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Will Store Growth Aid Duluth Holdings (DLTH) in Q3 Earnings?


Duluth Holdings Inc. DLTH is slated to report third-quarter fiscal 2017 results on Dec 7, before the market opens.

This apparel retailer has a mixed record of bottom-line surprises in the trailing four quarters, with a beat of 30% in the preceding quarter. Considering this, let’s delve into how things are shaping for the upcoming announcement.

Which Way are Estimates Treading?

The Zacks Consensus Estimate for the third quarter has declined by a penny over the past 30 days and is currently pegged at break even. We note that the company delivered earnings of one cent in the prior-year quarter.

On other hand, analysts polled by Zacks expect revenues of $84.3 million in the said quarter, which depicts an improvement of 25.7% from the year-ago quarter.

Duluth Holdings Inc. Price, Consensus and EPS Surprise

Factors Impacting the Quarter

Duluth Holdings has been steadily expanding store base, driven by strong growth in direct and retail segments. The upside can be attributed to robust men’s and women’s business lines. During the second quarter of fiscal 2017, the company opened three retail stores and remains on track with the opening of 15 new stores during fiscal 2017. We expect Duluth Holdings third-quarter performance to benefit from store expansion initiatives.

Additionally, the company’s widening consumer base is also attributable to dedicated omni-channel expansion efforts and marketing strategies. Owing to such endeavors, Duluth Holdings has been delivering year-over-year growth in top line for quite some time now.

However, retail store expansions have substantially raised the company’s selling, general and administrative (SG&A) expenses. SG&A expenses rose 39.4% and 26.1% year on year during the first and second quarters of 2017, respectively. Enhanced customer services and store occupancy costs have led to a rise in the company’s expenditure levels. Such headwinds are expected to linger in the third quarter as well. Nevertheless, we expect the aforementioned growth drivers to cushion the company from these obstacles and aid growth.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that Duluth Holdings is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Duluth Holdings carries a Zacks Rank #3 but has an Earnings ESP of -100.00% consequently making surprise prediction difficult

You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combinations

Here are some companies which, according to our model, have the right combination of elements to deliver earnings beat.

Ralph Lauren Corporation RL has an Earnings ESP of +1.05% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hilton Worldwide Holdings Inc. HLT has an Earnings ESP of +1.51% and a Zacks Rank #2.

Tailored Brands, Inc. TLRD has an Earnings ESP of +3.70% and a Zacks Rank #2.

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