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Is Duluth Holdings (DLTH) Poised to Beat Earnings in Q2?
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We expect Duluth Holdings, Inc. (DLTH - Free Report) to beat expectations when it reports second-quarter fiscal 2016 results on Sep 8, after the market closes. This will be the third quarterly results to be reported by this clothing and accessories company, since it began trading in Nov 2015.
Duluth Holdings, a Belleville, WI-based company specializes in casual wear, work wear and accessories for both men and women.
Let’s see how things are shaping up for this announcement.
Our proven model shows that Duluth Holdings is likely to beat earnings this quarter because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +14.29%. This indicates a likely positive earnings surprise.
Zacks Rank: Duluth Holdings carries a Zacks Rank #3 (Hold) which, when combined with +14.29% ESP, makes us reasonablyconfident about an earnings beat.
Note that stocks with a Zacks Rank #1, #2 or #3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 or #5) should never be considered going into an earnings announcement.
What is Driving the Better-Than-Expected Earnings?
Duluth Holdings has been delivering higher year-over-year net sales for the last 25 consecutive quarters, backed by strong sales in both the direct and retail segments. The direct net sales gains reflect positive customer response to the company’s national advertising and digital marketing campaigns, which drove an increase in website visits. The rise in retail net sales was driven by the opening of new retail stores, coupled with growth in comparable store sales.
However, the company is also incurring huge operating expenses due to the implementation of a new warehouse management system and advertising campaigns.
During the first quarter of fiscal 2016, Duluth Holdings started construction at its Belleville distribution center, which will add another 75,000 square feet of warehouse space by the third quarter. The company expects that these initiatives will go live in fiscal 2017.
We also expect several factors to support the company’s growth, including improved consumer spending power amid higher job growth and strong construction spending. Such improvements are expected to boost the company’s sales as higher consumer spending will result in a better lifestyle, which, in turn, will lead to the purchase of lifestyle products, including high-quality, fashionable clothes and accessories.
Other Stocks to Consider
Here are some companies in the consumer discretionary sector that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
PVH Corp. (PVH - Free Report) , with an Earnings ESP of +0.83% and a Zacks Rank #2 (Buy).
Francesca's Holdings Corporation , with an Earnings ESP of +11.11% and a Zacks Rank #2.
Columbia Sportswear Company (COLM - Free Report) , with an Earnings ESP of +2.59% and a Zacks Rank #3.
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Is Duluth Holdings (DLTH) Poised to Beat Earnings in Q2?
We expect Duluth Holdings, Inc. (DLTH - Free Report) to beat expectations when it reports second-quarter fiscal 2016 results on Sep 8, after the market closes. This will be the third quarterly results to be reported by this clothing and accessories company, since it began trading in Nov 2015.
Duluth Holdings, a Belleville, WI-based company specializes in casual wear, work wear and accessories for both men and women.
Let’s see how things are shaping up for this announcement.
DULUTH HOLDINGS Price, Consensus and EPS Surprise
DULUTH HOLDINGS Price, Consensus and EPS Surprise | DULUTH HOLDINGS Quote
Why a Likely Positive Surprise?
Our proven model shows that Duluth Holdings is likely to beat earnings this quarter because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +14.29%. This indicates a likely positive earnings surprise.
Zacks Rank: Duluth Holdings carries a Zacks Rank #3 (Hold) which, when combined with +14.29% ESP, makes us reasonablyconfident about an earnings beat.
Note that stocks with a Zacks Rank #1, #2 or #3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 or #5) should never be considered going into an earnings announcement.
What is Driving the Better-Than-Expected Earnings?
Duluth Holdings has been delivering higher year-over-year net sales for the last 25 consecutive quarters, backed by strong sales in both the direct and retail segments. The direct net sales gains reflect positive customer response to the company’s national advertising and digital marketing campaigns, which drove an increase in website visits. The rise in retail net sales was driven by the opening of new retail stores, coupled with growth in comparable store sales.
However, the company is also incurring huge operating expenses due to the implementation of a new warehouse management system and advertising campaigns.
During the first quarter of fiscal 2016, Duluth Holdings started construction at its Belleville distribution center, which will add another 75,000 square feet of warehouse space by the third quarter. The company expects that these initiatives will go live in fiscal 2017.
We also expect several factors to support the company’s growth, including improved consumer spending power amid higher job growth and strong construction spending. Such improvements are expected to boost the company’s sales as higher consumer spending will result in a better lifestyle, which, in turn, will lead to the purchase of lifestyle products, including high-quality, fashionable clothes and accessories.
Other Stocks to Consider
Here are some companies in the consumer discretionary sector that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
PVH Corp. (PVH - Free Report) , with an Earnings ESP of +0.83% and a Zacks Rank #2 (Buy).
Francesca's Holdings Corporation , with an Earnings ESP of +11.11% and a Zacks Rank #2.
Columbia Sportswear Company (COLM - Free Report) , with an Earnings ESP of +2.59% and a Zacks Rank #3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>