Duluth Holdings Inc.’s net first-quarter sales jumped 20.8 percent, but that boost wasn’t enough to meet Wall Street expectations and earnings fell short of projections.
The workwear and casual apparel brand delivered net income for the quarter of $3.2 million, or 10 cents a diluted share, a mixed result over last year’s $2.7 million, or 11 cents. Adjusted earnings per share tallied 7 cents per diluted share and were short of the FactSet estimate for 8 cents per share. The stock fell in after-hours trading by over 10 percent to $22.83.
Net sales for the three months ending May 1 increased 20.8 percent to $68.6 million from $56.8 million a year earlier. But that missed the FactSet estimate for sales of $69.7 million.
“During the first quarter, we delivered 21 percent net sales growth and we expanded our gross margin by 30 basis points, while controlling our expenses,” said chief executive officer Stephanie Pugliese. Duluth reported that the net sales increase was driven by 17.5 percent growth in direct sales and a 52.4 percent increase in sales through its 11 stores. The company added two new stores and one new outlet store in fiscal 2015 and is on track to open five new stores in fiscal 2016.
“Our infrastructure investments are proceeding as planned. During the first quarter, we began construction at our Belleville distribution center, which will add another 75,000 square feet of warehouse space by the third quarter of fiscal 2016,” said Pugliese. “Our plans for an order management system and new e-commerce platform to better serve our customers are moving forward and we expect these initiatives will go live during our first and second quarters of fiscal 2017, respectively.”
Gross profit increased 21.5 percent to $39.7 million, or 57.8 percent of net sales, compared with $32.7 million, or 57.8 percent of net sales, a year earlier. The improvement was attributed to improved product costs due to increased volume coupled with a product mix to higher margin products.
Looking ahead, Duluth reaffirmed its fiscal 2016 for net sales range of $370 million to $380 million and earnings per share in the range of 66 cents to 70 cents. The Capital IQ estimate for the year calls for revenues of $377 million and earnings per share of 68 cents.