Duluth Holdings Inc.

Good morning and welcome to the Duluth Holdings First Quarter 2021 Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Donnie Case, investor relations for Duluth Holdings.

Please go ahead. Thank you, and welcome to today's call to discuss Duluth Trading's first quarter financial results. Our earnings release, which we issued this morning, is available on our investor relations website at irduluthrating.com under press releases. I am here today with Steve Schlecht, non-executive chairman, Sam Stato, president and chief executive officer, and Dave Loretta, chief financial officer. On today's call, management will provide prepared remarks, and then we'll open the call to your questions. Before we begin, I would like to remind you that the comments on today's call will include forward-looking statements, which can be identified by the use of words such as estimate, anticipate, expect, and similar phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts, and assumptions, and are subject to risk and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Such risks and uncertainties include, but are not limited to, those that are described in our most recent annual report on Form 10-K and other SEC filings as applicable. These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. And with that, I'll turn the call over to Steve Schlecht, non-executive chair of Duluth Trading. Steve?

Thank you for joining today's call. We are pleased to report a solid first quarter with net sales growing more than 21% to $133 million year over year. Operating income was positive at $2 million and adjusted EBITDA was $10 million. We also reduced inventory by $31 million compared to the prior year period. Also, our balance sheet is as strong as it has been in recent years which positions us well to execute our strategic initiatives. Direct channel sales increased almost 2% against tough direct channel comps in the first quarter of last year. Retail store sales were up 93%, a significant increase from the comparable period when all stores were closed for roughly half the quarter. It looks like consumer shopping patterns are beginning to normalize as COVID fears moderate. While these are encouraging signs, it's still too early to know what the new normal will be post-pandemic. What we do know is that our strong omnichannel model will serve our customers well, regardless of how they want to shop, and that our customers are responding very favorable to our spring-summer collections as they head outdoors. Dave will fill in the details in his commentary on this. Over the past 20 months, I've had the privilege of leading our incredible Duluth team during some challenging times, and I couldn't be prouder of their dedication to our brand and customers. When we started to see some light at the end of the tunnel, my number one priority was to find the right person who has a proven track record in retail and who shares our core values. I am delighted to introduce you to that person, Sam Sotto, our new President and Chief Executive Officer. He's only the third CEO in Duluth Trading's 21-year history. Many of you may have met Sam while he was CEO of Finish Line, a leading specialty retailer that had over 900 branded U.S. locations and achieved $1.8 billion in net sales under his leadership. With over three decades of retail industry experience and proven results in omnichannel growth, Sam brings more than 15 years of applied executive leadership, working across business divisions and product categories. During his tenure at Finish Line, he spearheaded a successful merger with JD Sports, developed business extension strategies, including a key partnership with Macy's, and created a roadmap for digital and mobile-first evolution, all of which contributed to significant top-line sales growth. Sam started his career at Nordstrom, climbing the ranks from store sales associate to vice president, corporate merchandising, which speaks volumes to his talent and work ethic. I will now turn the call over to Sam to share his thoughts on what attracted him to Duluth and what he has observed during the first month on the job. Sam? Thank you, Steve.