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Why Is Dillard's (DDS) Down 7.7% Since its Last Earnings Report?
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It has been about a month since the last earnings report for Dillard's, Inc. (DDS - Free Report) . Shares have lost about 7.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is DDS due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Dillard's, Inc. Before we dive into how investors and analysts have reacted as of late
Dillard’s Beats on Q4 Earnings & Sales
Dillard's reported fourth-quarter fiscal 2017 results, wherein adjusted earnings per share of $2.82 per share rose 52.4% from $1.85 per share in the prior-year quarter. Moreover, bottom-line results significantly beat the Zacks Consensus Estimate of $1.82 per share.
Results mainly gained from the persistence of the positive trends witnessed in the third quarter into the fourth quarter. The earnings growth came on the back of solid comparable store sales (comps) increase, along with higher gross margins and relative expense management.
Dillard's total revenues (including service charges and other income) of $2,109.2 million improved 6.3% from the year-ago quarter, and also topped the Zacks Consensus Estimate of $2,041.1 million.
Dillard's net sales (including CDI Contractors LLC or CDI) rose 6.5% year over year to $2,061.3 million in the reported quarter. Merchandise sales, excluding CDI, increased 6.8% to roughly $2,025 million. Sales in comparable stores for the 13-week period ended Jan 27, 2018 jumped 3% from the year-ago period.
During the quarter, ladies’ apparel, juniors' and children's apparel, and men's apparel and accessories categories displayed above-average performance. However, this was offset by softness in cosmetics, ladies’ accessories and lingerie, home and furniture, and shoes categories. The Western and Eastern regions were the best performers, trailed by the Central region.
Consolidated gross margin expanded 53 basis points (bps), while gross margin from retail operations (excluding CDI) improved 48 bps due to higher markups.
Dillard's SG&A expenses (as a percentage of sales) remained flat with last year at 23.3%. In dollar terms, SG&A expenses rose 6.5% to $480.8 million driven by increased payroll, supplies and utilities. Further, an additional week of operations in fourth-quarter fiscal 2017 led to the increase in operating expenses.
Financial Details
Dillard’s ended the quarter with cash and cash equivalents of $187 million, long-term debt and capital leases (excluding current portions) of $368.3 million and total shareholders’ equity of $3,673.1 million. Merchandise inventories improved 4.1% year over year to $1,463.6 million.
In fiscal 2017, the company generated net cash flow from operations of $274.2 million and incurred $9.4 million in dividends.
Moreover, the company bought back 0.6 million shares for $34.6 million in the fourth quarter. This brings the total share repurchases made during the fiscal year to 4.1 million shares for about $219 million. As of Feb 3, 2018, Dillard’s had an authorization worth $34.8 million remaining under its $500 million buyback program.
Store Update
As of Feb 3, 2018, Dillard’s had about 268 namesake outlets and 24 clearance centers operating in 29 states, as well as an online store at www.dillards.com. Dillard’s total square footage, as of Feb 3 was 49.2 million.
Fiscal 2018 View
Following the solid quarter, Dillard’s provided its costs guidance for fiscal 2018. The company expects rentals of approximately $27 million compared with $28 million in fiscal 2017. Net interest and debt expenses are anticipated to be nearly $50 million, versus $63 million in fiscal 2017. Further, the company projects capital expenditures of about $140 million for fiscal 2018 against $131 million spent in fiscal 2017.
Depreciation and amortization expenses for fiscal 2018 are expected at $230 million compared with $232 million in the prior year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.
At this time, DDS has a nice Growth Score of B, however its Momentum is doing a bit better with an A. The stock was also allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and momentum investors than growth investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of this revision looks promising. It comes with little surprise DDS has a Zacks Rank # 1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Dillard's (DDS) Down 7.7% Since its Last Earnings Report?
It has been about a month since the last earnings report for Dillard's, Inc. (DDS - Free Report) . Shares have lost about 7.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is DDS due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Dillard's, Inc. Before we dive into how investors and analysts have reacted as of late
Dillard’s Beats on Q4 Earnings & Sales
Dillard's reported fourth-quarter fiscal 2017 results, wherein adjusted earnings per share of $2.82 per share rose 52.4% from $1.85 per share in the prior-year quarter. Moreover, bottom-line results significantly beat the Zacks Consensus Estimate of $1.82 per share.
Results mainly gained from the persistence of the positive trends witnessed in the third quarter into the fourth quarter. The earnings growth came on the back of solid comparable store sales (comps) increase, along with higher gross margins and relative expense management.
Dillard's total revenues (including service charges and other income) of $2,109.2 million improved 6.3% from the year-ago quarter, and also topped the Zacks Consensus Estimate of $2,041.1 million.
Dillard's net sales (including CDI Contractors LLC or CDI) rose 6.5% year over year to $2,061.3 million in the reported quarter. Merchandise sales, excluding CDI, increased 6.8% to roughly $2,025 million. Sales in comparable stores for the 13-week period ended Jan 27, 2018 jumped 3% from the year-ago period.
During the quarter, ladies’ apparel, juniors' and children's apparel, and men's apparel and accessories categories displayed above-average performance. However, this was offset by softness in cosmetics, ladies’ accessories and lingerie, home and furniture, and shoes categories. The Western and Eastern regions were the best performers, trailed by the Central region.
Consolidated gross margin expanded 53 basis points (bps), while gross margin from retail operations (excluding CDI) improved 48 bps due to higher markups.
Dillard's SG&A expenses (as a percentage of sales) remained flat with last year at 23.3%. In dollar terms, SG&A expenses rose 6.5% to $480.8 million driven by increased payroll, supplies and utilities. Further, an additional week of operations in fourth-quarter fiscal 2017 led to the increase in operating expenses.
Financial Details
Dillard’s ended the quarter with cash and cash equivalents of $187 million, long-term debt and capital leases (excluding current portions) of $368.3 million and total shareholders’ equity of $3,673.1 million. Merchandise inventories improved 4.1% year over year to $1,463.6 million.
In fiscal 2017, the company generated net cash flow from operations of $274.2 million and incurred $9.4 million in dividends.
Moreover, the company bought back 0.6 million shares for $34.6 million in the fourth quarter. This brings the total share repurchases made during the fiscal year to 4.1 million shares for about $219 million. As of Feb 3, 2018, Dillard’s had an authorization worth $34.8 million remaining under its $500 million buyback program.
Store Update
As of Feb 3, 2018, Dillard’s had about 268 namesake outlets and 24 clearance centers operating in 29 states, as well as an online store at www.dillards.com. Dillard’s total square footage, as of Feb 3 was 49.2 million.
Fiscal 2018 View
Following the solid quarter, Dillard’s provided its costs guidance for fiscal 2018. The company expects rentals of approximately $27 million compared with $28 million in fiscal 2017. Net interest and debt expenses are anticipated to be nearly $50 million, versus $63 million in fiscal 2017. Further, the company projects capital expenditures of about $140 million for fiscal 2018 against $131 million spent in fiscal 2017.
Depreciation and amortization expenses for fiscal 2018 are expected at $230 million compared with $232 million in the prior year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.
Dillard's, Inc. Price and Consensus
Dillard's, Inc. Price and Consensus | Dillard's, Inc. Quote
VGM Scores
At this time, DDS has a nice Growth Score of B, however its Momentum is doing a bit better with an A. The stock was also allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and momentum investors than growth investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of this revision looks promising. It comes with little surprise DDS has a Zacks Rank # 1 (Strong Buy). We expect an above average return from the stock in the next few months.