Duluth Holdings Inc (NASDAQ:DLTH) reported a 6.1% decrease in third-quarter net sales to $138 million, compared to the same period last year. The company attributed the decline to lower traffic in both direct and retail channels and a lack of penetration in spring/summer goods. Despite the fall in sales, Duluth expressed optimism for the future, citing improvements in business trends during the Black Friday through Cyber Monday period.
Key takeaways from the earnings call:
Duluth plans to introduce new products in the fourth quarter and pull forward select items from its spring 2024 assortments to boost sales.
The company has implemented strategic events and global events to drive sales.
Duluth is investing in its global supply chain strategy, sourcing and product innovation strategy, and technology roadmap to drive long-term growth.
The company’s new highly automated fulfillment center in Adairsville, Georgia, has exceeded output expectations, leading to lower costs and increased efficiency.
Duluth reported progress in cost savings, growth in sourcing and product innovation, and completion of technology and transformation initiatives.
The company announced the hiring of a new Vice President of sourcing.
Duluth expects to fully pay off outstanding debt balances and plans to decrease inventory year-over-year.
The company provided updated guidance for net sales, EPS, and adjusted EBITDA for the full year.
Duluth is also focusing on innovation in existing and new product categories, including the introduction of new silhouettes and fabrications, and the identification of new categories like the AKHG fitness line. The company is balancing promotions and discounting with maintaining brand integrity and profitability. It plans to improve gross margin levels in the future through initiatives such as logistics improvements, sourcing and product innovation, and technology transformation.
In terms of inventory management, Duluth has deliberately decreased inventory to improve stock-to-sales ratios and increase profitability. The company is also expanding its distribution capacity in Georgia, which will enable it to enter the wholesale market. It is currently testing a partnership with Costco (NASDAQ:COST) and is optimistic about the opportunity to broaden its customer base through this collaboration.
Finally, Duluth confirmed that it recently sold Best Made and is currently focused on growing the Duluth and AKHG brands, while remaining open to potential acquisitions in the future.
