Is Duluth Holdings (NASDAQ:DLTH) Weighed On By Its Debt Load?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, Duluth Holdings Inc. (NASDAQ:DLTH) does carry debt. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does Duluth Holdings Carry?

You can click the graphic below for the historical numbers, but it shows that as of August 2025 Duluth Holdings had US$57.3m of debt, an increase on US$25.6m, over one year. However, it does have US$5.74m in cash offsetting this, leading to net debt of about US$51.5m.

How Strong Is Duluth Holdings' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Duluth Holdings had liabilities of US$129.1m due within 12 months and liabilities of US$137.7m due beyond that. Offsetting these obligations, it had cash of US$5.74m as well as receivables valued at US$10.9m due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$250.1m.

This deficit casts a shadow over the US$140.2m company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. After all, Duluth Holdings would likely require a major re-capitalisation if it had to pay its creditors today. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Duluth Holdings can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

View our latest analysis for Duluth Holdings

Over 12 months, Duluth Holdings made a loss at the EBIT level, and saw its revenue drop to US$603m, which is a fall of 6.0%. We would much prefer see growth.

Caveat Emptor

Over the last twelve months Duluth Holdings produced an earnings before interest and tax (EBIT) loss. Its EBIT loss was a whopping US$29m. Considering that alongside the liabilities mentioned above make us nervous about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. Not least because it had negative free cash flow of US$33m over the last twelve months. So suffice it to say we consider the stock to be risky. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. To that end, you should be aware of the 1 warning sign we've spotted with Duluth Holdings .

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.