Shares of clothier Duluth Holdings (NASDAQ: DLTH) jumped after management reported a surprise profit this morning. Expected by analysts to report a $0.04-per-share loss for its fiscal third quarter 2019, Duluth instead reported a $0.01-per-share profit. Quarterly sales of $119.8 million likewise exceeded estimates for $115 million.
As of 11:10 a.m. EST, Duluth Holdings shares are trading 33.2% higher.
Image source: Getty Images.
Duluth's $0.01-per-share profit (and this was a GAAP profit, by the way) showed significant improvement over last year's results -- a $0.10-per-share loss in Q3 2018. The company turned the corner to profitability by sacrificing a bit on profit margin (down 250 basis points year over year), limiting the growth of selling, general, and administrative expenses to less than 1%, and growing sales 12% year over year.
The result was an operating profit -- and a profit on the bottom line as well.
Looking ahead to the close of this year, Duluth Holdings continues to believe it will end fiscal 2019 with full-year sales of about $615 million, in line with Wall Street estimates, and profits of between $0.60 and $0.66 per share. Given that Wall Street analysts are only looking for $0.60, this appears to open the possibility of significant profit upside, and investors really like the sound of that.
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 quadrupled the market.*
David and Tom just revealed what they believe are the ten 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.
*Stock Advisor returns as of June 1, 2019
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.