SEC Filing | Duluth Trading Company

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dlth-20220731x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________

FORM 10-Q

_________________________________________


þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2022


o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 001-37641

_________________________________________

DULUTH HOLDINGS INC.

(Exact name of registrant as specified in its charter)

_________________________________________

	99
Wisconsin	39-1564801
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

201 East Front Street Mount Horeb, Wisconsin	53572
(Address of principal executive offices)	(Zip Code)

(608) 424-1544

(Registrant’s telephone number, including area code)

_________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class B Common Stock, No Par Value	DLTH	NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	o	Accelerated Filer	þ
Non-accelerated Filer	o	Smaller Reporting Company	þ
		Emerging Growth Company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The number of shares outstanding of the Registrant’s Class A common stock, no par value, as of August 31, 2022, was 3,364,200.

The number of shares outstanding of the Registrant’s Class B common stock, no par value, as of August 31, 2022, was 30,013,639.

DULUTH HOLDINGS INC.

QUARTERLY REPORT ON FORM 10-Q

FOR QUARTER ENDED July 31, 2022

INDEX



	Part I—Financial Information	Page
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of July 31, 2022 and January 30, 2022 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the three and six months ended July 31, 2022 and August 1, 2021 (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 31, 2022 and August 1, 2021 (Unaudited)	6
	Condensed Consolidated Statement of Shareholders’ Equity for the six months ended July 31, 2022 (Unaudited)	7
	Condensed Consolidated Statement of Shareholders’ Equity for the six months ended August 1, 2021 (Unaudited)	8
	Condensed Consolidated Statements of Cash Flows for the six months ended July 31, 2022 and August 1, 2021 (Unaudited)	9
	Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
	Part II—Other Information
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 6.	Exhibits	29

Signatures		30

‎

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

DULUTH HOLDINGS INC.

Condensed Consolidated Balance Sheets - Assets

(Unaudited)

(Amounts in thousands)


	July 31, 2022		January 30, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	15,369	$	77,051
Receivables		5,764		5,455
Inventory, less reserves of $2,310 and $2,372, respectively		164,499		122,672
Prepaid expenses & other current assets		16,841		17,333
Prepaid catalog costs		35		10
Total current assets		202,508		222,521
Property and equipment, net		114,616		110,078
Operating lease right-of-use assets		114,980		120,911
Finance lease right-of-use assets, net		48,669		50,133
Available-for-sale security		5,823		6,554
Other assets, net		6,725		5,353
Total assets	$	493,321	$	515,550

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

‎

DULUTH HOLDINGS INC.

Condensed Consolidated Balance Sheets – Liabilities and Shareholders’ Equity

(Unaudited)

(Amounts in thousands)


	July 31, 2022		January 30, 2022
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable	$	53,604	$	45,402
Accrued expenses and other current liabilities		28,961		47,504
Income taxes payable		583		6,814
Current portion of operating lease liabilities		13,422		12,882
Current portion of finance lease liabilities		2,763		2,701
Current portion of Duluth long-term debt		—		—
Current maturities of TRI long-term debt		729		693
Total current liabilities		100,062		115,996
Operating lease liabilities, less current maturities		101,008		107,094
Finance lease liabilities, less current maturities		38,870		40,267
Duluth long-term debt, less current maturities		—		—
TRI long-term debt, less current maturities		26,271		26,608
Deferred tax liabilities		2,729		2,867
Total liabilities		268,940		292,832
Shareholders' equity:
Preferred stock, no par value; 10,000 shares authorized; no shares issued or outstanding as of July 31, 2022 and January 30, 2022		—		—
Common stock (Class A), no par value; 10,000 shares authorized; 3,364 shares issued and outstanding as of July 31, 2022 and January 30, 2022		—		—
Common stock (Class B), no par value; 200,000 shares authorized; 30,089 shares issued and 29,977 shares outstanding as of July 31, 2022 and 29,786 shares issued and 29,707 shares outstanding as of January 30, 2022		—		—
Treasury stock, at cost; 112 and 79 shares as of July 31, 2022 and January 30, 2022, respectively		(1,458)		(1,002)
Capital stock		97,102		95,515
Retained earnings		131,943		130,868
Accumulated other comprehensive income		2		489
Total shareholders' equity of Duluth Holdings Inc.		227,589		225,870
Noncontrolling interest		(3,208)		(3,152)
Total shareholders' equity		224,381		222,718
Total liabilities and shareholders' equity	$	493,321	$	515,550

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

‎

DULUTH HOLDINGS INC.

Condensed Consolidated Statements of Operations

(Unaudited)

(Amounts in thousands, except per share figures)


	Three Months Ended				Six Months Ended
	July 31, 2022		August 1, 2021		July 31, 2022		August 1, 2021
Net sales	$	141,511	$	149,127	$	264,415	$	282,546
Cost of goods sold (excluding depreciation and amortization)		65,903		67,701		121,744		134,577
Gross profit		75,608		81,426		142,671		147,969
Selling, general and administrative expenses		71,739		68,339		139,733		132,987
Operating income		3,869		13,087		2,938		14,982
Interest expense		879		1,182		1,755		2,490
Other income, net		78		56		124		72
Income before income taxes		3,068		11,961		1,307		12,564
Income tax expense		727		3,014		289		3,119
Net income		2,341		8,947		1,018		9,445
Less: Net loss attributable to noncontrolling interest		(27)		(45)		(56)		(91)
Net income attributable to controlling interest	$	2,368	$	8,992	$	1,074	$	9,536
Basic earnings per share (Class A and Class B):
Weighted average shares of common stock outstanding		32,766		32,624		32,732		32,582
Net income per share attributable to controlling interest	$	0.07	$	0.28	$	0.03	$	0.29
Diluted earnings per share (Class A and Class B):
Weighted average shares and equivalents outstanding		32,766		32,813		32,910		32,786
Net income per share attributable to controlling interest	$	0.07	$	0.27	$	0.03	$	0.29

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

‎

DULUTH HOLDINGS INC.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(Amounts in thousands)


	Three Months Ended				Six Months Ended
	July 31, 2022		August 1, 2021		July 31, 2022		August 1, 2021
Net income	$	2,341	$	8,947	$	1,018	$	9,445
Other comprehensive income
Securities available-for sale:
Unrealized security (loss) income arising during the period		(202)		419		(651)		689
Income tax (benefit) expense		(51)		105		(164)		173
Other comprehensive (loss) income		(151)		314		(487)		516
Comprehensive income		2,190		9,261		531		9,961
Comprehensive loss attributable to noncontrolling interest		(27)		(45)		(56)		(91)
Comprehensive income attributable ‎to controlling interest	$	2,217	$	9,306	$	587	$	10,052

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

‎

DULUTH HOLDINGS INC.

Condensed Consolidated Statement of Shareholders’ Equity

(Unaudited)

(Amounts in thousands)


	Six Months Ended July 31, 2022
								Accumulated		Noncontrolling
	Capital stock							other		interest in		Total
				Treasury		Retained		comprehensive		variable interest		shareholders'
	Shares	Amount		stock		earnings		income		entity		equity
Balance at January 30, 2022	33,071	$	95,515	$	(1,002)	$	130,868	$	489	$	(3,152)	$	222,718
Issuance of common stock	292		166		—		—		—		—		166
Stock-based compensation	—		618		—		—		—		—		618
Restricted stock forfeitures	(1)		—		—		—		—		—		—
Restricted stock surrendered for taxes	(33)		—		(455)		—		—		—		(455)
Other comprehensive loss	—		—		—		—		(336)		—		(336)
Net loss	—		—		—		(1,294)		—		(29)		(1,323)
Balance at May 1, 2022	33,329	$	96,299	$	(1,457)	$	129,575	$	153	$	(3,181)	$	221,389
Issuance of common stock	56		147		—		—		—		—		147
Stock-based compensation	—		656		—		—		—		—		656
Restricted stock forfeitures	(44)		—		—		—		—		—		—
Restricted stock surrendered for taxes	—		—		(1)		—		—		—		(1)
Other comprehensive loss	—		—		—		—		(151)		—		(151)
Net income (loss)	—		—		—		2,368		—		(27)		2,341
Balance at July 31, 2022	33,341	$	97,102	$	(1,458)	$	131,943	$	2	$	(3,208)	$	224,381

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

‎

DULUTH HOLDINGS INC.

Condensed Consolidated Statement of Shareholders’ Equity

(Unaudited)

(Amounts in thousands)


	Six Months Ended August 1, 2021
								Accumulated		Noncontrolling
	Capital stock							other		interest in		Total
				Treasury		Retained		comprehensive		variable interest		shareholders'
	Shares	Amount		stock		earnings		income		entity		equity
Balance at January 31, 2021	32,841	$	92,875	$	(628)	$	101,166	$	48	$	(3,000)	$	190,461
Issuance of common stock	101		132		—		—		—		—		132
Stock-based compensation	—		371		—		—