What To Expect From Duluth's 'Impressive Storytelling' Into Q3 Report

Wunderlich expects above-consensus third-quarter earnings from Duluth Holdings Inc DLTH Thursday, driven by strong sales of men's products and performance of new stores.

Analyst Eric Beder, who reiterated his Buy rating on Duluth shares, expects earnings of $0.01 a share, a penny above consensus, and anticipates the company to maintain its FY 2018 EPS guidance of $0.66 to $0.70.

That said, the company is likely to face higher store opening costs as it is expanding beyond the upper Midwest.

A Look Ahead

Looking ahead, Beder believes the fourth quarter “has started out strong, with the core Midwest market experiencing colder and wetter weather.”

Further, Beder sees continued gains from new stores and is positive on the recently opened King of Prussia location. In addition, the analyst expects the distribution costs to “somewhat normalize” in the fourth quarter, as Duluth anniversaries the distribution center expansion and a new third party provider.

“With unique and compelling product, a culture of full price sales and impressive product storytelling, and limited coverage outside of the Midwest, we believe Duluth is poised for multiple years of impressive top- and bottom-line growth, which we view as easily deserving of a premium multiple,” Beder wrote in a note.

Beder has a price target of $36 on Duluth shares, which closed Friday’s trading at $32.88.