Market Insider

Duluth plummets after sales miss, weak guidance

Source: Duluth Trading

Shares of Duluth Holdings fell as much as 25 percent Friday, a day after the company reported third-quarter earnings and gave weak fiscal 2016 guidance.

The stock later pared some of its losses, but was still 22 percent lower in afternoon trade.

On Thursday, Duluth reported earnings of 1 cent per share, beating Thomson Reuters' break-even consensus estimate. It also posted revenue of $67 million, missing Wall Street expectations of $69 million, according to Thomson Reuters.

The company also revised its fiscal 2016 outlook lower and said it is now expecting net sales between $360 million and $370 million. Duluth expects fiscal GAAP earnings per share between 52 cents and 60 cents. Analysts previously expected net sales of $380.1 million and GAAP earnings of 70 cents a share, according to FactSet consensus estimates.

Jim Duffy, an analyst at Stifel, downgraded Duluth from "buy" to "hold" on Friday. He said in a research note that the company's results showed "a sharp deceleration in direct revenue" with challenges expected to continue into its fourth quarter. His firm now assumes "a slower pace of growth" and "a greater dependence on retail," and is thus taking "a slightly more conservative outlook for sales and EPS through fiscal-year 2018." Stifel lowered its price target on Duluth to $33 from $35.

Disclosure: Stifel or an affiliate is a market maker or liquidity provider in the securities of Duluth Holdings.