IPO Report: Duluth Holdings (DLTH)

Francis Gaskins |


Duluth Holdings (DLTH) is a rapidly growing lifestyle brand of men’s and women’s casual wear, workwear and accessories sold exclusively through its own channels. The company is based in Belleville, WI.

Seven other companies are scheduled for the week of Nov 16. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: William Blair, Baird, Raymond James, BMO Capital Markets
Co-managers: None

End of lockup (180 days): Monday, May 18, 2016
End of 25-day quiet period: Tuesday, December 15, 2015

DLTH scheduled a $100 million IPO with a market capitalization of $419 million at a price range midpoint of $15 for Friday, Nov. 20, 2015 on Nasdaq.


DLTH is a rapidly growing lifestyle brand of men’s and women’s casual wear, workwear and accessories sold exclusively through its own channels.

DLTH offers a comprehensive line of innovative, durable and functional products, such as its Longtail T® shirts, Buck Naked™ underwear and Fire Hose® work pants, which reflect its position as the Modern, Self-Reliant American Lifestyle brand.



Per share dilution





Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

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Price /TanBV

% offered in IPO

Duluth Holdings (DLTH)







annualizing July 6 mos


P/E est fo Jan '16 yr






For July 6 mos

37% top line rev increase

Net income declined to  4.6% from 5.1% of rev, but increased 24%

87% direct sales

38% gross profit growth

Est P/E for Jan '16 yr, because seasonal is 25


DLTH is a rapidly growing lifestyle brand of men’s and women’s casual wear, workwear and accessories sold exclusively through its own channels.

DLTH offers a comprehensive line of innovative, durable and functional products, such as its Longtail T® shirts, Buck Naked™ underwear and Fire Hose® work pants, which reflect its position as the Modern, Self-Reliant American Lifestyle brand.


DLTH's business is subject to seasonal influences, with approximately 48% of net sales and approximately 59% of net income realized during the fourth quarter of the last two fiscal years, which includes the holiday season.


DLTH’s brand has a heritage in workwear that transcends tradesmen and appeals to a broad demographic of men and women for everyday and on-the-job use.

Proprietary Products

Approximately 88% of DLTH’s fiscal 2014 net sales consisted of proprietary products sold under its Duluth Trading brand name.

DLTH believes the foundation of its success is its culture of “poking average in the eye” by seeing things for what they could be and should be and finding a way to make them exactly that, and DLTH likes to do it all with a big, toothy grin.

DLTH’s brand is defined by: solution-based products manufactured with high quality craftsmanship, humorous and distinctive marketing and an outstanding customer experience.

Design Process

DLTH’s design process reflects a “there’s gotta be a better way” attitude, resulting in differentiated products with enhanced features and enduring styles that go beyond short-lived fashion trends. DLTH strives to make shopping for its products fun by using attention-grabbing advertisements that serve to reinforce is brand identity.

DLTH also uses storytelling to differentiate its products in the marketplace and create emotional connections with its customers.

DLTH provides its customers with a unique and entertaining experience across all channels through its content-rich website, catalogs and “store like no other” retail environment.

DLTH treats its customers like next-door neighbors, as exemplified by tis exceptional customer service and unconditional “No Bull Guarantee” on all purchases.

Duluth Trading Brand

To protect the integrity of the Duluth Trading brand, DLTH offers its products exclusively through tis omnichannel distribution network, consisting of tis website, catalogs and retail stores.

This model creates multiple touch points with DLTH’s customers and enables DLTH to control both the expression of its Duluth Trading brand and the pricing of its products.

Distribution Strategy

DLTH’s distribution strategy eliminates the need to sell through third-party retailers, allowing DLTH to focus on its core competencies of product development, storytelling and serving customers.


Duluth Trading was founded in 1989 when two brothers in the home construction industry were tired of dragging tools from job to job using discarded five-gallon drywall compound buckets.

The two brothers were never satisfied with the status quo and believed “there’s gotta be a better way.”

So they invented the Bucket Boss®—a ruggedly durable canvas tool organizer that fits around a drywall bucket and transformed the way construction workers organized their tools.

Capitalizing on their initial success, these brothers launched a catalog that later became known as Duluth Trading Company.

Under the initial philosophy of “Job Tough, Job Smart,” this catalog was dedicated to improving and expanding on existing methods of tool storage, organization and transport.

In December 2000, GEMPLER’S Inc., an agricultural and horticultural supply catalog business founded and owned by Stephen L. Schlecht, acquired Duluth Trading and brought the two mail order companies together.

Both catalogs had customers who worked outside and embraced the spirit of hands-on, self-reliant Americans.

In February 2003, the GEMPLER’S catalog business was sold to W.W. Grainger (NYSE:GWW) and proceeds from that sale have been used to fund the growth of Duluth Trading. With that transaction, GEMPLER’S, Inc. changed its corporate name to Duluth Holdings Inc.

Intellectual Property

DLTH owns or has the rights to use certain trademarks, service marks and trade names that are registered with the U.S. Patent and Trademark Office or exist under common law in the United States and other jurisdictions.

The “Duluth Trading Co” trade name and trademark is used both in the United States and internationally, and is material to DLTH’s business. Trademarks that are important in identifying and distinguishing DLTH’s products and services are Alaskan Hardgear®, Armachillo®, Ballroom®, Bucket Master®, Cab Commander®, Crouch Gusset®, Dry on the Fly®, Duluth Trading Company®, Duluthflex®, Fire Hose®, Longtail T®, No Polo Shirt® and Wild Boar Mocs®. DLTH’s rights to some of these trademarks may be limited to select markets. DLTH also owns domain names, including “duluthtrading.com.”


DLTH competes with a diverse group of direct-to-consumer companies and retailers, including men’s and women’s specialty apparel chains, department stores, outdoor specialty stores, apparel catalog businesses and online apparel businesses.

DLTH competes principally on the basis of brand recognition, innovation, product quality, customer service and price.

According to IRI, DLTH’s brand compares favorably to its competitors in the following categories: comfort, useful features, product fit, quality, durability and materials used.

DLTH believes this outperformance is a result of its solution-based product development and its high level of focus on maintaining the Duluth Trading brand. To stay ahead of its competition, DLTH continues to develop innovative solution-based products for which DLTH creates unique selling propositions that incorporate humor and storytelling.

5% Shareholders Pre-IPO

Stephen L .Schlecht and Marianne M. Schlecht Descendants Trust          37.8%

Stephen L. Schlecht      41.3%  


No dividends are planned.

Use of Proceeds

DLTH expects to receive $91 million from its IPO and use it for the following:

to make a final distribution to shareholders who were shareholders immediately prior to this offering, including some of its directors and officers, relating to the termination of its “S” corporation status in an amount equal to 100% of its cumulative undistributed taxable income, which DLTH currently estimates to be $51.1 million.

to fund growth initiatives and other general corporate purposes, including approximately $30.0 million to $33.0 million to fund new retail store expansion and approximately $7.0 million to $10.0 million to fund infrastructure expenditures, including a new order management system, asset management system, assortment planning system and e-commerce platform and office and distribution facilities. DLTH’s expected uses of net proceeds from this offering are based on its present plans, objectives and business condition.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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