Duluth Trading known for its Buck Naked underwear and Fire Hose work pants has filed to go public with plans to raise $115 million.
The Belleville, Wis.-based company is a rapidly growing lifestyle brand of men’s and women’s casual and workwear that is only sold through its own direct and retail channels. Net sales in fiscal 2014 increased 42.2 percent over the prior year to $231.9 million.
However, that growth did not come without a cost. The company incurred significant catalog costs and advertising expenses. Advertising expenses in fiscal 2014 were $49.4 million. Selling, general and administrative expenses increased 40.6 percent in the six months ending Aug. 2 due to a national advertising campaign. The company will also be changing its “S” corporation status when it goes public and will make a final “S” corporation payout of $46.3 million.
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Like many retailers, the company sees most of its sales in the fourth quarter during the holiday season. It operates six stores and two outlets. Duluth plans on opening three to five new stores in 2016 and said in its filing that there is the potential for 100 stores across the country. The stores have on average turned a profit in less than two years.
Duluth Trading is also known for its jeans with extra room that allow customers to “crouch without the ouch.” The company has a loyal customer base with 87 percent identifying themselves as working outside of the building trades with an annual average income of $75,000. The women’s business totaled 19 percent of net sales in fiscal 2014, but the company believes it can grow this business.
Duluth Trading was founded in 1989 by two brothers who invented the Bucket Boss, a canvas tool organizer. Following that, they launched a catalog dedicated to improving tool storage, called the Duluth Trading Company. In December 2000, it was acquired by Gempler’s an agricultural supply catalog business. In 2003, it was sold to W.W. Grainger.
The bankers on the deal include William Blair, Baird, Raymond James and BMO Capital Markets.