Personal Finance

Duluth Holdings' Revenue Growth Accelerates

The front of a Duluth Trading store.

Duluth Holdings (NASDAQ: DLTH) released its fiscal second-quarter results after the markets closed on Tuesday, Sept. 5. The workwear and accessories seller put together a great quarter and reported revenue growth of 31%. That marks its 30th consecutive quarter of increased year-over-year sales and represents an acceleration over the 22% revenue growth that was reported last quarter .

Let's put Duluth's second-quarter results under the microscope to learn more about what it accomplished during the period.

The front of a Duluth Trading store.

Image source: Getty Images.

Duluth Holdings Q2 results: The raw numbers

Metric Q2 2017 Q2 2016 Year-Over-Year Change
Revenue $86.2 million $65.8 million 31%
Net income $4.3 million $3.6 million 18%
Earnings per share $0.13 $0.11 18%

Data source: Duluth Holdings Inc.

What happened with Duluth Holdings this quarter?

  • Direct (catalog and online) sales grew 7% to $57.7 million while retail (brick-and-mortar) sales grew by 138% to $28.6 million. The huge retail sales jump was largely owed to having 12 more stores operating this quarter when compared to the year-ago period. Total revenue of $86.2 million came in far ahead of Wall Street's estimate of $82.5 million.
  • Gross margins fell by 240 basis points to 56.7%. Management stated that the decline was owed to lower shipping revenues because the company offered more free shipping promotions to customers during the period. Importantly, product gross margin increased slightly thanks to a favorable mix and better management of promotions.
  • Duluth's women's business accounted for 25% of total product sales and grew at a faster pace than its men's business. This result hints that its women's TV advertising campaign is bearing fruit.
  • Adjusted EBITDA increased 27% year over year to $9.5 million.
  • Earnings per share of $0.13 easily beat the $0.10 in EPS that analysts had predicted.
  • Three new stores were opened during the quarter, the company's 21st, 22nd, and 23rd stores. Since the end of the quarter, two more stores have opened.
  • Duluth's cash balance at the end of the quarter was $1.4 million.

What management had to say

Stephanie Pugliese, Duluth's CEO, said she was quite happy with the company's quarterly performance and continued success with bringing in new customers:

I am pleased to report that net sales increased over 30% during the second quarter, which marked our 30th consecutive quarter of increased net sales year-over-year. We drove a 35% increase in new customer acquisition year-over-year, as we continue to invest in our omnichannel model and in growing our brand awareness with our direct marketing efforts and with geographical expansion of our retail stores.

Pugliese also confirmed that the company is on track to open a total of six more stores by year's end. That would bring its total to 15 new stores for the fiscal year, which is two more stores than management was projecting last quarter.

Looking forward

Management restated that they expect to meet their previously communicated guidance for the full year 2017, which looks like this:

Metric 2016 Actual 2017 Guidance Year-Over-YearChange at Midpoint
Revenue $376 million $455 million to $465 million 22%
Adjusted EBITDA $41.2 million $47 million to $49.5 million 17%
GAAP EPS $0.66 $0.66 to $0.71 4%

Data source: Duluth Holdings.

Duluth's new CFO, Dave Loretta, stated on the call that full-year guidance was kept intact because the two additional store openings will not occur until the end of the year. That means they will not be open long enough to have a material impact on results.

Finally, Pugliese gave investors a sneak peek about what they can expect in fiscal year 2018. She stated that the number of new stores openings in fiscal year 2018 will be "comparable" to the 15 stores that will be opening this year, which hints that investors can expect another year of rapid top-line growth.

10 stocks we like better than Duluth Holdings

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Duluth Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of September 5, 2017

Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool recommends Duluth Holdings. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Personal Finance Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More