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Duluth Trading expanding its store base

4/8/2016

Brand awareness and sales growth are accelerating at Duluth Holdings where the company’s rapidly expanding store base is so young it won’t be able to report same-store sale growth until 2017.



Belleville, Wisconsin-based Duluth Holdings, known to customers as Duluth Trading Company, grew sales 27.5% to $140.4 million and net income increased 25.8% to $17.5 million, or 58 cents a share, during the quarter ended Jan. 31. For the full year, total sales rose 31.2% to $304 billion. Net income grew 16.1% to $27.4 million, or $1.06 a share.



The seller of men’s and women’s casual wear, work wear and accessories opened three new stores to end the year with nine locations.



“Fiscal 2015 was a milestone year for Duluth Trading. We became a publicly traded company, made great strides in increasing our brand awareness through highly successful marketing campaigns and opened three new stores bringing our total store count to nine,” said CEO Stephanie Pugliese. “We are especially proud of our financial performance despite the unusually warm weather and a highly promotional retail environment during the fourth quarter.”



Through clever and aggressive marketing, Duluth has built awareness among consumers while insights into purchase behaviors inform the company’s real estate strategy so that new stores quickly become profitable.



“Building brand awareness and acquiring customers is an important growth strategy for us, and we are pleased to report that our marketing efforts drove an increase of 28.1% in website visits year-over-year and more sales through our call center,” said Duluth CFO Mark DeOrio. “In 2015, our direct business, which includes catalog and online sales, accounted for 87.6% of total sales.”



Going forward, the direct contribution can be expected to account for a declining percentage of sales as expansion of the physical footprint accelerates. For example, the direct business grew 24.6% in the fourth quarter, while sales in the retail business increased 57%.



The company expects to open four to five new stores this year and seven to eight locations in 2017.



“Opening new retail stores is a key growth strategy for Duluth,” DeOrio said. “We are very pleased with the performance of the new retail locations. The average payback on our stores continues to be less than 24 months, and we are refining our store-opening process with each new location.”



In 2016, the company’s four to five new locations will be opening in the second half of the year in the Midwest while the seven to eight openings planned for 2017 push the company closer to the East coast where online spending activity reveals Duluth’s largest concentrations of customers are located.



Duluth describes itself as a lifestyle brand for the modern, self-reliant American, offering high-quality, solution-based apparel for men and women who lead a hands-on lifestyle and value a job well-done. The company strives to offer customers an engaging and entertaining experience, which is evident in marketing that incorporates humor and storytelling. The company bills its retail locations as a “store like no other” and its products are backed by a “No Bull Guarantee.”


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