Worth noting that the write up posted by roark33 (which is from July) forecasts "~$66MM in EBITDA" for 2019, but the company's current guidance is "Adjusted EBITDA in the range of $51.0 million to $55.0 million."
Agree with all the above comments about discounting. To a certain extent Duluth has already played the discounting game, with gross margin falling from ~57% in FY 2015 to something like ~54%
The leverage means this is almost certainly a pass for me. I have a hard time getting excited about a leveraged clothing retailer. That said, I am going to be driving right past one of their stores later today and might stop in and have a look.
Finally, does anyone have any thoughts about where Ebay sellers are sourcing Duluth stuff? A single seller has sold 800+ Duluth Trading Men's Longtail T-Shirts. Another seller has sold almost 100 Buck Naked Performance Boxer Briefs.
Management revised guidance in Sept. He was likely using previous management guidance.
I'd say the biggest reason for decline in gross margins is the large decrease in shipping revenues. DLTH recognizes shipping revenues at the top-line, but puts the expenses within SG&A (shipping revenue gross margin = 100%). Over the past several years, shipping revenues have dramatically fallen. The company doesn't break it out, but has frequently attributed the majority of gross margin decline to this reason. In the most recent nine months promotions seem to have had more of an impact on gross margins. While I don't like seeing discounts, it seems this is the world we live in. There are plenty of higher-end comps (Columbia Sportswear, North Face, LL Bean, etc.), that use discounting to drive sales. I wouldn't say a brand is dead simply because they use discounts to drive sales.
