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Dillard's (DDS) Q1 Earnings & Sales Surpass on High Demand

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Dillard's Inc. (DDS - Free Report) reported impressive first-quarter fiscal 2022 results, wherein the bottom and top lines surpassed the Zacks Consensus Estimate and advanced year over year. This marked the fifth straight quarter of the top and bottom-line beat. Results gained from the continued momentum in consumer demand and better inventory management.

Adjusted earnings of $13.37 per share have significantly surpassed the Zacks Consensus Estimate of $5.36. The bottom line surged more than two-fold from the year-ago quarter's $6.37 per share. The uptick can be attributed to robust sales, improved margins and lower operating expenses as a percentage of sales.

Total revenues of $1,612 million increased 21.3% from the prior-year quarter and beat the Zacks Consensus Estimate of $1,548 million. Total retail sales (excluding CDI Contractors, LLC) advanced 22% year over year to $1,581 million. Comparable store sales increased 23% year over year. The company witnessed robust sales in men’s apparel and accessories, ladies, and children’s apparel.

The retail gross margin expanded 470 basis points (bps) to 47.3% from the year-ago quarter. The increase can be attributed to improved consumer demand and better inventory management, which led to lower markdowns in the fiscal first quarter. On a consolidated basis, the gross margin of 46.5% reflects a 480-bps improvement from 41.7% in the prior-year quarter.

Dillard's consolidated SG&A expenses (as a percentage of sales) contracted 40 bps to 24.9% from the prior-year quarter's 25.3%. In dollar terms, SG&A expenses (operating expenses) grew 19.1% to $400.8 million.

The retail operating expense rate contracted 60 bps to 25.2%. In dollar terms, retail operating expenses grew 19% to $398.9 million due to elevated payroll and payroll-related expenses amid the current competitive wage environment.

Shares of the Zacks Rank #3 (Hold) company have gained 28.6% in the past three months against the industry's decline of 9.7%.

 

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Financial Details

Dillard's ended the quarter with cash and cash equivalents of $862.2 million, long-term debt of $321.3 million, and total shareholders' equity of $1,512.3 million. The company generated $365.2 million of cash from operating activities.

In first-quarter fiscal 2022, it repurchased shares worth $186.5 million of Class A common stock under its existing share repurchase program. As of Apr 30, 2022, Dillard's had $425.5 million authorization left under its February 2022 plan.

Dillard's, Inc. Price, Consensus and EPS Surprise

 

Dillard's, Inc. Price, Consensus and EPS Surprise

Dillard's, Inc. price-consensus-eps-surprise-chart | Dillard's, Inc. Quote

Store Update

In the quarter, Dillard's opened a 160,000-square-feet store at University Place in Orem, UT, which will replace the 200,000-square-feet Provo Towne Centre store in the same market. In the fall of 2022, it plans to replace the Westgate Mall store at a leased building in Amarillo, TX. The store will be replaced with a newly remodeled owned facility. It also shut down a clearance center located at University Mall in Tampa, FL.

That said, DDS currently operates 251 full-line Dillard’s stores and 29 clearance stores in 29 states and on dillards.com.

Stocks to Consider

Here are three better-ranked stocks to consider — Ross Stores (ROST - Free Report) , Signet Jewelers (SIG - Free Report) and Target Corporation (TGT - Free Report) .

Ross Stores operates as an off-price retailer of apparel and home accessories, primarily in the United States. It presently has a Zacks Rank #2 (Buy). ROST has a trailing four-quarter earnings surprise of 33.3%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and EPS suggests growth of 5% and 3.9%, respectively, from the year-ago period’s reported numbers.

Signet Jewelers, the retailer of diamond jewelry, watches and others, presently has a Zacks Rank #2. SIG has a trailing four-quarter earnings surprise of 73.8%, on average.

Although the Zacks Consensus Estimate for Signet Jewelers’ current financial-year sales suggests growth of 5.2%, its EPS reflects a decline of 8.2%, respectively, from the year-ago period’s reported numbers.

Target, which provides an array of goods ranging from household essentials and electronics to toys and apparel for men, women and kids, currently carries a Zacks Rank #2. TGT has a trailing four-quarter earnings surprise of 21.3%, on average.

The Zacks Consensus Estimate for Target’s current financial-year sales and EPS suggests growth of 3.7% and 7.3%, respectively, from the year-ago period’s reported figures.

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