Outdoorsy apparel retailer Duluth Trading Co. has embarked on an ambitious brick-and-mortar expansion plan — after opening 15 stores last year, the company is opening another 15 this year, and another 15 annually until it reaches 100, the Minneapolis Star-Tribune reports.
Stores bring not just more customers across all channels but also higher-spending ones, CEO Stephanie Pugliese told analysts in March, according to a conference call transcript from Motley Fool. "In 2017, direct growth in these store markets was more than double that of the growth rate in non-store market," she said.
The company, which traditionally featured mostly men's work gear and basics, is also expanding its women's offer, including the introduction of plus sizes.
As a public company (the retailer staged an initial public offering two and a half years ago), Duluth Trading Co. has grown newly ambitious about a cross-country expansion. The retailer, based in Belleville, Wisconsin, for years served as a small regional catalog-based retailer, catering to workmen and outdoorsy types like gardeners, but executives are confident that there's an enthusiastic consumer to reach well beyond its northern Midwestern base.
Sales are indeed up. In March, the company reported fourth quarter net sales rose 25% to $217.8 million from $174.7 million last year. Gross profit in the quarter was $116 million, or 53.3% of net sales, compared to $96.8 million or 55.4% of net sales last year. "The growth in the retail sales can be attributed to having 15 more stores as compared to last year," CFO Dave Loretta told analysts.
But it's not just that stores are adding sales, Pugliese said. "The customers that we acquire through our retail stores are strong profitable customers," she said, noting that they spend more on an annualized basis than customers in a non-store market.
Duluth Trading Co. offers mostly basics — presented with a quirky sense of humor in its advertising — but those include small details like gussets and pockets that many customers are willing to pay a bit more for. It's the kind of mark of quality and care that some analysts have suggested could help boost the likes of Gap as it struggles to return to the lofty place it once held in fashion consumers' minds. "We know that our guy appreciates the DNA that we put into all of our products — extra pockets, flexibility, ease of care to name a few," Pugliese said.
The retailer is also turning to women for growth, and, as part of that, is launching a line of plus sizes for women in the fall. "We believe that truly capable women aren't limited to a certain size and that we can continue to build relationships with new customers by expanding our offering to this part of the community," Pugliese said.