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Duluth Trading Q3 sales climb amid growing brick-and-mortar footprint

BY Marianne Wilson

Duluth Trading Co. posted mixed results for its third quarter as it continues to expand its store base.

The lifestyle retailer of men’s and women’s casual wear, workwear and accessories reported that net sales increased 25% to $83.7 million in the quarter ended October 29, compared to $67.0 million in the year-ago period. The increase was primarily attributable to an increase of 12 stores over the same period a year ago. It was the retailer’s 31st consecutive quarter of increased net sales year-over-year.

The company reported a net loss of $0.8 million, or $0.03 per diluted share compared to net income of $0.5 million, or $0.01 per diluted share, in the prior-year third quarter, amid increased costs. It was Duluth’s first loss since going public two years ago.

“Our 25% top line growth reflects our commitment to investing in our omnichannel model. We are growing our brand, attracting new customers, and the direct growth in our established store markets continues to perform well,” said Stephanie Pugliese, CEO of Duluth Trading.

The retailer, which started out as a catalog operation and then added e-commerce, opened 15 new stores in fiscal 2017, giving it a total of 31 locations, which is about double what it had at the beginning of the year. Stores generated 35% of the company’s total revenue in the third quarter. To date, it has signed nine leases for store openings in 2018, including three locations in Texas and one in South Portland, Maine. More are expected.

“We continue to attract new customers through our retail stores and during the third quarter, new customers acquired through retail was up 81%,” Pugliese said.

Duluth describes itself as a lifestyle brand for the modern, self-reliant American, offering high-quality, solution-based apparel for men and women who lead a hands-on lifestyle. Known for its quirky, fun advertisements and marketing, the company strives to offer customers an engaging and entertaining experience, online and in stores.

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Strong November raises retailers’ hopes for holidays

BY Marianne Wilson

Retail sales jumped in November as U.S. shoppers ramped up their spending as the crucial holiday season began.

Retail sales in November increased 0.9% over October on a seasonally adjusted basis and were up 6% year-over-year, according to the National Retail Federation. Online and other non-store sales increased 10.5% year-over-year.  (The NRF numbers exclude automobiles, gasoline stations and restaurants.)

“This has been an impressive start to the holiday season, perhaps the best in the last few years,” NRF chief economist Jack Kleinhenz said. “The combination of job and wage gains, modest inflation and a heathy balance sheet along with elevated consumer confidence has led to solid holiday spending by American households.”

Craig Johnson, president of retail research and consulting firm Customer Growth Partners, noted that, for the first time in years, growing spending momentum is evident across all demographics, not just among upper income quintiles. His firm raised its holiday forecast from 4.3% growth to 5.6% growth, the best increase since 2005.

Holiday 2017 is poised to turn out better than many expected — and may well be a lot better,” Johnson said. “After years in hibernation, consumers are finally flexing their spending muscles.”

There were broad-based monthly increases in November across most sectors with the exception of general merchandise stores, which remained unchanged. November’s results indicate that retail sales for the holiday season – defined as November and December – are on track to meet or exceed NRF’s holiday sales forecast for an increase between 3.6% and 4% over last year.

Specifics include:

• Online and other non-store sales were up 2.5% seasonally adjusted from October and up 10.5% unadjusted year-over-year.

• Electronics and appliance stores were up 2.1% seasonally adjusted over October and up 7.3% year-over-year unadjusted.

• Furniture and home furnishings stores were up 1.2% seasonally adjusted over October and up 8.6% year-over-year unadjusted.

• Building materials and garden supplies stores were also up 1.2% seasonally adjusted from October and up 11.2% year-over-year unadjusted.

• Sporting goods stores were up 0.9% seasonally adjusted over October and up 2.1% unadjusted year-over-year.

• Clothing and accessories stores were up 0.7% seasonally adjusted over October and up 4.9% year-over-year unadjusted.

• Health and personal care stores were up 0.4% seasonally adjusted over October and up 3.2% year-over-year unadjusted.

• Food and beverage stores were up 0.2% seasonally adjusted over October and up 3.7% year-over-year unadjusted.

• General merchandise stores were unchanged from October but up 4.4% year-over-year unadjusted.

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Customer Growth Partners raises holiday forecast

BY Marianne Wilson

It’s shaping up as a happy holiday for the nation’s retailers — so much so that one retail research/consulting firm has raised its already strong seasonal sales forecast.

Based on preliminary data for November from the Department of Commerce data, and on its own field research of America’s 50 largest retailers, Customer Growth Partners raised its holiday forecast from its already above-consensus forecast of 4.3% growth to 5.6% growth, the best increase since 2005.

“Accelerating rapidly after several years of tepid growth, holiday spending is seeing its best performance in years, with widespread gains both in stores and online, and across both value and upmarket formats,” said CGP president Craig Johnson.

Johnson noted that, for the first time in years, growing spending momentum is evident across all demographics, not just among upper income quintiles.

“The biggest driver of retail spending is growth in real disposable income,” he said. “We’re seeing solid job growth in both services and manufacturing, record stock markets, low inflation, and at least moderate wage growth, so all the ingredients are in place for a sustained rebound in consumer spending — which accounts for 70% of GDP.”

If sustained through December, the 5.6% pace would represent the strongest holiday retail growth since pre-recession 2005’s increase of 6.1%.

CGPs 17th Annual Holiday Forecast, issued in October, called for record sales for the November-December Holiday period of $663 billion, up from $635 billion last year. CGP has now raised its 2017 holiday forecast to $671 Billion, yielding the 5.6% year-over-year increase. [CGP’s forecast excludes autos/parts, gasoline/fuel oil, and restaurants.] As predicted in CGP’s forecast, estimated sales to date are paced by:

• Online sales: up 10.5%
• Home Improvement: up 8.5%
• Off-Price Stores: up 7.4%
• Superstores/Clubs: up 6.4%

Not all retail sectors have thrived, however, with women’s apparel retailers and sporting goods seeing sluggish sales at best. Department stores, while far lagging peak performance levels of many years ago, are more of a mixed bag, with better in-store traffic than dour expectations, along with improving online growth, according to CPG.

“Holiday 2017 is poised to turn out better than many expected — and may well be a lot better,” Johnson said. “After years in hibernation, consumers are finally flexing their spending muscles. Now, the cash registers are ringing — giving retailers, despite years in the doldrums, some real holiday cheer, to cheer about.”

CPG ranks the following as among the hottest products of the season:

• Apple’s iPhone X, iPhone 8-Plus and Series 3 Watches
• Nintendo Switch
• Microsoft’s X Box One-S
• WowWee’s Fingerlings• Squishies (multiples sources)
• Spinmaster’s Hatchimals, Air Hog drones, and PAW Patrol Lookout Tower
• Hasbro’s NERF and Star Wars/Last Jedi toys
• Sweaters (perennially the top gift item)
• Biggest self-gifting items:  women’s boots and ripped jeans.

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