.4 million as of July 28, 2024 and January 28, 2024, respectively.

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

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

Due to the timing of the inventory counts, an insignificant retail inventory shrinkage reserve was outstanding as of July 28, 2024, compared to $ 0.5 million as of January 28, 2024.

Inventory reserve for excess and obsolete items was $ 1.6 million and $ 1.4 million as of October 27, 2024 and January 28, 2024, respectively.

DULUTH HOLDINGS INC.

2 unchanged sentences

Prepaid expenses and other assets consist of the following:

July 28, 2024

October 27, 2024

January 28, 2024

37 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

of Operations

July 28, 2024

July 30, 2023

July 28, 2024

July 30, 2023

October 27, 2024

October 29, 2023

October 27, 2024

October 29, 2023

(in thousands)

20 unchanged sentences

Other information related to leases were as follows:

Six Months Ended

July 28, 2024

July 30, 2023

Nine Months Ended

October 27, 2024

October 29, 2023

(in thousands)

11 unchanged sentences

Operating leases

Future minimum lease payments under the non-cancellable leases are as follows as of July 28, 2024:

Future minimum lease payments under the non-cancellable leases are as follows as of October 27, 2024:

(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 28, 2024

October 27, 2024

January 28, 2024

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 28, 2024 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 27, 2024 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.

2 unchanged sentences

Accrued expenses and other current liabilities consist of the following:

July 28, 2024

October 27, 2024

January 28, 2024

18 unchanged sentences

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

During the six months ended July 28, 2024, certain changes in the inputs did impact the fair value of the available-for-sale security.

During the nine months ended October 27, 2024, 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 28, 2024

October 27, 2024

(in thousands)

13 unchanged sentences

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

No other-than-temporary impairment was recorded in the unaudited condensed consolidated statements of operations for the three months ended July 28, 2024 or July 30, 2023 .

The following table presents future principal receipts related to the Company’s available-for-sale security by contractual maturity as of July 28, 2024.

No other-than-temporary impairment was recorded in the unaudited condensed consolidated statements of operations for the three months ended October 27, 2024 or October 29, 2023 .

The following table presents future principal receipts related to the Company’s available-for-sale security by contractual maturity as of October 27, 2024.

(in thousands)

4 unchanged sentences

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

July 28, 2024

October 27, 2024

January 28, 2024

12 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Company has determined that it was the primary beneficiary of one VIE as of July 28, 2024 and January 28, 2024.

The Company has determined that it was the primary beneficiary of one VIE as of October 27, 2024 and January 28, 2024.

The Company leases the Company’s headquarters in Mt.

5 unchanged sentences

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

The condensed consolidated balance sheets include the following amounts as a result of the consolidation of TRI as of July 28, 2024 and January 28, 2024:

July 28, 2024

The condensed consolidated balance sheets include the following amounts as a result of the consolidation of TRI as of October 27, 2024 and January 28, 2024:

October 27, 2024

January 28, 2024

13 unchanged sentences

Three Months Ended

Six Months Ended

July 28, 2024

July 30, 2023

July 28, 2024

July 30, 2023

Nine Months Ended

October 27, 2024

October 29, 2023

October 27, 2024

October 29, 2023

(in thousands, except per share data)

5 unchanged sentences

Loss per share (Class A and Class B)

The computation of diluted loss per share excluded ( 0.4 ) million and ( 0.2 ) million of unvested restricted stock for the three months ended July 28, 2024 and July 30, 2023, because their inclusion would be anti-dilutive due to a net loss.

The computation of diluted loss per share excluded ( 0.0 ) million and ( 0.1 ) million of unvested restricted stock for the six months ended July 28, 2024 and July 30, 2023, because their inclusion would be anti-dilutive due to a net loss.

The computation of diluted loss per share excluded ( 0.3 ) million and 0.1 million of unvested restricted stock for the three months ended October 27, 2024 and October 29, 2023, because their inclusion would be anti-dilutive due to a net loss.

The computation of diluted loss per share excluded 0.0 million and 0.5 million of unvested restricted stock for the nine months ended October 27, 2024 and October 29, 2023, because their inclusion would be anti-dilutive due to a net loss.

DULUTH HOLDINGS INC.

2 unchanged sentences

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 $ 1.0 million and $ 2.4 million for the three and six months ended July 28, 2024, respectively.

Total stock compensation expense associated with restricted stock recognized by the Company was $ 1.0 million and $ 3.4 million for the three and nine months ended October 27, 2024, 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 28, 2024 is as follows:

A summary of the activity in the Company’s unvested restricted stock during the nine months ended October 27, 2024 is as follows:

Outstanding at January 28, 2024

Outstanding at July 28, 2024

At July 28, 2024, the Company had unrecognized compensation expense of $ 7.6 million related to the restricted stock awards, which is expected to be recognized over a weighted average period of 2.9 years.

Outstanding at October 27, 2024

At October 27, 2024, the Company had unrecognized compensation expense of $ 6.8 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 28, 2024

October 27, 2024

January 28, 2024

18 unchanged sentences

Three Months Ended

Six Months Ended

July 28, 2024

July 30, 2023

July 28, 2024

July 30, 2023

Nine Months Ended

October 27, 2024

October 29, 2023

October 27, 2024

October 29, 2023

(in thousands)

6 unchanged sentences

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

July 28, 2024

October 27, 2024

January 28, 2024

5 unchanged sentences

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

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

July 28, 2024

July 30, 2023

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

October 27, 2024

October 29, 2023

(in thousands)

4 unchanged sentences

Balance as of end of period

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 21 % and 22 % for the six months ended July 28, 2024 and July 30, 2023, 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.

The Company’s provision for income taxes during the interim reporting periods has historically been calculated by applying an estimate of the annual effective tax rate for the full year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period.

The effective tax rate related to controlling interest was ( 4.2 %) and 23 % for the nine months ended October 27, 2024 and October 29, 2023, 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 tax.

The effective tax rate fluctuated significantly year over year primarily as a result of the Company recording a valuation allowance on its deferred tax assets as of October 27, 2024.

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Company regularly assesses the realizability of deferred tax assets and under the asset and liability method prescribed under ASC 740, Income Taxes , the Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The realizability of deferred tax assets is assessed throughout the year and a valuation allowance is recorded, if necessary, to reduce net deferred tax assets to the amount more likely than not to be realized.

The Company considers all available evidence, both positive and negative, to determine the realizability of deferred tax assets and includes historical information about results of operations for the current and preceding years as well as more subjective information about future years.

In conducting this assessment, a significant piece of objective negative evidence evaluated by management was a cumulative loss over the most recent 36-month period ended October 27, 2024, which was not outweighed by available positive evidence and which limited the Company’s ability to give weight to projections of future growth for purposes of this assessment.

Accordingly, as of October 27, 2024, a valuation allowance of $ 10.1 million was provided against the net amount of deferred tax assets.

The amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.

As of January 28, 2024, there was no valuation allowance for deferred tax assets.

RESTRUCTURING

1 unchanged sentence

This was initiated in the second quarter of 2024 and is expected to continue beyond this fiscal year as we implement further structural changes.

On July 12, 2024 (the “Effective Date”), as a result of the phase two analysis of the fulfillment center network, the Company voluntarily entered into a lease amendment for one of its legacy fulfillment center leases in Dubuque, Iowa.

On July 12, 2024, as a result of the phase two analysis of the fulfillment center network, the Company voluntarily entered into a lease amendment for one of its legacy fulfillment center leases in Dubuque, Iowa.

The amended lease accelerated the lease expiration date from September 30, 2030 to October 27, 2024 .

The amended lease requires Duluth to pay an aggregate of $ 3.7 million (the “Termination Penalty”) in consideration of accelerating the lease termination date, which will be paid in four equal quarterly installments from October 2024 through August 2025.

The Company is amortizing the loss from the Termination Penalty, as well as the net loss from writing off the right-of-use asset and lease liability over the modified remaining lease term.

In addition, the Company is accelerating the depreciation of the non-transferrable fixed assets to have no remaining net book value by the modified lease expiration date.

The Company expects to recognize total restructuring expenses related to this lease amendment of $ 7.4 million during the second and third quarter of 2024.

During the three months ended July 28, 2024, the Company recognized restructuring charges of $ 1.6 million.

The Company amortized the loss from the Termination Penalty, as well as the net loss from writing off the right-of-use asset and lease liability over the modified remaining lease term.

In addition, the Company accelerated the depreciation of the non-transferrable fixed assets to have no remaining net book value as of the modified lease expiration date.

During the three and nine months ended October 27, 2024, the Company recognized restructuring charges of $ 6.2 million and $ 7.7 million, respectively.

Three Months Ended

July 28, 2024

Nine Months Ended

October 27, 2024

(in thousands)

2 unchanged sentences

Accelerated depreciation expense

Employee termination benefit expense

Other restructuring expense

Total restructuring expenses

2 unchanged sentences

As a result of the review, the Company determined that sales in a state were subject to certain local sales tax and that the Company had not sufficiently assessed such sales tax on sales to customers in prior fiscal years.

DULUTH HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Company concluded that some payment to the state is probable.

As of July 28, 2024, the Company recorded an estimated sales tax expense accrual of $ 2.4 million that is reflected in Selling, general and administrative expenses within the Consolidated Statements of Operations.

As of October 27, 2024, the Company recorded an estimated sales tax expense accrual of $ 2.4 million that is reflected in Selling, general and administrative expenses within the Consolidated Statements of Operations.

DULUTH HOLDINGS INC.

11 unchanged sentences

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.

Recent Accounting Pronouncements Not Yet Adopted

4 unchanged sentences

In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements.

The new guidance is effective for public companies with annual periods beginning after December 15, 2023, and interim periods within annual period beginning after December 15, 2024, with early adoption permitted.

Management is currently evaluating the effects adoption of this guidance will have on its consolidated financial statements.

The new guidance is effective for public companies with annual periods beginning after December 15, 2023, and interim periods within an annual period beginning after December 15, 2024, with early adoption permitted.

Management is currently evaluating the effects this guidance will have on its consolidated financial statements.

Income Taxes – Improvements to Income Tax Disclosures

3 unchanged sentences

This new guidance will be effective for annual periods beginning after December 15, 2024, and early adoption is permitted.

Management is currently evaluating the effects adoption of this guidance will have on its consolidated financial statements.

Management is currently evaluating the effects this guidance will have on its consolidated financial statements.

Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures

In November 2024, the FASB issued ASU No.

2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures.” This ASU requires that each interim and annual reporting period an entity disclose more information about the components of certain expense captions that is currently disclosed in the financial statements.

This update is effective for annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

Management is currently evaluating the effects this guidance will have on its consolidated financial statements.

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