What happened

Shares of outdoors-lifestyle brand Duluth Holdings (NASDAQ:DLTH) caught fire on Tuesday, the same day its CFO Dave Loretta gave a fireside chat at the Stifel 2020 Virtual Cross Sector Insight Conference. As of 3:00 p.m. EDT, the stock had climbed 29% higher for the session.

While it's tempting to attribute today's gains with something juicy Loretta shared in his presentation, it's more likely shares are still riding higher after last week's first-quarter earnings release.

A man draws an upward arrow on a transparent touchscreen.

Image source: Getty Images.

So what

Duluth Holdings stock was actually down sharply in early trading. Its first big run higher happened around 12:30 p.m., an hour before Loretta was scheduled to present. That's why today's rally isn't likely related.

All Duluth store locations were closed from March 20 through May 3. For context, its fiscal quarter ran from Feb. 2 to May 3. Therefore, all stores were closed for the majority of the quarter, pushing Wall Street's expectations really low.

Last week, Duluth reported Q1 results, and net sales were only down 4% year over year. In-store sales unsurprisingly fell 52%. But quarterly net sales from its catalog and website grew a whopping 32%. Sustaining these sales did come at a cost. It discounted merchandise to move some inventory, and it increased its digital advertising, among other moves that hurt profitability. Its net loss grew to $15 million as a result.

Still, Duluth's Q1 could have been much worse. Now, most of its stores have reopened, giving it hope to soon return to normal. This isn't what short sellers expected. Only about 10% of shares are sold short, which isn't terribly high. But it's a small-cap stock with low trading volume. According to data from Nasdaq, it currently takes almost nine days to cover. That is significant and helps explain why shares have almost doubled in a week. Shorts likely want out, but it takes time.

DLTH Chart

DLTH data by YCharts

Now what

Duluth Trading Company has long resonated with men. However, the company has been intentionally giving attention to the women's side of the business. Notably, Q1 net sales for its women's apparel was up 10% from the first quarter of 2019, showing that the effort is paying off. That's an encouraging sign if you're a long-term shareholder and something to watch going forward.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.