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Dillard's (DDS) Stock Gains on Q2 Earnings & Sales Beat

·4-min read

Shares of Dillard's Inc. DDS have jumped more than 12%, following the impressive second-quarter fiscal 2022 results. The bottom and top lines surpassed the Zacks Consensus Estimate and advanced year over year. This marked the sixth straight quarter of the top and bottom-line beat. Results have gained from the continued momentum in consumer demand.

Adjusted earnings of $9.30 per share have significantly surpassed the Zacks Consensus Estimate of $2.88. The bottom line rose 5.6% from the year-ago quarter's $8.81 per share.

Total revenues of $1,589 million increased 1.2% from the prior-year quarter and beat the Zacks Consensus Estimate of $1,554 million. Total retail sales (excluding CDI Contractors, LLC) advanced 1% year over year to $1,553 million. Comparable store sales remained flat year over year. The company witnessed robust sales in cosmetics, men’s apparel and accessories.

The retail gross margin contracted 20 basis points (bps) to 41.5% from the year-ago quarter. On a consolidated basis, the gross margin of 40.8% reflects a 20-bps improvement from 41% in the prior-year quarter.

Dillard's consolidated SG&A expenses (as a percentage of sales) expanded 200 bps to 25.3% from the prior-year quarter's 23.3%. In dollar terms, SG&A expenses (operating expenses) grew 9.7% to $401.3 million.

The retail operating expense rate expanded 200 bps to 25.7%. In dollar terms, retail operating expenses grew 9.7% to $399.5 million due to elevated payroll and payroll-related expenses amid the current competitive wage environment.

 

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Shares of DDS have lost 12.2% in the past three months but came ahead of the industry's decline of 18.9%.

Financial Details

Dillard's ended the quarter with cash and cash equivalents of $492.9 million, long-term debt of $321.3 million, and total shareholders' equity of $1,449 million. The company provided $279.1 million of cash by operating activities.

In second-quarter fiscal 2022, it repurchased $225.8 million worth of Class A common stock under its existing repurchase program. As of Jul 30, 2022, Dillard's had $199.7 million authorization left under its February 2022 plan.

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

 

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

Dillard's, Inc. price-consensus-eps-surprise-chart | Dillard's, Inc. Quote

Store Update

In the quarter, the Zacks Rank #4 (Sell) stock revealed plans to close stores in Sikes Senter in Wichita Falls, TX, and East Hills Mall in St. Joseph, MO, in the third quarter. Also, it will open its new store in The Empire Mall in Sioux Falls, SD, in fall 2023. That said, DDS currently operates 250 full-line Dillard’s stores, and 29 clearance stores in 29 states and on dillards.com.

Stocks to Consider

Here are three better-ranked stocks to consider — Dollar Tree DLTR, Costco Wholesale COST and Kroger KR.

Dollar Tree, a discount variety retail store operator, currently has a Zacks Rank #2 (Buy). DLTR has an expected EPS growth rate of 15.5% for three to five years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Dollar Tree’s current financial-year sales and EPS suggests growth of 6.7% and 40.5%, respectively, from the year-ago period’s actuals. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average.

Kroger, which provides an array of goods ranging from household essentials, groceries and electronics to toys and apparel for men, women and kids, currently carries a Zacks Rank #2. KR has a trailing four-quarter earnings surprise of 22.1%, on average.

The Zacks Consensus Estimate for Kroger’s current financial-year sales and EPS suggests growth of 3.2% and 4.1%, respectively, from the year-ago period’s reported figures. KR has an expected EPS growth rate of 9.9% for three-five years.

Costco, which sells high volumes of foods and general merchandise at discounted prices through membership warehouses, currently carries a Zacks Rank #2. COST has a trailing four-quarter earnings surprise of 9.7%, on average.

The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS suggests growth of 15.4% and 18.2%, respectively, from the year-ago period’s reported figures. COST has an expected EPS growth rate of 9.2% for three-five years.


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Dillard's, Inc. (DDS) : Free Stock Analysis Report
 
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