Lifestyle clothing brand Duluth Holdings Inc. (NASDAQ: DLTH) suffered backlash as it missed its bottom line, with net income dropping 88% down to $0.4 million, translating to a $0.01 EPS. Street estimates were looking for a number closer to $0.05, and with the large miss stock prices began to dwindle.
However, this is only the tip of the iceberg as the company has posted increases in net sales, gross margin as well as the opening of four new retail locations. This represents the 29th consecutive quarter that net sales increase with the company posting a 21.9% increase from the previous year first quarter, additionally, gross margin went up 30 basis points.
“We made several investments in the business this quarter that impacted SG&A in the short term but will benefit us long term. On the retail side of the business, we continue to make great progress in expanding our geographical footprint and omni-channel presence.” Said the CEO Stephanie Pugliese, hoping to prove that the small misstep in net income will not matter in the long run as they hope to maintain previous 2017 guidance. Duluth is also expected to open 12 additional retail stores in fiscal 2017.
Although Wall Street has reacted poorly to the below expected income results for the first quarter, it is more than probable that the company will regain its footing and produce impressive results throughout the rest of fiscal 2017. The long run vision of the company should reflect well on those intending to hold, and the current dip in price is a good way to get a foot in the door.