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Bear of the Day: Dillard's (DDS)

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I feel like beating up on retail is kicking a dead horse. We all know the plight of the brick-and-mortar shop. As more and more shopping goes online, retailers are struggling to keep afloat. Frankly, I feel it’s a great opportunity for retailers to differentiate themselves. It also kills off the weak hands and those companies that have been slacking off for too long. If you offer an inferior customer experience to go along with zero customer service and homogenous products then guess what? You deserve to go out of business.

I’m not saying that today’s Bear of the Day is going out of business. I’m just saying that there are more attractive corners of the market than this one. And this one is Dillard’s (DDS - Free Report) . Dillard's, Inc. operates as fashion apparel, cosmetics, and home furnishing retailer in the United States. It operates through two segments, Retail Operations and Construction. The company??s stores offer a selection of merchandise, including fashion apparel for women, men, and children; accessories; cosmetics; home furnishings; and other consumer goods. Its brand merchandise includes Antonio Melani, Gianni Bini, GB, Roundtree & Yorke, and Daniel Cremieux. The company also sells its merchandise online through its Website,, which features online gift registries and various other services. In addition, it operates a general contracting construction company that engages in constructing and remodeling stores. As of January 28, 2017, the company operated 293 Dillard's stores, including 25 clearance centers; and an Internet store. 

The company is a Zacks Rank #5 (Strong Sell) right now because of some bearish activity in its earnings estimates. Two analysts have dropped their estimates for the current quarter, current year and next year. The bearish moves have caused the Zacks Consensus Estimate for the current year to come down from 35 cents to 23 cents. The current year number has plummeted from $4.01 to 3.33. Next year is now showing there will be a contraction in earnings, coming down to $3.06 from $3.69.

It should come as no surprise that shares of Dillard’s have come under pressure in recent months. After rallying over $82 the stock dropped like a rock following last quarter’s earnings report, gapping down to the low $60s. The 50-day moving average is providing upside resistance right now with the stock trading at $53 today. An overbought Commodity Channel Index is coming down from close to 200 to 112. If that indicator crosses down through the zero line it’s a sell signal in the intermediate-term.

Investors looking for other stocks within the same industry should check out Zacks Rank #2 (Buy) Kohl’s (KSS - Free Report) . Two other regional department stores, JC Penny (JCP - Free Report) and Macy’s (M - Free Report) are Zacks Rank #3 (Hold) stocks.

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