Duluth Holdings Inc. (DLTH) is a workwear-centric lifestyle brand that has been negatively impacted by a decline in consumer spending. As a result, the company has been offering more promotional and clearance sales.
Unfortunately, Duluth shares have fallen approximately 60% over the past two years. Additionally, DLTH is currently trading below key technical levels after losing ground following a recent rally.
Duluth Basics
Duluth is a lifestyle brand designed for the modern, self-reliant American. Based in Mount Horeb, Wisconsin, the company sells high-quality workwear, casual wear, and accessories for both men and women. Duluth’s product range includes rain jackets, vests, flannels, underwear, toolboxes, and more.
While Duluth experienced solid growth from its initial public offering (IPO) in late 2015 through 2019, its growth has since slowed down in terms of both top-line and bottom-line figures. Estimates from Zacks suggest that Duluth’s revenue will decline by 4% this year, and its adjusted earnings per share will go from a positive $0.07 to a loss of -$0.12.
Image Source: Zacks Investment Research
Duluth’s earnings outlook has deteriorated rapidly, with current estimates for the fiscal year dropping from a positive $0.06 to a loss of -$0.12 since the release of its earnings report on August 31. Furthermore, consensus estimates for next year’s earnings have decreased from +$0.20 to +$0.02. This downward revision has resulted in Duluth being ranked as a Zacks Rank #5 (Strong Sell) at the moment.
Duluth attributed its recent weakness to lower average retail and order values due to reduced full-price sales and an increase in promotional and clearance sales.
Bottom Line
As mentioned earlier, Duluth’s stock has declined by 60% in the past two years, and it has experienced an 80% drop over the past five years compared to the 21% slide of its Zacks industry. DLTH shares recently fell below their 50-day and 200-day moving averages. In addition, Duluth’s Textile – Apparel industry is currently in the bottom 19% of over 250 Zacks industries. Therefore, it might be wise to avoid investing in Duluth at this time.
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