DLTH - Earnings call transcript Q1 2022

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Operator

Good day, and welcome to the Duluth Holdings First Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note, this event is being recorded. And now, I'd like to turn the conference over to Nitza McKee. ahead. go Please

Nitsa McKee

welcome first and call discuss to Thank financial to results. Trading's quarter Duluth you, today's

questions. Our call which ir.duluthtrading.com provide management our Sato, Loretta, Investor we I earnings Chief available then here prepared President Relations to is release, am open On Officer; will Web remarks, was and issued Financial Chief and site, and with Officer. will at today under your Executive Releases. morning, Press the Sam this Dave on call, today's

we like will the forward-looking identified Before would expect, comments phrases. on words statements, be and that I remind you anticipate, of begin, to can as use today's include by estimate, similar such call the which

to other results by cause of involve that, those Forward-looking of their the Sato, not on and These only over speak recent annual this risk statements forward-looking And events. that and as are XX-K President forward-looking as turn outcomes Executive forecasts, or not estimates, uncertainties in applicable. nature, as SEC but and most risks date Such upon to, that predictions relied the call Form Chief and filings be conference differ uncertainties I of should Sam expressed will Sam? future with the the in goals, include, report those call could are our materially and to are statements. from actual Officer. statements, projections, and to subject assumptions, described and limited

Sam Sato

our functionality, some are I'm demand for course share solution-based that of end grounded the on strategic the use. key the Thank intended to are joining of know details. products in call. We well-designed progress tremendous and quarter, initiatives you, today's durability, for that the Nitsa, and and We customers thanks made first over excited

pleased to on customers, play. life create two logo. hands, to we new take out is own The product attract we and with Americana brand that various address of with during quarter, both new resonate and Duluth lifestyle assortments our To embrace that our Trading highlight, their for expectations. our the each work by a needs Company workwear. Duluth of Duluth attitude and set sub-brand can-do their the I'm sub-brands in on focused distinct first deliver Our positions customers' and against customers introduced

our our analytics, a of first and the The and margin, customers. a dynamic desire in share, growing for to per that our model more being serve growing draw internal we our forward categories. loss sub-brand in undergone reported our positioning $X.XX. well of intensified income lifestyle steps women's was quarter lifestyle collection umbrella Trading as which as better launched I'll our on And and But the Hardgear face to the customers' I'll to AKHG on and we We've is work updates. position focused how Company to results. continued evolution digital growth. activities elevated also our their of in needed loss the on XXX $XXX operational Duluth common active as shortly, sales the for and strategies the we creation is our marked meaningful were we efficiency XX.X%, these brand AKHG, of executing increase target overall basis on gross of Alaskan innovative well address transition points new, net brand data and many of the an inventories recreation. demonstrate our enjoying recent and omni-channel each our projection, last position of of brand million, profit our for updates our technical assortments first, business over The business outdoors. April. With business and our healthier their active to layer see Collectively, under environment. a quarter touch year. QX Today, strong importantly, enable of will focus outdoor through products nearly marketing are first These million, net has customers as long-term elevated support than our first needs more producing our results of reaching effectiveness consistently the of plan a earnings share early our that macro meeting quarter-end, are at tactics of $X.X products

is to relevant fund an and sub-brand seasonally Duluth single-digit items increase gardening, brand Company initiatives AKHG high our customers' by development And supporting features to as launches. in Duluth and The improve, asset continue for new our with active strong, swim, We Trading our positioning sales overall strategic creative brand response and our April. to in outdoor hiking. growth categories led receipts the in investments

awareness new continued weekend, the last With Memorial brand campaigns, momentum with the exceeding support of year. through customer demand the Day

first lower to for sales $XXX planned clearance inventory. and prior the to million, delays of meaningfully down the levels net inventory were and be expected to due strategic shift to carry year were nearly reported quarter a Our

In fact, X% making last compared the X% up year. ended total we inventory, to goods quarter of with clearance

overall Our of year, is where were quarter, X% down inventory than at a beginning improvement higher the significant from XX%. quarter-end position last we the

that dollar gross of to strategic makeup profit in positive costs. outcome of absorbing last transportation our transition gross generating significantly margins, are our growth, product inventory is mix while inventory compared significantly higher-than-normal fueling the year. we healthier is Importantly, The higher

costs, and these in includes a is margin last direct result fall. in reported profit five years, million management incremental margin from as additional pricing the of expense and XX.X% inventory freight $X in Our of with strong we've roughly seen put profit as associated of gross airfreight last costs gross inventory our disciplines the Absent inbound place.

which that yield into to Dave continue improved margins, will strategies Our go further. operating results support

Absent per a in positive operational would airfreight loss the costs $X share also the management. the have I of our in and for of been expense million earnings quarter, $X.XX. $X.XX, Our EPS mentioned, QX reflects the impact airfreight costs, just sound diluted

to not is business in commodity fuel, Our labor inflationary and pressures markets, immune prices. the

going We to our adjustments the will the and make execute keep across playbook. business, momentum our to strategic continue continue to to model

put many to headwinds teams actions year. some Our place address we of last identified the in

expense been retail and in beginning dates winter variable average on items, inventory given in to buyers size brand in back were being that in seasons. our relative attracting first to selective price on of spend with plan to year, flex fall to see expect our manufacturers below and we've winter of winter near-term portfolio. account To We and sales broader from meet our the orders first with delivery continued to plans realize core an further tremendous raising we Day, fall offer able key that while leverage held macroeconomic target marketing investments periods, to Father's purchase. expenses example, to in the adjustments dollars We unlock lifestyle, anticipate new being quarter we our some mitigating our the and For fall take dates. of early advantage their trends lighter airfreight to growth our And opportunities selective on on meet and we're customers support are new points investments designed more our important These for higher certain have The congestion. making prices demand the continued we order benefit levels. customer certain assortment. acquisition is also and we during the seen factors. the to merchandise We supply active live end, chain well-positioned products last customer impact purposefully into and established

enhanced back-half the flow messaging as women's introduction And improved, prospecting of our a with in the receipt the As we driven up and the in activity collection new growth of much by buyer digital result, dialed of AKHG. increased brand quarter.

sales are More compared customers knowledge heightened valuable is our in product heavy metrics decision are clearance the the off. Quarter-to-date assisting brand into are to better in media motivated In up the associate With last new a accelerate in Net last assortment, trending year. last who training retail reflecting that was February position April, our better buyers year build search value higher an versus advertising and on improvement for inventory our sales to store in working channel to driven direct leaned our year. down channel channel messaging, sales product digital growth. March. focused largely first last and paying direction social the to we to in up retail last low along quarter New store up in our more us. to sales volume were up to with by average by direct lighter sales significantly basket April, are in was purposeful year. stories X.X% inventory and the media direct by conversation and a focus teen paid position XX% indicate quarter also year's recently, Net their the for but run and that transaction X%

These we and Our for Duluth We Dry by such provide the has This spring, have The ramped amazing. Duluth upon great product and Flex Garden stand leverage that favorite other features wicking, Stretch Fire cooling, the durability well-known in lifestyle get-it-done we examples comfort. women and Hose men our women's. providing by messaging a and CoolMax. moisture range new a across logo design seasonally are styles led garden support Company that new innovative men's re-branding Duluth for real brand's wide of up fabrication are such flex classic such unified activity. the paying customer Double to to Overall introducing that Denim, products introduced Fly, with are benefit more had relevant up of a on as active Training off. Fire NoGA short Duluth success been and as and our an and are efforts of and collection built have Women's Heirloom brand version Performance work response voice Hose pants pants

and the outdoor AKHG focuses and for elements. work who higher face our to stand up brace addressing Our the brand that conditions realignment they needs apparel recreation customers their while play would performance for on the gear in of

high have brand's that with identity Finally, and functional while and is always Alaskan conditions Hardgear outdoor movement allows we clothing and this underwear comfort innovative quality for change. infused

opens also know up closer that wider simply While This for adventure a hike, brand we these our be to know that the stream. consideration conditions, potential most collection the positioning in much customers stand brand's expands in home. we set or to may everyday fish the to AKHG fly of the want can trail, outdoor and up

real-life with Since AKHG reached one-third. similar of Duluth the coincided quickly adding broader level and settings. branding collection. allows AKHG of abruptly action introduction penetration brand are live for and five of women's quickly a has men re-branding for of The has and reviews women women's highly up together for in Our as women's our segment a imaginary new collection star our photogenic the the then, aspirational the

excited long are We and the growing segment. for of AKHG our run women potential

Serving core particularly assortment. collection Our first remains XX% women's XX,XXX has we Included consider business. be No seen outperformed potential to of products perennial see Tank. unders tops women comfortable our being for offering to layer Yank over quarter. and the close this to both base first That our bras we greater collected men, in America's significant in have expansion But and reviews. said, most the in is five-star the and favorite layer of our growth

Best great of growth Best to spirit. and the in also and Made within albeit healthy is a XX% the behind individual the quarter, product brands which live Best other unique work Lastly family relative lifestyle curated but for within the first realized Made source Made, a that the craftsmanship brands. embodied about small in offering storytelling The still allows rate our

the are initiatives peak to this internal that core we serve advance by operational technology iconic centers, that bottoms, inspired last about Our that our capabilities we automation of of for foundation coastline Within Aloha our fully shirt And swimwear, increase and and and and of capabilities beach and accuracy, men implementing expands receive faster am project. our off existing have to sortation The quicker capacity the investment we support pleased the plans in inbound system, In can into stages and I it brand expansion our be with that equipment the can long-term women inventory year. kicked Blueprint. capability On to build season accessories Kahala, offered our capital in Big we summer year make capacity. our are and we two logistic our advance the will to with styles. available daily receipts support details growth. the collection the Hawaii. shared with we tropics of our early features customers. report partnership Dam on-track of our These tops we speed, fulfillment exclusive call, Pacific

for strategies merchandized our recommendations tools systems higher better based decision. decision. In insights utilization that efficiencies automate analytics planning on focus quicker cost trend data customer facilitate making and The automated our next. our our merchandizing outbound savings to buy, scanning merchandising The and ground equipment one of And long quicker allow and move growth generate sortation insightful on and the Ultimately allow to addition, through are we shipping brand replenishment are inventory to toolsets driving labeling. how investments will investments will assortment underway automated our continue The of range on plan, capability enhanced activities. we enable on will from deeper and analysis. in teams value seamlessly merchandized and season store orders more to will carton

the in number market are reviews them, the products opportunities despite environment healthy well we of engaging deeper from plans informing measuring the the for our our that experiences underlying their interactions been reviews customers shopping channel have investing external activate penetration. and have for to for summary, In greater challenges, continue meet demand in of a we as base, and posing we We These see technology needs. plans. are customer and our to as

our more first for with to a growth liquidity, access our I'll ample financial the it are and outlook position With quarter of on earnings flow support Dave balance We power our positive the to strong that, that cash in turn year. and plans. strategic provide over details to

Dave Loretta

and good Sam, Thanks, morning.

factor XXXX, sales For quarter, was the last million decrease sales in reported down roughly in net And to year-over-year. a XX.X% we $XXX.X up this and declining million, sales X.X% compared to $XXX.X contributing our first same $XX and million. compared between last year the the year was in period

transaction channel from stores. year, the the in XX.X% Our X% while direct down channel value up a sales increase last driven average by were X.X%, retail was largely in

better we factors, call, shared and business around media our both our customers clearance branded in-stock assortment, products. of we transportation preserving are position position in enhanced. the selling new spring when on some of quarter inventory traffic quarter. the heavier and new brand By quarter we the Customer Because core were seasonal the of traffic store due anticipated these and our later reached spend and until digital and a the first As price the of to back-half the focused last on continue new year new our and well last two channels sales positions softer items. sub improved to we in messaging, conversion at and responded delays regular year our in collections April, through better driving on much core in

the has net sales single Memorial through strong high mentioned, April the continued and total Day Sam customer demand As for increased momentum digits, weekend. with

retaining the to core productivity with us more new buyers trend and their were who Buyers prior renew year. primarily to and once, than customers full an offering digits higher demand The being promotional less overall by driven compared strategically price During quarter, spent purchase last and of sales have order last purchase customer year. returning on mid-single are with and strength sales items the is more customer shopped significantly more combined first often. per on who average value improving increased our and

these buyers is rates first in retention conventional stronger buyers. by the roughly XX% spend quarter driven per price much are for the higher customer versus Our and

strategically buyer, customer XX% With clearance significant points year product increase last higher amount customer value. XXX insights, our we leads at and mix margins an which driving to the target profit of was segmentation are to and improvement conventional The our down year. relative lifetime marketing quarter, the basis almost XX.X% reported the inventory adjusting to these gross our to last in compared gross of margin of XX.X% beginning to to

pants, freight Turing increased the quarter nearly $XX.X our freight margin items fire certain never bypass the represent a year, $X to incremental to And Buck quarter year to expenses, of spent first some in last of million into same amount year. profit and Absolutely is year first gross ports. factored have strive for year at core out $XX.X of to airfreight expedited to for where historical the expense nearly quarter our we first such magnitude Naked cost, to $XX.X included men's hose last that guidance. quarter as X.X% items We shipping million $XX items first Our million year. compared gross Those matched to this be stock. million last compared to last our round was and million SG&A in as do and bestselling it our briefs, anticipate would activity high although not XX%. expediting profit

increased a year. net expense in higher of expenses, percentage of XXXX. implemented to $XXX,XXX and year, XX.X advertising XX $X.X rates store net a and compared Selling percentage expenses XX.X% the to XX% sales the general points last expenses. increased and This XX.X% selling to basis center administrative our in as increases fleet fulfillment of million sales decrease SG&A across of of by expenses As hourly wage network marketing included last the $X.X million back-half in driven compared in and

the on outbound shipments customer Additionally, fuel de-leverage. our to selling contributed surcharges expense

in We the increases offset gains rate expect realize the quarters and before second the to a and costs. to efficiency expense de-leveraging realizing similar higher selling analyzing wage third

the are In year. levels throughout terms the anticipating will charges, of we the elevated continue field

a the of future advertising for we'll awareness acquisition XX% quarter. roughly and a to XX% total feature the represent customer investments These percentage AKHG. and content and as X.X% brand messaging Duluth cost of development in campaigns. support of to positioning And products brand XXX this new compared of As increased points of last costs basis result year, as and creative our planned marketing sales net

we portion addition, direct return XX% ad reduced our the work on to spend. media flexible in media digital a targeting mail continued roughly it leverage by strategy higher In of and catalog more

Our representing paid close the largest digital advertising the to spend XX% this expect quarter, to component media second in total to our spend represented and quarter, about that increase mix. XX% increase we of in marketing the

points XX to Overall, basis investments points. strategically the to expenses of brand advertising audiences represent net Additionally, million momentum Salt XX.X% The last marketing to roughly subsequent New Lake compared from year. sales the that well spend increased basis new to additional XX.X% center administrative the Jersey awareness establish and City second fulfillment and costs as quarter will store XXX quarters. designed represents year. percentage and increase, costs, to total fixed and and expect last are last customer year Cherry de-leverage as develop of XXX we as the Hills, for our $X.X a XX% increase General and in cost opened technology important personnel packet

to We lesser our expect in similar a quarter but de-leverage additional reasons, extent. for second

year, For growth. back-half in the to of expenses we in leverage connection the realize with G&A expense expect sales anticipated

As count the our balance year. XX of or plans of today, no openings for stands store with the at

As XX contraction. we are share adjusted quarter sites have from $X.X margin and we'll store XXXX in XX.X% Adjusted the leases. first basis EBITDA potential was points the for locations of year more we details EBITDA discussed for million, last and previously, evaluating decrease signed once we

share or in was million $X.XX to $X.X quarter first $X.XX net share, last income Our loss the a year. of per $XXX,XXX a reported diluted net diluted or loss per of compared

positive have would Excluding $X.XX the per share. diluted last our a expedited been freight year, expense from EPS

credit, our capital the cash on net million to outstanding sheet, the $XXX year, on available million, million in million. minimal million working today same ended the credit. $XX.X Moving anticipate zero of line. and including borrowings $XXX our to stands $XX the line quarter Compared $XX cash outstanding balance and of we with of which we on line at on period last had in We

have quarter. last round that year-end effectively. re-launches position were Our quarter we were beginning than the inventory course receipts and is end as supporting level of delayed arrived brand is the roughly year of and where a sub Spring X% year significantly at healthier of over higher the at the the quarter in than

X% current for appropriate the we level last year, season. are of and spring minutes in at inventory compared summer clearance is and is Our to the X% where

timing Our million our capital expenditures, expected is fulfillment new including versus be $XX amount of guidance The XXXX previous implementation in the cost our represents lower million. of software center $XX for progress to payments of facility.

fighting shift projections. systems for automated lease building our our we reflected be The free retrieval position. XXXX provider will of our updated the contract payments the XXXX XXXX impact with flow benefit finalize expect storage Adairsville, heels the and flows in cash roughly progress Georgia, $XX of million. cash our On the million and and for cash We $XX have year-end and to will and now early timing

and business to add a marketing second These our business the product back-half sales digits and development we on of direct more up expect we be inform and channel mid-single make the data low quarter to and the and we're key in a facilitate components outlook brand distribution in customer back-half teens assortment and planning XXXX, our as are our the up digitally year. the summarize, investments Big shared, will of to mix. quarter to Blueprint. As led second Dam and analytics for To capacity, across capabilities our investments better and focused more the our efficient expanding insights being all and are

sales, we year. of For the and the in expect sales second mid-single retail quarter through back-half to be the digits

similar year. the second gross quarter expect of down compared spend for the to quarter amount as back-half sales plan XX in percentage second to roughly by second last the we to to back-half to the XXX down points we same percent margin and first With as year second a to increase profit of sales roughly third selling a sales, as expenses, $X a year quarter in in increase last year. back-half quarters the quarter points, the be the year to and to and year in expense to and flat the over be quarter expect as to of the be increase slightly last We and sales as the percent in percent gain up XXX year the will on the the last of XXX of be points of relative in sales. basis fourth the expenses advertising growth. leverage of flat by We a million XX to roughly basis basis Overhead roughly

our reaffirming with are are full-year the to pleased We or EBITDA $XXX guidance million the dynamic of range the closing, $X.XX $X.XX EPS sales In net year, million to million, of start $XX we $XX to given of and to environment. $X.XX. in adjusted $XXX million, with the great particularly

remain teams executing the our call for Our needs plans. on we'll And and questions. customers, business with on focused open our the the and of strategic that,

Operator

the We'll session. And now Komp Jonathan Please with first comes Instructions] go the ahead. begin from question Baird. question-and-answer [Operator

Jonathan Komp

approach Yes, following noticed, reception look hi, far, being the to the you've sort more any or And are any I or feedback think, see through consumer the if then a positioning of brand up forward? changes differences on you character wanted result share by walked product could the But the of you. and And if brand start pretty you forward, that as Sam, so of and going realignment curious as gathered. good you clearly I morning. Thank on sort in you rationale. realignment. the I'm

Sam Sato

gives really purposeful was only allows heavily a distinct and to and perspective features product work Blueprint, lean use really in not focused all in of development of level, capture Dam was team part benefit Yes, brand thanks, sub-brands. so for from Jonathan, high the this of then And the Big designing performance us, narrowly be within these products. of each to and our to Yes, positions the the initial question. ability intended really it but and these the developing create our at appreciate on and products, the a the marketing it

really prepared to our work, to in a back you of the particular. response. that unique saw went clear piece, created point So, to immediately women's AKHG brand. we've it yes, point We've Made. I similar Two, And we would that seen around our a what represents the and and the April; penetration women's Duluth our some that, in much separation pretty we start say priorities, at larger was it as position. create distinction And in launched to one relative incredible some I of Best as remarks Duluth comparison -- strategic has will for to

brand well. understanding of marketing distinct is us positions perspective, And serving I So, product creating development a by importantly, combination clear is customers. a think, from our from a the and

Jonathan Komp

Great, any helpful level early better-than-expected in the for year, and in follow-up the year, but maybe it's I your the just outlook, that's that outlook Understanding understand additional trying year. a really internal perspective. mentioned And the know the then are maintained exceeded full-year you've QX plans, for you baking thinking conservatism QX in balance outlook your the of confidence to the results? your after on

Sam Sato

more color. then I'll provide maybe bit a Yes, so quickly, let I'll just -- little and Dave answer I'll

of team we to weeks along and that in accounted that our receipt like scheduling we this took and these thinking about year, all earlier with our part faced supply receipt flow -- as multiple delay. we with ensure we some last year purposeful constraints were of the things for One dates planned really intentional action, chain

starting holiday peak through that's into went and QX, through in in and QX, think expect I in and to be so, flow as show And buildup importantly, we we receipt season, the QX. the QX, the that the go case to then, as through

continued QX. XXXX about below As year that now levels. dipping we into were talking the coming And our a through reminder, were out inventories of mid-XX% how QX, last

on of this we table we because in particular, left and planning our -- the last So, or was includes lack of for forecast was expect QX, part some what of was our demand year inventory. what and QX projected we thought the

Jonathan Komp

that reallocations seen year, marketing the may balance the and when the successes relate you some Yes, you looks forward tailwinds in have the April? at and that not maybe guess specifically, the makes you maybe that saw, some some of you look and further And isolate to sense. strategies like about it of the of the or for that whether discussion could of April I could carry you

Sam Sato

since and Yes, what ad impressed Jonathan, ago, purposeful company joining target year the spend. in to me, that think decrease our a the is I flexibility or ability has increase

so, is its chain inventory. terms impact supply experienced we've And anything in of this unlike and availability on of

years, higher And need pretty when back. what we than we well to could be, over that's shift, it the inventory so, a digital at in you're more the we is strategic to then a the news in flow and flow much as to see we advance, isn't that part in flexible couple And inventory up linear past, can is of had of in. great locked commit to that we advertising dial because a use the start then last would made you dial contracts And quickly. where to which we strategy, vehicles rate, more marketing

So, the marketing frankly. throughout of brand is job and team an pulling unbelievable months doing the quite our levers weeks,

like in weren't of And both and that we as as really the was their the so, and here, plans and hit marketing women's to soon we our site. centers, drove it AKHG case out. because inventories to March, started April, in receipts planned things launch flow pushed the And fulfillment that our especially the to targeted in, launch, saw of as to initiatives. they on And digital start that business a to lot stuff up stores ramped initially

Dave Loretta

annual our Yes, the XX% year Jonathan, I'll of or business of balance of add, only ahead sales. quarter of us. still represents first lot total XX% a I just mean, is

quarter-to-date Memorial we accelerate back-half up weekend, single-digit and business of to through the have. to get continue the low to range, needs obviously rates to that Day the growth So, the in is where

reflective the year of our So, I that's still. we're just think it's in early that guidance And reaffirming.

Jonathan Komp

again. color. Thanks it I'll on. pass helpful that's Great,

Sam Sato

Jonathan. Thanks,

Operator

Jim from next comes ahead. Please Duffy with The go Stifel. question

Jim Duffy

Thank Good morning. you.

Sam Sato

Hi, Jim.

Jim Duffy

response ask curious I'm question. on to some made your the the wanted you on incremental last I about return in spend. to comments marketing about indications

During the first quarter, some you pulled back marketing. on

growth? If drive ROI] inventory scale to could invest you behind you had so do business, would and have to the the believe [Ph] you set you that do initiatives out [high

Sam Sato

Yes, absolutely.

flow. up against as spend launches to our we're down I As of choppiness in or the said, the inventory that able flex collections, marketing receipt planned or depending on flows new

launching, is we're We're unbelievable brought We've in a -- excited in. prepared of layer it got women's of you age is Mossy bras, I'll hunting we're new I capsule excited category a a unbelievable couple within against about. And remarks which to with so, as some got the that up that; that we'll this in mentioned ramp that of today, market. We've growth. examples. about Oak, as comes partnership brand that got camouflage this my advertising products kind we've some give outsized delivering first new

her. whole disguising Tamer] this women's got [Ph], layer we've and line called its so, And for new offer seamless first [Line

a got that. campaign marketing we've so, good against pretty And

spend And And mentioned to collections. his because remarks, of in new so, flex exciting Dave we'll some innovations incredible that flow new goods flow. our some really have these prepared increasing as through the really in and new our QX choppiness receipts pipeline absolutely as coming; seeing But continue receipt we're ad and in of the flow we're products, just receipt the we that are new in. of the it's working

Jim Duffy

customer Is this concept in dig customer to existing to of this is to want level of use or go new using Understood. And to simply could there. file that acquisition efforts product customer detail established with that base? you're you compelling proof to the I reengage another

Sam Sato

of is mentioned of of in a the -- things. it's One invest customer as consumer think new should treasure-trove we hired a gaining customer information. that a I And he and data really handful perspective who strategies. up target where and calls, can and data. and our recently great brings amount shown acquisition good of the always way Insight, chop couple a And to rich us of actual already of as experience. our we add really tools, stand-up data we we're lot unbelievable continue And, Yes, fact, we've insight insight over Customer has had an in as Director we've last

coming have One us, price, to their more only acquire of us needs have. are -- mentioned their and but or frequency shown between us. us, spenders valuable time interaction And are of that significantly over is over the because the consumers conventional things they come because, in time, that size we not of the what through it basket, this the with his to us remarks, that prepared has to difference product he of versus that in call or Dave we those primarily

because and it of attract And narrow more different channels effective and acquisition. types who on So, we're making to spend we're customers ad largely through that digital trying look-alike can our much be targeting we in through even selective that's is retain.

Jim Duffy

That's great.

Your that seems full-price the [Ph] curious, selling I'm powerful. opportunity focus part? I the how [the size buyer] penetration this is market revenue And think you on about do purer versus does addressable the and revenue the price to the of buyer change encouraging. size that super the does How the but dimension that a base of of conventional a improve margin shift structural potential for base, think business? narrow of potential

Sam Sato

don't think no, I so. Yes,

I listen, I serve make price or of kind ultimately, and inflationary built a -- the is even just the now just our an whether terms surface the expanding you're -- times, we're I we're choice. we types penetration. in scratching in of -- large are But And think when the and everyone like opportunity of think, durability, market we considers products in value, for price they in where not of for produce market the of us. -- everybody's market, the think size not,

Jim Duffy

Great. Thank you, guys.

Sam Sato

Jim, Oh, sorry. Jim. Jonathan. Thanks, Thanks, I'm

Operator

Blair. next go comes Dylan ahead. Carden The question with William from Please

Dylan Carden

margin underlying kind P&L, the Thanks of peak gross of a I of or around cost gross some artificial flirting lot. continuing you're the of this margin out same Kind kind some vein, guess further back up headwinds. of of to sort

which there any consideration curious, long Is about. structural imbedded that you're a more there shift these talked brands underpins blueprint? speaking that's lot is kind kind mix in I'm standpoint full-price of margin selling, some a here with of more you've other of of for is from sort gross something kind promotional of level your portfolio a the recession? And so, And of towards cadence, being efficient that

Sam Sato

can The, in I certainly Yes, mid-XXs the long-term. kind guess, I'll of margin profit is we gross continue foundational that see Dylan. start that,

by to there's levels clearance more continue inventory we really the in And regular activity two big appropriate room we of are that so, deliver benefit driven in continue strategically to that control, and activity. the the will full-price, grow last price had on is mix The to there that, prevents that with years. promotional hopefully, is

of we going selling of of the -- So, is be to customer, it's do. of in gross and the product have margin on look mix value us. a these product about level that for of end consistent price initial we're opportunity the gross the that's cost, kind support -- to margin managing gross We that a margin profit the the shift, and which terms consistent selling. all on sub-brands at gross strive after mix and that we the margin comparable the categories to what to when delivery and of on competitiveness But markup

see the having growing gross that So, we kind alter of opportunity. profit don't sub-brands a impact and big our to due margin

Dylan Carden

-- still is level? margin growing guess I at that from crazy up core in getting sort the it of of of kind flirting I'm bit maybe of little history, you're as back that of to sort you're business at Is runs that But is you've around saying here a a structurally where mid-XXs of at kind is looking per mid-XXs high-XXs. think sort both, what -- least pre-pandemic high-XX been, you're is underlying

Sam Sato

into that margin. and have other I I, our I margins guess, XXs, product about costs then at And sell are our we talk Yes, that kind when baked mean high of gross profit level.

think rolling definitely of to achievable XX-month So, a that maintain yes, on basis. that's kind I

Dylan Carden

across revenue then, then legacy I from to sort cross-sell amongst brands, going of but you, kind be And to a some Duluth core, know there? guess are are some opportunity the brand the got those versus that are brands, overlap, Okay. the where And different, Duluth I opportunity? combined standpoint? commentary there's the penetration days, be just early portfolio if are there's of of kind curious you I'm of any exploring to customer profiles you

Sam Sato

Yes, the faster Duluth our larger business, and Best say we grow Duluth to plan share and so or, XX% of than we with Made AKHG balance. much be that AKHG the Duluth, continue just have rate of as at under move just Best forward. percentage Made to a to a high at being the is a level, And are represent

to In terms out of saying intended, geared was Jonathan, hard and use crossover, positions for work really create we've distinct for alike set end to as these earlier consumer. to I

to assortment crossover focus. lot working a from we're it's intentionally, -- So, of perspective have products not because an not hard have end-use to

their are, flannel the of customers that the happen a in we're shirt And actually making flannel of basket And so, because choice shirt Duluth order value particular. we in to size build they fact, believe aren't different versus for in AKHG, a buying a that that that some average in needs. between allows in them seeing terms us

Dylan Carden

Sorry.

because would of a use and that cannibalize if that mean one another, the other, there buying high flannel So, rain not combination is potential, of am am a shirt right? both is total those for basket over buying my I each I cost case right, and for jacket

Sam Sato

That's cannibalizing each correct. Not other.

Dylan Carden

those now to are that a yet out another, so, one of of brand of that's you distinct something come? sort might kind sorts there And and marketing be is customer actively of that to customers

Sam Sato

for is of opportunities how some for are more end different is AKHG learn customer. primarily instance, first us, consumers Duluth But us use consideration with within that's engaging distinct about or Made. similar they market, market some and foremost, Yes, items as we there and to Best buying potential to

Dylan Carden

right, I the okay. talked know All on I -- about little it am And I still we lot still bit lost. am call.

So, right. on it yet understood marketing to actually world when have back inventory the all But the if de-levered I sense the you pulling marketing didn't the in makes me.

right? or curious of I of of of sort sales gotten well. to am have the just go-forward rest I marketing you double outlook You so, some percent as kind of maintain And it level? understand and sounds around am just rid the try digit I sort catalog did hear for low

Sam Sato

things two on back over is been we've of there. so Yes, pulling years One catalog. couple the last

we still instance. So, We're re-brand do Father's It's a us great we're for for in to and an to opportunity And building it importantly, like us. Duluth really piece it repositioned investing brand key timeframes AKHG Day across gives genders. doing over catalog. it as

week. this hitting is catalog Day Father's Our

family and key those family moments take those to tell we'll So, stores. brand full

a In media of part is and better, creative terms to working -- and bit got just brand nonworking. is de-leverage, have the it we maybe of it we've really building. explain Nonworking

of positioning AKHG versus the women's as creating and and brand repositioning marketing targeted money So, Company, Duluth we driven Trading brand messaging marketing. Duluth by for instance, we spent commerce launched in

Dylan Carden

Got you. more makes sense. That

and and probably you kind curiosity ultimately so, won't I low-double. -- And high-single guess just of level of should you of commit if to kind get now, spend out that too. I of maybe ad but know right be can resting I

Sam Sato

as saying in of double I the are in am probably kind that will in this forward comfortable low And we digit digit of where be range. move range somewhere low we it's we today range. been that not Historically, double

Dylan Carden

Very good. Thanks the guys for taking Nice all questions. work.

Sam Sato

Bill. Appreciate it. Thanks,

Operator

which concludes conference And This much presentation. today's disconnect. question-and-answer you also our for today's call. session, Thank now you attending concludes may very

Duluth (DLTH) 2 Jun 222022 Q1 Earnings call transcript