Duluth Holdings Q1 2025 slides: sales drop 12%, maintains annual outlook

Duluth Holdings Inc (NASDAQ:DLTH) released its first quarter 2025 investor presentation on June 5, revealing continued financial challenges while maintaining its full-year guidance. The presentation comes after a disappointing fourth quarter 2024 that saw the company miss earnings expectations, contributing to the stock’s nearly 28% decline over the past six months.

Quarterly Performance Highlights

Duluth reported net sales of $102.7 million for Q1 2025, representing a 12.0% decrease from $116.7 million in the same period last year. The decline was more pronounced in retail sales, which fell from $75 million to $63 million, while direct sales showed a more modest decrease from $41 million to $40 million.

As shown in the following comparative performance chart:

The company posted a net loss of $15.3 million, or ($0.45) per share, compared to a net loss of $7.9 million in Q1 2024. Excluding certain items, the adjusted net loss was $10.8 million, or ($0.32) per share. Gross profit margin also declined year-over-year from 52.8% to 52.0%.

Adjusted EBITDA deteriorated to ($3.8) million, down from $1.8 million in the prior-year period, with the adjusted EBITDA margin falling from 1.6% to (3.7%).

Detailed Financial Analysis

Duluth’s balance sheet shows cash and cash equivalents of $8.6 million as of May 4, 2025. The company reported total debt of $64.0 million, consisting entirely of its line of credit, with no term loan balance. Total (EPA:TTEF) shareholders’ equity stood at $167.9 million, resulting in a debt-to-capital ratio of 27.6%.

The company’s financial position is summarized in the following slide:

Free cash flow worsened significantly to ($57.8) million compared to ($35.2) million in the prior-year period, reflecting increased cash usage in operations.

A concerning long-term trend is visible in Duluth’s historical performance data, which shows declining net sales and adjusted EBITDA since 2021:

Net sales have fallen from a peak of $699 million in 2021 to $627 million in 2024, while adjusted EBITDA has experienced an even steeper decline from $77 million to $15 million over the same period.

Capital expenditures have also fluctuated significantly, peaking at $53 million in 2023 before dropping to $17 million in 2024. The company projects $20 million in capital expenditures for 2025, primarily focused on two new store openings planned for the second half of the year.

Strategic Initiatives

Despite financial challenges, Duluth continues to emphasize its differentiated market position through what it calls its "Secret Sauce" - a combination of distinctive brands, product innovation, unique marketing, and customer experience.

The company’s strategic focus areas are illustrated in the following slide:

Duluth’s mission statement emphasizes "building high-quality, solution-based products for work, play and every day" and crafting "unique brands, durable products, standout customer service, and a No Bull Guarantee into industry-leading consumer experiences."

This strategic positioning aligns with CEO Sam Sotto’s recent statement that the company is "seeing tangible improvements in our logistics network, product development capabilities and digital experience," though these improvements have yet to translate into financial results.

Forward-Looking Statements

Despite the challenging Q1 results, Duluth maintained its fiscal 2025 outlook, projecting:

• Adjusted EBITDA range of $20 to $25 million
• Two new store openings in the second half of 2025

This guidance suggests management expects significant improvement in the coming quarters to offset the weak first quarter performance. The company’s CFO, Hina Agarwal, previously indicated that the focus for 2025 would be on "resetting price integrity, enhanced inventory management, and operational execution."

However, investors may approach this outlook with caution, given the stock’s current trading near its 52-week low of $1.58. The recent 8.21% price increase to $2.24 (as of June 4, 2025) suggests some market optimism, but the company faces significant challenges in reversing its multi-year downward trend in sales and profitability.

As Duluth works to implement its strategic initiatives and improve operational efficiency, investors will be watching closely to see if the company can deliver on its maintained fiscal 2025 guidance despite the disappointing start to the year.

Full presentation:

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