Why Duluth Holdings Wraps Up Today – The Motley Fool

What happened

In response to the fourth quarter financial results that missed the target, Duluth Holdings (NASDAQ: DLTH), a retailer that meets the needs of the tradespeople, dropped 23% at 10:51 am EDT on Friday.

So what

Here are the key figures for the fourth fiscal quarter:

• Revenues jumped 15% to $ 250.5 million. That was a few million dollars less than what Wall Street was waiting for.
• Gross margin decreased by 90 basis points to 52.4%. Operating margin decreased 150 basis points to 12.1%.
• Operating profit increased 2.6% to $ 30.3 million.
• Net income was $ 20.8 million, or $ 0.64 per share. This figure was up 7% from the same period last year, but was well below the $ 0.75 calculated by analysts.

Here are the figures of the full fiscal year:

• Revenues increased 20.5% to $ 568.1 million. This figure was in the middle of the steering range.
• Net income was $ 23.3 million, or $ 0.72 per share. These figures remained unchanged from one year to the next and were below the range of management guidance from US $ 0.79 to US $ 0.84.

Source of the image: Getty Images.

Duluth's Executive Director, Stephanie Pugliese, did her best during the investor conference call to contextualize the weak fourth quarter results:

On a macroeconomic level, we were not spared by the general slowdown in consumer spending and we felt the impact of declining traffic on all our channels. Internally, we encountered problems with the implementation of the systems and the late delivery of the product. As a result, our inventories were not aligned with the sales schedule and were not optimally distributed across the entire network. This has affected store productivity and added additional costs over the entire system, and some of our high-demand products have not been put on the market in time to take full advantage of the growing season. vacation.

Management provided investors with guidance for fiscal 2019:

• Sales are expected to be between $ 645 and $ 655 million. This represents growth of about 14% at mid-term. For context, Wall Street expected this amount to reach $ 675 million.
• Diluted earnings per share are expected to be between $ 0.74 and $ 0.80. Market watchers were expecting $ 1.01.

With worse-than-expected quarterly numbers and lower forecasts, it's not hard to understand why stocks are popular today.

Now what

There is not a lot of positive earnings for investors in this profit report. Sales growth is slowing, margins are decreasing, and the bottom line is almost unchanged.

Will management be able to straighten the vessel in 2019? I hope the answer is yes, but I find it hard to be enthusiastic about the idea of ​​buying this action for the moment, even if the price of the action is significantly lower.