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Dillard’s, Inc. (DDS - Free Report) continues to display solid momentum, thanks to its sound fundamentals and impressive growth efforts. Continued consumer demand and focus on inventory and expense management bode well. The company’s strategy to offer more fashion-forward and trendy products in order to attract customers has been a key driver.
DDS boasts a robust earnings surprise trend, which continued in fourth-quarter fiscal 2022. The company’s sales and earnings beat the Zacks Consensus Estimate. This marked the eighth straight quarter of a top-line beat and the 10th straight quarter of a bottom-line beat. Results gained from better inventory management and consumer demand. The company witnessed robust sales in cosmetics and ladies’ apparel.
Backed by the robust surprise trend, the Zacks Rank #1 (Strong Buy) stock has outperformed the industry and the Retail - Wholesale sector in the past year. DDS has rallied 16.6% against the industry’s decline of 30.5% and the sector’s dip of 15.6%. The stock also compares favorably with the S&P 500’s fall of 10.2% in the same period.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DDS' fiscal 2023 earnings also echoes a positive sentiment. The consensus mark for DDS’ fiscal 2023 earnings has moved up 2.9% to $33.50 per share in the past 30 days.
Dillard's is likely to retain its sales momentum on strong consumer demand, and robust sales across product categories and regions. In the fiscal fourth quarter, total revenues of $2,127 million increased 0.7% from the prior-year quarter. Total retail sales (excluding CDI Contractors, LLC) remained almost flat year over year to $2,069 million. Comparable store sales also remained flat year over year.
The company’s initiatives to control inventory and expenses have been contributing to bottom-line gains for the past few quarters. Improved consumer demand and better inventory management have been leading to lower markdowns.
Dillard's remains focused on maintaining a strong balance sheet and liquidity. Some highlights of its financial status include smaller rent obligations compared with the industry. This is because the company owns 90% of its retail stores and 100% of its corporate headquarters, distribution and fulfillment facilities. As of Jan 28, 2022, the company's long-term debt and finance lease liabilities (including subordinate debentures) remained flat at $521 million sequentially. The company’s debt-to-capitalization ratio of 0.24 compares favorably with the prior quarter’s 0.24.
However, stiff competition, higher wages and raw material price inflation are concerning. Also, the company has been witnessing elevated SG&A expenses for the past few quarters, which have been denting the bottom line to some extent. The persistence of the trend may partly affect the company’s profitability.
Nonetheless, investors are optimistic about the company’s share repurchases and dividend payments. In fourth-quarter fiscal 2022, it repurchased $24.3 million of Class A common stock under its existing repurchase program. As of Jan 28, it had shares worth $175.4 million remaining under its February 2022 plan.
Dillard’s board recently approved its quarterly dividend of 20 cents per share on the Class A and Class B common stock, which is payable on May 1, 2023, to shareholders of record as of Mar 31, 2023.
Urban Outfitters, a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gifts products, currently sports a Zacks Rank #1 (Strong Buy). URBN has a long-term earnings growth rate of 18%. Shares of URBN have gained 10.2% in the past year.
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2023 sales and EPS suggests growth of 4.3% and 41.7%, respectively, from the year-ago period’s reported levels. It has a trailing four-quarter negative surprise of 7.1%, on average.
Levi Strauss, a retailer of jeans, casual wear and related accessories for men, women and children, currently carries a Zacks Rank #2 (Buy). LEVI has an expected EPS growth rate of 6.3% for three to five years. Shares of LEVI have declined 7.8% in the past year.
The Zacks Consensus Estimate for Levi Strauss’ current financial-year revenues suggests growth of 2.1% from the year-ago reported figure, while the earnings estimate indicates a decline of 11.3%. LEVI has a trailing four-quarter earnings surprise of 14.3%, on average.
Tapestry, a designer and marketer of fine accessories and gifts for women and men in the United States and internationally, currently carries a Zacks Rank #2. The expected EPS growth rate of the company for three to five years is 12.5%. Shares of TPR have gained 24.5% in the past year.
The Zacks Consensus Estimate for Tapestry’s current financial-year EPS suggests growth of 7.2% from the year-ago reported figures. TPR has a trailing four-quarter earnings surprise of 10.6%, on average.
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Dillard's (DDS) Inventory Management Efforts Aid, Costs Hurt
Dillard’s, Inc. (DDS - Free Report) continues to display solid momentum, thanks to its sound fundamentals and impressive growth efforts. Continued consumer demand and focus on inventory and expense management bode well. The company’s strategy to offer more fashion-forward and trendy products in order to attract customers has been a key driver.
DDS boasts a robust earnings surprise trend, which continued in fourth-quarter fiscal 2022. The company’s sales and earnings beat the Zacks Consensus Estimate. This marked the eighth straight quarter of a top-line beat and the 10th straight quarter of a bottom-line beat. Results gained from better inventory management and consumer demand. The company witnessed robust sales in cosmetics and ladies’ apparel.
Backed by the robust surprise trend, the Zacks Rank #1 (Strong Buy) stock has outperformed the industry and the Retail - Wholesale sector in the past year. DDS has rallied 16.6% against the industry’s decline of 30.5% and the sector’s dip of 15.6%. The stock also compares favorably with the S&P 500’s fall of 10.2% in the same period.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DDS' fiscal 2023 earnings also echoes a positive sentiment. The consensus mark for DDS’ fiscal 2023 earnings has moved up 2.9% to $33.50 per share in the past 30 days.
Dillard's is likely to retain its sales momentum on strong consumer demand, and robust sales across product categories and regions. In the fiscal fourth quarter, total revenues of $2,127 million increased 0.7% from the prior-year quarter. Total retail sales (excluding CDI Contractors, LLC) remained almost flat year over year to $2,069 million. Comparable store sales also remained flat year over year.
The company’s initiatives to control inventory and expenses have been contributing to bottom-line gains for the past few quarters. Improved consumer demand and better inventory management have been leading to lower markdowns.
Dillard's remains focused on maintaining a strong balance sheet and liquidity. Some highlights of its financial status include smaller rent obligations compared with the industry. This is because the company owns 90% of its retail stores and 100% of its corporate headquarters, distribution and fulfillment facilities. As of Jan 28, 2022, the company's long-term debt and finance lease liabilities (including subordinate debentures) remained flat at $521 million sequentially. The company’s debt-to-capitalization ratio of 0.24 compares favorably with the prior quarter’s 0.24.
However, stiff competition, higher wages and raw material price inflation are concerning. Also, the company has been witnessing elevated SG&A expenses for the past few quarters, which have been denting the bottom line to some extent. The persistence of the trend may partly affect the company’s profitability.
Nonetheless, investors are optimistic about the company’s share repurchases and dividend payments. In fourth-quarter fiscal 2022, it repurchased $24.3 million of Class A common stock under its existing repurchase program. As of Jan 28, it had shares worth $175.4 million remaining under its February 2022 plan.
Dillard’s board recently approved its quarterly dividend of 20 cents per share on the Class A and Class B common stock, which is payable on May 1, 2023, to shareholders of record as of Mar 31, 2023.
Other Stocks to Consider
Here are three other top-ranked stocks to consider — Urban Outfitters (URBN - Free Report) , Levi Strauss & Co. (LEVI - Free Report) and Tapestry (TPR - Free Report) .
Urban Outfitters, a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gifts products, currently sports a Zacks Rank #1 (Strong Buy). URBN has a long-term earnings growth rate of 18%. Shares of URBN have gained 10.2% in the past year.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2023 sales and EPS suggests growth of 4.3% and 41.7%, respectively, from the year-ago period’s reported levels. It has a trailing four-quarter negative surprise of 7.1%, on average.
Levi Strauss, a retailer of jeans, casual wear and related accessories for men, women and children, currently carries a Zacks Rank #2 (Buy). LEVI has an expected EPS growth rate of 6.3% for three to five years. Shares of LEVI have declined 7.8% in the past year.
The Zacks Consensus Estimate for Levi Strauss’ current financial-year revenues suggests growth of 2.1% from the year-ago reported figure, while the earnings estimate indicates a decline of 11.3%. LEVI has a trailing four-quarter earnings surprise of 14.3%, on average.
Tapestry, a designer and marketer of fine accessories and gifts for women and men in the United States and internationally, currently carries a Zacks Rank #2. The expected EPS growth rate of the company for three to five years is 12.5%. Shares of TPR have gained 24.5% in the past year.
The Zacks Consensus Estimate for Tapestry’s current financial-year EPS suggests growth of 7.2% from the year-ago reported figures. TPR has a trailing four-quarter earnings surprise of 10.6%, on average.