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Dillard's (DDS) Q4 Earnings Surpass Estimates, Sales Miss
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Dillard's Inc. (DDS - Free Report) reported fourth-quarter fiscal 2020 results, wherein the bottom line surpassed the Zacks Consensus Estimate while sales lagged the same. Earnings benefited from the company’s efforts to effectively manage inventory, reduce costs and enhance liquidity.
Q4 in Details
Dillard's adjusted earnings of $3.43 per share surpassed the Zacks Consensus Estimate of $2.65. Moreover, the bottom line rose 24.7% from $2.75 reported in the year-ago quarter. This uptick can be attributable to improved margins and lower expenses.
Net sales of $1,570 million declined 20.2% from the prior-year quarter and missed the Zacks Consensus Estimate of $1,633 million. Total retail sales (excluding CDI Contractors, LLC) fell almost 19% to $1,521 million. Further, comparable store sales declined roughly 17% year over year.
Solid performance in home and furniture along with shoes and cosmetics was more than offset by weakness in ladies' apparel. Also, the Eastern region performed better than the Central and Western regions.
Notably, retail gross margin improved 171 basis points (bps) from the year-ago quarter, primarily due to lower markdowns. On a consolidated basis, gross margin expanded 127 bps year over year to 31.1%.
Dillard's consolidated SG&A expenses (as a percentage of sales) contracted 240 bps from the prior-year quarter to 21.4%. In dollar terms, SG&A expenses (operating expenses) declined roughly 26.8% to $335.8 million owing to a 30% decline in payroll expenses stemming from lower store operating hours.
Retail operating expenses of $334.3 million declined 26.8% year over year during the quarter. Moreover, as a percentage of sales, it contracted 230 bps to 22%.
Dillard’s ended fiscal 2020 with cash and cash equivalents of $360.3 million, long-term debt and finance leases of $365.8 million, and total shareholders’ equity of $1,441 million.
In fiscal 2020, the company’s cash used for operating activities was $252.9 million. Also, it bought back shares worth $95.6 million in the said time period under its $500-million repurchase program announced in March 2018. As of Jan 30, it had $173.1 million authorization remaining to be bought back under the aforementioned program. Apart from these, management boasts no outstanding borrowings under its existing revolving credit facility of $800 million.
Price Performance
In the past three months, shares of this Zacks Rank #3 (Hold) company have gained 68.1%, outperforming the industry’s growth of 60%.
Tapestry (TPR - Free Report) , with a Zacks Rank #2 (Buy), has an expected long-term earnings growth rate of 10%.
DICK’S Sporting Goods, Inc. (DKS - Free Report) has a long-term earnings growth rate of 5.6% and presently, a Zacks Rank #2.
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Dillard's (DDS) Q4 Earnings Surpass Estimates, Sales Miss
Dillard's Inc. (DDS - Free Report) reported fourth-quarter fiscal 2020 results, wherein the bottom line surpassed the Zacks Consensus Estimate while sales lagged the same. Earnings benefited from the company’s efforts to effectively manage inventory, reduce costs and enhance liquidity.
Q4 in Details
Dillard's adjusted earnings of $3.43 per share surpassed the Zacks Consensus Estimate of $2.65. Moreover, the bottom line rose 24.7% from $2.75 reported in the year-ago quarter. This uptick can be attributable to improved margins and lower expenses.
Net sales of $1,570 million declined 20.2% from the prior-year quarter and missed the Zacks Consensus Estimate of $1,633 million. Total retail sales (excluding CDI Contractors, LLC) fell almost 19% to $1,521 million. Further, comparable store sales declined roughly 17% year over year.
Solid performance in home and furniture along with shoes and cosmetics was more than offset by weakness in ladies' apparel. Also, the Eastern region performed better than the Central and Western regions.
Notably, retail gross margin improved 171 basis points (bps) from the year-ago quarter, primarily due to lower markdowns. On a consolidated basis, gross margin expanded 127 bps year over year to 31.1%.
Dillard's consolidated SG&A expenses (as a percentage of sales) contracted 240 bps from the prior-year quarter to 21.4%. In dollar terms, SG&A expenses (operating expenses) declined roughly 26.8% to $335.8 million owing to a 30% decline in payroll expenses stemming from lower store operating hours.
Retail operating expenses of $334.3 million declined 26.8% year over year during the quarter. Moreover, as a percentage of sales, it contracted 230 bps to 22%.
Dillards, Inc. Price, Consensus and EPS Surprise
Dillards, Inc. price-consensus-eps-surprise-chart | Dillards, Inc. Quote
Financial Details & Liquidity
Dillard’s ended fiscal 2020 with cash and cash equivalents of $360.3 million, long-term debt and finance leases of $365.8 million, and total shareholders’ equity of $1,441 million.
In fiscal 2020, the company’s cash used for operating activities was $252.9 million. Also, it bought back shares worth $95.6 million in the said time period under its $500-million repurchase program announced in March 2018. As of Jan 30, it had $173.1 million authorization remaining to be bought back under the aforementioned program. Apart from these, management boasts no outstanding borrowings under its existing revolving credit facility of $800 million.
Price Performance
In the past three months, shares of this Zacks Rank #3 (Hold) company have gained 68.1%, outperforming the industry’s growth of 60%.
3 Retail Stocks to Watch
Hibbett Sports, Inc. (HIBB - Free Report) has a long-term earnings growth rate of 17.2% and currently, a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Tapestry (TPR - Free Report) , with a Zacks Rank #2 (Buy), has an expected long-term earnings growth rate of 10%.
DICK’S Sporting Goods, Inc. (DKS - Free Report) has a long-term earnings growth rate of 5.6% and presently, a Zacks Rank #2.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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