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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Q & A
Operator
Operator

[Operator Instructions] The first question comes from John D Morris of D.A. Davidson. Please go ahead.

Analyst
John D Morris

Hi thanks. Good morning, everybody.

Executive
Stephen L. Schlecht

Hi, John.

Analyst
John D Morris

Thanks. Question for you on inventory. Can you give us a feel of what the inventory would have been if you were adjusting for the fact that you've got the pull forward to correct for last year. I'm just wondering, it looks even with that potentially a little bit high up 39% relative to sales growth, and I wonder if you can give us any comfort there on where you might be expecting that inventory to be, let's say, at the end of fourth quarter? So those two questions.

Executive
Dave Loretta

Yeah. Sure we moved our inventory forward by quite a bit three to four weeks, which in this period of time amounts to a fairly large amount in excess of $20 million of inventory that we pulled in early. Relative to last year, we know that we were late in getting those inventories into our warehouse and out to our stores. So I'd say under normal circumstances and if we come back and repeat next year, we would expect our inventories to be closer in line to where our sales growth are. At the end of the year, I think we'll also see a greater increase in the inventory levels because we're going to repeat that activity in preparation for spring and summer. So we're expecting inventory to be between 20% and 30% higher on a year-over-year basis at the end of the year, reflecting that continued pull forward. And then as we proceed through 2020, get the inventories back inline with sales growth.

Analyst
John D Morris

All right. That's good to know ahead of time. So we know when to expect that. And then I guess some part or maybe partially connected to that, just trying to understand a little bit better about the expectation for implied sales growth for the fourth quarter, maybe I missed it because you're kind of going through the full year numbers pretty quickly. But is my math correct, given the window over the full year guide that sales growth in Q4 would be, I guess low- to mid-single digits, and I'm wondering -- well is that correct and if so, I guess, given the way you're managing the inventory levels. Why would that be the case in terms of a decel compared to the third quarter growth rate?

Executive
Dave Loretta

Yeah. The fourth quarter will have from a sales growth standpoint, the impact of going against our 53rd week last year. So from a fiscal period standpoint, low mid-single digits is correct from a 52-week to 52-week basis. It's going to be a little bit above that in the high mid-single digits and really that's what we're managing our inventory flow to is the sales on a week -- same week-over-week basis.

Analyst
John D Morris

Okay, great. That's great clarification. Good luck for holiday. The stores look great, especially with that Alaska hard gear. Thanks guys.

Executive
Dave Loretta

Great. Thanks, John.

Executive
Stephen L. Schlecht

Thank