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Is Dillard's Digital Growth Enough to Offset Store Traffic Slump?

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Key Takeaways

  • Dillard's posted a 3% gain in total retail and comparable sales despite uneven in-store traffic industrywide.
  • DDS leverages its digital platform to extend reach beyond 272 stores and support omnichannel shopping.
  • Dillard's retail gross margin rose to 45.3%, providing flexibility to invest in stores and digital growth.

Dillard’s Inc. (DDS - Free Report) third-quarter fiscal 2025 results highlight the growing importance of its digital platform as the retailer navigates uneven in-store traffic across the department store industry. While mall traffic remains under pressure industrywide, Dillard’s continues to leverage its online channel as a key touchpoint to engage customers and support overall sales performance.

The company reported a 3% year-over-year increase in total retail sales and comparable store sales in the fiscal third quarter, reflecting steady demand despite a challenging consumer backdrop. Although Dillard’s does not provide e-commerce sales numbers separately, management has consistently emphasized the role of dillards.com in extending reach beyond physical stores and complementing its brick-and-mortar footprint of 272 locations.

The digital platform enables customers to access a broad assortment, supports omnichannel shopping behavior, and helps mitigate traffic volatility at malls and shopping centers.

In-store performance remains mixed. While comparable sales growth indicates resilience, the company acknowledged broader risks tied to changes in mall traffic and consumer shopping patterns, a key concern outlined in its forward-looking statements. To adapt, Dillard’s continues to focus on merchandising strength in categories such as ladies’ apparel, accessories and shoes, which posted solid gains in the quarter, helping drive traffic where demand remains intact.

At the same time, disciplined inventory management and a healthy gross margin provide flexibility to invest in stores and digital capabilities. The retail gross margin improved to 45.3%, signaling effective execution despite cost pressures.

Overall, while Dillard’s digital platform plays an increasingly critical role in offsetting softer store traffic, sustained growth will likely depend on its ability to balance omnichannel investments with continued relevance in physical retail locations.

The Zacks Rundown for DDS

Dillard’s shares have gained 32.6% in the past year compared with the industry’s growth of 33%.

 

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Image Source: Zacks Investment Research

 

From a valuation standpoint, DDS trades at a forward 12-month price-to-earnings ratio of 19.52X, higher than the industry’s 14.44X multiple.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

The Zacks Consensus Estimate for Dillard’s fiscal 2025 and 2026 earnings implies year-over-year declines of 9.4% and 7.5%, respectively. Earnings estimates for fiscal 2025 and 2026 have been northbound in the past seven days. DDS currently sports a Zacks Rank #1 (Strong Buy).

Solid Picks in DDS’s Broader Sector

We have highlighted three other top-ranked stocks from the Retail sector, namely Macy's Inc. (M - Free Report) , The Gap Inc. (GAP - Free Report) and Kohl's Corp. (KSS - Free Report) .

Macy's is an omnichannel retail organization operating stores, websites and mobile applications under three brands — Macy's, Bloomingdale's and bluemercury. M flaunts a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Macy's fiscal 2025 sales and earnings indicates declines of 3.1% and 18.2%, respectively, from the year-ago period’s reported figures. M has a trailing four-quarter earnings surprise of 78.9%, on average.

Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. GAP has a Zacks Rank #1 at present.

The Zacks Consensus Estimate for Gap’s fiscal 2025 sales indicates growth of 1.8% from the year-ago period’s reported figure, while that for fiscal 2026 suggests a decline of 2.7%. GAP has a trailing four-quarter earnings surprise of 19.1%, on average.

Kohl's is a U.S.-based department store chain that operates specialty department stores and an e-commerce site in the United States. KSS currently has a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Kohl's fiscal 2025 sales and earnings indicates declines of 3.9% and 7.3%, respectively, from the year-ago period’s reported figures. KSS has a trailing four-quarter earnings surprise of 7.8%, on average.


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