Personal Finance

Why Duluth Holdings Jumped Today

A view of a Duluth Trading store with display

What happened

Shares of Duluth Holdings (NASDAQ: DLTH) , a purveyor of clothing and gear targeted at tradespeople, rose as much as 10% in early morning trading before moderating to a 3% gain as of 10:50 a.m. EDT on Wednesday. Investors can thank better-than-expected second-quarter results for the boost.

So what

Here's a review of the key headlines from the quarter that caused Wall Street to cheer:

  • Total revenue grew 31% to $86.2 million. This represents the company's 30th consecutive quarter of increased year-over-year sales. It also came in far higher than the $82.5 million in revenue that analysts had predicted.
  • Gross margins declined by 240 basis points because of higher levels of free shipping promotions.
  • Adjusted EBITDA increased 27% year over year to $9.5 million.
  • Earnings per share of $0.13 grew 18% when compared to the year-ago period. This figure was well ahead of the $0.10 in EPS that market watchers had expected.
  • Three new stores were opened during the period. Management also announced that six more stores will open before the end of the year. That's two more than previously communicated.
  • Full-year guidance was reaffirmed.

When these expectations-topping results were combined with the company's weak stock price , today's bullish share price move seems appropriate.

A view of a Duluth Trading store with display

Image source: Duluth Holdings.

Now what

Duluth CEO Stephanie Pugliese shared some good news with investors related to introducing new customers to the brand:

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

Investors also got a sneak peek of what to expect from the company in 2018. Management stated on the conference call that it expects the number of new store openings in 2018 to be "comparable" to this year's results. That should go a long way toward helping the company reach its goal of 100 retail stores in the U.S.

Overall, Duluth's second-quarter results clearly show that the company is successfully executing its growth strategy and that its brand continues to bring in new customers. With shares still trading within a few dollars off their 52-week low, this bull thinks that right now is a fine time to buy into this growth stock.

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

DLTH

Other Topics

Stocks

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