dlth-20250504x10q

Three Months Ended

May 4, 2025

April 28, 2024

(in thousands)

Direct-to-consumer

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 May 4, 2025


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	o
Non-accelerated Filer	þ	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 June 4, 2025, was 3,364,200.

The number of shares outstanding of the Registrant’s Class B common stock, no par value, as of June 4, 2025, was 34,214,660.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

DULUTH HOLDINGS INC.

Condensed Consolidated Balance Sheets - Assets

(Unaudited)

(Amounts in thousands)


	May 4, 2025		February 2, 2025
ASSETS
Current Assets:
Cash and cash equivalents	$	8,579	$	3,335
Receivables		4,248		3,970
Income tax receivable		—		—
Inventory, less reserves of $2,333 and $2,135, respectively		176,108		166,545
Prepaid expenses & other current assets		22,189		17,781
Total current assets		211,124		191,631
Property and equipment, net		106,274		111,560
Operating lease right-of-use assets		100,076		102,663
Finance lease right-of-use assets, net		32,112		32,957
Available-for-sale security		4,860		4,491
Other assets, net		9,259		9,140
Deferred tax assets		—		—
Total assets	$	463,705	$	452,442

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)


	May 4, 2025		February 2, 2025
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable	$	45,940	$	73,882
Accrued expenses and other current liabilities		27,543		35,684
Income taxes payable		65		65
Current portion of operating lease liabilities		15,875		15,534
Current portion of finance lease liabilities		2,578		2,541
Line of credit		64,000		—
Current maturities of TRI long-term debt		953		931
Total current liabilities		156,954		128,637
Operating lease liabilities, less current maturities		86,471		89,222
Finance lease liabilities, less current maturities		29,962		30,621
TRI long-term debt, less current maturities		24,054		24,283
Deferred tax liabilities		1,371		—
Total liabilities		298,812		272,763
Shareholders' equity:
Preferred stock, no par value; 10,000 shares authorized; no shares ‎ issued or outstanding as of May 4, 2025 and February 2, 2025		—		—
Common stock (Class A), no par value; 10,000 shares authorized; 3,364 shares issued and outstanding as of May 4, 2025 and February 2, 2025		—		—
Common stock (Class B), no par value; 200,000 shares authorized; 32,154 shares issued and 31,890 shares outstanding as of May 4, 2025 and 32,077 shares issued and 31,813 shares outstanding as of February 2, 2025		—		—
Treasury stock, at cost; 264 and 264 shares as of May 4, 2025 and February 2, 2025, respectively		(2,596)		(2,332)
Capital stock		108,329		108,009
Retained earnings		62,428		77,721
Accumulated other comprehensive loss		(300)		(722)
Total shareholders' equity of Duluth Holdings Inc.		167,861		182,676
Noncontrolling interest		(2,968)		(2,997)
Total shareholders' equity		164,893		179,679
Total liabilities and shareholders' equity	$	463,705	$	452,442

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
	May 4, 2025		April 28, 2024
Net sales	$	102,704	$	116,684
Cost of goods sold (excluding depreciation and amortization)		49,349		55,060
Gross profit		53,355		61,624
Selling, general and administrative expenses		65,707		70,595
Operating loss		(12,352)		(8,971)
Interest expense		1,481		993
Other (loss) income, net		(161)		16
Loss before income taxes		(13,994)		(9,948)
Income tax expense (benefit)		1,270		(2,083)
Net loss		(15,264)		(7,865)
Less: Net income attributable to noncontrolling interest		29		8
Net loss attributable to controlling interest	$	(15,293)	$	(7,873)
Basic earnings per share (Class A and Class B):
Weighted average shares of common stock outstanding		33,714		33,087
Net loss per share attributable to controlling interest	$	(0.45)	$	(0.24)
Diluted earnings per share (Class A and Class B):
Weighted average shares and equivalents outstanding		33,714		33,087
Net loss per share attributable to controlling interest	$	(0.45)	$	(0.24)

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

‎

DULUTH HOLDINGS INC.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)

(Amounts in thousands)


	Three Months Ended
	May 4, 2025		April 28, 2024
Net loss	$	(15,264)	$	(7,865)
Other comprehensive loss
Securities available-for sale:
Unrealized security gain (loss) arising during the period		422		(140)
Income tax expense (benefit)		—		(35)
Other comprehensive income (loss)		422		(105)
Comprehensive loss		(14,842)		(7,970)
Comprehensive income attributable to noncontrolling interest		29		8
Comprehensive loss attributable ‎to controlling interest	$	(14,871)	$	(7,978)

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)


	Three Months Ended May 4, 2025
								Accumulated		Noncontrolling
	Capital stock							other		interest in		Total
				Treasury		Retained		comprehensive		variable interest		shareholders'
	Shares	Amount		stock		earnings		(loss) income		entity		equity
Balance at February 2, 2025	35,177	$	108,009	$	(2,332)	$	77,721	$	(722)	$	(2,997)	$	179,679
Issuance of common stock	766		66		—		—		—		—		66
Stock-based compensation	—		254		—		—		—		—		254
Restricted stock forfeitures	(567)		—		—		—		—		—		—
Restricted stock surrendered for taxes	(122)		—		(264)		—		—		—		(264)
Other comprehensive loss	—		—		—		—		422		—		422
Net (loss) income	—		—		—		(15,293)		—		29		(15,264)
Balance at May 4, 2025	35,254	$	108,329	$	(2,596)	$	62,428	$	(300)	$	(2,968)	$	164,893

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)


	Three Months Ended April 28, 2024
								Accumulated		Noncontrolling
	Capital stock							other		interest in		Total
				Treasury		Retained		comprehensive		variable interest		shareholders'
	Shares	Amount		stock		earnings		loss		entity		equity
Balance at January 28, 2024	34,387	$	103,579	$	(1,738)	$	121,392	$	(427)	$	(3,056)	$	219,750
Issuance of common stock	782		110		—		—		—		—		110
Stock-based compensation	—		1,372		—		—		—		—		1,372
Restricted stock forfeitures	(15)		—		—		—		—		—		—
Restricted stock surrendered for taxes	(80)		—		(383)		—		—		—		(383)
Other comprehensive income	—		—		—		—		(105)		—		(105)
Net loss	—		—		—		(7,873)		—		8		(7,865)
Balance at April 28, 2024	35,074	$	105,061	$	(2,121)	$	113,519	$	(532)	$	(3,048)	$	212,879

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

‎

DULUTH HOLDINGS INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands)


	Three Months Ended
	May 4, 2025		April 28, 2024
Cash flows from operating activities:
Net loss	$	(15,264)	$	(7,865)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		6,749		8,251
Stock based compensation		254		1,372
Deferred income taxes		1,371		(2,274)
Loss on disposal of property and equipment		748		13
Changes in operating assets and liabilities:
Receivables		(278)		(4,617)
Income taxes receivable		—		533
Inventory		(9,563)		(10,677)
Prepaid expense & other current assets		(1,920)		871
Software hosting implementation costs, net		(2,446)		(2,617)
Trade accounts payable		(28,159)		(13,150)
Accrued expenses and deferred rent obligations		(7,940)		(4,488)
Other assets		(193)		37
Noncash lease impacts		178		945
Net cash used in operating activities		(56,463)		(33,666)
Cash flows from investing activities:
Purchases of property and equipment		(1,332)		(1,525)
Principal receipts from available-for-sale security		53		48
Net cash used in investing activities		(1,279)		(1,477)
Cash flows from financing activities:
Proceeds from line of credit		64,450		28,000
Payments on line of credit		(450)		(17,000)
Payments on TRI long term debt		(225)		(204)
Payments on finance lease obligations		(622)		(737)
Payments of tax withholding on vested restricted shares		(264)		(383)
Other		97		109
Net cash provided by financing activities		62,986		9,785
Increase (decrease) in cash and cash equivalents		5,244		(25,358)
Cash and cash equivalents at beginning of period		3,335		32,157
Cash and cash equivalents at end of period	$	8,579	$	6,799
Supplemental disclosure of cash flow information:
Interest paid	$	1,481	$	993
Income taxes paid	$	—	$	2
Supplemental disclosure of non-cash information:
Unpaid liability to acquire property and equipment	$	1,271	$	1,392

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

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

A. Nature of Operations

Duluth Holdings Inc. (“Duluth Trading” or the “Company”), a Wisconsin corporation, is a lifestyle brand of men’s and women’s casual wear, workwear and accessories sold primarily through the Company’s own omnichannel platform. The Company’s products are marketed under the Duluth Trading name, with the majority of products being exclusively developed and sold as Duluth Trading branded merchandise.

The Company identifies its operating segments according to how its business activities are managed and evaluated. The Company continues to report one reportable external segment, consistent with the Company’s omnichannel business approach. The Company’s revenues generated outside the United States were insignificant.

The Company has two classes of authorized common stock: Class A common stock and Class B common stock. The rights of holders of Class A common stock and Class B common stock are identical, except for voting and conversion rights. Each share of Class A common stock is entitled to ten votes per share and is convertible at any time into one share of Class B common stock. Each share of Class B common stock is entitled to one vote per share. The Company’s Class B common stock trades on the NASDAQ Global Select Market under the symbol “DLTH.”

B. Basis of Presentation

The condensed consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). The Company consolidates TRI Holdings, LLC (“TRI”) as a variable interest entity (see Note 6 “Variable Interest Entity” for further information). All significant intercompany balances and transactions have been eliminated in consolidation.

The Company’s fiscal year ends on the Sunday nearest to January 31 of the following year. Fiscal 2025 is a 52-week period and ends on February 1, 2026. Fiscal 2024 was a 53-week period and ended on February 2, 2025. The three months of fiscal 2025 and fiscal 2024 represent the Company’s 13-week periods ended May 4, 2025 and April 28, 2024, respectively.

The accompanying condensed consolidated financial statements as of and for the three months ended May 4, 2025 and April 28, 2024 have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of the Company, include all adjustments (which are normal and recurring in nature) necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such SEC rules and regulations as of and for the three months ended May 4, 2025 and April 28, 2024. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s annual report on Form 10-K for the fiscal year ended February 2, 2025.

C. Inventory

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 and obsolete items was $2.3 million and $2.1 million as of May 4, 2025 and February 2, 2025, respectively.

D. Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:


	May 4, 2025		February 2, 2025
(in thousands)
Prepaid expenses & other current assets
Pending returns inventory, net	$	1,735	$	2,301
Current software hosting implementation costs, net		3,728		3,749
Other prepaid expenses		16,726		11,731
Prepaid expenses & other current assets	$	22,189	$	17,781

Other assets, net
Intangible assets, net	$	410	$	414
Non-current software hosting implementation costs		7,456		7,498
Other assets, net		1,393		1,228
Other assets, net	$	9,259	$	9,140

E. Seasonality of Business

The Company’s business is affected by the pattern of seasonality common to most apparel businesses. Historically, the Company has recognized a significant portion of its revenue and operating profit in the fourth fiscal quarter of each year due to increased sales during the holiday season.

F. Cash and Cash Equivalents

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

G. Significant Accounting Policies

There have been no significant changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended February 2, 2025.
‎

2. LEASES

Based on the criteria set forth in ASC Topic 842, Leases (“ASC 842”), the Company recognizes right-of-use (ROU) assets and lease liabilities related to leases on the Company’s consolidated balance sheets. The Company determines if an arrangement is, or contains, a lease at inception. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities reflect the obligation to make lease payments arising from the lease. At any given time during the lease term, the lease liability represents the present value of the remaining lease payments and the ROU asset is measured at the amount of the lease liability, adjusted for pre-paid rent, unamortized initial direct costs and the remaining balance of lease incentives received. Both the lease ROU asset and liability are reduced to zero at the end of the lease.

The Company leases retail space under non-cancelable lease agreements, which expire on various dates through 2036. Substantially all of these arrangements are store leases. Store leases generally have initial lease terms ranging from five years to fifteen years with renewal options and rent escalation provisions. At the commencement of a lease, the Company includes only the initial lease term as the option to extend is not reasonably certain. The Company does not record leases with a lease term of 12 months or less on the Company’s consolidated balance sheets.

When calculating the lease liability on a discounted basis, the Company applies its estimated discount. The Company bases this discount on a collateralized interest rate as well as publicly available data for instruments with similar characteristics.

In addition to rent payments, leases for retail space contain payments for real estate taxes, insurance costs, common area maintenance, and utilities that are not fixed. The Company accounts for these costs as variable payments and does not include such costs as a lease component.

The expense components of the Company’s leases reflected on the Company’s consolidated statement of operations were as follows:


	Consolidated Statement	Three Months Ended
	of Operations	May 4, 2025		April 28, 2024
(in thousands)
Finance lease expenses
Amortization of right-of-use ‎assets	Selling, general and ‎administrative expenses	$	722	$	838
Interest on lease liabilities	Interest expense		368		409
Total finance lease expense		$	1,090	$	1,247
Operating lease expense	Selling, general and ‎administrative expenses	$	4,898	$	5,093
Amortization of build-to-suit ‎leases capital contribution	Selling, general and ‎administrative expenses		321		321
Variable lease expense	Selling, general and ‎administrative expenses		2,801		2,922
Total lease expense		$	9,110	$	9,583

‎

Other information related to leases were as follows:


	Three Months Ended
	May 4, 2025		April 28, 2024
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	622	$	737
Operating cash flows from finance leases	$	368	$	409
Operating cash flows from operating leases	$	4,921	$	5,268

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	1,398	$	-

Weighted-average remaining lease term (in years):
Finance leases		10		10
Operating leases		6		7

Weighted-average discount rate:
Finance leases		4.5%		4.5%
Operating leases		4.4%		4.2%

Future minimum lease payments under the non-cancellable leases are as follows as of May 4, 2025:


Fiscal year	Finance		Operating
(in thousands)
2025 (remainder of fiscal year)	$	2,981		14,961
2026		3,993		19,860
2027		3,993		18,552
2028		4,017		16,641
2029		4,217		14,116
Thereafter		20,997		33,447
Total future minimum lease payments	$	40,198	$	117,577
Less – Discount		(7,658)		(15,231)
Lease liability	$	32,540	$	102,346

3. DEBT AND CREDIT AGREEMENT

Debt consists of the following:


	May 4, 2025		February 2, 2025
(in thousands)
TRI Senior Secured Note	$	21,507	$	21,714
TRI Note		3,500		3,500
	$	25,007	$	25,214
Less: current maturities		953		931
TRI long-term debt	$	24,054	$	24,283

Duluth Line of credit	$	64,000	$	—
Less: current maturities		64,000		—
Duluth long-term debt	$	—	$	—

TRI Holdings, LLC

TRI entered into a senior secured note (“TRI Senior Secured Note”) with an original balance of $26.7 million. The TRI Senior Secured Note is scheduled to mature on October 15, 2038 and requires installment payments with an interest rate of 4.95%. See Note 6 “Variable Interest Entities” for further information.

TRI entered into a promissory note (“TRI Note”) with an original balance of $3.5 million. The TRI Note is scheduled to mature in November 2038 and requires annual interest payments at a rate of 3.05%, with a final balloon payment due in November 2038.

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

Credit Agreement

On May 14, 2021, the Company entered into a credit agreement (the “Credit Agreement”), which was treated as a modification for accounting purposes. The Credit Agreement originally matured on May 14, 2026 and provided for borrowings of up to $150.0 million that were available under a revolving senior credit facility, with a $5.0 million sublimit for issuance of standby letters of credit, as well as a $10.0 million sublimit for swing line loans. At the Company’s option, the interest rate applicable to the revolving senior credit facility was a floating rate equal to: (i) the Bloomberg Short-Term Bank Yield Index rate (“BSBY”) plus the applicable rate of 1.25% to 2.00% determined based on the Company’s rent adjusted leverage ratio, or (ii) the base rate plus the applicable rate of 0.25% to 1.00% based on the Company’s rent adjusted leverage ratio. The Credit Agreement was secured by essentially all Company assets and required the Company to maintain compliance with certain financial and non-financial covenants, including a maximum rent adjusted leverage ratio and a minimum fixed charge coverage ratio as defined in the Credit Agreement.

On July 8, 2022, the Company entered into the First Amendment to the Credit Agreement (the “First Amendment”), which was treated as a modification for accounting purposes. The First Amendment amended the Credit Agreement in order to (i) increase the revolving commitment from $150.0 million to $200.0 million; (ii) extend the maturity date from May 14, 2026 to July 8, 2027; (iii) amend the pricing index to replace BSBY with the Term Secured Overnight Financing Rate; and (iv) reduce the commitment fee in some instances.

On January 31, 2025 the Company entered into the Second Amendment to the Credit Agreement (the “Second Amendment”). The Second Amendment amended the Credit Agreement, in part, to (i) decrease the revolving commitment from $200 million to $100 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). The reduction in the revolving commitment rightsized the credit facility with the Company’s cash needs to fund seasonal inventory builds and capital

4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:


	May 4, 2025		February 2, 2025
(in thousands)
Salaries and benefits	$	2,552	$	3,897
Deferred revenue		8,514		9,783
Freight		1,381		2,495
Product returns		3,808		4,568
Unpaid purchases of property & equipment		1,375		1,264
Accrued advertising		2,977		929
Other		6,936		12,748
Total accrued expenses and other current liabilities	$	27,543	$	35,684

5. FAIR VALUE

ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., an exit price). The exit price is based on the amount that the holder of the asset or liability would receive or need to pay in an actual transaction (or in a hypothetical transaction if an actual transaction does not exist) at the measurement date. ASC 820 describes a fair value hierarchy based on three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last unobservable, as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s assets and liabilities measured at fair value are categorized as Level 3 instruments. The fair value of the Company’s available-for-sale security was valued based on a discounted cash flow method (Level 3), which incorporates the U.S. Treasury yield curve, credit information and an estimate of future cash flows. During the three months ended May 4, 2025, certain changes in the inputs did impact the fair value of the available-for-sale security. The calculated fair value is based on estimates that are subjective in nature and involve uncertainties and matters of significant judgement and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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

May 4, 2025

Cost or

Gross

Amortized

Unrealized

Estimated

Cost

Gains

Losses

Fair Value

(in thousands)

Level 3 security:

Corporate trust

5,303

—

(443)

4,860

February 2, 2025

Cost or

Gross

Amortized

Unrealized

Estimated

Cost

Gains

Losses

Fair Value

(in thousands)

Level 3 security:

Corporate trust

5,356

—

(865)

4,491

The Company does not intend to sell the available-for-sale-security in the near term and does not believe that it will be required to sell the security. The Company reviews its securities on a quarterly basis to monitor its exposure to other-than-temporary impairment.

No other-than-temporary impairment was recorded in the unaudited condensed consolidated statements of operations for the three months ended May 4, 2025 or April 28, 2024.

The following table presents future principal receipts related to the Company’s available-for-sale security by contractual maturity as of May 4, 2025.


	Amortized		Estimated
	Cost		Fair Value
(in thousands)
Within one year	$	224	$	192
After one year through five years		1,469		1,305
After five years through ten years		2,183		2,018
After ten years		1,427		1,345
Total	$	5,303	$	4,860

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


	May 4, 2025				February 2, 2025
		Carrying Amount		Fair Value		Carrying Amount		Fair Value
(in thousands)
TRI Long-term debt, including short-term portion	$	25,007	$	23,116	$	25,214	$	21,225

The above long-term debt, including short-term portion is attributable to the consolidation of TRI in accordance with ASC Topic 810, Consolidation. The fair value was also based on a discounted cash flow method (Level 3) based on credit information and an estimate of future cash flows.

6. VARIABLE INTEREST ENTITY

Based upon the criteria set forth in ASC 810, Consolidation, the Company consolidates variable interest entities (“VIEs”) in which it has a controlling financial interest and is therefore deemed the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance; 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 May 4, 2025 and February 2, 2025.

The Company leases the Company’s headquarters in Mt. Horeb, Wisconsin from TRI. In conjunction with the lease, the Company invested $6.3 million in a trust that loaned funds to TRI for the construction of the Company’s headquarters. TRI is a Wisconsin limited liability company whose primary purpose and activity is to own this real property. The Company considers itself the primary beneficiary for TRI as the Company has both the power to direct the activities that most significantly impact the entity’s economic performance and is expected to receive benefits that are significant to TRI. As the Company is the

primary beneficiary, it consolidates TRI and the lease is eliminated in consolidation. The Company does not consolidate the trust as the Company is not the primary beneficiary.

The condensed consolidated balance sheets include the following amounts as a result of the consolidation of TRI as of May 4, 2025 and February 2, 2025:


	May 4, 2025		February 2, 2025
(in thousands)
Cash	$	18	$	11
Property and equipment, net		22,166		22,321
Total assets	$	22,184	$	22,332

Other current liabilities	$	145	$	115
Current maturities of long-term debt		953		931
TRI long-term debt		24,054		24,283
Noncontrolling interest in VIE		(2,968)		(2,997)
Total liabilities and shareholders' equity	$	22,184	$	22,332

7. LOSS PER SHARE

Earnings per share is computed under the provisions of ASC 260, Earnings Per Share. Basic earnings per share is based on the weighted average number of common shares outstanding for the period. Diluted earnings per share is based on the weighted average number of common shares plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding restricted stock and are considered only for dilutive earnings per share unless considered anti-dilutive. The reconciliation of the numerator and denominator of the basic and diluted earnings per share calculation is as follows:


	Three Months Ended
	May 4, 2025		April 28, 2024
(in thousands, except per share data)
Numerator - net loss attributable to ‎controlling interest	$	(15,293)	$	(7,873)
Denominator - weighted average shares ‎ (Class A and Class B)
Basic		33,714		33,087
Dilutive shares		—		—
Diluted		33,714		33,087
Loss per share (Class A and Class B)
Basic	$	(0.45)	$	(0.24)
Diluted	$	(0.45)	$	(0.24)

The computation of diluted loss per share excluded (0.8) million and 0.3 million of unvested restricted stock for the three months ended May 4, 2025 and April 28, 2024, because their inclusion would be anti-dilutive due to a net loss.

8. STOCK-BASED COMPENSATION

The Company accounts for its stock-based compensation plan in accordance with ASC 718, Stock Compensation, which requires the Company to measure all share-based payments at grant date fair value and recognize the cost over the requisite service period of the award.

Total stock compensation expense associated with restricted stock recognized by the Company was $0.3 million and $1.4 million for the three months ended May 4, 2025 and April 28, 2024 respectively. The Company’s total stock compensation expense is included in selling, general and administrative expenses on the Condensed Consolidated Statements of Operations.

A summary of the activity in the Company’s unvested restricted stock during the three months ended May 4, 2025 is as follows:


		Weighted
		average
		fair value
	Shares	per share
Outstanding at February 2, 2025	1,686,267	$	6.02
Granted	741,563		2.21
Vested	(394,010)		6.94
Forfeited	(567,341)		6.07
Outstanding at May 4, 2025	1,466,479	$	3.71

At May 4, 2025, the Company had unrecognized compensation expense of $3.9 million related to the restricted stock awards, which is expected to be recognized over a weighted average period of 2.7 years.

9. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:


	May 4, 2025		February 2, 2025
(in thousands)
Land and land improvements	$	4,486	$	4,486
Leasehold improvements		58,202		57,732
Buildings		36,291		36,272
Vehicles		84		84
Warehouse equipment		65,612		65,592
Office equipment and furniture		54,542		54,542
Computer equipment		9,784		9,472
Software		40,537		39,952
		269,538		268,132
Accumulated depreciation and amortization		(165,337)		(159,450)
		104,201		108,682
Construction in progress		2,073		2,878
Property and equipment, net	$	106,274	$	111,560

10. REVENUE

The Company’s revenue primarily consists of the sale of apparel, footwear and hard goods. Revenue for merchandise that is shipped to our customers from our distribution centers and stores is recognized upon shipment. Store revenue is recognized at the point of sale, net of returns, and excludes taxes. Shipping and processing revenue generated from customer orders are included as a component of net sales and shipping and processing expense, including handling expense, is included as a component of selling, general and administrative expenses. Sales tax collected from customers and remitted to taxing authorities is excluded from revenue and is included in accrued expenses.

Sales disaggregated based upon sales channel is presented below.

102,704

116,684

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 liabilities primarily consist of gift card liabilities and are recorded in Accrued expenses and other current liabilities under deferred revenue (see Note 4 “Accrued Expenses and Other Current Liabilities”) on the Company’s consolidated balance sheets. Upon issuance of a gift card, a liability is established for its cash value. The gift card liability is relieved and revenues on gift cards are recorded at the time of redemption by the customer.

Contract assets and liabilities on the Company’s consolidated balance sheets are presented in the following table:


	May 4, 2025		February 2, 2025
(in thousands)
Contract assets	$	1,735	$	2,301
Contract liabilities	$	8,514	$	9,782

Revenue from gift cards is recognized when the gift card is redeemed by the customer for merchandise or as a gift card breakage, an estimate of gift cards which will not be redeemed. The Company does not record breakage revenue when escheat liability to the relevant jurisdictions exists. Gift card breakage is recorded within Net sales on the Company’s consolidated statement of operations. The following table provides the reconciliation of the contract liability related to gift cards for the three months ended:


	May 4, 2025		April 28, 2024
(in thousands)
Balance as of beginning of period	$	9,782	$	9,579
Gift cards sold		2,797		2,222
Gift cards redeemed		(4,034)		(3,635)
Gift card breakage		(31)		(61)
Balance as of end of period	$	8,514	$	8,105

11. INCOME TAXES

The Company’s provision for income taxes during the interim reporting periods has historically been calculated by applying an estimate of the annual effective tax rate for the full year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. The effective tax rate related to controlling interest was (9%) and 21% for the three months ended May 4, 2025 and April 28, 2024, respectively. The income from TRI was excluded from the calculation of the Company’s effective tax rate, as TRI is a limited liability company and not subject to income tax. The effective tax rate fluctuated significantly year over year primarily as a result of the Company recording a valuation allowance on its deferred tax assets as of May 4, 2025.

12. SEGMENT REPORTING

As of May 4, 2025 and April 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.


	Three Months Ended
	May 4, 2025		April 28, 2024
	(13 weeks)		(13 weeks)
(in thousands)

Net sales	$	102,704	$	116,684
Cost of goods sold		49,349		55,060
Gross margin	$	53,355	$	61,624
Less:
Outbound shipping expenses	$	6,186	$	6,759
Advertising expenses		10,076		11,982
Variable expenses		10,886		10,646
Overhead expenses		38,559		41,208
Total selling, general and administrative		65,707		70,595
Operating loss		(12,352)		(8,971)
Interest expense		1,481		993
Other (loss) income, net		(161)		16
Loss before income taxes		(13,994)		(9,948)
Income tax expense (benefit)		1,270		(2,083)
Net loss		(15,264)		(7,865)
Less: Net income (loss) attributable to noncontrolling interest		29		8
Net loss attributable to controlling interest	$	(15,293)	$	(7,873)

13. RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

Segment Reporting – Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting: Improvements to Reportable Segment Disclosures.” This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The new guidance is effective for public companies with annual periods beginning after December 15, 2023, and interim periods within an annual period beginning after December 15, 2024, with early adoption permitted. 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

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes: Improvements to Income Tax Disclosures.” This ASU improves the transparency of income tax disclosures by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation and (ii) income taxes paid disaggregated by jurisdiction. This new guidance will be effective for annual periods beginning after December 15, 2024, and early adoption is permitted. Management is currently evaluating the effects this guidance will have on its consolidated financial statements.

Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with the financial statements and related notes of Duluth Holdings Inc. included in Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended February 2, 2025 (“2024 Form 10-K”).

The Company’s fiscal year ends on the Sunday nearest to January 31 of the following year. Fiscal 2025 is a 52-week period and ends on February 1, 2026. Fiscal 2024 was a 53-week period and ended on February 2, 2025. The three months of fiscal 2025 and fiscal 2024 represent our 13-week periods ended May 4, 2025 and April 28, 2024, respectively.

Unless the context indicates otherwise, the terms the “Company,” “Duluth,” “Duluth Trading,” “we,” “our,” or “us” are used to refer to Duluth Holdings Inc.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. All statements other than statements of historical or current facts included in this Quarterly Report on Form 10-Q are forward-looking statements. Forward looking statements refer to our current expectations and projections relating to our financial condition, results of operations, plans, objectives, strategies, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “could,” “estimate,” “expect,” “project,” “plan,” “potential,” “intend,” “believe,” “may,” “might,” “will,” “objective,” “should,” “would,” “can have,” “likely,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected earnings, revenue, costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth initiatives, or strategies are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including the risks and uncertainties described under Part I, Item 1A “Risk Factors,” in our 2024 Form 10-K, and other SEC filings, which factors are incorporated by reference herein. These risks and uncertainties include, but are not limited to, the following: the impact of inflation and measures to control inflation on our results of operations; the prolonged effects of economic uncertainties on store and website traffic; disruptions to our distribution network, supply chains and operations; failure to effectively manage inventory levels; our ability to maintain and enhance a strong brand and sub-brand image; adapting to declines in consumer confidence, inflation and decreases in consumer spending; disruptions to our e-commerce platform; our ability to meet customer delivery time expectations; our ability to properly allocate inventory throughout our distribution network to fulfill customer demand; our failure to meet our debt covenant ratios; natural disasters, unusually adverse weather conditions, boycotts, prolonged public health crises, epidemics or pandemics and unanticipated events; generating adequate cash from our existing stores and direct sales to support our growth; the impact of changes in corporate tax regulations and sales tax; identifying and responding to new and changing customer preferences; the success of the locations in which our stores are located; effectively relying on sources for merchandise located in foreign markets; transportation delays and interruptions, including port congestion; our inability to timely and effectively obtain shipments of products from our suppliers and deliver merchandise to our customers; the inability to maintain the performance of our maturing store portfolio; our inability to deploy marketing tactics to strengthen brand awareness and attract new customers in a cost effective manner; our ability to successfully open new stores; effectively adapting to new challenges associated with our expansion into new geographic markets; competing effectively in an environment of intense competition or elevated promotions; our ability to adapt to significant changes in sales due to the seasonality of our business; price reductions or inventory shortages resulting from failure to purchase the appropriate amount of inventory in advance of the season in which it will be sold; the potential for further increases in price and lack of availability of raw materials; our dependence on third-party vendors to provide us with sufficient quantities of merchandise at acceptable prices; the susceptibility of the price and availability of our merchandise to international trade conditions, including tariffs; failure of our vendors and their manufacturing sources to use acceptable labor or other practices; our dependence upon key executive management or our inability to hire or retain the talent required for our business; increases in costs of fuel or other energy, transportation or utility costs and in the costs of labor and employment; failure of our information technology systems to support our current and growing business, before and after our planned upgrades; disruptions in our supply chain and fulfillment centers; our inability to protect our trademarks or other intellectual property rights; infringement on the intellectual property of third parties; acts of war, terrorism or civil unrest; the impact of governmental laws and regulations and the outcomes of legal proceedings; changes in U.S. and non-U.S. laws affecting the importation and taxation of goods, including imposition of unilateral tariffs on imported goods; our ability to secure the personal and/or financial information of our customers and employees; failure to comply with data privacy regulations; our ability to comply with the security standards for the credit card industry; our failure to maintain adequate internal controls over our financial and management systems; acquisition, disposition, and development risks; and other factors that may be disclosed in our SEC filings or otherwise.

Moreover, we operate in an evolving environment, new risk factors and uncertainties emerge from time to time and it is not possible for management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. We qualify all of our forward-looking statements by these cautionary statements.

We undertake no obligation to update or revise these forward-looking statements, except as required under the federal securities laws.

Overview

We are a lifestyle brand of men’s and women’s casual wear, workwear and accessories sold primarily through our own omnichannel platform. We offer products nationwide through our website and catalog. In 2010, we initiated our omnichannel platform with the opening of our first store. Since then, we have expanded our retail presence, and as of May 4, 2025, we operated 62 retail stores and three outlet stores.

We offer a comprehensive line of innovative, durable and functional products, such as our Longtail T^® shirts, Buck Naked^TM underwear, Fire Hose^® work pants, and No-Yank^® Tank, which reflect our position as the Modern, Self-Reliant American Lifestyle brand. Our brand has a heritage in workwear that transcends tradesmen and appeals to a broad demographic for everyday and on-the-job use.

From our heritage as a catalog for those working in the building trades, Duluth Trading has become a widely recognized brand and proprietary line of innovative and functional apparel and gear. Over the last decade, we have created strong brand awareness, built a loyal customer base and generated sales momentum. We have done so by sticking to our roots of “there’s gotta be a better way” and through our relentless focus on providing our customers with quality, functional products.

A summary of our financial results is as follows:

Net sales decreased by 12.0% over the prior year first quarter to $102.7 million;

Net loss of $15.3 million in fiscal 2025 first quarter compared to the prior year first quarter net loss of $7.9 million; and

Adjusted EBITDA decreased to ($3.8) million in fiscal 2025 first quarter compared to the prior year first quarter Adjusted EBITDA of $1.8 million.

See the “Reconciliation of Net Loss to EBITDA and EBITDA to Adjusted EBITDA” section for a reconciliation of our net loss to EBITDA and EBITDA to Adjusted EBITDA, both of which are non-U.S. GAAP financial measures. See also the information under the heading “Adjusted EBITDA” in the section “How We Assess the Performance of Our Business” for our definition of Adjusted EBITDA.

Our management’s discussion and analysis includes market sales metrics for our stores, website and catalog sales. Market areas are determined by a third-party that divides the United States and Puerto Rico into 280 unique geographical areas. Our store market sales metrics include sales from our stores, website and catalog. Our non-store market sales metrics include sales from our website and catalog.

Economic Conditions

The macroeconomic environment is experiencing inflation, tariff and recessionary concerns and general uncertainty regarding the future economic environment and therefore we cannot predict the ultimate impact of these economic conditions on our operational and financial performance. Given the uncertainty, we cannot reasonably estimate store traffic patterns and the prolonged impact on overall consumer demand.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of financial and operating measures that affect our operating results.

Net Sales

Net sales reflect our sale of merchandise plus shipping and handling revenue collected from our customers, less returns and discounts. Direct-to-consumer sales are recognized upon shipment of the product and store sales are recognized at the point of sale.

Gross Profit

Gross profit is equal to our net sales less cost of goods sold. Gross profit as a percentage of our net sales is referred to as gross margin. Cost of goods sold includes the direct cost of purchased merchandise; inventory shrinkage; inventory adjustments due to obsolescence, including excess and slow-moving inventory and lower of cost and net realizable reserves; inbound freight; and freight from our distribution centers to our retail stores. The primary drivers of the costs of individual goods are raw material costs. Depreciation and amortization are excluded from gross profit. We expect gross profit to increase to the extent that we successfully grow our net sales. Our gross profit may not be comparable to other retailers, as we do not include distribution network and store occupancy expenses in calculating gross profit, but instead we include them in selling, general and administrative expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include all operating costs not included in cost of goods sold. These expenses include all payroll and payroll-related expenses and occupancy expenses related to our stores and to our operations at our headquarters, including utilities, depreciation and amortization and distribution network expenses. They also include marketing expense, which primarily includes digital and television advertising, catalog production, mailing and print advertising costs, as well as all logistics costs associated with shipping product to our customers, consulting and software expenses and professional services fees. Selling, general and administrative expenses as a percentage of net sales is usually higher in lower-volume quarters and lower in higher-volume quarters because a portion of the costs are relatively fixed.

Adjusted EBITDA

We believe Adjusted EBITDA is a useful measure of operating performance, as it provides a clearer picture of operating results by excluding the effects of financing and investing activities by eliminating the effects of interest and depreciation costs and eliminating expenses that are not reflective of underlying business performance. We use Adjusted EBITDA to facilitate a comparison of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business.

We define Adjusted EBITDA as consolidated net income before depreciation and amortization, interest expense and provision for income taxes adjusted for the impact of certain items, including non-cash, restructuring expenses and other items we do not consider representative of our ongoing operating performance. We believe Adjusted EBITDA is less susceptible to variances in actual performance resulting from depreciation, amortization and other items. We also use Adjusted EBITDA as one of the key financial metrics in determining bonus compensation for our employees. This non-GAAP measure may not be comparable to similarly titled measures used by other companies.

Results of Operations

The following table summarizes our unaudited consolidated results of operations for the periods indicated, both in dollars and as a percentage of net sales.


	Three Months Ended
	May 4, 2025			April 28, 2024
(in thousands)
Net sales	$	102,704		$	116,684
Cost of goods sold (excluding depreciation and amortization)		49,349			55,060
Gross profit		53,355			61,624
Selling, general and administrative expenses		65,707			70,595
Operating loss		(12,352)			(8,971)
Interest expense		1,481			993
Other (loss) income, net		(161)			16
Loss before income taxes		(13,994)			(9,948)
Income tax expense (benefit)		1,270			(2,083)
Net loss		(15,264)			(7,865)
Less: Net income (loss) attributable to noncontrolling interest		29			8
Net loss attributable to controlling interest	$	(15,293)		$	(7,873)
Percentage of Net sales:
Net sales		100.0	%		100.0	%
Cost of goods sold (excluding depreciation ‎and amortization)		48.0	%		47.2	%
Gross margin		52.0	%		52.8	%

Selling, general and administrative expenses	64.0	%	60.5	%
Operating loss	(12.0)	%	(7.7)	%
Interest expense	1.4	%	0.9	%
Other (loss) income, net	(0.2)	%	-	%
Loss before income taxes	(13.6)	%	(8.5)	%
Income tax expense (benefit)	1.2	%	(1.8)	%
Net loss	(14.9)	%	(6.7)	%
Less: Net income (loss) attributable to noncontrolling interest	-	%	-	%
Net loss attributable to controlling interest	(14.9)	%	(6.7)	%

Three Months Ended May 4, 2025, Compared to Three Months Ended April 28, 2024

Net Sales

Net sales decreased $14.0 million, or 12.0%, to $102.7 million in the three months ended May 4, 2025 compared to $116.7 million in the three months ended April 28, 2024. The decrease in net sales was primarily driven by decline in web traffic due to slower promotional activity.

Store market net sales decreased $6.4 million, or 8.2%, to $71.6 million in the three months ended May 4, 2025 compared to $78.1 million in the three months ended April 28, 2024. Non-store market net sales decreased by $5.5 million, or 16.5%, to $28.0 million in the three months ended May 4, 2025 compared to $33.6 million in the three months ended April 28, 2024.

Gross Profit

Gross profit decreased $8.3 million, or 13.4%, to $53.4 million in the three months ended May 4, 2025 compared to $61.6 million in the three months ended April 28, 2024. As a percentage of net sales, gross margin decreased to 52.0% of net sales in the three months ended May 4, 2025, compared to 52.8% of net sales in the three months ended April 28, 2024. The decrease in gross margin percentage was primarily driven by higher clearance penetration, partially offset by improvement in product costs from our direct to factory sourcing initiative.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $4.9 million, or 6.9%, to $65.7 million in the three months ended May 4, 2025 compared to $70.6 million in the three months ended April 28, 2024. Selling, general and administrative expenses as a percentage of net sales increased to 64.0% in the three months ended May 4, 2025, compared to 60.5% in the three months ended April 28, 2024.

The increase in selling, general and administrative expense as a percentage of net sales was mainly driven by decrease in net sales, partially offset by a decrease in advertising spend.

Income Taxes

Income tax expense was $1.3 million in the three months ended May 4, 2025, compared to income tax benefit of $2.1 million in the three months ended April 28, 2024. The provision for first quarter of fiscal 2025 reflected an addition to valuation allowance of $4.1 million which was established against the net amount of deferred tax assets as well as pre-tax loss in the previous fiscal year.

Net Loss Attributable to Controlling Interest

Net loss attributable to controlling interest was $15.3 million, in the three months ended May 4, 2025 compared to net loss of $7.9 million in the three months ended April 28, 2024.

Reconciliation of Net Loss to EBITDA and EBITDA to Adjusted EBITDA

The following table presents reconciliations of net loss to EBITDA and EBITDA to Adjusted EBITDA, both of which are non-U.S. GAAP financial measures, for the periods indicated below. See the above section titled “How We Assess the Performance of Our Business,” for our definition of Adjusted EBITDA.


	Three Months Ended
	May 4, 2025		April 28, 2024
(in thousands)
Net loss	$	(15,264)	$	(7,865)
Depreciation and amortization		6,749		8,251
Amortization of internal-use software hosting
subscription implementation costs		1,129		1,170
Interest expense		1,481		993
Income tax expense (benefit)		1,270		(2,083)
EBITDA	$	(4,635)	$	466
Long-term incentive expense		293		1,372
Impairment expense		549		—
Adjusted EBITDA	$	(3,793)	$	1,838

As a result of the factors discussed above in the “Results of Operations” section, Adjusted EBITDA decreased $5.6 million to ($3.8) million in the three months ended May 4, 2025 compared to $1.8 million in the three months ended April 28, 2024. As a percentage of net sales, Adjusted EBITDA decreased to (3.7%) of net sales in the three months May 4, 2025 compared to 1.6% of net sales in the three months ended April 28, 2024.

Liquidity and Capital Resources

General

Our business relies on cash from operating activities and a credit facility as our primary sources of liquidity. Our primary cash needs have been for inventory, marketing and advertising, payroll, store leases, and capital expenditures associated with infrastructure and information technology. The most significant components of our working capital are cash, inventory, accounts payable and other current liabilities. At May 4, 2025, our net working capital was $54.2 million, including $8.6 million of cash and cash equivalents.

We expect to spend approximately $17.0 million in fiscal 2025 on capital expenditures, inclusive of software hosting implementation costs, primarily due to investments in logistics optimization, including investments in the fulfillment network and information technology. Due to the seasonality of our business, the fourth quarter typically has the most significant impact on our amount of cash from operating activities. We also use cash in our investing activities for capital expenditures throughout all four quarters of our fiscal year.

We believe that our cash flow from operating activities and the availability of cash under our credit facility will be sufficient to cover working capital requirements and anticipated capital expenditures for the foreseeable future.

Cash Flow Analysis

A summary of operating, investing and financing activities is shown in the following table.


	Three Months Ended
	May 4, 2025		April 28, 2024
(in thousands)
Net cash used in operating activities	$	(56,463)	$	(33,666)
Net cash used in investing activities		(1,279)		(1,477)
Net cash provided by financing activities		62,986		9,785
Increase (decrease) in cash and cash equivalents	$	5,244	$	(25,358)

Net Cash Used in Operating Activities

Operating activities consist primarily of net loss adjusted for non-cash items that include depreciation and amortization, stock-based compensation and the effect of changes in operating assets and liabilities.

For the three months ended May 4, 2025, net cash used in operating activities was $56.5 million, which primarily consisted of cash used in operating assets and liabilities of $50.3 million and a $15.3 million net loss for the three months ended May 4, 2025 partially offset by depreciation of $6.7 million. The cash used in operating assets and liabilities of $50.3 million was primarily due to a $28.2 million decrease in accounts payable and $9.6 million increase in inventory.

For the three months ended April 28, 2024, net cash used in operating activities was $33.7 million, which primarily consisted of cash used in operating assets and liabilities of $33.2 million and a $7.9 million net loss for the three months ended April 28, 2024 partially offset by depreciation of $8.3 million. The cash used in operating assets and liabilities of $33.2 million was primarily due to a $10.7 million increase in inventory and $13.2 million decrease in trade accounts payable.

Net Cash Used in Investing Activities

Investing activities consist primarily of capital expenditures related to investments in infrastructure and information technology.

For the three months ended May 4, 2025 and April 28, 2024, net cash used in investing activities was $1.3 million and $1.5 million, respectively.

Net Cash Provided by Financing Activities

Financing activities consist primarily of borrowings and payments related to our revolving line of credit as well as payments on finance lease obligations.

For the three months ended May 4, 2025 and April 28, 2024, net cash provided by financing activities was $63.0 million and $9.8 million, respectively, primarily consisting of net borrowings under our revolving line of credit.

Contractual Obligations

There have been no significant changes to our contractual obligations as described in our Annual Report on Form 10-K for the fiscal year ended February 2, 2025.

Off-Balance Sheet Arrangements

We are not a party to any material off-balance sheet arrangements.

Critical Accounting Policies and Critical Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as the related disclosures of contingent assets and liabilities at the date of the financial statements. We evaluate our accounting policies, estimates, and judgments on an on-going basis. We base our estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions and such differences could be material to the consolidated financial statements.

As of the date of this filing, there were no significant changes to any of the critical accounting policies and estimates described in our 2024 Form 10-K.

Recent Accounting Pronouncements

See Note 14 “Recent Accounting Pronouncements,” of Notes to Condensed Consolidated Financial Statements included in Part 1, Item 1, of this quarterly report on Form 10-Q for information regarding recent accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes in the market risks described in our 2024 Form 10-K. See Note 3 “Debt and Credit Agreement,” of Notes to Condensed Consolidated Financial Statements included in Part 1, Item 1, of this quarterly report on Form 10-Q, for disclosure on our interest rate related to borrowings under our credit agreement.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Section 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires management of an issuer subject to the Exchange Act to evaluate, with the participation of the issuer’s principal executive and principal

financial officers, or persons performing similar functions, the effectiveness of the issuer’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act), as of the end of each fiscal quarter. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(d) and 15d-15(d) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are subject to certain legal proceedings and claims in the ordinary course of business. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, financial condition, operating results or cash flows. We establish reserves for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable.

Item 1A. Risk Factors

We operate in a rapidly changing environment that involves a number of risks that may have a material adverse effect on our business, financial condition and results of operations. For a detailed discussion of the risks that affect our business, please refer to the section entitled “Risk Factors” in our 2024 Form 10-K, or other SEC filings. There have been no material changes to our risk factors as previously disclosed in our fiscal 2024 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any equity securities during the quarter ended May 4, 2025, which were not registered under the Securities Act.

The following table contains information regarding shares acquired by us during the quarter, which consisted solely of shares acquired from employees in lieu of amounts required to satisfy minimum tax withholding requirements upon the vesting of the employees’ restricted stock during the three months ended May 4, 2025.


				Total number	Approximate dollar
				of shares purchased	value of shares that
	Total number			as part of publicly	may yet to be
	of shares	Average price		announced plans	purchased under the
Period	purchased	paid per share		or programs	plans or programs
February 3, 2025 - March 2, 2025	2,273	$	3.01	—	$	—
March 3, 2025 - April 6, 2025	242,595		2.41	—		—
April 7, 2025 - May 4, 2025	148,277		1.74	—		—
Total	393,145	$	2.16	—	$	—

Item 5. Other Information

During the three months ended May 4, 2025, no director or Section 16 officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
‎


Exhibit No.
10.1	Second Amendment, dated as of January 31, 2025, among Duluth Holdings Inc., the Lenders party thereto, Bank of America, N.A., as Administrative Agent, Swingline Lender and L/C Issuer, BofA Securities, Inc., as a Joint Lead Arranger and Sole Bookrunner, and Keybanc Capital Markets Inc., as a Joint Lead Arranger, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 6, 2025.
10.2	Employment Agreement between Stephanie L. Pugliese and Duluth Holdings Inc., effective as of May 5, 2025, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 2, 2025.+
10.3	Credit Agreement, dated as of April 28, 2025, among Duluth Holdings Inc., certain financial institutions as Lenders thereto, and BMO Bank N.A., Administrative Agent, Swing Line Lender and a Letter of Credit Issuer, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 1, 2025.
10.4	Pledge and Security Agreement, dated as of April 28, 2025, by and between Duluth Holdings Inc. and BMO Bank, N.A., incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed May 1, 2025.
10.5	Consulting Agreement, dated as of May 1, 2025, by and between Duluth Holdings Inc. and Ronald Robinson.*
10.6	Inducement Stock Award Agreement, dated May 5, 2025, by and between Ms. Pugliese and the Company.
10.7	Inducement Restricted Stock Award Agreement, dated May 5, 2025, by and between Ms. Pugliese and the Company.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act, as amended.*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended.*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended May 4, 2025 has been formatted in Inline XBRL (Inline Extensible Business Reporting Language and contained in Exhibits 101).

+	Indicates a management contract or compensation plan or arrangement
*	Filed herewith
**	In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be “furnished” and not “filed.”


Date: June 6, 2025
	DULUTH HOLDINGS INC. ‎(Registrant)
		/s/ Heena Agrawal
		Heena Agrawal
		Senior Vice President, Chief Financial Officer
		(On behalf of the Registrant and as Principal Financial Officer and Interim Principal Accounting Officer)



	Part I—Financial Information	Page
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of May 4, 2025 and February 2, 2025 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the three months ended May 4, 2025 and April 28, 2024 (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the three months ended May 4, 2025 and April 28, 2024 (Unaudited)	6
	Condensed Consolidated Statement of Shareholders’ Equity for the three months ended May 4, 2025 (Unaudited)	7
	Condensed Consolidated Statement of Shareholders’ Equity for the three months ended April 28, 2024 (Unaudited)	8
	Condensed Consolidated Statements of Cash Flows for the three months ended May 4, 2025 and April 28, 2024 (Unaudited)	9
	Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
	Part II—Other Information
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 5.	Other Information	29
Item 6.	Exhibits	30

Signatures		31