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Can Dillard's (DDS) Growth Initiatives Take it Higher?

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With persistent focus on increasing productivity, developing a leading omni-channel platform and enhancing its domestic operations, Dillard's Inc. (DDS - Free Report) is well positioned to sustain its growth momentum.

As a leading player among fashion apparel, cosmetics and home furnishing retailers, Dillard’s offers a broad array of merchandise at its stores. These stores feature products from both national and exclusive brands. Also, the company has created a niche for itself through its stringent focus on offering fashionable products and adding value through exceptional customer care service. We believe this strategy will act as a catalyst for attracting more customers, leading to top- and bottom-line growth.

This departmental store chain is likely to gain from better brand relations, focus on in-trend categories, store remodels and rewarding store personnel. Moreover, Dillard’s strategies to boost growth across its eCommerce business include improving merchandise assortments and effective inventory management.

Despite the aforementioned positives, soft economic recovery and stiff competition in the retail merchandise space may prove to be hurdles for the company. While Dillard’s earnings and sales outpaced estimates in the second quarter, its fiscal 2016 outlook indicates significant cost pressures, which might hurt both margins and the bottom line.

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Moreover, the Zacks Consensus Estimate of $5.83 and $5.70 for fiscal 2016 and fiscal 2017, has decreased 4 cents and 6 cents, respectively, over the past 60 days.

Zacks Rank

Dillard’s currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the retail space include Macy's, Inc. (M - Free Report) , J. C. Penney Company, Inc. and American Eagle Outfitters, Inc. (AEO - Free Report) , all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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