Factors Likely To Impact Duluth Holdings' (DLTH) Q3 Earnings

Duluth Holdings Inc. (NASDAQ:DLTH) is slated to release third-quarter fiscal 2018 results on Dec 6, before the opening bell. The apparel retailer’s bottom-line surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Let’s see how things are shaping up prior to the upcoming results.

Efforts to Boost Sales Bode Well

Duluth Holdings engages in frequent store openings, which is a prudent strategy for augmenting the top line. Moreover, strength in the direct and the retail business channels along with strong brands and rising demand for assortments are motivating management to constantly enhance stores. For 2018, the company is on track with opening 15 stores across market locations. We expect the company’s third-quarter performance to benefit from such store-expansion initiatives.

Further, the company’s well-chalked marketing efforts provide further boost to sales. Duluth Holdings’ marketing endeavors are spread across numerous channels, which has been helping the company to expand its retail presence. Further, the company is committed toward augmenting omni-channel capabilities. In this respect, the company focuses on enhancing ‘buy online pick up in-store’ facility by upgrading distribution networks, augmenting shipping capabilities and making greater investments in technology.

Going ahead, we expect such endeavors to fuel Duluth Holdings’ top line. Encouragingly, the Zacks Consensus Estimate for third-quarter sales is pegged at $104.7 million, depicting a rise of almost 25% from the prior-year quarter’s reported figure.

Duluth Holdings Inc. Price, Consensus and EPS Surprise

Cost Woes to Linger

Duluth Holdings’ gross margins have been dismal for a while, thanks to higher freight costs and decline in shipping revenues. To top this, the company is incurring higher SG&A expenses, mainly stemming from higher customer service expenses and occupancy costs. These headwinds are likely to dent the bottom line in the to-be-reported quarter. Incidentally, the Zacks Consensus Estimate for the third quarter is currently pegged at a loss of 10 cents per share, wider than the year-ago quarter’s loss of 3 cents.

Zacks Model

Our proven model doesn’t show that Duluth Holdings is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Duluth Holdings currently carries a Zacks Rank #3, its Earnings ESP of 0.00% reduces chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here..

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that they also have the right combination of elements to post an earnings beat:

Rent-A-Center, Inc (NASDAQ:RCII) has an Earnings ESP of +8.20% and a Zacks Rank #1.

lululemon athletica inc. (NASDAQ:LULU) has an Earnings ESP of +1.53% and a Zacks Rank #2.

CBS Corporation (NYSE:CBS) has an Earnings ESP of +1.04% and a Zacks Rank #3.

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