Dillard's (DDS) Q3 Earnings & Sales Miss; Stock Down 6.4%
Shares of Dillard's Inc. DDS dropped 6.4% yesterday after the company reported dismal third-quarter fiscal 2015 results. Both top and bottom lines declined year over year and fell short of expectations.
Dillard's quarterly adjusted earnings of $1.03 per share missed the Zacks Consensus Estimate of $1.15 and plunged 14.9% on a year-over-year basis. Including one-time items, earnings came in at $1.19 per share, down 8.5% from the prior-year quarter.
Dillard's Inc. (DDS) - Quarterly EPS | FindTheCompany
Dillard's total revenue (including service charges and other income) of $1,472.9 million slipped 1.8% from the year-ago quarter and came in below the Zacks Consensus Estimate of $1,487 million.
Dillard's net sales (including CDI Contractors LLC or CDI) dipped 1.7% year over year to $1,434.7 million in the reported quarter. Merchandise sales, excluding CDI, fell 2.8% to roughly $1,382 million. Merchandise comparable-store sales for the thirteen-week period ended Oct 31, 2015, dropped 4% from the comparable period ended Nov 1, 2014.
During the reported quarter, the outperforming categories were cosmetics, juniors' and children's apparel, and shoes and ladies' apparel. On the contrary, the home and furniture category remained quite weak, along with softness noted in the men's apparel and accessories, and ladies' accessories and lingerie categories. The best performing region was Eastern, trailed by the Western and Central areas, respectively.
Consolidated gross margin contracted 30 basis points (bps), while gross margin from retail operations (excluding CDI) expanded 11 bps. The difference in retail and consolidated gross margin was due to higher revenue at CDI, which involves lower margin operations.
Dillard's selling, general and administrative expenses (as a percentage of sales) escalated 60 bps to 28.8%, on account of higher payroll and insurance costs, somewhat offset by lower advertising expenses.
Financial Details
Dillard’s ended the third quarter of fiscal 2015 with cash and cash equivalents of $100.1 million, long-term debt and capital leases standing (excluding current portions) at $622.3 million, and total shareholders’ equity of $1,817.2 million.
During the first three quarters, the company generated net cash flow from operations of $83.3 million.
Further, during the quarter, Dillard's bought back 1.9 million shares for $174.6 million, with repurchases worth $117.5 million remaining under its existing authorization.
Store Update
As of Oct 31, 2015, Dillard’s had about 274 namesake outlets and 23 clearance centers operating in 29 states, and an online store at www.dillards.com. Dillard’s total square footage as of quarter end was 50.1 million.
Concurrently, the company announced the introduction of its 155,000-square-foot store at Liberty Center in Cincinnati, OH, and a new store spanning over 126,000 square feet, at Fremaux Town Center in Slidell, LA.
Zacks Rank
Currently, Dillard’s carries a Zacks Rank #3 (Hold). Better-ranked stocks in the retail sector include Casey's General Stores, Inc. CASY, sporting a Zacks Rank #1 (Strong Buy), American Eagle Outfitters, Inc. AEO and L Brands, Inc. LB, each with a Zacks Rank #2 (Buy).
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