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What changed in DULUTH HOLDINGS INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of DULUTH HOLDINGS INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+124 added−123 removedSource: 10-K (2025-03-24) vs 10-K (2024-03-22)

Top changes in DULUTH HOLDINGS INC.'s 2025 10-K

124 paragraphs added · 123 removed · 99 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

45 edited+7 added−15 removed221 unchanged
Biggest changeThe following discussion contains references to fiscal years 2023 and 2022, which refer to our fiscal years ended January 28, 2024 and January 29, 2023, respectively. Fiscal years 2023 and 2022 were 52-week periods. Duluth Trading is a lifestyle brand of men’s and women’s workwear, casual wear, outdoor apparel and accessories primarily sold through our own omnichannel platform.
Biggest changeDuluth Trading is a lifestyle brand of men’s and women’s workwear, casual wear, outdoor apparel and accessories primarily sold through our own omnichannel platform. We offer products nationwide through our website. In 2010, we initiated our omnichannel platform with the opening of our first store.
As a controlled company, certain exemptions under the NASDAQ listing standards exempt us from the obligation to comply with certain NASDAQ corporate governance requirements, including the requirements: that a majority of our board of directors consist of independent directors, as defined under the rules of NASDAQ; 19 Table of Contents that we have a nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
As a controlled company, certain exemptions under the 19 Table of Contents NASDAQ listing standards exempt us from the obligation to comply with certain NASDAQ corporate governance requirements, including the requirements: that a majority of our board of directors consist of independent directors, as defined under the rules of NASDAQ; that we have a nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, difficulty in integrating new systems or systems of acquired businesses or a breach of security of these systems could adversely impact the operations of our business, including disruption of our ability to accept and fulfill customer orders, effective management of inventory, inefficient ordering and replenishment of products, e-commerce operations, retail business credit card transaction authorization and processing, corporate email communications and our interaction with the public on social media.
The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, difficulty in integrating new systems or systems of acquired businesses or a breach of security of these systems has and could adversely impact the operations of our business, including disruption of our ability to accept and fulfill customer orders, effective management of inventory, inefficient ordering and replenishment of products, e-commerce operations, retail business credit card transaction authorization and processing, corporate email communications and our interaction with the public on social media.
Our products feature proprietary designs and distinct names, such as our Longtail T® shirts, Buck Naked TM underwear, Fire Hose® work pants and No-Yank TM Tank. Our product assortment appeals to our customers for their everyday and on-the-job use. The majority of our products represent enduring styles that go beyond short-lived fashion trends.
Our products feature proprietary designs and distinct names, such as our Longtail T® shirts, Buck Naked® underwear, Fire Hose® work pants and No-Yank® Tank. Our product assortment appeals to our customers for their everyday and on-the-job use. The majority of our products represent enduring styles that go beyond short-lived fashion trends.
New initiatives may be proposed in the United States that may have an impact on the trading status of certain countries and may include retaliatory duties or other trade sanctions that, if enacted, would increase the cost of products purchased from suppliers in such countries with which we do business.
New initiatives have been and may be proposed in the United States that may have an impact on the trading status of certain countries and may include retaliatory duties or other trade sanctions that, if enacted, would increase the cost of products purchased from suppliers in such countries with which we do business.
We cannot control all of the various factors that might affect timely and effective procurement of supplies of product from our third-party suppliers and delivery of merchandise to our customers. A majority of the products that we purchase must be shipped to our fulfillment centers in Wisconsin, Iowa, Georgia and Utah.
We cannot control all of the various factors that might affect timely and effective procurement of supplies of product from our third-party suppliers and delivery of merchandise to our customers. A majority of the products that we purchase must be shipped to our fulfillment centers in Wisconsin, Georgia and Utah.
Our failure to comply with the restrictive covenants under our revolving credit facility and other debt instruments could result in an event of default, which, if not cured or waived, could result in us being required to repay these borrowings before their due date.
Our failure to comply with the restrictive covenants under our revolving credit facility and other debt instruments could result in an event of default, which, if not cured or waived, could result in us being required to repay these borrowings before their due date with penalties.
We cannot be sure that we will be able to attract and retain a sufficient number of qualified personnel in future periods. Our business is seasonal, and if we do not efficiently manage inventory levels, our results of operations could be adversely affected.
We cannot be sure that we will be able to attract and retain a sufficient number of qualified personnel in future periods. Our business is seasonal, and if we do not efficiently manage inventory levels and allocation, our results of operations could be adversely affected.
The ongoing economic uncertainty continues to affect our business operations and it is impossible to predict the effect and ultimate impact of ongoing economic uncertainties. Business activities continue to face economic uncertainties, including but not limited to increased inflation and interest rates and global supply chain constraints.
The ongoing economic uncertainty continues to affect our business operations and it is impossible to predict the effect and ultimate impact of ongoing economic uncertainties. Business activities continue to face economic uncertainties, including but not limited to increased inflation and interest rates, tariffs and global supply chain constraints.
To achieve our growth strategy, we must continue to implement our operational plans and strategies, improve and expand our infrastructure of people, information systems and facilities and expand, train and manage our employee base. To support continued growth, we must effectively integrate, develop and motivate a large number of employees.
To achieve our growth strategy, we must continue to implement our operational plans and strategies, improve and expand our infrastructure of people, information systems and facilities and expand, train and manage our employee base. To support growth, we must effectively integrate, develop and motivate a large number of employees.
We are also subject to payment card association operating rules, including data security rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply.
We are also subject to payment card association operating rules, including data privacy and security rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply.
Dependence on our e-commerce business and its continued growth subjects us to certain risks, including: diversion of traffic from our stores; liability for online content; the need to keep pace with rapid technological change; government regulation of the Internet, including taxation; and threats to the computer systems that operate our website and related support systems, including viruses, malware and other malicious code, misconfiguration, systems failure or inadequacy, compromise or unauthorized access and similar disruptions.
Dependence on our e-commerce business and its continued growth subjects us to certain risks, including: diversion of traffic from our stores; liability for online content; the need to keep pace with rapid technological change; government regulation of the Internet, including data privacy and taxation; and threats to the computer systems that operate our website and related support systems, including viruses, malware and other malicious code, misconfiguration, systems failure or inadequacy, compromise or unauthorized access and similar disruptions.
We seek to ensure the consistent product quality by training Duluth Trading-certified factory auditors to selectively examine pre-production samples, conduct periodic site visits to certain of our vendors’ production facilities and inspect inbound shipments at our fulfillment centers. Fulfillment Centers We operate fulfillment centers located in Belleville, Wisconsin, Dubuque, Iowa, Salt Lake City, Utah and Adairsville, Georgia.
We seek to ensure the consistent product quality by training Duluth Trading-certified factory auditors to selectively examine pre-production samples, conduct periodic site visits to certain of our vendors’ production facilities and inspect inbound shipments at our fulfillment centers. Fulfillment Centers We operate fulfillment centers located in Belleville, Wisconsin, Salt Lake City, Utah and Adairsville, Georgia.
Financial Risks Our net sales and profits depend on the level of consumer spending for apparel, footwear and accessories, which is sensitive to general economic conditions and other factors. An economic recession or a decline in consumer spending could have a material adverse effect on our business and results of operations.
Financial Risks Our net sales and profits depend on the level of consumer spending for apparel, footwear and accessories, which is sensitive to general economic conditions and other factors. An economic recession or a decline in consumer spending or consumer sensitivity to pricing could have a material adverse effect on our business and results of operations.
We also use other paid and non-paid advertising. Our paid advertising includes search engine marketing, display advertising and paid social media. Our non-paid advertising efforts include search engine optimization, non-paid social media and email. We obtain a significant amount of traffic via search engines and, therefore, rely on search engines such as Google, Yahoo! and Bing.
We also use other paid and non-paid advertising. Our paid advertising includes search engine marketing, display advertising and paid social media. Our non-paid advertising efforts include search engine optimization, non-paid social media and email. We obtain a significant amount of traffic via search engines and, therefore, rely on search engines such as Google.
We may be unable to accurately forecast our operating results and growth rate. We may not be able to accurately forecast our operating results and growth rate. We use a variety of factors in our forecasting and planning processes, including historical results, recent history and assessments of economic and market conditions, among other things.
We may be unable to accurately forecast our operating results. We may not be able to accurately forecast our operating results. We use a variety of factors in our forecasting and planning processes, including historical results, recent history and assessments of economic and market conditions, among other things.
Severe weather events may impact our ability to supply our retail stores, deliver orders to customers on schedule and staff our retail stores, fulfillment centers and call center, which could have an adverse effect on our business and results of operations. Our product designs are not protected by substantial intellectual property rights.
Severe weather events may impact our ability to supply our retail stores, deliver orders to customers on schedule and staff our retail stores, fulfillment centers and call center, which could have an adverse effect on our business and results of operations. 17 Table of Contents Our product designs are not protected by substantial intellectual property rights.
Our business requires compliance with many laws and regulations, including labor and employment, customs, truth-in-advertising, consumer protection and zoning and occupancy laws and ordinances that regulate retailers generally and/or govern the importation, promotion and sale of merchandise and the operation of stores and warehouse facilities.
Our business requires compliance with many laws and regulations, including labor and employment, customs, truth-in-advertising, data privacy and security, consumer protection and zoning and occupancy laws and ordinances that regulate retailers generally and/or govern the importation, promotion and sale of merchandise and the operation of stores and warehouse facilities.
The imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional 18 Table of Contents administrative burdens for us and decrease our future sales, which could have an impact on our business, financial condition and results of operations.
The imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us and decrease our future sales, which could have an impact on our business, financial condition and results of operations.
Trademarks that are important in identifying and distinguishing our products and services are AKHG ® , Alaskan Hardgear ® Armachillo ® , Ballroom ® , Buck Naked ® , Bullpen ® , Cab Commander ® , Crouch Gusset ® , Dang Soft ® , Dry on the Fly ® , Duluth Trading Co ® , DuluthFlex ® , Fire Hose ® , Flexpedition ® , Longtail T ® , NoGA ® ,No Polo Shirt ® , No Yank ® , Spit & Polish ® , and Wild Boar ® .
Trademarks that are important in identifying 6 Table of Contents and distinguishing our products and services are AKHG ® , Alaskan Hardgear ® Armachillo ® , Ballroom ® , Buck Naked ® , Bullpen ® , Cab Commander ® , Crouch Gusset ® , Dang Soft ® , Dry on the Fly ® , Duluth Trading Co ® , DuluthFlex ® , Fire Hose ® , Flexpedition ® , Longtail T ® , NoGA ® , No Polo Shirt ® , No Yank ® , Spit & Polish ® , and Wild Boar ® .
As a result, offers to acquire us, which may represent a premium over the available market price of our Class B common stock, may be withdrawn or otherwise fail to be realized.
As a result, offers to acquire us, which may represent a premium over the available market price of our Class B common stock, may be withdrawn or otherwise fail to be realized. 21 Table of Contents
If our business does not generate sufficient cash flow from operations to fund these activities and 16 Table of Contents sufficient funds are not otherwise available from our existing revolving credit facility or future credit facilities, we may need additional equity or debt financing.
If our business does not generate sufficient cash flow from operations to fund these activities and sufficient funds are not otherwise available from our existing revolving credit facility or future credit facilities, we may need additional equity or debt financing.
Competitors have attempted to copy our product designs in the past, and we expect that if we are able to raise our national profile, our products may be subject to greater imitation by existing and new 17 Table of Contents competitors.
Competitors have attempted to copy our product designs in the past, and we expect that if we are able to raise our national profile, our products may be subject to greater imitation by existing and new competitors.
Patent and Trademark Office, trademark offices in other jurisdictions, 6 Table of Contents or exist under common law in the United States and other jurisdictions. The “Duluth Trading Co” trade name and trademark is used both in the United States and internationally and is material to our business.
Patent and Trademark Office, trademark offices in other jurisdictions, or exist under common law in the United States and other jurisdictions. The “Duluth Trading Co” trade name and trademark is used both in the United States and internationally and is material to our business.
The growth rates in net sales and profitability that we forecast may not be achieved. The growth of our sales and profitability depends on the growth of demand for the products we offer, and our business is affected by general economic and business conditions.
The changes in net sales and profitability that we forecast may not be achieved. Our sales and profitability depends on the growth of demand for the products we offer at the prices we offer, and our business is affected by general economic and business conditions.
If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely decline.
If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share 20 Table of Contents price would likely decline.
If we fail to comply with these rules or requirements, or if our systems containing payment information are breached or compromised, we may be liable for card issuing banks’ costs, subject to fines and higher transaction fees and/or lose our ability to accept credit and debit card payments from our customers and process electronic funds transfers or facilitate other types of payments, and our business and operating results could be adversely affected.
If we fail to comply with these rules or requirements, or if our systems containing payment information are breached or compromised, we may be liable for card issuing banks’ costs, subject to fines and higher transaction fees and/or lose our ability to accept credit and debit card payments from our customers and process electronic funds transfers or facilitate other types of payments, and our business and operating results could be adversely affected. 16 Table of Contents We depend on cash generated from our operations to support our growth, which could strain our growth.
We may be subject to assessments for additional taxes, including sales taxes, which could adversely affect our business. In accordance with current law, we pay, collect and/or remit taxes in those states where we or our subsidiary, as applicable, maintain a physical presence.
We may be subject to assessments for additional taxes, including sales taxes, which could adversely affect our business. In accordance with current law, we pay, collect and/or remit taxes in those states where we or our subsidiary, as applicable, maintain a physical presence. Tax laws are complex and their application differs from state to state.
Our rights to some of these trademarks may be limited to select markets. We also own domain names, including “duluthtrading.com.” Employees As of January 28, 2024, we employed 950 full-time and 1,373 part-time and flexible part-time employees, 1,054 of which were employed at our retail stores. The number of employees, particularly part-time employees, fluctuates depending upon seasonal needs.
Our rights to some of these trademarks may be limited to select markets. We also own domain names, including “duluthtrading.com.” Employees As of February 2, 2025, we employed 807 full-time and 1,441 part-time and flexible part-time employees, 1,085 of which were employed at our retail stores. The number of employees, particularly part-time employees, fluctuates depending upon seasonal needs.
Customer Service We are committed to providing outstanding customer service and believe in treating our customers like next-door neighbors. Our retail stores are stocked with a comprehensive assortment of our products and staffed with knowledgeable and well-trained sales associates.
Customer Service We are committed to providing outstanding customer service and believe in treating our customers like next-door neighbors. Our retail stores are stocked with a comprehensive assortment of our products and staffed with knowledgeable and well-trained sales associates. We stand behind all purchases with our “No Bull Guarantee.” Manufacturing We do not own or operate any manufacturing facilities.
If we do not accurately anticipate the future demand for a particular product or the time it will take to obtain new inventory, inventory levels will not be appropriate and our results of operations could be adversely affected. We expect a disproportionate amount of our net sales to occur during our fourth quarter.
As a result, it may be difficult to respond to changes in customer demand. If we do not accurately anticipate the future demand for a particular product or the time it will take to obtain new inventory, inventory levels will not be appropriate and our results of operations could be adversely affected.
Duluth Trading was founded in 1989 when two brothers in the home construction industry were tired of dragging tools from job to job using discarded five-gallon drywall compound buckets.
Since then, we have expanded our retail presence, and as of February 2, 2025, we operated 62 retail stores and three outlet stores. Duluth Trading was founded in 1989 when two brothers in the home construction industry were tired of dragging tools from job to job using discarded five-gallon drywall compound buckets.
Wayfair, Inc. et al , or Wayfair, that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state. In response to Wayfair, or otherwise, states or local governments have adopted, or begun to enforce, laws requiring us to calculate, collect and remit taxes on sales in their jurisdictions.
Wayfair, Inc. et al , or Wayfair, that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state.
Dependence on our e-commerce sales channel subjects us to numerous risks that could have a material adverse effect on our business, financial condition and results of operations. Our results of operations and financial condition are dependent on maintaining our e-commerce business and expanding our e-commerce business is an important part of our growth strategy.
Our results of operations and financial condition are dependent on maintaining our e-commerce business and expanding our e-commerce business is an important part of our growth strategy.
All of our products are produced according to our specifications, and we require all of our manufacturers to adhere to strict regulatory compliance and standards of conduct.
To ensure that our high standards of quality and timely delivery of merchandise are met, we work closely with our third-party partners. All of our products are produced according to our specifications, and we require all of our manufacturers to adhere to strict regulatory compliance and standards of conduct.
If such claims are successful, our business and results of operations could be materially adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and materially adversely affect our business, financial condition and operating results. 21 Table of Contents Anti-takeover provisions in our charter documents and under Wisconsin law could make an acquisition of our company more difficult, limit attempts by our shareholders to replace or remove our current management and limit the market price of our Class B common stock.
If such claims are successful, our business and results of operations could be materially adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and materially adversely affect our business, financial condition and operating results.
As we expand our business, we will need significant amounts of cash to pay our existing and future lease obligations, purchase inventory, pay personnel and invest in our infrastructure and facilities.
We primarily rely on cash flow generated from our direct-to-consumer and retail store sales and borrowings under our credit facility to fund our current operations and our growth initiatives. As we expand our business, we will need significant amounts of cash to pay our existing and future lease obligations, purchase inventory, pay personnel and invest in our infrastructure and facilities.
Our business is subject to seasonal influences, with increased net sales and net income realized during the fourth quarter of our fiscal year, which includes the holiday season. We must maintain sufficient inventory levels to operate our business successfully, but we must also avoid accumulating excess inventory, which increases working capital needs and potentially lowers gross margins.
Our business is subject to seasonal influences, with increased net sales and net income realized during the fourth quarter of our fiscal year, which includes the holiday season.
This usually requires us to order our products, and enter into commitments for the purchase of our products, well in advance of the time these products will be offered for sale. As a result, it may be difficult to respond to changes in customer demand.
Some of these suppliers often require lengthy advance notice of order requirements in order to be able to manufacture and supply products in the quantities requested. This usually requires us to order our products, and enter into commitments for the purchase of our products, well in advance of the time these products will be offered for sale.
Relying on third-party service providers puts us at risk from disruptions in their operations, such as employee strikes, inclement weather and their inability to meet our shipping demands. Our efforts to mitigate the impact of future thresholds may not be successful or may result in similar surcharges.
Relying on third-party service providers puts us at risk from disruptions in their operations, such as employee strikes, inclement weather and their inability to meet our shipping demands. Moreover, we may be unable to obtain terms as favorable as those received from the transportation providers we currently use, which would further increase our costs.
We may be subject to shipping surcharges and thresholds during the peak holiday shopping season, which may have a negative impact on our earnings. These factors may negatively impact our financial condition and results of operations.
In addition, if our products are not delivered to our customers on time, our customers may cancel their orders or we may lose business from these customers in the future. We may be subject to shipping surcharges and thresholds during the peak holiday shopping season, which may have a negative impact on our earnings.
Our failure to comply with restrictive covenants under our revolving credit facility and other debt instruments could trigger prepayment obligations.
Failure to accurately forecast our operating results could cause investors’ perceptions of our business to be adversely affected, and the market price of our Class B common stock could decline. Our failure to comply with restrictive covenants under our revolving credit facility and other debt instruments could trigger prepayment obligations.
If we do not stock or restock popular products in amounts sufficient to meet customer demand, it could significantly affect our revenue and our future growth. If we overstock products, we may be required to take significant inventory markdowns or write-offs and incur commitment costs, which could reduce profitability.
We expect a disproportionate amount of our net sales to occur during our fourth quarter. If we do not stock or restock popular products in amounts sufficient to meet customer demand, it could significantly affect our revenue and our future growth.
We have built strong, long-term relationships with our vendors. In fiscal 2023, 59% of our purchases came from our largest supplier, an agent partner in Hong Kong who manages multiple factories across Asia and Latin America, including Bangladesh, Cambodia, China, Egypt, Honduras, Indonesia, Mexico, Pakistan, and Vietnam.
Instead, we arrange with third-party vendors for the manufacturing of our merchandise. We have built strong, long-term relationships with our vendors. In fiscal 2024, 43% of our purchases came from our largest supplier, an agent partner in Hong Kong.
Our sourcing strategy focuses on identifying and employing vendors that provide quality materials and fine craftsmanship that our customers expect of our brand. To ensure that our high standards of quality and timely delivery of merchandise are met, we work closely with our third-party partners.
Goods manufactured on our behalf, ("non-market buy") are sourced from multiple factories across the globe, including concentrations in Vietnam, Indonesia, Pakistan, Bangladesh, and Cambodia. Our sourcing strategy focuses on identifying and employing vendors that provide quality materials and fine craftsmanship that our customers expect of our brand.
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We offer products nationwide through our website. 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 January 28, 2024, we operated 62 retail stores and three outlet stores.
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The following discussion contains references to fiscal years 2024 and 2023, which refer to our fiscal years ended February 2, 2025 and January 28, 2024, respectively. Fiscal year 2024 was a 53-week period and 2023 was a 52-week period.
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We stand behind all purchases with our “No Bull Guarantee.” Our call center is open for calls from 5 A.M. to 1 A.M. Central Time, seven days a week and is staffed with friendly, knowledgeable representatives dedicated to making every customer experience positive.
Added
Our efforts to mitigate the impact of future thresholds may not be successful or may result in similar surcharges. These factors may negatively impact our financial condition and results of operations. Dependence on our e-commerce sales channel subjects us to numerous risks that could have a material adverse effect on our business, financial condition and results of operations.
Removed
As a convenience to our customers, we offer live chat through our website, which is available from 7 A.M. to 8 P.M. Central Time on weekdays and 8 A.M. to 5 P.M. Central Time on weekends. Manufacturing We do not own or operate any manufacturing facilities. Instead, we arrange with third-party vendors for the manufacturing of our merchandise.
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We must maintain sufficient inventory levels and properly allocate inventory throughout our distribution network to operate our business successfully, but we must also avoid accumulating excess inventory, which increases working capital needs and potentially lowers gross margins. We obtain substantially all of our inventory from suppliers located outside the 15 Table of Contents United States.
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Moreover, we may be unable to obtain terms as favorable as those received from the transportation providers we currently use, which would further increase our costs. In addition, if our products are not delivered to our customers on time, our customers may cancel their orders or we may lose business from these customers in the future.
Added
If we overstock products, we may be required to take significant inventory markdowns or write-offs and incur commitment costs, as well as incur costs related to a pack-and-hold approach for inventory, which could reduce profitability.
Removed
We obtain substantially all of our inventory from suppliers located outside the United States. Some of these suppliers often require lengthy advance notice of 15 Table of Contents order requirements in order to be able to manufacture and supply products in the quantities requested.
Added
For example, during the holiday season in 2024, there were challenges in inventory planning resulting in delays in processing at a legacy fulfillment center.
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We depend on cash generated from our operations to support our growth, which could strain our growth. We primarily rely on cash flow generated from our direct-to-consumer and retail store sales and borrowings under our credit facility to fund our current operations and our growth initiatives.
Added
In response to Wayfair, or otherwise, states or local governments have adopted, or begun to enforce, laws requiring us to 18 Table of Contents calculate, collect and remit taxes on sales in their jurisdictions.
Removed
Failure to accurately forecast our operating results and growth rate could cause our actual results to be materially lower than anticipated, and if our growth rates decline as a result, investors’ perceptions of our business may be adversely affected, and the market price of our Class B common stock could decline.
Added
Anti-takeover provisions in our charter documents and under Wisconsin law could make an acquisition of our company more difficult, limit attempts by our shareholders to replace or remove our current management and limit the market price of our Class B common stock.
Removed
While we believe that we have appropriately remitted all taxes based on our interpretation of applicable law, tax laws are complex and their application differs from state to state.
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A material weakness in our system of internal control over financial reporting was identified. Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on the effectiveness of our system of internal control.
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As a public company, we are required by Section 404 of the Sarbanes-Oxley Act to evaluate the effectiveness of our internal control over financial reporting, beginning with this Annual Report on Form 10-K for the year ended January 28, 2024.
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We must also include a report issued by our independent registered public accounting firm based on their audit of our internal controls over financial reporting.
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In connection with our assessment of internal control over financial reporting for the fiscal year, we determined that we did not maintain effective internal control over financial reporting because the Company did not perform effective risk 20 Table of Contents assessment related to the mapping of general ledger accounts to the consolidated financial statements resulting in manual controls in the financial reporting process that were not designed to sufficiently mitigate the risk of incorrect presentation of certain general ledger accounts in the consolidated financial statements.
Removed
While the control deficiency did not result in a material misstatement to the consolidated financial statements, there is a reasonable possibility that a material misstatement of our consolidated financial statements may not have been prevented or detected on a timely basis.
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We have initiated the appropriate steps to remediate the control deficiency contributing to the material weakness to ensure these controls are designed, implemented and operating effectively.
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The occurrence of, or failure to remediate, a material weakness and any future material weaknesses in our internal control over financial reporting or determination that our disclosure controls and procedures are ineffective may have other consequences that could materially and adversely affect our business, including an adverse impact on the market price of our common stock, potential actions or investigations by regulatory authorities, adverse legal action by stakeholders, or a loss of investor confidence and damage to our reputation.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAlong with this model, we engage and utilize various third parties to measure risk profiles of ourselves and vendors, security threats specific to our Company both internal and external through multiple avenues such as website and social media and perform periodic penetration tests to identify cybersecurity risks and threats to the Company.
Biggest changeAlong with this model, we engage and utilize various third parties to measure risk profiles of ourselves and vendors, security threats specific to our Company both internal and external through multiple avenues such as our website and social media and perform periodic penetration tests on Company systems to identify cybersecurity risks and threats to the Company.
This includes r eviewing the Company’s cybersecurity and other information technology risks, controls and procedures, including high-level review of the threat landscape facing the Company and the Company’s strategy to mitigate cybersecurity risks and potential breaches, and the Company’s plan to respond to data breaches.
This includes r eviewing the Company’s cybersecurity and other information technology risks, controls and procedures, including a high-level review of the threat landscape facing the Company and the Company’s strategy to mitigate cybersecurity risks and potential breaches, and the Company’s plan to respond to data breaches.
“Risk Factors” for a discussion of our information technology and cybersecurity risks. In fiscal 2023, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition. 23 Table of Contents
“Risk Factors” for a discussion of our information technology and cybersecurity risks. In fiscal 2024, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition. 23 Table of Contents
Cybersecurity Governance Our audit committee of our board of the directors is formally charged with oversight of cybersecurity risk.
Cybersecurity Governance Our audit committee of our board of directors is formally charged with oversight of cybersecurity risk.
We contractually require third parties to report cybersecurity incidents to us so we can assess the impact of the incident and any necessary regulatory reporting obligations that may be required.
We contractually require third parties to report cybersecurity incidents, if applicable, to us so we can assess the impact of the incident and any necessary regulatory reporting obligations that may be required.
These risks include, among others described in our risk factor disclosures in Item 1A of this Annual Report on Form 10-K: operational risks, fraud, harm to employees or customers and violation of data privacy or security laws. These cybersecurity risks make it necessary that we expend extensive assets on cybersecurity.
These risks include, among others described in our risk factor disclosures in Item 1A of this Annual Report on Form 10-K: operational risks, fraud, harm to employees or customers and violation of data privacy or security laws. These cybersecurity risks make it necessary that we incur significant expenditures on cybersecurity.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocation Number of Stores Primary Use Gross Sq Ft Leased/Owned Retail Stores North East Connecticut 1 Store 9,792 Leased Maine 1 Store 12,951 Leased Massachusetts 1 Store 16,360 Leased New Jersey 2 Store 24,741 Leased Pennsylvania 2 Store 34,945 Leased Rhode Island 1 Store 14,528 Leased Midwest Illinois 3 Store 38,410 Leased Indiana 1 Store 14,557 Leased Iowa 1 Store 12,249 Leased Kansas 1 Store 15,385 Leased Michigan 3 Store 45,588 Leased Minnesota 4 Store 61,900 Leased Missouri 2 Store 27,692 Leased Nebraska 1 Store 15,757 Leased North Dakota 1 Store 14,557 Leased Ohio 4 Store 58,420 Leased South Dakota 1 Store 9,166 Leased Wisconsin 4 Store 53,246 Leased South Alabama 2 Store 31,312 Leased Arkansas 1 Store 15,656 Leased Florida 1 Store 14,557 Leased Georgia 1 Store 20,041 Leased Kentucky 2 Store 28,582 Leased North Carolina 2 Store 41,672 Leased Oklahoma 1 Store 15,536 Leased Tennessee 2 Store 27,325 Leased Texas 6 Store 92,212 Leased Virginia 2 Store 31,828 Leased West Alaska 1 Store 25,409 Leased Colorado 3 Store 52,643 Leased Oregon 2 Store 39,463 Leased Utah 1 Store 15,602 Leased Washington 1 Store 15,656 Leased Other Mount Horeb, WI Photo Studio 7,000 Leased Belleville, WI Outlet store 17,890 Owned Oshkosh, WI Outlet store 12,777 Leased Red Wing, MN Outlet store 15,560 Leased Mount Horeb, WI Corporate headquarters 108,000 Leased Kowloon, Hong Kong Office 1,855 Leased Belleville, WI Fulfillment center 220,000 Owned Dubuque, IA Fulfillment center 216,000 Leased Adairsville, GA Fulfillment center 494,144 Leased Salt Lake City, UT Fulfillment center 228,800 Leased The leases on our retail stores expire at various times and are subject to renewal options and rent escalation provisions.
Biggest changeLocation Number of Stores Primary Use Gross Sq Ft Leased/Owned Retail Stores North East Connecticut 1 Store 9,792 Leased Maine 1 Store 12,951 Leased Massachusetts 1 Store 16,360 Leased New Jersey 2 Store 24,741 Leased Pennsylvania 2 Store 34,945 Leased Rhode Island 1 Store 14,528 Leased Midwest Illinois 3 Store 38,410 Leased Indiana 1 Store 14,557 Leased Iowa 1 Store 12,249 Leased Kansas 1 Store 15,385 Leased Michigan 3 Store 45,588 Leased Minnesota 4 Store 61,900 Leased Missouri 2 Store 27,692 Leased Nebraska 1 Store 15,757 Leased North Dakota 1 Store 14,557 Leased Ohio 4 Store 58,420 Leased South Dakota 1 Store 9,166 Leased Wisconsin 4 Store 53,246 Leased South Alabama 2 Store 31,312 Leased Arkansas 1 Store 15,656 Leased Florida 1 Store 14,557 Leased Georgia 1 Store 20,041 Leased Kentucky 2 Store 28,582 Leased North Carolina 2 Store 41,672 Leased Oklahoma 1 Store 15,536 Leased Tennessee 2 Store 27,325 Leased Texas 6 Store 92,212 Leased Virginia 2 Store 31,828 Leased West Alaska 1 Store 25,409 Leased Colorado 3 Store 52,643 Leased Oregon 2 Store 39,463 Leased Utah 1 Store 15,602 Leased Washington 1 Store 15,656 Leased Leased to Open New Store Kansas City, Missouri Store 16,045 Leased Other Mount Horeb, WI Photo Studio 7,000 Leased Belleville, WI Outlet store 17,890 Owned Oshkosh, WI Outlet store 12,777 Leased Red Wing, MN Outlet store 15,560 Leased Mount Horeb, WI Corporate headquarters 108,000 Leased Kowloon, Hong Kong Office 1,855 Leased Belleville, WI Fulfillment center 220,000 Owned Adairsville, GA Fulfillment center 494,144 Leased Salt Lake City, UT Fulfillment center 228,800 Leased We consider these properties to be in good condition and believe that our facilities are adequate for our operations and provide sufficient capacity to meet our anticipated requirements.
ITEM 2. PROPERTIES The following table sets forth the location, primary use and size of our leased and owned facilities as of January 28, 2024.
ITEM 2. PROPERTIES The following table sets forth the location, primary use and size of our leased and owned facilities as of February 2, 2025.
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We consider these properties to be in good condition and believe that our facilities are adequate for our operations and provide sufficient capacity to meet our anticipated requirements. 24 Table of Contents
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The leases on our retail stores expire at various times and are subject to renewal options and rent escalation provisions. As we approach lease renewals for about 25% of our stores through 2026, we are thoroughly evaluating each location for remodel, relocation, or exit based on enhance performance standards. 24 Table of Contents

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeSutera has served as our Senior Vice President, Chief Technology Officer and Logistics since August 2022. Mr. Sutera previously served as the Chief Technology Officer of JD Sports Fashion / Finish Line from March 2016 through August 2021, where Mr. Sutera oversaw the company’s information and technology functions and digital operational solutions. Before that, Mr.
Biggest changeHe previously served as US Chief Technology & Operations Officer of Signa Sports United from January 2022 to August 2022, as Executive Vice President/Chief Technology & Information Officer of JD Sports Fashion from March 2016 to August 2021, as Senior Vice President/CTO for Hudson Bay Corporation from November 2013 to February 2016 and as Senior Vice President of Digital Technology & Operations of Saks Fifth Avenue from March 2007 to November 2013.
Officers are appointed annually by the Board of Directors at the meeting of directors immediately following the annual meeting of shareholders. There are no family relationships among any officers or director, except as disclosed below, arrangements or understandings between any officer and any other person pursuant to which the officer was selected.
Officers are appointed annually by the Board of Directors at the meeting of directors immediately following the annual meeting of shareholders. There are no family relationships among any officers or director, except as disclosed below, or arrangements or understandings between any officer and any other person pursuant to which the officer was selected.
Sato began his career in 1985 at Nordstrom Inc., where he held various leadership roles within merchandising. Mr. Sato has been involved in the retail industry for over 30 years. Heena K. Agrawal 48 Ms. Agrawal has served as our Senior Vice President and Chief Financial Officer since February 2024. Ms.
Sato began his career in 1985 at Nordstrom Inc., where he held various leadership roles within merchandising. Mr. Sato has been involved in the retail industry for over 30 years. Heena K. Agrawal 49 Ms. Agrawal has served as our Senior Vice President and Chief Financial Officer since February 2024. Ms.
Homolka previously served as Chief Property and Design Officer and Vice President of Real Estate, Store Design and Construction at Cabela’s from October 2015 to February 2017 and Vice President of Human Resources and Asset Protection from January 2012 to October 2015. 26 Table of Contents Richard W. Schlecht 43 Mr.
Homolka previously served as Chief Property and Design Officer and Vice President of Real Estate, Store Design and Construction at Cabela’s from October 2015 to February 2017 and Vice President of Human Resources and Asset Protection from January 2012 to October 2015. Richard W. Schlecht 44 Mr.
Homolka 57 Mr. Homolka has served as our Senior Vice President of Talent, DE&I, and Retail Operations since February 2020 and previously served as our Vice President of Human Resources, Store Operations and Asset Protection from January 2019 to February 2020, and Vice President of Human Resources from February 2017 to January 2019. Mr.
Homolka has served as our Senior Vice President of Talent, Retail Store Operations, Contact Center Operations, Asset Protection & Safety since February 2020 and previously served as our Vice President of Human Resources, Store Operations and Asset Protection from January 2019 to February 2020, and Vice President of Human Resources from February 2017 to January 2019. Mr.
The information presented below is as of March 22, 2024. Name Age Office Samuel M. Sato 60 Mr. Sato was appointed to our Board of Directors in May 2021, and since that time has served as President and Chief Executive Officer.
Schlecht will assume day-to-day leadership of the Company. Samuel M. Sato 61 Mr. Sato was appointed to our Board of Directors in May 2021, and since that time has served as President and Chief Executive Officer.
Shepherd has served as our Senior Vice President of Brand and Marketing since October 2023, serving as caretaker of the brand and voice of customer experience across all facets of the Company.
Weber has served as our Senior Vice President of Brand and Marketing since August 2024, serving as caretaker of brand and marketing across all facets of the company. From July 2023 to August 2024, Mr. Weber served as our Vice President of Brand and Marketing, taking on successively greater responsibility of the company’s brand, marketing, and customer analytics functions.
Mr. Schlecht holds a BSBA degree with a minor in Statistics from Denver University. Mr. Schlecht is the son of Stephen L. Schlecht, the Chairman of the Board of Directors of Duluth Holdings Inc. Neala K. Shepherd 47 Ms.
Mr. Schlecht holds a BSBA degree with a minor in Statistics from Denver University. Mr. Schlecht is the son of Stephen L. Schlecht, the Chairman of the Board of Directors of Duluth Holdings Inc. Albert J. Sutera 59 Mr. Sutera has served as our Senior Vice President, Chief Technology Officer and Logistics since August 2022.
Ms. Agrawal holds a Bachelor of Commerce, Accounting, and Taxation degree from Narsee Monjee College of Commerce and Economics and an M.B.A. from Indiana University Kelley School of Business. Ms. Agrawal has been involved in the retail industry for over 20 years. Albert J. Sutera 57 Mr.
Ms. Agrawal holds a Bachelor of Commerce, Accounting, and Taxation degree from Narsee Monjee College of Commerce and Economics, an M.B.A. from the Kelley School of Business at Indiana University, CPA (inactive), and is a CFA charter holder. Eli M. Getson 54 Mr. Getson has served as our Senior Vice President and Chief Merchandising Officer since August 2024.
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Sutera served as the Chief Technology Officer for the Hudson’s Bay Company from 2013 to 2016 and Chief Technology Officer & Digital Operations for Saks Fifth Avenue from 2007 to 2013. Earlier in his career, he held senior technology roles with companies including JetBlue Airways, Liberty Travel / GOGO Worldwide Vacations, Volvo North America, and General Electric. David S.
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The information presented below is as of March 21, 2025. Name Age Office Stephen L. Schlecht 77 Mr. Schlecht is the founder of our Company and has served as Chairman of the Board of Directors and Senior Advisor since May 2021. Mr. Schlecht has served on our Board of Directors since our founding in 1986. Mr.
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She previously served as our Senior Vice President of Customer Experience from March 2022 to October 2023, Vice President of Merchandising and Marketing from May 2020 to March 2022 and Vice President of Marketing from February 2019 to May 2020.
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Schlecht previously served as Executive Chairman from February 2015 to May 2021, and as Chief Executive Officer from August 2019 to May 2021. Prior to that, Mr. Schlecht served as Chairman of the Board of Directors and Chief Executive Officer from February 2003 to February 2015 and as President from February 2003 to February 2012.
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Prior to joining Duluth Trading, she served as Senior Director of Marketing for The Buckle, a leading specialty retailer in fashion apparel, from October 2017 to 2019. Previously, she spent 15 years at Cabela’s in a variety of leadership roles across marketing, advertising, creative and brand, most recently serving as Senior Director of Marketing from September 2015 to October 2017.
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He also served as President and Chief Executive Officer of GEMPLER’S, Inc., which he founded in 1986, until February 2003. Mr. Schlecht holds a B.S.B.A. degree and an M.B.A. from Northwestern University. As previously announced, the Board of Directors of the Company appointed Mr.
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She earned a B.S. degree in Communications / Marketing from Oklahoma Christian University in 1999. PART II
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Schlecht as Interim Chief Executive Officer of the Company in addition to his role as Senior Advisor to the Company, effective April 25, 2025, unless the Board appoints a permanent Chief Executive Officer prior to such date. During the transition period between the announcement of Mr. Sato’s retirement and April 25, 2025, Mr.
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From December 2016 through April 2024, Mr. Getson served as Senior Vice President and General Merchandise Manager at Academy Sports and Outdoors, a retailer of trending outdoor and sports categories. From June 2010 through November 2016, Mr. Getson served as Executive Vice President and General Merchandise Manager at Golfsmith International. Prior to that, Mr.
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Getson served in various roles at Cabela’s, Bon-Ton Corporation, Perry Ellis International, and Polo Ralph Lauren. 26 Table of Contents David S. Homolka 58 Mr.
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Mr. Sutera holds a B.S. in Finance and Accounting from Montclair State University and a Master’s Certificate in Computer Science and Project Management from Stevens Institute of Technology. Garth N. Weber 55 Mr.
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Prior to joining Duluth Trading, he served as Vice President of Brand and Creative at Wilson Sporting Goods from 2021 to 2023, a leading manufacturer and retailer in high-performance sports equipment, apparel, footwear and accessories. Previously, he spent nearly 5 years at adidas as Senior Director of Global Brand Design. Mr.
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Weber earned a Bachelor of Arts degree in Philosophy from Wheaton College and a Master of Fine Arts degree in Fiction from the State University of New York Brockport. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe believe the number of beneficial holders of the Company’s Class B common stock is in excess of this amount. Dividends Our Class B common stock began trading on November 19, 2015. Since that time, we have not declared any cash dividends, and we do not anticipate declaring any cash dividends in the foreseeable future.
Biggest changeWe believe the number of beneficial holders of the Company’s Class B common stock is in excess of this amount. Dividends Our Class B common stock began trading on November 19, 2015.
Our Class A common stock is neither listed nor traded on an exchange. Shareholders of Record As of March 5, 2024, there were approximately 107 holders of record, based upon data provided by our transfer agent, of our Class B common stock, one of whom is the sole holder of our Class A common stock.
Our Class A common stock is neither listed nor traded on an exchange. Shareholders of Record Based upon data provided by our transfer agent, as of March 21, 2025 , there were approximately 107 holders of record of our Class B common stock, one of whom is the sole holder of our Class A common stock.
I TEM 6. [RESERVED] ‎ 27 Table of Contents
I TEM 6. [RESERVED] ‎ 28 Table of Contents
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Securities Authorized for Issuance Under Equity Compensation Plans Information required by this Item concerning our Equity Compensation Plan Information is set forth in our definitive proxy statement for our 2024 annual meeting of shareholders to be held on May 23, 2024 (the “Proxy Statement”) under the caption “Proposal Four: Approval of the 2024 Equity Incentive Plan of Duluth Holdings, Inc.”, and is incorporated herein by reference .
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Since that time, we have not declared any cash dividends, and we do not anticipate declaring any cash dividends in the foreseeable future. 27 Table of Contents Securities Authorized for Issuance Under Equity Compensation Plans Information regarding our equity compensation plans is set forth in Part III, Item 12. Security Ownership of Beneficial Owners and Management and Related Shareholder Matters.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFiscal Year Ended January 28, 2024 January 29, 2023 (in thousands) Net sales 646,681 653,307 Cost of goods sold (excluding depreciation and amortization) 321,710 309,872 Gross profit 324,971 343,435 Selling, general and administrative expenses 333,804 337,204 Operating (loss) income (8,833) 6,231 Interest expense 4,156 3,653 Other income, net 923 376 (Loss) income before income taxes (12,066) 2,954 Income tax (benefit) expense (2,693) 708 Net (loss) income (9,373) 2,246 Less: Net income (loss) attributable to noncontrolling interest (17) (58) Net (loss) income attributable to controlling interest $ (9,356) $ 2,304 Percentage of Net sales: Net sales 100.0 % 100.0 % Cost of goods sold (excluding depreciation and amortization) 49.7 % 47.4 % Gross profit 50.3 % 52.6 % Selling, general and administrative expenses 51.6 % 51.6 % Operating (loss) income (1.4) % 1.0 % Interest expense 0.6 % 0.6 % Other income, net 0.1 % — % (Loss) income before income taxes (1.9) % 0.5 % Income tax (benefit) expense (0.4) % 0.1 % Net (loss) income (1.4) % 0.3 % Less: Net income (loss) attributable to noncontrolling interest — % — % Net (loss) income attributable to controlling interest (1.4) % 0.3 % Fiscal 2023 Compared to Fiscal 2022 Net Sales Net sales decreased $6.6 million, or 1.0%, to $646.7 million in fiscal 2023 compared to $653.3 million in fiscal 2022.
Biggest changeFiscal Year Ended February 2, 2025 January 28, 2024 (in thousands) Net sales 626,629 646,681 Cost of goods sold (excluding depreciation and amortization) 318,119 321,710 Gross profit 308,510 324,971 Selling, general and administrative expenses 337,623 334,540 Restructuring expense 7,748 — Operating loss (36,861) (9,569) Interest expense 4,554 4,156 Other income, net 173 923 Loss before income taxes (41,242) (12,802) Income tax expense (benefit) 2,370 (2,862) Net loss (43,612) (9,940) Less: Net income (loss) attributable to noncontrolling interest 59 (17) Net loss attributable to controlling interest $ (43,671) $ (9,923) Percentage of Net sales: Net sales 100.0 % 100.0 % Cost of goods sold (excluding depreciation and amortization) 50.8 % 49.7 % Gross profit 49.2 % 50.3 % Selling, general and administrative expenses 53.9 % 51.7 % Restructuring expense 1.2 % — % Operating loss (5.9) % (1.5) % Interest expense 0.7 % 0.6 % Other income, net — % — % Loss before income taxes (6.6) % (2.0) % Income tax expense (benefit) 0.4 % (0.4) % Net loss (7.0) % (1.5) % Less: Net income (loss) attributable to noncontrolling interest — % — % Net loss attributable to controlling interest (7.0) % (1.5) % Fiscal 2024 Compared to Fiscal 2023 Net Sales Net sales decreased $20.1 million, or 3.1%, to $626.6 million in fiscal 2024 compared to $646.7 million in fiscal 2023.
Non-GAAP Financial Measures See the above section titled “How We Assess the Performance of Our Business,” for our definition of Adjusted EBITDA and Free Cash Flow. Reconciliation of Net (Loss) Income to EBITDA and EBITDA to Adjusted EBITDA The following table represents reconciliations of net (loss) income to EBITDA and EBITDA to Adjusted EBITDA for the periods indicated below.
Non-GAAP Financial Measures See the above section titled “How We Assess the Performance of Our Business,” for our definition of Adjusted EBITDA and Free Cash Flow. Reconciliation of Net Loss to EBITDA and EBITDA to Adjusted EBITDA The following table represents reconciliations of net (loss) income to EBITDA and EBITDA to Adjusted EBITDA for the periods indicated below.
Over the last decade, we have created strong brand awareness, built a loyal customer base and generated robust 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.
Over the last decade, we have created strong brand awareness, built a loyal customer base and generated sales growth. 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.
Revenue Recognition Revenue for merchandise that is shipped to our customers from our fulfillment centers and stores is recognized upon shipment following customer payment, which is when the customer obtains control of the product and has the ability to direct the use of the product, including, among other options, the ability to redirect the product to a different shipping destination.
Revenue Recognition Revenue for merchandise that is shipped to our customers from our fulfillment centers and stores is recognized upon shipment following customer payment, which is when the customer obtains control of the product and has the ability to direct 35 Table of Contents the use of the product, including, among other options, the ability to redirect the product to a different shipping destination.
Merchandise exchanges of 35 Table of Contents the same product and price are not considered merchandise returns and are therefore excluded when calculating the sales returns reserve. Inventories Our inventories are composed of finished goods and are stated at the lower of cost or net realizable value, with cost determined using the first-in, first-out method.
Merchandise exchanges of the same product and price are not considered merchandise returns and are therefore excluded when calculating the sales returns reserve. Inventories Our inventories are composed of finished goods and are stated at the lower of cost or net realizable value, with cost determined using the first-in, first-out method.
For a discussion of fiscal 2022 results compared to fiscal 2021, refer to the Company’s Annual Report on Form 10-K for the year ended January 29, 2023. Overview We are a lifestyle brand of men’s and women’s workwear, casual wear, outdoor apparel and accessories sold primarily through our own omnichannel platform. We offer products nationwide through our website and catalog.
For a discussion of fiscal 2023 results compared to fiscal 2022, refer to the Company’s Annual Report on Form 10-K for the year ended January 28, 2024. Overview We are a lifestyle brand of men’s and women’s workwear, casual wear, outdoor apparel and accessories sold primarily through our own omnichannel platform. We offer products nationwide through our website and catalog.
For fiscal 2023, net cash provided by operating activities was $38.7 million, which primarily consisted of non-cash depreciation and amortization of $32.2 million, amortization of stock-based compensation of $4.2 million and cash provided by operating assets and liabilities of $13.7 million, which was partially offset by net loss of ($9.4) million.
For fiscal 2023, net cash provided by operating activities was $38.7 million, which primarily consisted of non-cash depreciation and amortization of $32.2 million, amortization of stock-based compensation of $4.2 million and cash provided by operating assets and liabilities of $14.5 million, which was partially offset by net loss of ($9.9) million.
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. ‎ 28 Table of Contents Our management’s discussion and analysis includes market sales metrics for our stores, website and catalog sales.
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.
Net Cash Used in Financing Activities Financing activities consist primarily of borrowings and payments related to our revolving line of credit and other long-term debt, as well as payments on finance lease obligations. For fiscal 2023 and fiscal 2022, net cash used in financing activities was $3.3 million and $3.2 million, respectively, primarily consisting of payments on finance lease obligations.
Net Cash Used in Financing Activities Financing activities consist primarily of borrowings and payments related to our revolving line of credit and other long-term debt, as well as payments on finance lease obligations. For fiscal 2024 and fiscal 2023, net cash used in financing activities was $3.8 million and $3.3 million, respectively, primarily consisting of payments on finance lease obligations.
Free Cash Flow We believe Free Cash Flow is a useful measure of performance as an indication of our financial strength and provides additional perspective on our ability to efficiently use capital in executing our growth strategy.
Free Cash Flow We believe Free Cash Flow is a useful measure of performance as an indication of the Company’s ability to generate cash and provides additional perspective on our ability to efficiently use capital in executing our growth strategy.
See “Forward-Looking Statements.” These forward-looking statements are subject to numerous risks and uncertainties, including those described under “Risk Factors.” Our actual results could differ materially from those suggested or implied by any forward-looking statements. Management’s discussion focuses on fiscal 2023 results compared to fiscal 2022. Fiscal year 2023 and 2022 were 52-week periods.
See “Forward-Looking Statements.” These forward-looking statements are subject to numerous risks and uncertainties, including those described under “Risk Factors.” Our actual results could differ materially from those suggested or implied by any forward-looking statements. Management’s discussion focuses on fiscal 2024 results compared to fiscal 2023. Fiscal year 2024 was a 53-week period and 2023 was a 52-week period.
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, catalog and orders placed through the call center.
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.
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 January 28, 2024, we operated 62 retail stores and three outlet stores.
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 February 2, 2025, we operated 62 retail stores and three outlet stores.
The increase was primarily driven by lower inventory levels, partially offset by higher purchases of property and equipment. Liquidity and Capital Resources General Our business relies on cash from operating activities and a credit facility as our primary sources of liquidity.
The decrease was primarily driven by higher inventory levels compared to a reduction in inventory in the prior year, partially offset by a decrease in purchases of property and equipment. Liquidity and Capital Resources General Our business relies on cash from operating activities and a credit facility as our primary sources of liquidity.
We spent $53.2 million in fiscal 2023 on capital expenditures, inclusive of investments in software hosting implementation costs, which are included in Prepaid expenses & other current assets on the Company’s Consolidated Balance Sheets. We expect to spend approximately $25.2 million in fiscal 2024 on capital expenditures.
We spent $17.4 million in fiscal 2024 on capital expenditures, inclusive of investments in software hosting implementation costs, which are included in Prepaid expenses & other current assets on the Company’s Consolidated Balance Sheets. We expect to spend approximately $20.0 million in fiscal 2025 on capital expenditures.
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. As of January 28, 2024 our working capital was $78.5 million, which includes cash and cash equivalents of $32.2 million.
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. As of February 2, 2025 our working capital was $63.1 million, which includes cash and cash equivalents of $3.3 million.
As a percentage of net sales, Adjusted EBITDA decreased to 5.2% of net sales in fiscal 2023 compared to 6.7% of net sales in fiscal 2022. Free Cash Flow The following table represents a reconciliation of Net cash provided by operating activities, the most comparable U.S. GAAP financial measure, to free cash flow.
As a percentage of net sales, Adjusted EBITDA decreased to 2.3% of net sales in fiscal 2024 compared to 5.1% of net sales in fiscal 2023. Free Cash Flow The following table represents a reconciliation of Net cash provided by operating activities, the most comparable U.S.
No valuation allowance was recognized for the years ended January 28, 2024 or January 29, 2023. We establish assets and liabilities for uncertain tax positions taken or expected to be taken in income tax returns, using a more-likely-than-not recognition threshold. We recognize penalties and interest related to uncertain tax positions as income tax expense.
A valuation allowance was recognized for the year ended February 2, 2025. We establish assets and liabilities for uncertain tax positions taken or expected to be taken in income tax returns, using a more-likely-than-not recognition threshold. We recognize penalties and interest related to uncertain tax positions as income tax expense.
Net Cash Used in Investing Activities Investing activities consist primarily of capital expenditures related to a new fulfillment center and information technology. For fiscal 2023, net cash used in investing activities was $48.7 million, driven by purchases of property and equipment of $49.1 million, primarily related to the Adairsville, Georgia fulfillment center.
For fiscal 2024, net cash used in investing activities was $8.1 million, driven by purchases of property and equipment of $8.3 million. For fiscal 2023, net cash used in investing activities was $48.7 million, driven by purchases of property and equipment of $49.1 million, primarily related to the Adairsville, Georgia fulfillment center.
Fiscal Year Ended January 28, 2024 January 29, 2023 (in thousands) Net cash provided by (used in) operating activities $ 38,673 $ (1,396) Net cash used in investing activities (48,718) (26,873) Net cash used in financing activities (3,346) (3,234) Decrease in cash and cash equivalents $ (13,391) $ (31,503) ‎ 33 Table of Contents Net Cash Provided by (Used in) Operating Activities Operating activities consist primarily of net (loss) income adjusted for non-cash items that include depreciation and amortization, stock-based compensation and the effect of changes in assets and liabilities.
Fiscal Year Ended February 2, 2025 January 28, 2024 (in thousands) Net cash (used in) provided by operating activities $ (16,917) $ 38,673 Net cash used in investing activities (8,129) (48,718) Net cash used in financing activities (3,776) (3,346) Decrease in cash and cash equivalents $ (28,822) $ (13,391) ‎ 33 Table of Contents Net Cash (Used in) Provided by Operating Activities Operating activities consist primarily of net (loss) income adjusted for non-cash items that include depreciation and amortization, stock-based compensation and the effect of changes in assets and liabilities.
The increase in interest expense was primarily attributable to increased interest rates on outstanding debt in fiscal 2023 compared to fiscal 2022. Income Taxes Income tax benefit was $2.7 million in fiscal 2023 compared to income tax expense of $0.7 million in fiscal 2022.
Interest Expense Interest expense increased $0.4 million to $4.6 million in fiscal 2024 compared to $4.2 million in fiscal 2023. The increase in interest expense was primarily attributable to increased interest rates on outstanding debt in fiscal 2024 compared to fiscal 2023.
A summary of our financial results is as follows: Net sales in fiscal 2023 decreased by 1.0% over the prior year to $646.7 million; Net loss in fiscal 2023 was ($9.4) million compared to prior year net income of $2.2 million; and Adjusted EBITDA in fiscal 2023 decreased 23.2% over the prior year to $33.4 million.
A summary of our financial results is as follows: Net sales in fiscal 2024 decreased by 3.1% compared to the prior year to $626.6 million; Net loss in fiscal 2024 was ($43.6) million compared to prior year net loss of ($9.9) million; and Adjusted EBITDA in fiscal 2024 decreased $18.0 million compared to the prior year to $14.6 million.
See Note 3 “Leases” of Notes to Consolidated Financial Statements for additional discussion of these obligations. 34 Table of Contents Off-Balance Sheet Arrangements We are not a party to any significant off-balance sheet arrangements.
Contractual Obligations In connection with our investing and operating activities, we have entered into certain contractual obligations. See Note 3 “Leases” of Notes to Consolidated Financial Statements for additional discussion of these obligations. Off-Balance Sheet Arrangements We are not a party to any significant off-balance sheet arrangements.
Fiscal Year Ended January 28, 2024 January 29, 2023 (in thousands) Net cash provided by (used in) operating activities $ 38,673 $ (1,396) Purchases of property and equipment (49,086) (27,065) Free Cash Flow (non-GAAP) $ (10,413) $ (28,461) 32 Table of Contents Free cash flow increased $18.0 million to ($10.4) million in fiscal 2023 compared to ($28.5) million in fiscal 2022.
GAAP financial measure, to free cash flow. 32 Table of Contents Fiscal Year Ended February 2, 2025 January 28, 2024 (in thousands) Net cash (used in) provided by operating activities $ (16,917) $ 38,673 Purchases of property and equipment (8,329) (49,086) Free Cash Flow (non-GAAP) $ (25,246) $ (10,413) Free cash flow decreased $14.8 million to ($25.2) million in fiscal 2024 compared to ($10.4) million in fiscal 2023.
The decrease in gross margin rate was primarily due to a lower mix of full price sales as customers purchasing activity increased during periods of promotions. ‎ 31 Table of Contents Selling, General and Administrative Expenses Selling, general and administrative expenses decreased $3.4 million, or 1.0%, to $333.8 million in fiscal 2023 compared to $337.2 million in fiscal 2022.
The decrease in gross margin rate was primarily due to a lower mix of full price sales as customers’ purchasing activity increased during periods of promotions, partially offset by an improvement in product costs from our direct to factory sourcing initiative. ‎ 31 Table of Contents Selling, General and Administrative Expenses Selling, general and administrative expenses increased $3.1 million, or 0.9%, to $337.6 million in fiscal 2024 compared to $334.5 million in fiscal 2023.
The cash provided by operating assets and liabilities of $13.7 million primarily consisted of a $29.2 million decrease in inventory partially offset by a $5.4 million and $5.1 million decrease in trade accounts payable and accrued expenses, respectively.
The cash provided by operating assets and liabilities of $14.5 million primarily consisted of a $29.2 million decrease in inventory partially offset by a $5.4 million and $4.4 million decrease in trade accounts payable and accrued expenses, respectively. Net Cash Used in Investing Activities Investing activities consist primarily of capital expenditures related to a new fulfillment center and information technology.
For fiscal 2022, net cash used in operating activities was $1.4 million, which primarily consisted of net income of $2.2 million, non-cash depreciation and amortization of $30.8 million, amortization of stock-based compensation of $2.7 million, which was offset by cash used in operating assets and liabilities of $37.2 million.
For fiscal 2024, net cash used in operating activities was $16.9 million, which primarily consisted of non-cash depreciation and amortization of $32.3 million and amortization of stock-based compensation of $4.0 million, offset by cash used in operating assets and liabilities of $12.0 million and net loss of ($43.6) million.
Our effective tax rate related to controlling interest was 22.4% in fiscal 2023 compared to 23.5% in fiscal 2022. Net (Loss) Income Attributable to Controlling Interest Net loss attributable to controlling interest was ($9.4) million in fiscal 2023 compared to net income attributable to controlling interest of $2.3 million in fiscal 2022, due to the factors discussed above.
Income Taxes Income tax expense was $2.4 million in fiscal 2024 compared to income tax benefit of $2.9 million in fiscal 2023. Our effective tax rate related to controlling interest was (5.7%) in fiscal 2024 compared to 22.4% in fiscal 2023.
The cash used in operating assets and liabilities of $37.2 million primarily consisted of a $32.3 million increase in inventory, primarily due to the pull forward of spring receipts, and a $11.8 million decrease in accrued expenses, partially offset by a $12.7 million increase in trade accounts payable.
The cash used in operating assets and liabilities of $12.0 million primarily consisted of a $40.8 million increase in inventory partially offset by a $22.9 million increase in trade accounts payable.
Gross Profit Gross profit decreased $18.5 million, or 5.4%, to $325.0 million in fiscal 2023 compared to $343.4 million in fiscal 2022. As a percentage of net sales, gross margin decreased to 50.3% of net sales in fiscal 2023 compared to 52.6% of net sales in fiscal 2022.
As a percentage of net sales, gross margin decreased to 49.2% of net sales in fiscal 2024 compared to 50.3% of net sales in fiscal 2023.
Fiscal Year Ended January 28, 2024 January 29, 2023 (in thousands) Net (loss) income $ (9,373) $ 2,246 Depreciation and amortization 32,159 30,810 Amortization of internal-use software hosting ‎ subscription implementation costs 4,961 3,392 Interest expense 4,156 3,653 Income tax (benefit) expense (2,693) 708 EBITDA (non-GAAP) 29,210 40,809 Stock based compensation 4,195 2,711 Adjusted EBITDA (non-GAAP) $ 33,405 $ 43,520 As a result of the factors discussed above in the “Results of Operations” section, Adjusted EBITDA decreased $10.1 million, or 23.2%, to $33.4 million in fiscal 2023 compared to $43.5 million in fiscal 2022.
Fiscal Year Ended February 2, 2025 January 28, 2024 (in thousands) Net loss $ (43,612) $ (9,940) Depreciation and amortization 31,133 32,159 Amortization of internal-use software hosting ‎ subscription implementation costs 5,281 4,961 Interest expense 4,554 4,156 Income tax (benefit) expense 2,370 (2,862) EBITDA (non-GAAP) (274) 28,474 Long-term incentive expense 4,152 4,195 Restructuring expense 7,748 — Impairment expense 2,998 — Adjusted EBITDA (non-GAAP) $ 14,624 $ 32,669 As a result of the factors discussed above in the “Results of Operations” section, Adjusted EBITDA decreased $18.0 million to $14.6 million in fiscal 2024 compared to $32.7 million in fiscal 2023.
Store market net sales decreased $11.4 million, or 2.5%, to $445.1 million in fiscal 2023 compared to $456.5 million in fiscal 2022. Net sales in non-store markets increased $4.4 million, or 2.3%, to $196.0 million in fiscal 2023 compared to $191.6 million in fiscal 2022.
Net sales in non-store markets decreased $21.7 million, or 11.1%, to $174.3 million in fiscal 2024 compared to $196.0 million in fiscal 2023. Gross Profit Gross profit decreased $16.5 million, or 5.1%, to $308.5 million in fiscal 2024 compared to $325.0 million in fiscal 2023.
Given the uncertainty, we cannot reasonably estimate store traffic patterns and the prolonged impact on overall consumer demand. ‎ 29 Table of Contents 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.
Our non-store market sales metrics include sales from our website, catalog and orders placed through the call center. ‎ 29 Table of Contents 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.
Selling, general and administrative expenses as a percentage of net sales was 51.6% in fiscal 2023 and fiscal 2022. Interest Expense Interest expense increased $0.5 million to $4.2 million in fiscal 2023 compared to $3.7 million in fiscal 2022.
Selling, general and administrative expenses as a percentage of net sales was 53.9% in fiscal 2024 compared to 51.7% in fiscal 2023. The increase in selling, general and administrative expense as a percentage of net sales was mainly driven by increased overhead costs, partially offset by optimization in our outbound shipping network.
Removed
Economic Conditions The United States economy has experienced high inflation during 2022 and 2023 and there are expectations in the market that inflation may remain at elevated levels. The ultimate impact of higher inflationary periods and efforts to control inflation on our operational and financial performance still depends on future developments outside of our control.
Added
The decrease in net sales was primarily driven by lower average unit retail prices, processing delays at a legacy fulfillment center, lower web conversion and a decline in store traffic.
Removed
For fiscal 2022, net cash used in investing activities was $26.9 million, driven by purchases of property and equipment of $27.1 million, primarily related to the Adairsville, Georgia fulfillment center.
Added
Following the surge in unit demand over the Black Friday weekend, inventory units housed in our highly automated Adairsville center were significantly depleted resulting in a higher level of orders being routed to a legacy fulfillment facility, which resulted in significant backlog.
Removed
As of and for the fiscal year ended January 28, 2024, we were in compliance with all financial and non-financial covenants. Contractual Obligations In connection with our investing and operating activities, we have entered into certain contractual obligations.
Added
We subsequently reduced promotional depth and frequency to address the order backlog and maintain sales quality, which constrained top-line growth. Store market net sales decreased $3.3 million, or 0.8%, to $441.8 million in fiscal 2024 compared to $445.1 million in fiscal 2023.
Added
The provision for fiscal 2024 reflected the establishment of a valuation allowance against the net amount of deferred tax assets as well as pre-tax loss in the current year. Net Loss Attributable to Controlling Interest Net loss attributable to controlling interest was ($43.7) million in fiscal 2024 compared to ($9.9) million in fiscal 2023, due to the factors discussed above.
Added
The increase in inventory and trade accounts payable was primarily related to an increase in in-transit inventory as we moved from purchasing through an agent to buying directly from factories coupled with higher inventory receipts on core year-round products to mitigate low in-stock post Black Friday week.
Added
On January 31, 2025, the Company entered into the Second Amendment to the Credit Agreement (the “Second Amendment”), which was treated as an extinguishment for accounting purposes.
Added
The Second Amendment amends the Credit Agreement in order to (i) decrease the revolving commitment from $200.0 million to $100.0 million; (ii) revise the definition of 34 Table of Contents “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).

Other DLTH 10-K year-over-year comparisons