Duluth Holdings Inc. (DLTH) Q2 2023 Earnings: A Mixed Bag of Results
Duluth Holdings Inc. (NASDAQ:DLTH) recently held its second quarter 2023 conference call, discussing the company's financial results and strategic initiatives. The company's earnings release, issued earlier, is available on their investor relations website. The call was led by Sam Sato, president and chief executive officer, and Dave Loretta, senior vice president and chief financial officer. The discussion included forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from those expressed.
Strategic Initiatives and Q2 Performance
Sam Sato began the call by sharing updates on two key strategic initiatives. The first is the successful launch of their new highly automated fulfillment center in Adairsville, Georgia. This upgrade to their logistics network is expected to support long-term growth, meet customer expectations for faster delivery, and generate cost efficiencies. The second initiative is the growth of their sourcing and product innovation functions, with the onboarding of new team members with extensive experience in apparel design and manufacturing.
Turning to their Q2 performance, Sato reported strong customer demand, evidenced by growth in units sold, increased buyer counts and online visits, and higher conversion rates. However, total net sales for the second quarter were $139 million, down 1.7% from last year, largely due to lower store traffic in May. Despite this, their online performance was strong, growing by nearly 2% in the quarter.
Financial Performance and Outlook
Dave Loretta, the CFO, provided more details on the financial results and outlook for the year. The company reported net sales of $139.1 million for the second quarter, down 1.7% compared to $141.5 million last year. The slight decrease in net sales was largely attributed to a lower average retail and order value due to lower levels of full-price selling and a higher level of promotional and clearance sales. The company's second quarter gross profit margin was 51.4%, compared to 53.4% last year, reflecting a lower mix of full-price sales.
Looking ahead, the company confirmed its net sales guidance for the year of $645 million to $660 million but reduced the EPS and adjusted EBITDA estimates reflecting their first-half results and a second-half outlook in which they see consumers remaining somewhat price sensitive. They now expect full-year adjusted EBITDA of $40 million to $42 million and a loss per share of $0.15 to $0.08.
Leadership Transition
On a final note, Dave Loretta announced his decision to step down as senior vice president and chief financial officer on September 15. He will be succeeded by Mike Murphy, the current vice president and chief accounting officer, who will serve as interim chief financial officer. Sam Sato expressed his gratitude for Loretta's contributions and leadership at Duluth over the past six years and expressed confidence in a seamless transition.
This article first appeared on GuruFocus.
