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Bear of the Day: Duluth Holdings Inc. (DLTH)

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Duluth Holdings Inc. (DLTH - Free Report) is a workwear-centric lifestyle brand that’s been hit by slowing consumer spending, forcing it to offer more promotional and clearance sales.

Worst still, Duluth shares have fallen around 60% in the last two years. And DLTH is once again trading under some key technical levels after it gave up ground following a recent rally.

Duluth Basics

Duluth is a lifestyle brand designed for the ‘modern, self-reliant American.’ The Mount Horeb, Wisconsin-based firm sells quality, solution-based workwear and casual wear, alongside accessories for men and women. Duluth sells everything from rain jackets and vests to flannels and underwear. Duluth also sells supplies such as toolboxes and much more.

Duluth posted a nice stretch of growth from its IPO in late 2015 through 2019. DLTH still produced solid top-line expansion after that, but its growth is now fading on both the top and bottom lines.

Zacks estimates call for Duluth’s revenue to slip 4% this year. Plus, it is projected to tumble from adjusted earnings of +$0.07 a share to a loss of -$0.12 a share this year.

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Image Source: Zacks Investment Research

Duluth’s earnings outlook has tumbled rather quickly, with its current fiscal year estimate down from +$0.06 to -$0.12 since its August 31 earnings release. Meanwhile, its consensus estimates for next year slipped from +$0.20 to +$0.02. Duluth’s downward revisions help it land a Zacks Rank #5 (Strong Sell) right now.

Duluth pointed to “lower average retail and order value due to lower levels of full-price selling and a higher level of promotional and clearance sales” as part of the reason for its recent weakness.

Bottom Line

As I touched on up top, Duluth stock has fallen 60% in the last two years. This is part of an 80% drop during the past five years vs. its Zacks industry’s 21% slide.

DLTH shares recently slipped right back underneath their 50-day and 200-day moving averages again. Its Textile – Apparel industry is in the bottom 19% of over 250 Zacks industries right now. Therefore, it might be best to stay away from Duluth. 

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