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Duluth Holdings Inc. (DLTH - Free Report) is bucking the gloomy retail trend by focusing on its Midwest roots. This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth next year.

Duluth Holdings is a Belleville, Wisconsin-based men and women's lifestyle brand whose tag line is for the "Modern, Self-Reliant American." Operating as Duluth Trading, it offers casual wear, workwear and accessories.

It uses humor and storytelling to convey the uniqueness of its products which are sold exclusively through its website, catalogs and 26 retail locations. It's best known for its funny television commercials. It also stands by its "No Bull Guarantee."

A Beat in the Second Quarter

On Sept 5, Duluth reported its second quarter results and beat the Zacks Consensus by 3 cents. Earnings were $0.13 versus the consensus of $0.10.

Despite fears on Wall Street that Amazon is taking over the retail world, Duluth saw net sales increase 31% to $86.2 million from $65.8 million in the prior year.

It was the 30th consecutive quarter of increased year-over-year net sales. It saw a 35% increase in new customer acquisition thanks to a push in its direct marketing efforts and geographical expansion of its retail stores.

For instance, I recently got a Duluth catalog in the mail for the first time. And who hasn't seen its television commercials by now?

As of the end of the second quarter, it had opened 9 new stores this year, bucking the "brick and mortar is dying" theme and is on track to open six more stores for the remainder of the year. That would be a total of 15 new stores in fiscal 2017.

Reaffirmed Its Full Year Outlook

The company reaffirmed full year outlook. That includes earnings in the range of $0.66 to $0.71.

The analysts have fiscal 2017 estimates on the high end of the range.

The Zacks Consensus Estimate is $0.70 which is a gain of 5.6% over the $0.66 it made last year.

Next year, analysts are even more bullish. They see earnings jumping 20.3% to $0.84.

Shares Hit By Retail Malaise

Even though the news looks good out of Wisconsin, retail stocks have been out of favor with investors.

Duluth shares are down 24% year-to-date.



But even with the sell off, shares still aren't cheap. They trade with a forward P/E of 27.

For investors looking for a retailer that is growing, instead of contracting, then Duluth is one to keep on the short list.

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