Duluth Holdings (DLTH) risk factors, FY2026 10-K

What changed since the prior 10-K

New

• New

  ” for a discussion of our information technology and cybersecurity risks

• New

  IT EM 3. LEGAL PROCEEDINGS

• New

  In formation about our Executive Officers

• New

  Common Stock Listing and Trading

• New

  IT EM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

• New

  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

• New

  Adjusted EBITDA in fiscal 2025 increased to $24.9 million compared to the prior year of $14.6 million

• New

  Selling, General and Administrative Expenses

• New

  comparison of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business

• New

  Selling, general and administrative expenses decreased $27.1 million, or 8.0%, to $310.5 million in fiscal 2025 compared to $337.6 million in fiscal 2024. Selling, general and administrative expenses as a percentage of net sales was 54.9% in fiscal 2025 compared to 53.9% in fiscal 2024

• New

  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

• New

  The decrease in inventory and trade accounts payable was primarily driven by lower receipts in 2025 to better align with sales

• New

  On July 16, 2025, the Company entered into the First Amendment to the New Credit Agreement, pursuant to which all revolving credit loans advanced or prepaid pursuant to such Sweep to Loan Arrangement shall bear interest based on the Base Rate

• New

  Critical Accounting Estimates

• New

  Critical Accounting Policies

• New

  Sales tax collected is not recognized as revenue as it is ultimately remitted to governmental authorities

• New

  Opinion on the Consolidated Financial Statements

• New

  We identified the assessment of the product return reserve as a critical audit matter. A high degree of auditor judgement was required to assess whether the historical return rate used to estimate the reserve for product returns is indicative of future returns

• New

  LIABILITIES AND SHAREHOLDERS' EQUITY

• New

  Commitments and contingencies

• New

  Adjustments to reconcile net loss to net cash provided

• New

  Loss on disposal of property and equipment

• New

  Principles of Consolidation

• New

  Notes to Consolidated Financial Statements

• New

  Cost of Goods Sold and Selling, General and Administrative Expenses

• New

  Advertising and Direct Mail Expenses

• New

  Concentrations of Credit Risk

• New

  Cash and Cash Equivalents

• New

  The Company recorded depreciation expense of $ 21.9 million and $ 28.7 million for fiscal 2025 and fiscal 2024, respectively. The Company expenses as incurred all routine repair and maintenance costs that do not extend the estimated useful life of the asset

• New

  Prepaid Expenses and Other Assets

• New

  Software Hosting Implementation Costs

• New

  Impairment of Long-Lived Assets

• New

  Total stock compensation expense associated with restricted stock recognized by the Company was $ 2.5 million and $ 4.0 million for fiscal 2025 and fiscal 2024, respectively, and is included in Selling, general and administrative expenses on the Consolidated Statements of Operations

• New

  Taxes Collected from Customers

• New

  Other Comprehensive Income

• New

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

• New

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

• New

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

• New

  4. DEBT AND CREDIT AGREEMENT

• New

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

• New

  outstanding principal amount from the applicable borrowing date at a rate per annum equal to the base rate plus the applicable margin; and (iv) each other obligation will bear interest on the unpaid amount at a rate per annum equal to the base rate plus the applicable margin

• New

  The new $ 100.0 million Revolver replaces the prior revolving credit facility at a lower interest rate and extends the availability of funds to April 28, 2030 . The Company believes the New Credit Agreement will provide the Company with flexibility and liquidity to finance seasonal inventory builds

• New

  5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

• New

  6. VARIABLE INTEREST ENTITIES

• New

  Contract Assets and Liabilities

• New

  Total current tax expense

• New

  Total income taxes paid, net

• New

  The tax effects of unrealized gains and losses on securities are components of other comprehensive income and therefore excluded from deferred tax expense

• New

  income tax expense. There were no material amounts recorded as tax expense for interest or penalties for the years ended February 1, 2026 or February 2, 2025

• New

  11. COMMITMENTS AND CONTINGENCIES

• New

  On June 4, 2025, as a result of right-sizing the expense structure of the Company, the Company voluntarily underwent a reduction in force

• New

  Income Taxes – Improvements to Income Tax Disclosures

• New

  Evaluation of Disclosure Controls and Procedures

• New

  Management’s Annual Report on Internal Control over Financial Reporting

• New

  Changes in Internal Control Over Financial Reporting

• New

  ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

• New

  ITEM 11. EXECUTIVE COMPENSATION

• New

  ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

• New

  (a)(2) Financial Statements and Financial Statement Schedule

• New

  Description of Registrant’s Securities, incorporated by reference to Exhibit 4.1 of the Company’s Annual Report on Form 10-K for the year ended February 2, 2020

• New

  Form of Restricted Stock Agreement for non-employee directors under the 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.17 of the Company’s Registration Statement on Form S-1 (File No. 333-207300), filed October 6, 2015

• New

  + Indicates a management contract or compensation plan or arrangement

Dropped

• DroppedStrategic Risks

  If we fail to offer products that customers want to purchase, our business and results of operations could be adversely affected

  Failure to offer products customers want to purchase or anticipate preferences.

• DroppedStrategic Risks

  There can be no assurance that we will be able to successfully anticipate or identify our customers’ needs and preferences and design products and product features in response. These risks could have a material adverse effect on our brand as well as our results of operations and financial condition

  Inability to maintain and enhance Duluth Trading brands due to negative publicity.

• DroppedStrategic Risks

  We may face risks and challenges if we pursue further geographic expansion

  Risks and challenges associated with geographic expansion and new store locations.

• DroppedStrategic Risks

  If we fail to acquire new customers, or fail to do so in a cost-effective manner, we may not be able to increase net revenue or profit per active customer

  Failure to acquire new customers in a cost-effective manner, including expensive advertising.

• DroppedStrategic Risks

  as expected, we have suffered a decline in customer growth and net sales. A continued decrease in the level of usage or customer growth may have a material adverse effect on our business, financial condition and operating results

  Decline in customer growth and net sales impacting financial results and growth prospects.

• DroppedStrategic Risks

  If we cannot compete effectively in the apparel, footwear and accessories industry, our business and results of operations may be adversely affected

  Intense competition in the apparel, footwear, and accessories industry.

• DroppedStrategic Risks

  We may engage in strategic transactions that could negatively impact our liquidity, increase our expenses and present significant distractions to management

  Strategic transactions impacting liquidity, increasing expenses, and distracting management.

• DroppedStrategic Risks

  If we fail to achieve our growth strategy, our business, financial condition and operating results could be harmed

  Failure to achieve growth strategy and expand employee and facility infrastructure.

• DroppedOperational Risks

  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

  Ongoing economic uncertainty affecting business operations.

• DroppedOperational Risks

  Business activities continue to face economic uncertainties, including but not limited to increased inflation and interest rates, tariffs and global supply chain constraints. The economic uncertainties may continue for an extended period and have adversely impacted, and may continue to impact, our business

  Economic uncertainties including inflation, interest rates, tariffs, and supply chain constraints.

• DroppedOperational Risks

  We rely on sources for merchandise located in foreign markets, and our business may therefore be adversely affected by legal, regulatory, economic and political risks associated with international trade and those markets

  Reliance on foreign merchandise sources subject to international trade risks.

• DroppedOperational Risks

  The occurrence of one or more of these events could result in disruptions to our operations, which in turn could increase our cost of goods sold, decrease our gross profit, or impact our ability to deliver to our customers

  Potential retaliatory duties, trade sanctions, or new U.S. trade initiatives increasing product costs.

• DroppedOperational Risks

  If we fail to timely and effectively obtain shipments of products from our suppliers and deliver merchandise to our customers, our business and operating results could be adversely affected

• DroppedOperational Risks

  Competitive pricing pressures with respect to shipping our products to our customers may harm our business and results of operations

• DroppedOperational Risks

  We rely on third-party service providers to deliver products purchased through our direct-to-consumer channel to our customers and our business could be negatively impacted by disruptions in the operations of these third-party service providers

• DroppedOperational Risks

  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

• DroppedOperational Risks

  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

• DroppedOperational Risks

  Increases in the price of raw materials, fuel and labor, or their reduced availability, could increase our cost of goods and cause delays

• DroppedOperational Risks

  If our key suppliers or service providers were unable or unwilling to provide the products and services we require, our business could be adversely affected

• DroppedOperational Risks

  We rely on third parties to provide us with services in connection with certain aspects of our business, and any failure by these third parties to perform their obligations could have an adverse effect on our business and results of operations

• DroppedOperational Risks

  Inventory shrinkage could have a material adverse effect on our business, financial condition and results of operations

• DroppedOperational Risks

  We are subject to data security and privacy risks that could negatively affect our results, operations or reputation

• DroppedOperational Risks

  We rely significantly on information technology, and any inadequacy, interruption, integration failure or security failure of this technology could harm our ability to effectively operate our business

• DroppedOperational Risks

  Our failure to retain our executive management team and to attract qualified new personnel could adversely affect our business and results of operations

• DroppedOperational Risks

  An inability to attract and retain qualified employees to meet our staffing needs in our corporate office, stores, fulfillment centers or call center could result in higher payroll costs and adversely affect our operating results

• DroppedOperational Risks

  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

• DroppedFinancial Risks

  We are subject to payment-related risks

• DroppedFinancial Risks

  We depend on cash generated from our operations to support our growth, which could strain our growth

• DroppedFinancial Risks

  We may be unable to accurately forecast our operating results

• DroppedFinancial Risks

  Our failure to comply with restrictive covenants under our revolving credit facility and other debt instruments could trigger prepayment obligations

• DroppedLegal, Tax, Compliance, Reputation and Other Risks

  We may be subject to increased labor costs due to external factors, including changes in laws and regulations, and we may be subject to unionization, work stoppages or slowdowns

• DroppedLegal, Tax, Compliance, Reputation and Other Risks

  Unseasonal or severe weather conditions may adversely affect our merchandise sales

• DroppedLegal, Tax, Compliance, Reputation and Other Risks

  Our product designs are not protected by substantial intellectual property rights

• DroppedLegal, Tax, Compliance, Reputation and Other Risks

  If we are unable to protect or preserve our brand image and our proprietary rights, our business may be adversely affected

• DroppedLegal, Tax, Compliance, Reputation and Other Risks

  We may be subject to liability if we infringe upon the intellectual property rights of third parties

• DroppedLegal, Tax, Compliance, Reputation and Other Risks

  If our independent suppliers do not use ethical business practices or comply with applicable regulations and laws, our reputation could be materially harmed and our business and results of operations may be adversely affected

• DroppedLegal, Tax, Compliance, Reputation and Other Risks

  We may be subject to assessments for additional taxes, including sales taxes, which could adversely affect our business

• DroppedLegal, Tax, Compliance, Reputation and Other Risks

  We may become involved in a number of legal proceedings and audits, and outcomes of such legal proceedings and audits could adversely affect our business, financial condition and results of operations

• DroppedLegal, Tax, Compliance, Reputation and Other Risks

  Changes to accounting rules or regulations could significantly affect our financial results

• DroppedRisks Related to Ownership of our Class B Common Stock

  We are a controlled company within the meaning of the NASDAQ rules, and as a result, we rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies

• DroppedRisks Related to Ownership of our Class B Common Stock

  that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities

• DroppedRisks Related to Ownership of our Class B Common Stock

  Our stock price may be volatile or may decline regardless of our operating performance, resulting in substantial losses for investors

• DroppedRisks Related to Ownership of our Class B Common Stock

  other events or factors, including those resulting from pandemics, war, incidents of terrorism or responses to these events

• DroppedRisks Related to Ownership of our Class B Common Stock

  If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline

• DroppedRisks Related to Ownership of our Class B Common Stock

  The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain additional executive management and qualified board members

• DroppedRisks Related to Ownership of our Class B Common Stock

  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

• DroppedRisks Related to Ownership of our Class B Common Stock

  establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by shareholders at annual or special shareholder meetings

All 62 risk factors

Headings as the filing states them, in filing order.

Other Duluth Holdings 10-Ks

• FY2025 10-K risk factors

  47 risks

  Duluth Holdings faces high risks in customer acquisition, foreign supply chain reliance, and information technology security. The apparel retailer depends heavily on third-party manufacturers, seasonal holiday sales in the fourth quarter, and e-commerce channel performance.

  Filed Mar 24, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.