Duluth Holdings Inc. (NASDAQ:DLTH) Q3 2019 Earnings Conference Call - Final Transcript

Dec 05, 2019 • 09:30 am ET

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Duluth Holdings Inc. (NASDAQ:DLTH) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Stephen L. Schlecht

the quarter, we launched our new concept store that exclusively features men's underwear in the Mall America. We also opened the new markets of Nashville and Knoxville, Tennessee, which completed our store build out for 2019 bringing us the total count of stores to 61. While we announced last quarter that we were moderating our retail expansion, storage played an important role in building brand awareness and driving meaningful growth.

In the third quarter, stores contributed nearly 50% of our top line and they are critical to our omnichannel strategy to deliver the experience that today's customers demand, shopping when, where and how they want. Now that we have focus and ship from stores capabilities, we are just beginning to see their potential. In quarter three, which we just completed, 13% of direct sales were fulfilled from store inventory which supports improved customer service and enhance inventory flow.

Keep in mind that we did not have these powerful systems up and running last fourth quarter and we are very pleased to see how fast our customers are adopting the convenience of ordering online and picking up in stores, and even better a third of those customers purchased additional merchandise in the third quarter, while in the store.

Optimizing our retail stores and infrastructures is how we'll improve the ROI on the investments we have made over the last couple of years. We are also intensely focused on areas that need improvement, driving traffic to our stores is a top priority. Even though, we put our stores where our customers are, we still need to create greater market awareness through local advertising and in-store events. We also need to draw a greater attention to the product newness that we're delivering to customers. Our marketing team has been testing new ads in target areas, using local TV and radio support, direct mail prospects and the social media.

Results have been positive, yet, we have more work ahead of us as we roll out these programs across our footprint. Expanding on our newness initiative, I'm pleased to report that we have seen progress on the new products' front. Our men's pant fit relaunch has been successful, especially in the slim and standard fit categories, which affords us the opportunity to attract a base of new and younger customers. Our men's Dang Soft underwear is off to a strong start and Buck Naked prints [Phonetic] are posting results above expectations.

our women's business continues to show healthy growth, with the expansion of the plus sizes and introduction of core line extensions. We're making good traction here and are very focused on filling the pipeline with new and innovative products.

Regarding our third quarter results, they were within our current expectations but still not showing our brand's true potential. The top line grew 12% and we are in $0.01 per diluted share, which reflects our focus on controlling expenses and achieving some SG&A leverage as expected.

Moving into the all-important fourth quarter. I am confident