William Blair analyst Dylan Carden has maintained their neutral stance on DLTH stock, giving a Hold rating on August 23.
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Dylan Carden has given his Hold rating due to a combination of factors impacting Duluth Holdings. The company has shown some positive signs, such as better-than-expected second-quarter results and a return to growth in the retail channel. These improvements were driven by higher average order values and more effective marketing strategies, which have helped increase store traffic and conversion rates. Additionally, the return of CEO Stephanie Pugliese has brought a focus on promotional reset, cost control, and inventory management, leading to an expansion in gross margin and a reduction in inventory levels.
However, despite these positive developments, there are still significant challenges that warrant a cautious approach. Clearance inventory remains high, and while some progress has been made in reducing it, this could pressure margins in the upcoming quarters. The company also faces a $15 million negative impact from tariffs, which it plans to mitigate through vendor negotiations and strategic price increases. Furthermore, the current valuation reflects volatile performance and an uncertain macroeconomic environment, with risks of broader economic headwinds and potential declines in sales as promotional activities are scaled back. These factors contribute to the Hold rating, as the future performance remains uncertain.
In another report released on August 23, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $2.00 price target.