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Why Dillard's (DDS) is Likely to Continue Its Momentum in 2022
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Dillard’s Inc. (DDS - Free Report) stock is well-poised to continue its momentum in 2021, driven by its strong fundamentals and growth efforts. Continued momentum in consumer demand, and focus on inventory and expense management bode well.
In the past year, the DDS stock has outperformed the industry, the Retail-Wholesale sector and the market at large. The company has skyrocketed 350.9% compared with the industry and the S&P 500’s growth of 83.7% and 28.8%, respectively. Meanwhile, it fared better than the sector’s decline of 7.9%.
The company’s earnings estimates for the fourth quarter and fiscal 2021 have been unchanged in the past 30 days. The positive trend signifies bullish analyst sentiments and justifies the company’s Zacks Rank #1 (Strong Buy), indicating further outperformance in the near term.
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Factors to Keep the Momentum Going
Dillard's has been witnessing an uptrend, owing to its robust surprise trend. The bottom and top lines surpassed the Zacks Consensus Estimate and advanced year over year in third-quarter fiscal 2021. This marked the sixth straight quarter of an earnings beat. Net sales rallied 44.5% from the prior-year quarter, with year-over-year total retail sales (excluding CDI Contractors, LLC) growth of 47%. Comparable store sales advanced 48% year over year and 12% from the third quarter of fiscal 2019. Adjusted earnings of $9.81 per share surged more than six-fold from the year-ago quarter's figure of $1.49 per share.
Dillard's has been keen on inventory management since the start of the pandemic through measures like cancellation, suspension and delaying of shipments as well as merchandise purchase reduction. These aggressive measures to lower excess inventory have proved beneficial for the company's margins. As of the end of third-quarter fiscal 2021, inventory declined about 1% year over year to $1,525.9 million. Prior to this, inventory levels were down 13% and 17% in the second and first quarters of fiscal 2021, while the same fell 26%, 22%, 20% and 14% in the fourth, third, second and first quarters of fiscal 2020, respectively.
Inventory reductions have been resulting in lower markdowns, which have been boosting the gross margin. The retail gross margin improved significantly to 46.7% from 36.6% in the year-ago quarter and expanded 1,221 basis points (bps) from 34.5% in the third quarter of fiscal 2019. The increase can be attributed to improved consumer demand and better inventory management, which led to lower markdowns in the fiscal third quarter. On a consolidated basis, the gross margin of 46.2% reflects a sharp improvement from 35.7% in the prior-year quarter.
Dillard's has been undertaking several steps to reduce costs starting from first-quarter fiscal 2020, which were retained in the third quarter of fiscal 2021. Some of these are an extension of vendor payment terms, reduction of discretionary and capital expenditure, and payroll reduction.
In third-quarter fiscal 2021, the company's consolidated SG&A expenses (as a percentage of sales) contracted 450 bps to 26.5% from the prior-year quarter's 31%. The decline was driven by lower payroll and payroll-related expenses as the company operates with reduced operating hours and fewer associates. The retail operating expense rate declined 442 bps to 26.8% on a two-year basis. In dollar terms, operating expenses fell 6% to $391.5 million.
Here's How Other Stocks Fared
We have highlighted three other top-ranked stocks in the Retail - Wholesale sector, namely Citi Trends (CTRN - Free Report) , Kohl's (KSS - Free Report) and Tapestry (TPR - Free Report) .
Citi Trends — a value-priced retailer of fashion apparel, accessories and home goods — currently sports a Zacks Rank #1. Shares of the company have rallied 69.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Citi Trends’ sales and earnings per share (EPS) for the current financial year suggests growth of 29.6% and 199.2%, respectively, from the year-ago period. CTRN has a trailing four-quarter earnings surprise of 79.5%, on average.
Kohl's, a department store chain that operates specialty department stores and an e-commerce site in the United States, presently flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 114.5%, on average. Shares of the company have gained 21% in the past year.
The Zacks Consensus Estimate for Kohl's sales and EPS for the current financial year suggests growth of 24.1% and 703.3%, respectively, from the year-ago period. KSS has an expected EPS growth rate of 8% for three-five years.
Tapestry, the designer and marketer of fine accessories and gifts for women and men in the United States and internationally, sports a Zacks Rank #1 at present. The company has a trailing four-quarter earnings surprise of 29%, on average. Shares of TPR have gained 21.4% in the past year.
The Zacks Consensus Estimate for Tapestry’s sales and EPS for the current financial year suggests 14.8% and 17.9% growth, respectively, from the year-ago period. TPR has an expected EPS growth rate of 12.3% for three-five years.
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Why Dillard's (DDS) is Likely to Continue Its Momentum in 2022
Dillard’s Inc. (DDS - Free Report) stock is well-poised to continue its momentum in 2021, driven by its strong fundamentals and growth efforts. Continued momentum in consumer demand, and focus on inventory and expense management bode well.
In the past year, the DDS stock has outperformed the industry, the Retail-Wholesale sector and the market at large. The company has skyrocketed 350.9% compared with the industry and the S&P 500’s growth of 83.7% and 28.8%, respectively. Meanwhile, it fared better than the sector’s decline of 7.9%.
The company’s earnings estimates for the fourth quarter and fiscal 2021 have been unchanged in the past 30 days. The positive trend signifies bullish analyst sentiments and justifies the company’s Zacks Rank #1 (Strong Buy), indicating further outperformance in the near term.
Factors to Keep the Momentum Going
Dillard's has been witnessing an uptrend, owing to its robust surprise trend. The bottom and top lines surpassed the Zacks Consensus Estimate and advanced year over year in third-quarter fiscal 2021. This marked the sixth straight quarter of an earnings beat. Net sales rallied 44.5% from the prior-year quarter, with year-over-year total retail sales (excluding CDI Contractors, LLC) growth of 47%. Comparable store sales advanced 48% year over year and 12% from the third quarter of fiscal 2019. Adjusted earnings of $9.81 per share surged more than six-fold from the year-ago quarter's figure of $1.49 per share.
Dillard's has been keen on inventory management since the start of the pandemic through measures like cancellation, suspension and delaying of shipments as well as merchandise purchase reduction. These aggressive measures to lower excess inventory have proved beneficial for the company's margins. As of the end of third-quarter fiscal 2021, inventory declined about 1% year over year to $1,525.9 million. Prior to this, inventory levels were down 13% and 17% in the second and first quarters of fiscal 2021, while the same fell 26%, 22%, 20% and 14% in the fourth, third, second and first quarters of fiscal 2020, respectively.
Inventory reductions have been resulting in lower markdowns, which have been boosting the gross margin. The retail gross margin improved significantly to 46.7% from 36.6% in the year-ago quarter and expanded 1,221 basis points (bps) from 34.5% in the third quarter of fiscal 2019. The increase can be attributed to improved consumer demand and better inventory management, which led to lower markdowns in the fiscal third quarter. On a consolidated basis, the gross margin of 46.2% reflects a sharp improvement from 35.7% in the prior-year quarter.
Dillard's has been undertaking several steps to reduce costs starting from first-quarter fiscal 2020, which were retained in the third quarter of fiscal 2021. Some of these are an extension of vendor payment terms, reduction of discretionary and capital expenditure, and payroll reduction.
In third-quarter fiscal 2021, the company's consolidated SG&A expenses (as a percentage of sales) contracted 450 bps to 26.5% from the prior-year quarter's 31%. The decline was driven by lower payroll and payroll-related expenses as the company operates with reduced operating hours and fewer associates. The retail operating expense rate declined 442 bps to 26.8% on a two-year basis. In dollar terms, operating expenses fell 6% to $391.5 million.
Here's How Other Stocks Fared
We have highlighted three other top-ranked stocks in the Retail - Wholesale sector, namely Citi Trends (CTRN - Free Report) , Kohl's (KSS - Free Report) and Tapestry (TPR - Free Report) .
Citi Trends — a value-priced retailer of fashion apparel, accessories and home goods — currently sports a Zacks Rank #1. Shares of the company have rallied 69.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Citi Trends’ sales and earnings per share (EPS) for the current financial year suggests growth of 29.6% and 199.2%, respectively, from the year-ago period. CTRN has a trailing four-quarter earnings surprise of 79.5%, on average.
Kohl's, a department store chain that operates specialty department stores and an e-commerce site in the United States, presently flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 114.5%, on average. Shares of the company have gained 21% in the past year.
The Zacks Consensus Estimate for Kohl's sales and EPS for the current financial year suggests growth of 24.1% and 703.3%, respectively, from the year-ago period. KSS has an expected EPS growth rate of 8% for three-five years.
Tapestry, the designer and marketer of fine accessories and gifts for women and men in the United States and internationally, sports a Zacks Rank #1 at present. The company has a trailing four-quarter earnings surprise of 29%, on average. Shares of TPR have gained 21.4% in the past year.
The Zacks Consensus Estimate for Tapestry’s sales and EPS for the current financial year suggests 14.8% and 17.9% growth, respectively, from the year-ago period. TPR has an expected EPS growth rate of 12.3% for three-five years.