Taking a closer look at those results, EPS came in at $0.43, good for a comfortable $0.09 beat. In fact, that was its widest EPS beat since the company went public in November 2015. Driving the earnings upside was a 24.4% jump in revenue to $174.7 million, which was also well ahead of the $163.7 million consensus. During its earnings call last night, management commented that at the beginning of Q4, it voiced concerns that the warm weather was negatively impacting sales of its winter clothing lines. However, it noted that while the warm weather did create a headwind during the first half of the quarter, the latter part of December and January were very strong.
The retail segment continues to grow rapidly as DLTH gradually adds more store fronts to its base. At the time of its IPO, the direct segment (catalogue + e-commerce) accounted for 90% of sales and retail was at just 10%. Now, direct accounts for 82% and retail has nearly doubled to 18%. DLTH accelerated the pace of store launches in order to take advantage of the holiday shopping season, which provided a boost to the Q4 topline.
On the downside, gross margin did slip to 55.4% from 56.1% in the year ago quarter. Sales of higher margin products did help, but, this was more than offset by promotions in the highly competitive market. This gross margin erosion is a common theme within the retail environment today.
As mentioned above. DLTH also provided upside revenue guidance for FY18. Specifically, it guided for sales of $455-$465 million vs. the $448.4 million Capital IQ Consensus. Its EPS guidance of $0.66-$0.71 was inline with the $0.69 consensus. There are a couple key catalysts that DLTH expects will drive strong growth this year. Namely, it is continuing its steady approach to new store openings. This quarter, DLTH is looking to open four stores (IN, MA, CO, MN). For the full year, DLTH is looking to open 10-12 stores.
Additionally, the company is investing in and upgrading its systems, including a new order management system (OMS) and a new e-commerce platform. DLTH says that the new OMS system will improve its visibility to customers' entire order history, allowing it to serve them more quickly and efficiently. While the new Salesforce Demandwear e-commerce platform will provide a highly functional replacement to its homegrown system that was not built for the omnichannel experience of the future.