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Item 8. Financial Statements and Supplementary Data

2025-03-24 compared with 2024-03-22 · 135 added, 135 removed, 671 unchanged (29% of the section changed)

2 unchanged sentences

Report of Independent Registered Public Accounting Firm ( KPMG LLP , PCAOB ID No.

Consolidated Balance Sheets as of January 28, 2024 and January 29, 202 3

Consolidated Statements of Operations for Fiscal Years Ended January 28, 2024 and January 29, 202 3

Consolidated Statements of Comprehensive Income for Fiscal Years Ended January 28, 2024 and January 29, 202 3

Consolidated Statements of Shareholders’ Equity for Fiscal Years Ended January 28, 2024 and January 29, 202 3

Consolidated Statements of Cash Flows for Fiscal Years Ended January 28, 2024 and January 29, 202 3

Consolidated Balance Sheets as of February 2, 2025 and January 28, 202 4

Consolidated Statements of Operations for Fiscal Years Ended February 2, 2025 and January 28, 202 4

Consolidated Statements of Comprehensive Income for Fiscal Years Ended February 2, 2025 and January 28, 202 4

Consolidated Statements of Shareholders’ Equity for Fiscal Years Ended February 2, 2025 and January 28, 202 4

Consolidated Statements of Cash Flows for Fiscal Years Ended February 2, 2025 and January 28, 202 4

Notes to Consolidated Financial Statements

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of Duluth Holdings Inc.

(the Company) as of January 28, 2024 and January 29, 2023, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for the years then ended, and the related notes and financial statement schedule II - Valuation and Qualifying Accounts (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 28, 2024 and January 29, 2023, and the results of its operations and its cash flows for each of the years then ended, in conformity with U.S.

and subsidiaries (the Company) as of February 2, 2025 and January 28, 2024 , the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for the years then ended, and the related notes and financial statement schedule II - Valuation and Qualifying Accounts (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of February 2, 2025 and January 28, 2024, and the results of its operations and its cash flows for each of the years then ended, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 28, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 22, 2024 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

1 unchanged sentence

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

10 unchanged sentences

Product return reserve

As discussed in Note 5 to the consolidated financial statements, as of January 28, 2024 the Company recorded $5,541 thousand in reserves for product returns within accrued expenses and other current liabilities.

As discussed in Note 5 to the consolidated financial statements, as of February 2, 2025 the Company recorded $4,568 thousand in reserves for product returns within accrued expenses and other current liabilities.

Management estimates the product return reserve using its own historical sales and product return information.

We identified the assessment of the product return reserve as a critical audit matter.

A high degree of auditor judgment was required to assess whether the historical return rate used to estimate the reserve for product returns is indicative of future returns.

A high degree of auditor judgement was required to assess whether the historical return rate used to estimate the reserve for product returns is indicative of future returns.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the product return reserve.

This included controls

related to determining the historical return rate used to estimate product returns.

We evaluated and tested the design and implementation of certain internal controls related to the product return reserve.

This included controls related to determining the historical return rate used to estimate product returns.

We assessed the Company’s ability to accurately estimate the product return rate by comparing prior period estimates to actual product return rates experienced.

3 unchanged sentences

March 21, 2025

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

DULUTH HOLDINGS INC.

Opinion on Internal Control Over Financial Reporting

We have audited Duluth Holdings, Inc.’s (the Company) internal control over financial reporting as of January 28, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, because of the effect of the material weakness, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of January 28, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 28, 2024 and January 29, 2023, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for the years then ended, and the related notes and financial statement schedule II – Valuation and Qualifying Accounts (collectively, the consolidated financial statements), and our report dated March 22, 2024 expressed an unqualified opinion on those consolidated financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

A material weakness related to the mapping of general ledger accounts to the consolidated financial statements has been identified and included in management’s assessment.

The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the January 28, 2024 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Milwaukee, Wisconsin

March 22, 2024

DULUTH HOLDINGS INC.

Consolidated Balance Sheets

(Amounts in thousands)

January 28, 2024

February 2, 2025

January 28, 2024

10 unchanged sentences

Other assets, net

Deferred tax asset

Deferred tax assets

LIABILITIES AND SHAREHOLDERS' EQUITY

15 unchanged sentences

10,000 shares authorized;

‎ issued or outstanding as of January 28, 2024 and January 29, 2023

‎ issued or outstanding as of February 2, 2025 and January 28, 2024

Common stock (Class A), no par value;

10,000 shares authorized;

‎ 3,364 shares issued and outstanding as of January 28, 2024 and

‎ 3,364 shares issued and outstanding as of February 2, 2025 and

‎ January 28, 2024

1 unchanged sentence

200,000 shares authorized;

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

‎ 32,077 shares issued and 31,813 shares outstanding as of February 2, 2025 and

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

Treasury stock, at cost;

155 and 112 shares as of January 28, 2024 and

264 and 155 shares as of February 2, 2025 and

‎ January 28, 2024, respectively

11 unchanged sentences

Fiscal Year Ended

January 28, 2024

February 2, 2025

January 28, 2024

1 unchanged sentence

Selling, general and administrative expenses

Operating (loss) income

Restructuring expense

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 expense (benefit)

Net income (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):

1 unchanged sentence

‎ common stock outstanding

Net (loss) income per share attributable

Net loss per share attributable

‎ to controlling interest

2 unchanged sentences

‎ equivalents outstanding

Net (loss) income per share attributable

Net loss per share attributable

‎ to controlling interest

4 unchanged sentences

Fiscal Year Ended

January 28, 2024

February 2, 2025

January 28, 2024

Net (loss) income

Other comprehensive (loss) income

Other comprehensive loss

Securities available-for-sale:

2 unchanged sentences

Other comprehensive loss

Comprehensive (loss) income

Comprehensive loss

Comprehensive income (loss) attributable

‎ to noncontrolling interest

Comprehensive (loss) income attributable

Comprehensive loss attributable

‎ to controlling interest

13 unchanged sentences

Restricted stock surrendered

Changes in the TRI Holdings, LLC Consolidation

Other comprehensive loss

Net income (loss)

Balance at January 28, 2024

6 unchanged sentences

Net (loss) income

Balance at January 28, 2024

Balance at February 2, 2025

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

3 unchanged sentences

Fiscal Year Ended

January 28, 2024

February 2, 2025

January 28, 2024

Cash flows from operating activities:

Net (loss) income

Adjustments to reconcile net income to net cash provided

8 unchanged sentences

Software hosting implementation costs, net

Deferred catalog costs

Trade accounts payable

2 unchanged sentences

Noncash lease impacts

Net cash provided by (used in) operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities:

6 unchanged sentences

Proceeds from line of credit

Payments on line of credit

Proceeds from long term debt

Payments on long term debt

Payment on line of credit

Payments on TRI long term debt

19 unchanged sentences

In 2010, the Company initiated its omnichannel platform with the opening of its first store.

Since then, Duluth Trading has expanded its retail presence, and as of January 28 , 2024, the Company operated 62 retail stores and three outlet stores.

Since then, Duluth Trading has expanded its retail presence, and as of February 2, 2025, the Company operated 62 retail stores and three outlet stores.

The Company identifies its operating segments according to how its business activities are managed and evaluated.

13 unchanged sentences

The Company’s fiscal year ends on the Sunday nearest to January 31 of the following year.

Fiscal 2023 and Fiscal 2022 ended on January 28, 2024 and January 29, 2023, respectively.

Fiscal 2023 and Fiscal 2022 were each a 52-week period.

Fiscal 2024 and Fiscal 2023 ended on February 2, 2025 and January 28, 2024, respectively.

Fiscal 2024 was a 53-week period and Fiscal 2023 was a 52-week period.

Seasonality of Business

2 unchanged sentences

Revision of Prior Period Financial Information

The Company has revised its Consolidated Balance Sheet as of January 29, 2023 and related notes included herein to correct immaterial classification errors in Property and equipment, Prepaid expenses and Finance lease right-of-use assets, net.

Revisions have been reflected in the Consolidated Balance Sheet as of January 29, 2023 to increase Property and equipment by $ 8.2 million and decrease Prepaid expenses and Finance lease right-of-use assets, net by $ 4.2 million and $ 4.0 million, respectively.

The Company also revised the fiscal 2022 Consolidated Statement of Cash Flows to decrease cash flows used in operating activities by $ 4.2 million and increase cash flows used in investing activities by $ 4.2 million.

There were no changes to previously reported net income, total assets, or shareholders’ equity.

During fiscal 2024, management identified inaccuracies in the collection of local sales tax transactions within certain states.

Accordingly, the Company has revised its consolidated financial statements and related notes to increase Accrued expenses by $ 3.2 million and Deferred tax assets by $ 0.8 million as of January 28, 2024, and to increase Selling, general and administrative expenses by $ 0.7 million and income tax benefit by $ 0.2 million for the year ended January 28, 2024.

The cumulative errors related to periods prior to fiscal 2023 resulted in a decrease to Retained earnings by $ 2.4 million as of the beginning of fiscal 2023.

The Company has determined that the errors were immaterial to all impacted periods and has corrected the impacted periods as an immaterial correction of an error.

The Company also revised the fiscal 2024 quarterly consolidated financial statements to correct the impact of the errors on the respective periods.

DULUTH HOLDINGS INC.

30 unchanged sentences

Freight from the Company's fulfillment centers to its stores

Advertising expenses including:

Marketing expenses including:

digital, television, and social media advertising;

1 unchanged sentence

and print advertising costs

Freight associated with shipping product to customers

Consulting and professional fees

Logistical costs associated with shipping product to customers

Consulting and software expenses and professional services fees

Advertising and Catalog Expenses

22 unchanged sentences

The Company considers short-term investments with original maturities of three months or less when purchased to be cash equivalents.

As of January 29, 2023, Cash and cash equivalents consisted of cash, amounts receivable from credit card issuers and money market funds.

As of February 2, 2025, Cash and cash equivalents consisted of cash, amounts receivable from credit card issuers and money market funds.

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.

1 unchanged sentence

The Company’s principal supplier of inventory accounted for 43 % and 59 % of total inventory expenditures in fiscal 2024 and fiscal 2023, respectively.

The Company also had a second supplier that accounted for 10 % and 11 % of total inventory expenditures in fiscal 2023 and fiscal 2022, respectively.

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, obsolete items and shrinkage was $ 1.4 million and $ 1.8 million as of January 28, 2024 and January 29, 2023, respectively.

Inventory reserve for excess, obsolete items and shrinkage was $ 2.1 million and $ 1.4 million as of February 2, 2025 and January 28, 2024, respectively.

DULUTH HOLDINGS INC.

2 unchanged sentences

Property and equipment consist of the following:

January 28, 2024

February 2, 2025

January 28, 2024

22 unchanged sentences

Prepaid expenses and other assets consist of the following:

January 28, 2024

February 2, 2025

January 28, 2024

20 unchanged sentences

Indicators such as unexpected adverse business conditions, economic factors, competitive activities, loss of key personnel and acts by governments may signal that an asset has become impaired.

Management performed its annual qualitative assessment of goodwill as of December 31, 2023 and 2022, which included assessed factors such as macroeconomic conditions, industry and market considerations, cost factors and overall financial performance and determined that it was more likely than not that the fair value of the Company was greater than its carrying amount;

as such, no further evaluation of goodwill was deemed necessary.

No impairment was recognized for the years ended January 28, 2024 or January 29, 2023.

Management performed its annual qualitative assessment of goodwill as of December 31, 2024 and 2023, which included assessing factors such as macroeconomic conditions, industry and market considerations, cost factors and overall financial performance.

The next step after the qualitative assessment failed was estimating the fair value of the reporting unit, which management used the market valuation approach.

Through the annual assessment, management determined the carrying amount of the Goodwill exceeded its value.

Thus, the Company recognized a full impairment for the year ended February 2, 2025.

Intangible Assets and Other Assets

2 unchanged sentences

Amortization expense was $ 0.2 million for fiscal 2024 and fiscal 2023.

Accumulated amortization was $ 1.0 million and $ 0.8 million as of January 28, 2024 and January 29, 2023, respectively.

Accumulated amortization was $ 1.2 million and $ 1.0 million as of February 2, 2025 and January 28, 2024, respectively.

DULUTH HOLDINGS INC.

Notes to Consolidated Financial Statements

Scheduled future amortization of amortizable other assets is as follows as of January 28, 2024:

Scheduled future amortization of amortizable other assets is as follows as of February 2, 2025:

(in thousands)

3 unchanged sentences

Such analyses necessarily involve judgment.

For fiscal 2023, management did not identify any events or changes in circumstances that indicated the potential impairment of long-lived assets.

For fiscal 2024, management identified a triggering event for two stores within the annual impairment test.

Management determined expected undiscounted cash flows were greater than the carrying value and therefore, no impairment was recorded.

Store Pre-opening Costs

2 unchanged sentences

In connection with the IPO, the Company adopted the 2015 Equity Incentive Plan of Duluth Holdings Inc.

There are awards outstanding under the 2015 plan, but we do not grant new awards under the plan.

We have adopted the 2024 Equity Incentive Plan of Duluth Holdings Inc.

(“2024 Plan”), which provides compensation alternatives such as stock options, shares, restricted stock, restricted stock units, deferred stock and performance share units, using or based on the Company’s Class B common stock.

1 unchanged sentence

Restricted stock issued to board members generally vests over a period of one year .

Restricted stock issued to key employees and executives typically vests over a period of three years to five years based on the terms for each individual award.

Restricted stock issued to key employees and executives typically vests over a period of three years to four years based on the terms for each individual award.

The fair value of the restricted stock is determined based on the market value of the Company’s Class B common stock on the grant date.

3 unchanged sentences

Notes to Consolidated Financial Statements

The following is a summary of the activity in the Company’s unvested restricted stock during the years ended January 28, 2024 and January 29, 2023:

The following is a summary of the activity in the Company’s unvested restricted stock during the years ended February 2, 2025 and January 28, 2024:

Weighted average

1 unchanged sentence

Outstanding at January 28, 2024

At January 28, 2024, the Company had unrecognized compensation expense of $ 6.4 million related to the restricted stock awards, which is expected to be recognized over a weighted average period of 2.3 years.

Outstanding at February 2, 2025

At February 2, 2025, the Company had unrecognized compensation expense of $ 5.8 million related to the restricted stock awards, which is expected to be recognized over a weighted average period of 2.5 years.

Treasury Stock

24 unchanged sentences

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

January 28, 2024

February 2, 2025

(in thousands)

12 unchanged sentences

No other-than-temporary impairment was recorded in the Consolidated Statements of Operations in fiscal 2024 or fiscal 2023 .

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

The following table presents the future receipts related to the Company’s available-for-sale security by contractual maturity as of February 2, 2025.

(in thousands)

4 unchanged sentences

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

January 28, 2024

February 2, 2025

January 28, 2024

23 unchanged sentences

Consolidated Statement of Operations

January 28, 2024

February 2, 2025

January 28, 2024

17 unchanged sentences

Other information related to leases were as follows:

January 28, 2024

February 2, 2025

January 28, 2024

12 unchanged sentences

Operating leases

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

Future minimum lease payments under the non-cancellable leases are as follows as of February 2, 2025 :

(in thousands)

7 unchanged sentences

Debt consists of the following:

January 28, 2024

February 2, 2025

January 28, 2024

10 unchanged sentences

While the above notes are consolidated in accordance with ASC Topic 810, Consolidation , the Company is not the guarantor nor the obligor of these notes.

Future principal maturities of all TRI debt, excluding unamortized financing fees of $ 1.0 million associated with the TRI debt are as follows as of February 2, 2025:

(in thousands)

Credit Agreement

9 unchanged sentences

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

As of January 28, 2024, and for the fiscal year then ended, the Company was in compliance with all financial and non-financial covenants in the Credit Agreement.

Future principal maturities of all TRI debt, excluding unamortized financing fees of $ 1.1 million associated with the TRI debt are as follows as of January 28, 2024:

(in thousands)

DULUTH HOLDINGS INC.

Notes to Consolidated Financial Statements

On January 31, 2025, the Company entered into the Second Amendment to the Credit Agreement (the “Second Amendment”), which was treated as an extinguishment for accounting purposes.

The Second Amendment amends the Credit Agreement in order to (i) decrease the revolving commitment from $ 200.0 million to $ 100.0 million (ii) revise the definition of “Applicable Rate” to provide for pricing terms in the event of a Rent Adjusted Leverage Ratio greater than or equal to 3.50 :1.0;

(iii) limit the exceptions to the prohibition on restricted payments to (a) making dividends or distributions by any subsidiary to the Company, and (b) the acquisition of equity interests in satisfaction of tax withholding obligations associated with restricted stock or awards under employee incentive plans;

and (iv) provide that the Maximum Rent Adjusted Leverage Ratio and the Minimum Fixed Charge Coverage Ratio will be measured commencing on the fiscal quarter ending May 2, 2021 and measured quarterly thereafter as of the last day of each fiscal quarter of the Company (other than for the fiscal quarter ending February 2, 2025).

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

January 28, 2024

February 2, 2025

January 28, 2024

11 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 VIE as of January 28, 2024 and January 29, 2023.

The Company has determined that it was the primary beneficiary of one VIE as of February 2, 2025 and January 28, 2024.

The Company leases the Company’s headquarters in Mt.

7 unchanged sentences

Notes to Consolidated Financial Statements

The Consolidated Balance Sheets include the following amounts as a result of the consolidation of TRI as of January 28, 2024 and January 29, 2023.

January 28, 2024

The Consolidated Balance Sheets include the following amounts as a result of the consolidation of TRI as of February 2, 2025 and January 28, 2024.

February 2, 2025

January 28, 2024

14 unchanged sentences

Fiscal Year Ended

January 28, 2024

February 2, 2025

January 28, 2024

4 unchanged sentences

Earnings per share (Class A and Class B)

The computation of diluted loss per share excluded 0.4 million shares of unvested restricted stock for the fiscal year ended January 28, 2024, respectively, because their inclusion would be anti-dilutive due to a net loss.

The computation of diluted loss per share excluded 0.1 million shares of unvested restricted stock for the fiscal year ended February 2, 2025 , respectively, because their inclusion would be anti-dilutive due to a net loss.

The Company’s revenue primarily consists of the sale of apparel, footwear and hard goods.

4 unchanged sentences

Sales disaggregated based upon sales channel is presented below.

January 28, 2024

February 2, 2025

January 28, 2024

4 unchanged sentences

Contract Assets and Liabilities

The Company’s contract assets primarily consist of the right of return for amounts of inventory to be returned that is expected to be resold and is recorded in Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets.

The Company’s contract assets primarily consist of the right of return for amounts of inventory to be returned that are expected to be resold and are recorded in Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets.

The Company’s contract liabilities primarily consist of gift card liabilities and are recorded upon issuance in Accrued expenses and other current liabilities under deferred revenue (see Note 5 “Accrued Expenses and Other Current Liabilities”) on the Company’s Consolidated Balance Sheets.

1 unchanged sentence

Contract assets and liabilities on the Company’s Consolidated Balance Sheets are presented in the following table:

January 28, 2024

February 2, 2025

January 28, 2024

6 unchanged sentences

The following table provides the reconciliation of the contract liability related to gift cards:

January 28, 2024

February 2, 2025

January 28, 2024

7 unchanged sentences

Fiscal Year Ended

January 28, 2024

February 2, 2025

January 28, 2024

2 unchanged sentences

The tax effects of unrealized gains and losses on securities are components of other comprehensive income and therefore excluded from deferred tax expense.

Realization of the deferred tax asset over time is dependent upon the Company generating sufficient taxable earnings in future periods.

In making the determination that the realization of the deferred tax was more likely than not, the Company considered several factors including its recent earnings history, its expected earnings in the future, and appropriate tax planning

DULUTH HOLDINGS INC.

Notes to Consolidated Financial Statements

The Company believes it will be able to fully utilize its established deferred tax assets and therefore no valuation allowance has been established as of January 28, 2024 and January 29, 2023 .

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 February 2, 2025, a valuation allowance of $ 11.8 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.

The reconciliation of income tax expense to the amount computed at the federal statutory rate was as follows:

Fiscal Year Ended

January 28, 2024

February 2, 2025

January 28, 2024

6 unchanged sentences

Adjustments to uncertain tax positions

Valuation allowance

Total income tax expense

2 unchanged sentences

Significant components of deferred tax assets and liabilities were as follows:

January 28, 2024

February 2, 2025

January 28, 2024

3 unchanged sentences

Uniform inventory capitalization

Goodwill and intangibles

Unrealized loss on investment

4 unchanged sentences

Business Interest limitation

Sales tax accrual

Unrecognized tax benefits

2 unchanged sentences

Federal and state NOL

Gross deferred tax assets

Valuation allowance

Total deferred tax assets

DULUTH HOLDINGS INC.

Notes to Consolidated Financial Statements

Deferred tax liabilities:

6 unchanged sentences

Net deferred tax assets (liabilities)

As of January 28, 2024, we had state net operating losses (“NOL”) of approximately $ 7.6 million, with deferred tax assets of $ 0.3 million related to these state NOLs.

These state net operating loss carryforwards expire at various intervals from 2029 through 2044.

As of February 2, 2025, we had state net operating losses (“NOL”) of approximately $ 23.2 million, with deferred tax assets of $ 1.2 million related to these state NOLs.

These state net operating loss carryforwards expire at various periods beginning in 2029.

The federal NOL is approximately $ 30.1 million, with deferred tax asset of $ 6.3 million related to the federal NOL.

1 unchanged sentence

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

January 28, 2024

February 2, 2025

January 28, 2024

(in thousands)

DULUTH HOLDINGS INC.

Notes to Consolidated Financial Statements

Balance beginning of year

3 unchanged sentences

Balance at end of year

If recognized, $ 0.1 million of the Company’s unrecognized tax benefits as of January 28, 2024, would affect the Company’s effective tax rate.

If recognized, $ 0.1 million of the Company’s unrecognized tax benefits as of February 2, 2025, would affect the Company’s effective tax rate.

The Company does not anticipate that there will be a material change in the balance of the unrecognized tax benefits in the next 12 months.

Any interest and penalties related to uncertain tax positions are recorded in income tax expense.

There were no material amounts recorded as tax expense for interest or penalties for the years ended January 29, 2023.

There were no material amounts recorded as tax expense for interest or penalties for the years ended February 2, 2025 or January 28, 2024.

The Company files income tax returns in the United States federal jurisdiction and in various state jurisdictions.

3 unchanged sentences

The Company makes quarterly non-discretionary “safe harbor” matching contributions to the Plan equal to 100 % of the basic contribution made by each participant on the first 3 % of his or her compensation plus 50 % of the basic contribution made by each participant on the next 2 % of his or her compensation.

As of January 1, 2025, the Company updated the non-discretionary “safe harbor” matching contributions to the Plan to 100 % of the basic contribution made by each participant on the first 1 % of his or her compensation plus 50 % of the basic contribution made by each participant on the next 5 % of his or her compensation.

The Company is also permitted to make discretionary profit sharing contributions to the Plan.

4 unchanged sentences

Because of the uncertainties related to the incurrence, amount and range of loss on any pending litigation or claim, management is currently unable to predict the ultimate outcome of any litigation or claim, determine whether a liability has been incurred or make an estimate of the reasonably possible liability that could result from an unfavorable outcome.

DULUTH HOLDINGS INC.

Notes to Consolidated Financial Statements

Management believes, after considering a number of factors and the nature of any outstanding litigation or claims, that the outcome will not have a material effect upon the Company’s results of operations, financial condition or cash flows.

However, because of the unpredictable nature of these matters, the Company cannot provide any assurances regarding the outcome of any litigation or claim to which it is a party or the impact on it of an adverse ruling in such matters.

SEGMENT REPORTING

As of February 2, 2025 and January 28, 2024, we had one reportable segment.

The Company’s operating segment is based on how the Chief Operating Decision Maker (“CODM”) makes decisions about allocating resources and assessing performance.

Our CODM is our Chief Executive Officer and the CODM receives discrete financial information for the Company’s gross margin and a summarized comprehensive statement of income monthly that categorizes selling, general and administrative expenses into four line items with remaining expenses and expenditures for long-lived assets being consolidated as an omnichannel business.

The following table summarizes the Company’s gross margin and selling, general and administrative expenses.

Fiscal Year Ended

February 2, 2025

January 28, 2024

(in thousands)

Cost of goods sold

Outbound shipping expenses

Advertising expenses

Variable expenses

Overhead expenses

Total selling, general and administrative

Operating loss

RECENT ACCOUNTING PRONOUNCEMENTS

7 unchanged sentences

In fiscal 2024 and 2023, $ 11.2 million and $ 10.1 million of capitalized costs associated with implementation activities, net of amortization are classified within Prepaid expenses & other current assets on the Company’s Consolidated Balance Sheets, respectively, and $ 5.3 million and $ 5.0 million of related amortization costs are included in Selling, general and administrative expenses on the Company’s Consolidated Statement of Operations, respectively.

Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments

DULUTH HOLDINGS INC.

Notes to Consolidated Financial Statements

Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued Accounting Standards Update No.

7 unchanged sentences

ASU 2016-13 did not have a material impact on the Company’s consolidated financial statements.

Recently Accounting Pronouncements Not Yet Adopted

Segment Reporting – Improvements to Reportable Segment Disclosures

4 unchanged sentences

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 Company adopted ASU 2023-07 on January 29, 2024, the first day of the Company’s first quarter for the fiscal year ending February 2, 2025, the Company’s fiscal year 2024.

Recent Accounting Pronouncements Not Yet Adopted

Income Taxes – Improvements to Income Tax Disclosures

6 unchanged sentences

VALUATION AND QUALIFYING ACCOUNTS

For the Years Ended January 28, 2024 and January 29, 2023

For the Years Ended February 2, 2025 and January 28, 2024

(Amounts in thousands)

Inventory reserve

Year ended January 28, 2024

Year ended February 2, 2025

Year ended January 28, 2024

Product returns reserve

Year ended January 28, 2024

Year ended February 2, 2025

Year ended January 28, 2024

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 8. Financial Statements and Supplementary Data