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Dillard's (DDS) to Report Q2 Earnings: What's in the Offing?

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Dillard’s, Inc. (DDS - Free Report) is expected to release its second-quarter fiscal 2018 results on Aug 9. The company has an average trailing four-quarter miss of 49.9% even though it has delivered a positive earnings surprise in three quarters.

The Zacks Consensus Estimate, presently pegged at a loss of 47 cents for the impending quarter, has widened in the past 30 days. However, the consensus mark reflects an improvement from a loss per share of 58 cents in second-quarter 2017.

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

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

Let’s see how things are shaping up prior to the upcoming earnings release.

Factors at Play

Dillard’s constant efforts to enhance brick-and-mortar stores and e-commerce business, which strengthen its customer base, are impressive. On the store front, the company will gain by enhancing brand relations, focusing on in-trend categories, store remodels and rewarding store personnel. Also, its enhanced merchandise assortments and effective inventory management will drive growth across the company’s e-commerce business. We expect Dillard’s focus on increasing productivity at existing stores, developing a leading omni-channel platform and widening its domestic operations to boost its top- and bottom-line performance in the upcoming quarter.

Meanwhile, this leading departmental store chain continues benefiting from its niche market position, offering a broad array of merchandise in its stores, featuring products from both national and exclusive brands. Additionally, Dillard’s constant shareholder-friendly moves are impressive.

Apparently, the company’s top and bottom line in first-quarter fiscal 2018 surpassed estimates and improved year over year. The upside was driven by positive trends consistent from fourth-quarter fiscal 2017 through the first quarter of fiscal 2018. Notably, the bottom-line performance was aided by higher sales and comparable store sales. Sales gained from strength across its ladies' accessories and lingerie, men's apparel and accessories, juniors' and children's apparel as well as home and furniture categories.

However, persistence of challenging trends in the retail apparel space due to changing customer preferences remains a hurdle. Also, Dillard’s operates in the highly competitive retail merchandise industry, which might dent the company’s profitability in the to-be-reported quarter.

The Zacks Consensus Estimate for quarterly revenues is $1,459 million, implying a decrease 0.4% from the prior-year quarter's actual figure.

Though shares of Dillard’s have gained 25.8% in the past six months, it underperformed the industry’s rally of 31.7%.

Zacks Model
 
Our proven model does not show that Dillard’s is likely to beat earnings estimates in the fiscal second quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Dillard’s has an Earnings ESP of 0.00%. Although the company carries a Zacks Rank #3, we need to have a positive ESP to be confident of an earnings beat.

Stocks With Favorable Combination

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Foot Locker, Inc. (FL - Free Report) has an Earnings ESP of +5.30% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Boot Barn Holdings, Inc. (BOOT - Free Report) has an Earnings ESP of +2.85% and a Zacks Rank of 2.

Nordstrom, Inc. (JWN - Free Report) has an Earnings ESP of +0.27% and a Zacks Rank #3.

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