BELLEVILLE, Wis., March 21, 2017 (GLOBE NEWSWIRE) Duluth Holdings Inc. (dba, Duluth Trading Company) (“Duluth Trading” or the “Company”) (NASDAQ:DLTH), a lifestyle brand of men’s and women’s casual wear, workwear and accessories, today announced its financial results for the fiscal fourth quarter and fiscal year ended January 29, 2017 and its financial guidance for fiscal year 2017.

Highlights for the Fourth Quarter Ended January 29, 2017

• Net sales increased 24.4% to $174.7 million compared to $140.4 million in the prior-year fourth quarter
• Gross margin decreased 70 basis points (bps) to 55.4% compared to 56.1% in the prior-year fourth quarter
• Net income was $14.0 million, or $0.43 per diluted share, compared to $17.5 million, or $0.58 per diluted share in the prior-year fourth quarter. Adjusted for income taxes, pro forma net income for the prior-year fourth quarter was $11.3 million, or $0.37 per diluted share
• Adjusted EBITDA¹ increased 22.7% to $24.7 million compared to $20.1 million in the prior-year fourth quarter
• During the fourth quarter, the Company opened two new retail stores in Manassas, Virginia and in Independence, Missouri
• 28^th consecutive quarter of increased net sales year-over-year

¹See Reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA in the accompanying financial tables.

Highlights for the Fiscal Year Ended January 29, 2017

• Net sales increased 23.7% to $376.1 million compared to $304.2 million in the prior year
• Gross margin decreased 10 bps to 56.9% compared to 57.0% a year ago
• Net income was $21.3 million, or $0.66 per diluted share, compared to $27.4 million, or $1.06 per diluted share in the prior year. Adjusted for income taxes, pro forma net income for the prior-year was $17.3 million, or $0.66 per diluted share
• Adjusted EBITDA¹ increased 21.1% to $41.2 million compared to $34.0 million in the prior year
• During fiscal 2016, the Company opened a total of seven retail stores

¹See Reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA in the accompanying financial tables.

Management Commentary

“I am pleased to report that net sales increased 24% with adjusted EBITDA up 21% and GAAP diluted earnings per share at $0.66 for the full year. While we experienced unseasonably warm weather early in the fourth quarter, we had a very positive customer response when the weather turned in late December and the holiday season arrived. I am extremely proud of how well our team delivered an outstanding Duluth omnichannel experience to our customers,” said Stephanie Pugliese, Chief Executive Officer of Duluth Trading.

“We made great progress executing our strategic objectives for the year. We have increased our aided brand awareness year-over-year, demonstrating the continued effectiveness of our marketing campaigns. Retail sales grew 76% year-over-year, and they now account for 18% of total net sales. We are also capturing a greater share of the household closet with a broader assortment of men’s products and with women’s apparel continuing to outpace our overall growth.”

“On the retail front, we continue to improve our store opening process and to accelerate the pace of new store openings. We recently opened our 17^th store in Noblesville, Indiana and later this week, we will celebrate the grand opening of our 18^th store in Burlington, Massachusetts, and including these two stores, we now expect a total of 10 to 12 new stores in fiscal 2017. With the progress we have made so far, including investments in our order management system and e-commerce platform, we believe we are well positioned for continued growth and profitability in fiscal 2017.”

Operating Results for the Fourth Quarter Ended January 29, 2017

Net sales increased 24.4% to $174.7 million, compared to $140.4 million in the same period a year ago. The net sales increase was driven by a 14.5% growth in direct net sales and a 105.6% growth in retail net sales, with growth achieved in all product categories. The increase in retail net sales was primarily attributable to the opening of seven new retail stores during fiscal 2016.

Gross profit increased 22.8% to $96.8 million, or 55.4% of net sales, compared to $78.8 million, or 56.1% of net sales, in the corresponding prior-year period. The 70 basis point decrease in gross margin was primarily due to a highly promotional retail environment during the fourth quarter, which was partially offset by product mix shift to higher margin products.

Selling, general and administrative expenses increased 23.6% to $73.9 million, compared to $59.8 million in the same period a year ago. As a percentage of net sales, selling, general and administrative expenses decreased 30 basis points to 42.3%, compared to 42.6% in the corresponding prior-year period. As a percentage of net sales, advertising and marketing costs remained flat at 20.1% in the current period, compared to the corresponding prior-year period, primarily due to the Company’s planned decrease in catalog spend as a percentage of net sales, coupled with a decrease in on-line advertising due to higher net sales, which was offset by an increase in television advertising, particularly in the women’s advertising campaign. As a percentage of net sales, selling expenses decreased 30 basis points to 13.7%, compared to 14.0% in the corresponding prior-year period, primarily due to a decrease in distribution labor and shipping expenses.  The reduced distribution labor was the result of our increased use of our expanded Belleville distribution center and a corresponding reduction in the use of our higher costs third-party logistic providers.  The decrease in shipping expenses was due to leverage from an increase in retail net sales, which was partially offset by an increase in customer service due to the growth in retail. As a percentage of net sales, general and administrative expenses remained flat at 8.5% in the current period, compared to the corresponding prior-year period, primarily due to a decrease in personnel expenses due to operating leverage as a result of higher net sales, offset by an increase in store rent expense, primarily due to store pre-opening costs and depreciation expense due to an increase in retail stores.

Net income was $14.0 million, or $0.43 per diluted share, compared to $17.5 million, or $0.58 per diluted share, in the prior-year period. Adjusted for income taxes, pro forma net income for the prior-year period was $11.3 million, or $0.37 per diluted share.

The pro forma net income gives effect to the conversion of the Company to a “C” corporation, which was effective November 25, 2015. Prior to such conversion, the Company was an “S” corporation and generally not subject to income taxes. The pro forma net income, therefore, includes an adjustment for income tax expense on the income attributable to controlling interest as if the Company had been a “C” corporation as of February 4, 2013 at an assumed combined federal, state and local effective tax rate of 40%, which approximates the calculated statutory rate for each period.

Adjusted EBITDA increased 22.7% to $24.7 million, or 14.1% of net sales, compared to $20.1 million, or 14.3% of net sales, in the prior-year period.  Duluth Trading defines Adjusted EBITDA as consolidated net income (loss) before depreciation and amortization, interest expense and provision for income taxes adjusted for the impact of certain items, including non-cash and other items.

Balance Sheet and Liquidity

The Company ended the quarter with a cash balance of approximately $24.0 million, with net working capital of $66.1 million, and no borrowings on its $40.0 million revolving line of credit.

Fiscal 2017 Outlook

• Net sales in the range of $455.0 million to $465.0 million
• Adjusted EBITDA¹ in the range of $47.0 million to $49.5 million
• EPS in the range of $0.66 to $0.71 per diluted share
• Capital expenditures of $31.0 to $35.0 million²
• 10 to 12 new store openings, adding 120,000 to 144,000 of additional selling square footage

¹See Reconciliation of forecasted net income to forecasted EBITDA and forecasted EBITDA to forecasted Adjusted EBITDA in the accompanying financial tables.

²Fiscal 2017 capital expenditures primarily include the Company’s plan to open 10 to 12 retail stores and information technology investments.

The table below recaps the Company’s signed new store leases and the opening timeframe.

Conference Call Information

A conference call and audio webcast with analysts and investors will be held on Tuesday, March 21, 2017 at 4:30 pm Eastern Time, to discuss the results and answer questions.

• Live conference call: 844-875-6915 (domestic) or 412-317-6711 (international)
• Conference call replay available through April 4, 2017: 877-344-7529 (domestic) or 412-317-0088 (international)
• Replay access code: 10100934
• Live and archived webcast: ir.duluthtrading.com              

The Company is enabling investors to pre-register for the earnings conference call so that they can expedite their entry into the call and avoid the need to wait for a live operator. In order to pre-register for the call, investors can visit http://dpregister.com/10100934 and enter in their contact information. Investors will then be issued a personalized phone number and pin to dial into the live conference call. Individuals can pre-register any time prior to the start of the conference call on March 21^st.

About Duluth Trading

Duluth Trading is a rapidly growing lifestyle brand for the Modern, Self-Reliant American. Based in Belleville, Wisconsin, we offer high quality, solution-based casual wear, workwear and accessories for men and women who lead a hands-on lifestyle and who value a job well-done. We provide our customers an engaging and entertaining experience.  Our marketing incorporates humor and storytelling that conveys the uniqueness of our products in a distinctive, fun way, and our products are sold exclusively through our content-rich website, catalogs, and “store like no other” retail locations. We are committed to outstanding customer service backed by our “No Bull Guarantee” - if it’s not right, we’ll fix it. Visit our website at www.duluthtrading.com

Non-GAAP Measurements

Management believes that non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Within this release, including the tables attached hereto, reference is made to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).  See attached Table “Reconciliation of Net Income to EBITDA and EBITDA to Adjusted EBITDA,” for a reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA for the three months and fiscal year ended January 29, 2017, versus the three months and fiscal year ended January 31, 2016.  See also attached Table “Reconciliation of Forecasted Net Income to Forecasted EBITDA and Forecasted EBITDA to Forecasted Adjusted EBITDA,” for a reconciliation of forecasted net income to forecasted EBITDA and forecasted EBITDA to forecasted adjusted EBITDA for the fiscal year ending January 28, 2018. Adjusted EBITDA is a metric used by management and frequently used by the financial community, which provides insight into an organization’s operating trends and facilitates comparisons between peer companies, since interest, taxes, depreciation and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA excludes certain items that are unusual in nature or not comparable from period to period.  The Company provides this information to investors to assist in comparisons of past, present and future operating results and to assist in highlighting the results of on-going operations.  While the Company’s management believes that non-GAAP measurements are useful supplemental information, such adjusted results are not intended to replace the Company’s GAAP financial results and should be read in conjunction with those GAAP results.

(Tables Follow)