A month has gone by since the last earnings report for Dillard's, Inc. (DDS). Shares have added about 16.2% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is DDS due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Dillard's, Inc. Before we dive into how investors and analysts have reacted as of late
Dillard’s Beats on Q1 Earnings & Sales Estimates
Dillard's reported robust first-quarter fiscal 2018 results. Earnings came in at $2.89 per share, marking a 36.3% increase from $2.12 per share in the prior-year quarter. The bottom-line figure also surpassed the Zacks Consensus Estimate of $2.73 per share.
Results mainly gained from the continuation of positive trends witnessed in the fourth quarter of fiscal 2017. Also, bottom-line growth was aided by higher sales and comparable store sales (comps).
Total revenues (including service charges and other income) of $1,490.7 million, increased 2.6% from the year-ago quarter and exceeded the Zacks Consensus Estimate of $1,453 million.
Dillard's net sales (including CDI Contractors LLC or CDI) rose 2.7% year over year to $1,456.3 million in the reported quarter. Merchandise sales, excluding CDI, increased roughly 2% to $1,409 million. Sales in comparable stores for the 13-week period (ended May 5, 2018), were up 2% from the year-ago period.
Furthermore, ladies' accessories and lingerie, home and furniture as well as juniors' and children's apparel categories displayed above-average performance. While men's apparel and accessories sales were marginally above trend, ladies' apparel was in-line with the trend. However, this was offset by softness across cosmetics and shoes. Notably, the western region was the best performer, followed by the eastern and central regions.
While consolidated gross margin contracted 66 basis points (bps), gross margin from retail operations (excluding CDI) decreased 31 bps. Nonetheless, inventory grew 4% in the period.
Dillard's SG&A expenses (as a percentage of sales) were down 10 bps from last year to 27.9%. In dollar terms, the metric rose 2.4% to $406 million driven by higher selling payroll and services bought.
Financial Details
Dillard’s ended the quarter with cash and cash equivalents of $164.1 million, long-term debt and capital leases of $368 million and total shareholders’ equity of $1,682.1 million. Merchandise inventories improved 3.9% year over year to $1,780.8 million.
In the reported quarter, the company generated net cash flow of $55.4 million from operations and paid $2.8 million in dividends.
Moreover, the company bought back roughly 0.5 million shares for $34.8 million. This completes the total authorized repurchases under the $500 million program in February 2016.
Dillard's also announced a new authorization of $500 million share buyback program in March this year. As of May 5, 2018, the company had outstanding shares worth 27.6 million.
Store Update
As of May 5, 2018, Dillard’s had about 267 namesake outlets and 25 clearance centers operating in 29 states, alongside an online store at www.dillards.com. Its total square footage, as of May 5, was 49.1 million.
Fiscal 2018 View
Following the impressive quarterly performance, Dillard’s updated its guidance for fiscal 2018. The company expects rentals of approximately $29 million compared with $27 million guided earlier. Rentals came in at $28 million in fiscal 2017. Net interest and debt expenses are still anticipated to be $50 million compared with $63 million in fiscal 2017. Furthermore, it continues to project capital expenditures of about $140 million for fiscal 2018 compared with $130 million incurred last year.
For fiscal 2018, depreciation and amortization expenses are projected to be $225 million, down from the previous guidance of $230 million. Dillard’s incurred depreciation and amortization expenses of $232 million in fiscal 2017.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter
VGM Scores
At this time, DDS has a strong Growth Score of A and a grade with the same score on the momentum front. The stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for growth and momentum investors while value investors may want to look elsewhere.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions indicates a downward shift. It comes with little surprise DDS has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Dillard's (DDS) Up 16.2% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Dillard's, Inc. (DDS). Shares have added about 16.2% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is DDS due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Dillard's, Inc. Before we dive into how investors and analysts have reacted as of late
Dillard’s Beats on Q1 Earnings & Sales Estimates
Dillard's reported robust first-quarter fiscal 2018 results. Earnings came in at $2.89 per share, marking a 36.3% increase from $2.12 per share in the prior-year quarter. The bottom-line figure also surpassed the Zacks Consensus Estimate of $2.73 per share.
Results mainly gained from the continuation of positive trends witnessed in the fourth quarter of fiscal 2017. Also, bottom-line growth was aided by higher sales and comparable store sales (comps).
Total revenues (including service charges and other income) of $1,490.7 million, increased 2.6% from the year-ago quarter and exceeded the Zacks Consensus Estimate of $1,453 million.
Dillard's net sales (including CDI Contractors LLC or CDI) rose 2.7% year over year to $1,456.3 million in the reported quarter. Merchandise sales, excluding CDI, increased roughly 2% to $1,409 million. Sales in comparable stores for the 13-week period (ended May 5, 2018), were up 2% from the year-ago period.
Furthermore, ladies' accessories and lingerie, home and furniture as well as juniors' and children's apparel categories displayed above-average performance. While men's apparel and accessories sales were marginally above trend, ladies' apparel was in-line with the trend. However, this was offset by softness across cosmetics and shoes. Notably, the western region was the best performer, followed by the eastern and central regions.
While consolidated gross margin contracted 66 basis points (bps), gross margin from retail operations (excluding CDI) decreased 31 bps. Nonetheless, inventory grew 4% in the period.
Dillard's SG&A expenses (as a percentage of sales) were down 10 bps from last year to 27.9%. In dollar terms, the metric rose 2.4% to $406 million driven by higher selling payroll and services bought.
Financial Details
Dillard’s ended the quarter with cash and cash equivalents of $164.1 million, long-term debt and capital leases of $368 million and total shareholders’ equity of $1,682.1 million. Merchandise inventories improved 3.9% year over year to $1,780.8 million.
In the reported quarter, the company generated net cash flow of $55.4 million from operations and paid $2.8 million in dividends.
Moreover, the company bought back roughly 0.5 million shares for $34.8 million. This completes the total authorized repurchases under the $500 million program in February 2016.
Dillard's also announced a new authorization of $500 million share buyback program in March this year. As of May 5, 2018, the company had outstanding shares worth 27.6 million.
Store Update
As of May 5, 2018, Dillard’s had about 267 namesake outlets and 25 clearance centers operating in 29 states, alongside an online store at www.dillards.com. Its total square footage, as of May 5, was 49.1 million.
Fiscal 2018 View
Following the impressive quarterly performance, Dillard’s updated its guidance for fiscal 2018. The company expects rentals of approximately $29 million compared with $27 million guided earlier. Rentals came in at $28 million in fiscal 2017. Net interest and debt expenses are still anticipated to be $50 million compared with $63 million in fiscal 2017. Furthermore, it continues to project capital expenditures of about $140 million for fiscal 2018 compared with $130 million incurred last year.
For fiscal 2018, depreciation and amortization expenses are projected to be $225 million, down from the previous guidance of $230 million. Dillard’s incurred depreciation and amortization expenses of $232 million in fiscal 2017.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter
Dillard's, Inc. Price and Consensus
Dillard's, Inc. Price and Consensus | Dillard's, Inc. Quote
VGM Scores
At this time, DDS has a strong Growth Score of A and a grade with the same score on the momentum front. The stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for growth and momentum investors while value investors may want to look elsewhere.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions indicates a downward shift. It comes with little surprise DDS has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.