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Dillard's (DDS) Plunges 8.3% on Q4 Earnings and Sales Miss
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Dillard's Inc. (DDS - Free Report) reported a dismal fourth-quarter fiscal 2016, wherein both sales and earnings lagged estimates and plunged year over year. Results were primarily hurt by the persistent challenging trends in the apparel retail segment.
Consequently, shares of this department store chain declined nearly 8.3% yesterday. Moreover, Dillard’s shares have declined 31.7% in the past one year, underperforming the Zacks categorized Retail–Regional Department Stores industry that dropped 18.9% in the same time frame.
The company posted adjusted earnings of $1.85 per share, which lagged the Zacks Consensus Estimate of $2.34 and plunged nearly 17.8% from $2.25 in the year-ago quarter. Earnings lagged primarily due to soft sales stemming from weak traffic trends attributed to industry challenges, mainly owing to change in consumer preference from offline to online shopping.
Including one-time items, the company reported earnings per share of $1.72, down 25.5% from $2.31 earned in the prior-year quarter.
Dillard's total revenue (including service charges and other income) of $1,983.9 million dropped 6.3% from the year-ago quarter and missed the Zacks Consensus Estimate of $1,999 million.
Dillard's net sales (including CDI Contractors LLC or CDI) declined 6.7% year over year to $1,935.6 million in the reported quarter. Merchandise sales, excluding CDI, fell 6.2% to roughly $1,896 million. Merchandise comparable-store sales for the 13-week period ended Jan 28, 2017 were down 6% from the comparable period ended Jan 30, 2016.
During the reported quarter, sales at all of the company’s categories decreased. While ladies’ apparel, men’s apparel and accessories were among the relatively stronger categories, home & furniture, and shoes remained considerably weak. The best performing region was Eastern, trailed by the Western and Central regions, respectively.
Consolidated gross margin expanded 24 basis points (bps), while gross margin from retail operations (excluding CDI) rose 8 bps.
Dillard's selling, general and administrative (SG&A) expenses (as a percentage of sales) escalated 160 bps to 23.3%. In dollar terms, consolidated SG&A expenses reflected a marginal 0.5% growth to $451.6 million. Higher SG&A expenses in the quarter were due to a rise in selling payroll and services purchased expenses, partly neutralized by savings in several expense categories.
Financial Details
Dillard’s ended fiscal 2016 with cash and cash equivalents of $347 million, long-term debt and capital leases (excluding current portions) of $530.1 million and total shareholders’ equity of $1,717.4 million. Inventory improved 2.3% year over year to $1,406.4 million.
In fiscal 2016, the company generated net cash flow from operations of $517.2 million. It bought back 1.3 million shares for $80.6 million in the fiscal fourth quarter, bringing the fiscal year repurchases to 3.8 million shares for $246.2 million. With this, the company has authorization worth $253.8 million remaining as of Jan 28, 2017, under its $500 million share repurchase plan announced in Feb 2016.
Store Update
As of Jan 28, 2017, Dillard’s had about 268 namesake outlets and 25 clearance centers operating in 29 states, as well as an online store at www.dillards.com. Dillard’s total square footage, as of the end of fiscal 2016, was 49.2 million.
Fiscal 2017 Outlook
For fiscal 2017, Dillard’s expects rentals of approximately $25 million compared with $26 million in fiscal 2016. Further, net interest and debt expenses are anticipated to be nearly $63 million, flat with fiscal 2016 level.
The company projects capital expenditures of about $125 million for fiscal 2017 compared with $105 million in fiscal 2016. Depreciation and amortization expenses for fiscal 2017 are expected at $240 million compared with $244 million in the prior year.
Currently, Dillard’s carries a Zacks Rank #4 (Sell). Better-ranked stocks in the retail sector include The Children’s Place Inc. (PLCE - Free Report) , Kate Spade & Company , both sporting a Zacks Rank #1 (Strong Buy) and Zumiez Inc. (ZUMZ - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Children’s Place, with a long-term earnings growth rate of 10.3%, has surged nearly 17.7% in the last six months.
Kate Spade has gained nearly 23.4% in the past six months. Moreover, it has a long-term earnings growth rate of 28.3%.
Zumiez has jumped 21.2% in the last six months. The stock has a long-term earnings growth rate of 15%.
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Dillard's (DDS) Plunges 8.3% on Q4 Earnings and Sales Miss
Dillard's Inc. (DDS - Free Report) reported a dismal fourth-quarter fiscal 2016, wherein both sales and earnings lagged estimates and plunged year over year. Results were primarily hurt by the persistent challenging trends in the apparel retail segment.
Consequently, shares of this department store chain declined nearly 8.3% yesterday. Moreover, Dillard’s shares have declined 31.7% in the past one year, underperforming the Zacks categorized Retail–Regional Department Stores industry that dropped 18.9% in the same time frame.
The company posted adjusted earnings of $1.85 per share, which lagged the Zacks Consensus Estimate of $2.34 and plunged nearly 17.8% from $2.25 in the year-ago quarter. Earnings lagged primarily due to soft sales stemming from weak traffic trends attributed to industry challenges, mainly owing to change in consumer preference from offline to online shopping.
Including one-time items, the company reported earnings per share of $1.72, down 25.5% from $2.31 earned in the prior-year quarter.
Dillard's total revenue (including service charges and other income) of $1,983.9 million dropped 6.3% from the year-ago quarter and missed the Zacks Consensus Estimate of $1,999 million.
Dillard's net sales (including CDI Contractors LLC or CDI) declined 6.7% year over year to $1,935.6 million in the reported quarter. Merchandise sales, excluding CDI, fell 6.2% to roughly $1,896 million. Merchandise comparable-store sales for the 13-week period ended Jan 28, 2017 were down 6% from the comparable period ended Jan 30, 2016.
During the reported quarter, sales at all of the company’s categories decreased. While ladies’ apparel, men’s apparel and accessories were among the relatively stronger categories, home & furniture, and shoes remained considerably weak. The best performing region was Eastern, trailed by the Western and Central regions, respectively.
Consolidated gross margin expanded 24 basis points (bps), while gross margin from retail operations (excluding CDI) rose 8 bps.
Dillard's selling, general and administrative (SG&A) expenses (as a percentage of sales) escalated 160 bps to 23.3%. In dollar terms, consolidated SG&A expenses reflected a marginal 0.5% growth to $451.6 million. Higher SG&A expenses in the quarter were due to a rise in selling payroll and services purchased expenses, partly neutralized by savings in several expense categories.
Financial Details
Dillard’s ended fiscal 2016 with cash and cash equivalents of $347 million, long-term debt and capital leases (excluding current portions) of $530.1 million and total shareholders’ equity of $1,717.4 million. Inventory improved 2.3% year over year to $1,406.4 million.
In fiscal 2016, the company generated net cash flow from operations of $517.2 million. It bought back 1.3 million shares for $80.6 million in the fiscal fourth quarter, bringing the fiscal year repurchases to 3.8 million shares for $246.2 million. With this, the company has authorization worth $253.8 million remaining as of Jan 28, 2017, under its $500 million share repurchase plan announced in Feb 2016.
Store Update
As of Jan 28, 2017, Dillard’s had about 268 namesake outlets and 25 clearance centers operating in 29 states, as well as an online store at www.dillards.com. Dillard’s total square footage, as of the end of fiscal 2016, was 49.2 million.
Fiscal 2017 Outlook
For fiscal 2017, Dillard’s expects rentals of approximately $25 million compared with $26 million in fiscal 2016. Further, net interest and debt expenses are anticipated to be nearly $63 million, flat with fiscal 2016 level.
The company projects capital expenditures of about $125 million for fiscal 2017 compared with $105 million in fiscal 2016. Depreciation and amortization expenses for fiscal 2017 are expected at $240 million compared with $244 million in the prior year.
Dillard's, Inc. Price, Consensus and EPS Surprise
Dillard's, Inc. Price, Consensus and EPS Surprise | Dillard's, Inc. Quote
Zacks Rank
Currently, Dillard’s carries a Zacks Rank #4 (Sell). Better-ranked stocks in the retail sector include The Children’s Place Inc. (PLCE - Free Report) , Kate Spade & Company , both sporting a Zacks Rank #1 (Strong Buy) and Zumiez Inc. (ZUMZ - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Children’s Place, with a long-term earnings growth rate of 10.3%, has surged nearly 17.7% in the last six months.
Kate Spade has gained nearly 23.4% in the past six months. Moreover, it has a long-term earnings growth rate of 28.3%.
Zumiez has jumped 21.2% in the last six months. The stock has a long-term earnings growth rate of 15%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>