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Dillard’s, Inc. (DDS - Free Report) has retained its niche in the market through a stringent focus on offering fashionable products to its customers and adding value through exceptional customer care service. We believe that the company’s strategy of featuring fashion-forward and trendy products acts as a catalyst for attracting more customers.
Dillard’s is actively expanding its customer base through strategic initiatives in physical stores and e-commerce. Additionally, the company’s efficient inventory management efforts bode well.
Driven by these factors, this Zacks Rank #3 (Hold) stock has outperformed the industry in the past year. DDS has rallied 28.5% compared with the industry’s growth of 17.3%. Dillard’s also compared favorably with the Retail-Wholesale sector’s growth of 21.3% and the S&P 500’s improvement of 23.6% in a year. A VGM Score of A further speaks volumes for the stock.
Image Source: Zacks Investment Research
Why is Dillard’s a Stock to Watch?
Dillard’s is gaining from its focus on in-trend categories and store-related efforts. Its efforts to capture growth opportunities in brick-and-mortar stores and the e-commerce business have been the key to retaining existing customers and attracting new ones.
On the storefront, the company gained from initiatives to enhance brand relations, a focus on in-trend categories, store remodels and higher rewards to store personnel. In March 2024, Dillard’s opened a store at the Empire Mall location in Sioux Falls, SD. This marked the company’s entry into the 30th state of the United States. Its activewear brands have been gaining market share.
The company’s e-commerce business is catching pace with strategies like the enhancement of merchandise assortments and effective inventory management. We expect DDS to gain from its focus on increasing productivity at existing stores, developing a leading omnichannel platform and enhancing domestic operations in the years ahead.
Dillard's has also demonstrated remarkable efficiency in inventory management — a crucial aspect of retail success. Dillard’s has been delivering improved inventory levels in the past few quarters, driven by its ongoing inventory-management initiatives. The company exited the first quarter of fiscal 2024 with inventory declining 1.6% year over year to $1.4 billion as of May 4, 2024. Inventory reductions have resulted in lower markdowns, which is boosting the gross margin.
The consolidated gross margin expanded 90 basis points (bps) year over year to 44.6% in the fiscal first quarter. The retail gross margin of 46.2% reflected year-over-year growth of 60 bps, driven by moderate gross margin expansions in home and furniture, ladies’ accessories and lingerie, men’s apparel and accessories, ladies’ apparel, and juniors’ and children’s apparel categories. However, the gross margin in the cosmetics and shoes categories was nearly flat.
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 because it owns 90% of its retail stores and 100% of its corporate headquarters, distribution and fulfillment facilities.
A Challenging Retail Backdrop Creates Hurdles
Dillard’s continues to witness the effects of a challenging retail environment due to the cautious buying behavior of consumers for a while now. This impacted sales and comparable-store sales (comps) and led to higher operating expenses in the first quarter of fiscal 2024. The company’s comps slipped 2% year over year, while total retail sales fell 1.5%. Retail sales were affected by the challenging sales environment in the quarter.
Wrapping Up
Despite facing challenges, Dillard's strategic focus on inventory management, store and e-commerce development and offering trendy merchandise has positioned it strongly in the competitive retail landscape. These efforts highlight Dillard's resilience and adaptability in a dynamic market.
Macy's is an omnichannel retail organization operating stores, websites and mobile applications under three brands — Macy's, Bloomingdale's and bluemercury. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Macy's current fiscal-year earnings and sales indicates declines of 1.7% and 20.3%, respectively, from the previous year’s reported figures. M has a trailing four-quarter average earnings surprise of 57.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. The company currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Abercrombie’s current fiscal-year sales and earnings implies growth of 10.4% and 47.3%, respectively, from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Gap is a premier international specialty retailer offering diverse clothing, accessories and personal care products. It currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Gap’s current fiscal-year earnings and sales calls for growth of 0.2% and 21.7%, respectively, from the previous year’s reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
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Dillard's (DDS) Trend-Right Merchandise Strategy Favors Stock
Dillard’s, Inc. (DDS - Free Report) has retained its niche in the market through a stringent focus on offering fashionable products to its customers and adding value through exceptional customer care service. We believe that the company’s strategy of featuring fashion-forward and trendy products acts as a catalyst for attracting more customers.
Dillard’s is actively expanding its customer base through strategic initiatives in physical stores and e-commerce. Additionally, the company’s efficient inventory management efforts bode well.
Driven by these factors, this Zacks Rank #3 (Hold) stock has outperformed the industry in the past year. DDS has rallied 28.5% compared with the industry’s growth of 17.3%. Dillard’s also compared favorably with the Retail-Wholesale sector’s growth of 21.3% and the S&P 500’s improvement of 23.6% in a year. A VGM Score of A further speaks volumes for the stock.
Image Source: Zacks Investment Research
Why is Dillard’s a Stock to Watch?
Dillard’s is gaining from its focus on in-trend categories and store-related efforts. Its efforts to capture growth opportunities in brick-and-mortar stores and the e-commerce business have been the key to retaining existing customers and attracting new ones.
On the storefront, the company gained from initiatives to enhance brand relations, a focus on in-trend categories, store remodels and higher rewards to store personnel. In March 2024, Dillard’s opened a store at the Empire Mall location in Sioux Falls, SD. This marked the company’s entry into the 30th state of the United States. Its activewear brands have been gaining market share.
The company’s e-commerce business is catching pace with strategies like the enhancement of merchandise assortments and effective inventory management. We expect DDS to gain from its focus on increasing productivity at existing stores, developing a leading omnichannel platform and enhancing domestic operations in the years ahead.
Dillard's has also demonstrated remarkable efficiency in inventory management — a crucial aspect of retail success. Dillard’s has been delivering improved inventory levels in the past few quarters, driven by its ongoing inventory-management initiatives. The company exited the first quarter of fiscal 2024 with inventory declining 1.6% year over year to $1.4 billion as of May 4, 2024. Inventory reductions have resulted in lower markdowns, which is boosting the gross margin.
The consolidated gross margin expanded 90 basis points (bps) year over year to 44.6% in the fiscal first quarter. The retail gross margin of 46.2% reflected year-over-year growth of 60 bps, driven by moderate gross margin expansions in home and furniture, ladies’ accessories and lingerie, men’s apparel and accessories, ladies’ apparel, and juniors’ and children’s apparel categories. However, the gross margin in the cosmetics and shoes categories was nearly flat.
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 because it owns 90% of its retail stores and 100% of its corporate headquarters, distribution and fulfillment facilities.
A Challenging Retail Backdrop Creates Hurdles
Dillard’s continues to witness the effects of a challenging retail environment due to the cautious buying behavior of consumers for a while now. This impacted sales and comparable-store sales (comps) and led to higher operating expenses in the first quarter of fiscal 2024. The company’s comps slipped 2% year over year, while total retail sales fell 1.5%. Retail sales were affected by the challenging sales environment in the quarter.
Wrapping Up
Despite facing challenges, Dillard's strategic focus on inventory management, store and e-commerce development and offering trendy merchandise has positioned it strongly in the competitive retail landscape. These efforts highlight Dillard's resilience and adaptability in a dynamic market.
3 Promising Stocks
A few better-ranked stocks are Macy's Inc. (M - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and The Gap Inc. (GPS - Free Report) .
Macy's is an omnichannel retail organization operating stores, websites and mobile applications under three brands — Macy's, Bloomingdale's and bluemercury. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Macy's current fiscal-year earnings and sales indicates declines of 1.7% and 20.3%, respectively, from the previous year’s reported figures. M has a trailing four-quarter average earnings surprise of 57.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. The company currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Abercrombie’s current fiscal-year sales and earnings implies growth of 10.4% and 47.3%, respectively, from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Gap is a premier international specialty retailer offering diverse clothing, accessories and personal care products. It currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Gap’s current fiscal-year earnings and sales calls for growth of 0.2% and 21.7%, respectively, from the previous year’s reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.