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Bear of the Day: Dillard's, Inc. (DDS)

Benjamin Rains

Dillard's (DDS) posted worse-than-projected second-quarter results on August 15 as the department store chain’s struggles to adapt to the e-commerce and delivery age remain. DDS shares are now down over 26% in the last 12 months and Dillard’s outlook doesn’t appear as though it will help boost investor confidence.

Second Quarter

Dillard's posted an adjusted quarterly loss of $1.74 per share last week. This marked a massive downturn from the year-ago period’s loss and came in far below our Zacks Consensus Estimate that called for a loss of $0.66. Meanwhile, DDS Q2 revenues slipped roughly 3%, while comparable store sales dipped 2%.

Investors should also note that the company did not even provide any positive management updates or quotes in its latest quarterly press release. In fact, Dillard’s provided almost no guidance whatsoever, which is hardly a good sign. The Little Rock, Arkansas-based company’s rough second quarter is part of ongoing disappointment from fellow department stores such as Macy’s (M), J.C. Penney (JCP) and Nordstrom (JWN).

 

 

 

 

DDS Overview

We can see that Dillard’s sales have slipped in recent years amid a quickly changing retail landscape. DDS executives have focused on trying to reward shareholders with buybacks and dividends instead. The company bought back roughly 0.8 million shares during Q2 for a total $48.9 million, under its $500-million repurchase program.

As we mentioned at the top, DDS stock has tumbled recently. Shares of DDS are down roughly 6% in 2019. But this actually comes in far better than the broader department store market’s 38% average decline. The chart below, however, shows just how terrible the last five years have been for Dillard’s, especially against the larger retail market’s impressive climb.

 

 

 

 

Outlook & Earnings Trends

Moving on, the company’s third-quarter revenue is projected to fall approximately 4% to $1.40 billion, with full-year fiscal 2019 revenue expected to sink 2.5%. Peeking further down the road, the company’s 2020 revenue is projected to fall 0.50% below our current-year estimate.

Dillard’s earnings estimates appear even worse at the moment. The company’s adjusted Q3 earnings are projected to tumble from positive $0.27 a share in the year-ago period to a loss of $0.21 per share. The firm’s full-year EPS figure is also expected to sink 42%, with 2020 projected to come in 9.4% below our current-year estimate. Investors will also see just how much worse its earnings estimate picture has turned.

 

 

 

 

Bottom Line

Dillard’s is a Zacks Rank #5 (Strong Sell) at the moment that investors should probably avoid until it shows some signs of a comeback. DDS also holds an “F” grade for Growth in our Style Scores system and a “D” for Momentum.

Investors still interested in the broader retail space might instead turn to #2 (Buy)-ranked Columbia Sportswear (COLM) and other non-department store players.

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Macy's, Inc. (M) : Free Stock Analysis Report
 
Nordstrom, Inc. (JWN) : Free Stock Analysis Report
 
J. C. Penney Company, Inc. (JCP) : Free Stock Analysis Report
 
Dillard's, Inc. (DDS) : Free Stock Analysis Report
 
Columbia Sportswear Company (COLM) : Free Stock Analysis Report
 
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