Why Duluth Stock Is Diving Today

Duluth Holdings Inc. DLTH reported a second-quarter FY23 sales decline of 1.7% year-on-year to $139.10 million, beating the consensus of $138.41 million.

EPS loss of $(0.06) missed the analyst consensus of breakeven $(0.00).

Retail store net sales decreased by 7% to $52.3 million due to slower store traffic, which was partially offset by continued strong conversion rates.

Gross margin decreased to 51.4% from 53.4%, and the gross profit decreased to $71.5 million from $75.6 million a year ago.

The gross profit margin decreased primarily due to a lower product margin rate amidst the continued promotional retail environment.

The company ended the quarter with a cash balance of $11.1 million.

CFO Update

Duluth Holdings CFO Dave Loretta will step down effective September 15. The company's VP, Chief Accounting Officer Michael Murphy, will serve as the interim CFO while the company initiated a search for a permanent replacement.

"We are incredibly excited to share the news that our new highly automated fulfillment center in Adairsville, GA is up and running ahead of schedule and on budget. The center represents a truly transformational advancement in our supply chain capabilities that moves us forward in meeting customers' growing expectations for faster online deliveries and positions us to gain operational efficiencies as early as our peak selling season this year. The investment to automate and expand capacity in our logistics network is a key pillar of our Big Dam Blueprint and I would like to thank all the team members who contributed to realizing this major milestone," President and CEO Sam Sato said.

Outlook

Duluth Holdings reaffirmed its FY23 revenue outlook of $645 million-$660 million versus the consensus of $647.56 million. 

The company expects EPS in the range of $(0.15)-$(0.08) versus the consensus of $0.05 (prior view: $0.02-$0.08).

Duluth sees an adjusted EBITDA of $40 million-$42 million (prior view: $47 million-$49 million).

Price Action: DLTH shares are trading lower by 13% at $6.39 on the last check Thursday.