Duluth Holdings Inc. · NASDAQ:DLTH
Duluth — William Blair Consumer Growth Conference 2018
26 slides from Duluth's conference presentation, Jun 13, 2018
Slide 1: Net Sales $470M+ and Growth Opportunities
$470M+ Net Sales 27% CAGR 2014-2017 Growth Opportunities: Grow Market with Omnichannel Presence Thoughtfully Expand Assortment Build Opportunity in Women’s and Sub- brands Rapidly Growing Authentic Lifestyle Brand $1 Billion Net Sales Target 100 Store Potential In Identified Markets Store Payback <2
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation dated June 13, 2018 includes “forwardJooking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts included in this presentation, including statements concerning D
Slide 3: Introduction to Duluth Trading Co.
Introduction to Duluth Trading Co.
Slide 4: Workwear Heritage is the Foundation of our Authentic Lifestyle Brand
= Workwear Heritage is the Foundation of our Authentic, Everyday Lifestyle Brand = Long History of Product Innovation and Solution-Based Design = Humorous and Distinctive Marketing = Outstanding and Engaging Customer Experience = Nationwide Omnichannel Presence with Controlled Distribution June 13,2
Slide 5: Rapidly growing lifestyle brand with well-established direct business
= Rapidly growing lifestyle brand with well-established direct business Multiple revenue growth opportunities > Build brand awareness to expand customer base > Expand retail presence with attractive unit economics > Grow women’s business > Broaden men’s assortment Strategic investments support long
Slide 6: Strong track record of 20%+ revenue and EBITDA growth
= Strong track record of 20%+ revenue and EBITDA growth = Strategic investments support long term objectives Net Sales ($Mils) Adjusted EBITDA ($Mils) (1) F14-17 CAGR = 27% F14-17 CAGR = 20% 2014 2015 2016 2017 2018E 2014 2015 2016 2017 2018E LU ' pesur (1) Adjusted to reflect the add-back of stock
Slide 7: Growth Strategy
Growth Strategy
Slide 8: Growth Strategies
Growth Strategies TRADING DULUTH elows STORES ak ee Ss50+ 4.7585 STARS! ou wn 0 AFL oe TR ATED ToT DULUTHTRADING.COM DuamtH June 13,2018 3 Grow Women's Business 4 Broaden Assortmentin Select Men's Product Categories
Slide 9: Build Brand Awareness
eae Pav ey Build Brand Awareness “i = Digital Advertising > Paid-for search and banner ads > Social media (organic and sponsored) “ > Targeted emails el WATCH #@ TV ADS = TV Advertising >» Strategically placed national ads -~ - a » Memorable, humorous ads I — ice. a0 = Catalog > Captivating storytel
Slide 10: Identified markets with ~100 potential store locations
= Identified markets with ~100 potential store locations > Utilize direct segment data to determine markets with existing customer base >» Focuson regions with demographic that aligns with target customer >» Geographic diversity indicates significant white space opportunity ‘@ Full Line © Outet © An
Slide 11: Markets Grow with New Stores & Improve Over Time
\ > Markets Grow with New Stores & Improve Over Time Direct sales growth accelerates in store markets 18 to 24 months Total Sales in a store market grow up to 3X with the presence of retail after opening, as evidenced by the higher growth rates in older store markets Average Increase in Total Salesi
Slide 12: Retail Stores Attract New, More Valuable Customers
Retail Stores Attract New, More Valuable Customers Retail customers more likely to shop across channels, categories, and spend more Multi-Channel Buyers Multi-Category Buyers Sales Per Customer Retail Buyer Direct Segment Retail Buyer Direct Segment Retail Buyer Direct Segment Buyer Buyer Buyer 2 D
Slide 13: Omnichannel: Buy Online Pick-up in Store, Ship-from-Store, Omni Returns
=~ 1. Buy Online, Pick-upin Store baad) 2. Ship- from-Store Bl 3. Omni Returns Whatit is What the benefits are Scope Offer customer items for immediate pickupat a local store Leverage our store fleetas a local, low volume fulfillment center Seamlessly process omni returns and exchanges in- store Dea
Slide 14: Grow Women's Business
Grow Women’s Business Net sales increased 37% in 2017 Continued customer acquisition through marketing investments and retail presence Expand product offering to address more of her lifestyle Introduce plus sizes in Fall 2018 2013 2014 2015 2016 2017 DeantH June 13,2018 “
Slide 15: Broaden Men's Assortment: Net sales increased 22% in 2017
Net sales increased 22% in 2017 Extend core products through color, fabric and size Increase penetration in spring and transitional product (rain, mid- weight jackets, etc.) Continue to introduce products that expand occasions for wear Expansion of closet share in sub- brands > Duluth-Built Business
Slide 16: Order Management System and IT Investments
Order Management System Point of Sale Upgrade Forecasting & Planning Logistics & Warehouse Operations Data and Customer Analytics DeantH + Real-time inventory visibility across the chain Stabilize system platform + Integration with OMS, Chip & Pin, Gift Card enhancement + Streamline customer returns
Slide 17: Financial Review
Financial Review
Slide 18: Year Ended January 28, 2018
Year Ended January 28, 2018 (Sin milions) 25.3% metal $376 —— [sat] 2016 2017 Adjusted EBITDA” (Sin mlions) $46 S41 2016 2017 Margin 10.9% 5% Gross Profit a $261 soi 2016 2017 Margin 56.9% bad Net Income?) (Sin milions) $23 S21 2016 oat Margin 5.7% 20% (1) Adustedto reflectthe add-back of stock comp
Slide 19: Quarter Ended April 29, 2018
fs Ended April 29, Gross Profit (Sin mlions) __18Tk _5 (Sin mlions) Direct sea et Bis ™ Retail | sca % 3 mos. 2017 3 mos. 2018 3 mos. 2017 3mos. 2018 ( 4/30/2017) ( 1429/2018) (4/30/2017) (4/29/2018) Margin 58.1% 55.8% Adjusted EBITDA Net Income?) (Sin milions) (Sin mlions) $27 $26 $0.4 | $(0.7) 3 m
Slide 20: Strong Balance Sheet and Liquidity
F Strang Balehes Shoot and Liquidity | aM As of ($ in millions) 2018 Cash $ 1D = $1.2 million of cash with $22.7 million of debt outstanding” Debt L 15 = Terminated $60 million revolver and emm.rean : entered into new $130 million credit Line of Credit 21.3 facility ($80 million revolver with $50 mi
Slide 21: FY 2018 Guidance
FY 2018 Guidance 2017 Actual 2018 dance — Assumptio Net Sales $471.4M $555M to $575M Direct mid-single digit growth; Retail $215M-$225M Adjusted EBITDA $46.4M $51M to $54M. 10% to 16% YOY Growth EPS $0.72 $0.79 to $0.84 26% tax rate and 32.4 million shares o/s CAPEX $42.8M $45M to $55M 15 new store
Slide 22: Long-Term Targets
ay Long-Term Targets 2017 Actual Lon Assumptio Net Sales $471.4M ~$1 Billion Open ~15 stores per year 50-60% retail stores / 40-50% direct Adjusted EBITDA 9.8% Low double digits Stable gross margin Margin Rate Leverage expenses Benefits from IT / omnichannel investments CAPEX $42.8M $220M New stores
Slide 23: Rapidly growing lifestyle brand with well-established direct business
= Rapidly growing lifestyle brand with well-established direct business Multiple revenue growth opportunities > Build brand awareness to expand customer base > Expand retail presence with attractive unit economics > Grow women’s business > Broaden men’s assortment Strategic investments support long
Slide 24: tes
tes a) = ® fal 2 Sg
Slide 25: Adjusted EBITDA Reconciliation
3.Months Ended Fiscal Year Ended (S in millions) April 29, April30, January 28, January 29, 2018 2017 2018 2017 Net Income $ (07) $ 04 $ 236 $ 215 (+) Depreciation & Amorization 23 16 73 47 (+) Interest Expense, net 08 02 20 02 (4) Income Tax Expense (0.2) 0.2 119 13.5 EBITDA $22 $ 24 $ 448 $ 39.9 A
Slide 26: New Store Locations and Timing
Location Timin Gross Sq Ft Anchorage, AK Opened 3/1/18 25,409 West Fargo, ND. Opened 3/22/18 14,557 Colorado Springs, CO Opened 5/3/18 12,410 Lubbock, TX Opened 5/10/18, 15,536 Denton, TX Opened 5/17/18 14,557 Portland, OR Opened 5/24/18 19,075 Columbus, OH 2018 14,749 Arlington, TX 2018 15,536 Gold
Duluth Holdings — William Blair Consumer Growth Conference 2018 on 6ix