Duluth Trading Company 10Q

Here's a link to the most recent Duluth Trading Company 10Q statement, representing the first six months of their fiscal year.

On page five, we observe the following for 2022.

• Net Sales of $264.4 million.
• Gross Margin of $142.7 million ... 54.0%.
• Selling, General, and Administrative Expense of $139.7 million.
• EBIT of $2.9 million ... just 1.1% of sales.
• Notice that last year EBIT was $15.0 million ... 5.3% of sales.
• Yeah, this business is STRUGGLING.

We observe a different business model here, don't we? Instead of 22% gross margins at Best Buy, we have 54% gross margins at Duluth Trading Company. This gives Duluth a lot more money to spend ... on marketing ... and they mail catalogs ... lots of catalogs ... and they have stores ... lots of overhead.

All of those extra gross margin dollars enable cash flow used to market more often (catalogs, television), which generate sales which generate gross margin dollars which enable cash flow and you get the picture here.

While Best Buy cannot be marketing-dependent, Duluth Trading Company "can" be marketing-dependent because of their gross margins.

What you sell dictates what your marketing strategy is.