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Bull of the Day: Duluth Holdings (DLTH)

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Through its popular Duluth Trading brand, Duluth Holdings (DLTH - Free Report) is a retailer that sells casual wear, workwear, and accessories for men and women. Duluth markets its products under trademarks, trade names, and service marks including Dry on the Fly, Duluthflex, Longtail T, and its namesake brand, among many other.

Duluth went public back in 2015, and the company was founded in 1989.

Better-Than-Expected Q2 Earnings

Duluth’s second quarter results showed nice growth overall. Earnings of 20 cents per share easily beat the Zacks Consensus Estimate, while revenues of $110.7 million rose 28.3% year-over-year.

Revenue growth in Q2 was driven primarily by a nice uptick in direct sales, and a huge 74% jump in retail sales; new store openings were the main reason for soaring retail store sales.

And thanks to lower spending on advertising and marketing, the company’s bottom line expanded.

As a result, management reiterated its guidance for the year, with sales and EPS growth of 20% and 14%, respectively.

CEO Stephanie Pugliese said that this quarter was Duluth’s 34th quarter in a row that sales increased year-over-year, and she reaffirmed that the retailer is still on track to open 15 new stores during the fiscal year.

“These results demonstrate the strength of the Duluth Trading brand and validate the investments we have made in building our omnichannel presence over the past few years. For the balance of the year, we plan to focus on product innovation, digital marketing, opening the remaining seven stores, and the completion of key technology and infrastructure projects to prepare us for our peak selling season,” said Pugliese in Duluth’s earnings release.

Year-to-date, DLTH stock is up almost 67%, and shares have risen about 50% over the past 12 months.

Estimates have been rising lately too, pushing the stocks towards a Zacks Rank #1 (Strong Buy).

For the current fiscal year, Twilio’s earnings are expected to grow over 25% year-over-year. Four analysts have revised their estimate upwards in the past 60 days, and the Zacks Consensus Estimate has moved three cents higher from 81 cents to 84 cents during the same time frame.

2019 looks pretty strong too, and earnings are expected to grow around 22.6%; next year’s consensus estimate sits at $1.03 cents per share, with three upward revisions in the last 60 days.

Bottom Line

Thanks to a big, aggressive retail push, shares of DLTH have been on a bullish run in the last few months, and with future expansion on the horizon, investors have many reasons to remain optimistic.

If you’re an investor looking for a retail stock to add to your portfolio for the holiday season heats up, make sure to keep DLTH on your shortlist.

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