Dillard’s Q1 Profit and Sales (DDS) Exceed High Demand – May 13, 2022

Dillard Company. (tuck Free report) reported impressive results for the first quarter of fiscal 2022, with the bottom and top lines exceeding Zacks’ consensus estimate and advancing year after year. This represents the fifth consecutive quarter of top and bottom wins. Results gained from continued momentum in consumer demand and better inventory management.

Adjusted earnings of $13.37 per share significantly exceeded Zacks Consensus’ estimate of $5.36. Net profit more than doubled last year’s $6.37 per share. This increase can be attributed to strong sales, improved profit margins, and lower operating expenses as a percentage of sales.

Total revenue of $1,612 million was up 21.3% from the prior year quarter and beat the Zacks consensus estimate of $1,548 million. Total retail sales (excluding CDI Contractors, LLC) increased 22% year over year to $1,581 million. Similar store sales increased 23% year over year. The company has seen strong sales in men’s and women’s and children’s apparel and accessories.

Total retail margin expanded 470 basis points to 47.3% compared to the same quarter last year. The increase can be attributed to improved consumer demand and better inventory management, which led to lower write-offs in the first quarter of the fiscal year. On a consolidated basis, gross margin of 46.5% reflects an improvement of 480 basis points from 41.7% in the prior year quarter.

Dillard SG&A consolidated expenses (as a percentage of sales) contracted 40 basis points to 24.9% from 25.3% in the prior year quarter. In dollar terms, SG&A (operating expenses) grew 19.1% to $400.8 million.

Retail operating expenses contracted 60 basis points to 25.2%. In dollar terms, retail operating expenses grew 19% to $398.9 million due to higher payroll and payroll-related expenses amid the current competitive pay environment.

Zacks’ No. 3 (Hold) stock has gained 28.6% in the past three months versus the industry’s 9.7% decline.


Image source: Zacks Investment Research

Financial details

Dillard closed the quarter in cash and cash equivalents of $862.2 million, long-term debt of $321.3 million, and total equity of $1,512.3 million. The company generated $365.2 million in cash from operating activities.

In the first quarter of fiscal year 2022, it repurchased $186.5 million of shares of Class A common stock under its existing stock buyback program. As of April 30, 2022, Dillard had a mandate of $425.5 million remaining under the February 2022 plan.

Store update

This quarter, Dillards opened a 160,000-square-foot store at University Place in Orem, Utah, which will replace the 200,000-square-foot Provo Town Center store in the same market. In the fall of 2022, it plans to replace the Westgate Mall store in a rented building in Amarillo, Texas. The store will be replaced by a newly renovated owned facility. It also closed a customs clearance center located on the University Mall in Tampa, Florida.

However, DDS currently operates 251 full Dillards stores and 29 clearance stores in 29 states and on dillards.com.

stock to consider

Here are three best rated stocks to consider – Ross Stores (Roast free report), ring jewelry (SIG free report) and Target company (TGT free report).

Ross Stores operates as a retailer of clothing and home accessories, primarily in the United States. It currently has a Zacks rating of #2 (Buy). ROST posted a surprise fourth-quarter profit of 33.3% on average. you can see The full list of Zacks #1 stocks (strong buy) today is here.

Zacks Consensus’ estimate for current fiscal year sales for Ross Stores and EPS suggests growth of 5% and 3.9%, respectively, compared to the numbers reported in the same period last year.

Signet Jewelers, a retailer of jewelry, watches, and more, has a Zacks rating of #2. SIG posted a surprise fourth-quarter profit of 73.8% on average.

Although the Zacks consensus estimate for Signet Jewelers’ current fiscal year sales points to 5.2% growth, earnings per share reflect an 8.2% drop, respectively, from figures reported in the same period last year.

Target, which provides a range of merchandise ranging from home essentials and electronics to toys and apparel for men, women, and children, currently holds Zacks rating of No. 2. TGT posted a surprise fourth-quarter profit of 21.3% on average.

Zacks’ consensus estimate of Target’s sales for the current fiscal year and earnings per share are 3.7% and 7.3%, respectively, from figures reported in the same period last year.

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