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Duluth Holdings Inc . (NASDAQ:DLTH), a retailer specializing in apparel and accessories with annual revenue of $631 million, has amended its existing credit facility, effectively reducing its revolving commitment from $200 million to $100 million, as disclosed in a recent SEC filing.
The Second Amendment to the Credit Agreement, which took effect on January 31, 2025, also introduces revised terms including a new pricing structure based on the Rent Adjusted Leverage Ratio and updated covenants related to restricted payments and financial ratios. According to InvestingPro data, the company operates with a significant debt burden, with a debt-to-equity ratio of 1.1.
The adjustment to the credit facility aims to align with Duluth’s operational cash requirements, particularly for seasonal inventory and capital expenditures. The company anticipates that the reduced facility will lead to savings on fees. This strategic financial move comes as Duluth Holdings continues to navigate the retail landscape, adjusting its financial strategy to meet its current and future needs.
With the stock trading near its 52-week low of $2.73 and showing a negative return on equity of -16%, InvestingPro subscribers can access 10+ additional key insights about the company’s financial health and future prospects through the comprehensive Pro Research Report.
The revised "Applicable Rate" under the amended agreement provides for different pricing should the Rent Adjusted Leverage Ratio exceed 3.50:1.0. Furthermore, the amendment restricts certain payments except dividends or distributions from subsidiaries to the Company and the acquisition of equity interests to satisfy tax withholdings on employee stock awards.
The updated covenants stipulate that the Maximum Rent Adjusted Leverage Ratio and the Minimum Fixed Charge Coverage Ratio will be measured quarterly from the fiscal quarter ending May 2, 2021, excluding the fiscal quarter ending February 2, 2025.
The changes in the credit agreement reflect Duluth Holdings’ proactive financial management and its commitment to maintaining a strong balance sheet. The information is based on a press release statement and the full text of the Second Amendment to the Credit Agreement can be found in the company’s SEC filing.
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