Dillard's (DDS) Customer Base & Fashion Foresight Fuel Growth
Dillard’s, Inc. DDS is actively expanding its customer base through strategic initiatives in physical stores and e-commerce. The company focuses on enhancing brand relationships, remodeling stores and optimizing its activewear segment.
The retailer stands out for its fashionable and trendy merchandise offerings. Dillard’s wide array of products from national and exclusive brands caters to the latest fashion trends. The commitment to offering fashion-forward products supports the company's strategy to attract and retain a diverse customer base.
Dillard's has also demonstrated remarkable efficiency in inventory management — a crucial aspect of retail success. By the end of the third quarter of fiscal 2023, the company reported a modest 1% year-over-year decline in inventory levels.
Driven by these factors, the Zacks Rank #3 (Hold) stock has outperformed the industry in the past year. DDS has rallied 26.9% against the industry’s growth of 11.3%. A VGM Score of B further speaks volumes for the stock.
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Financial Stability Bodes Well
Dillard's focuses on a strong balance sheet and liquidity, benefiting from lower rental costs for owning most of its properties. The company owns 90% of its retail stores, and 100% of its corporate headquarters, distribution and fulfillment facilities. Its long-term debt was stable at $547.6 million, and the times interest earned ratio improved significantly from 96 to 113.5 in the fiscal third quarter.
Additionally, Dillard's continues to prioritize shareholder value through share buybacks and regular dividends. In the third quarter of fiscal 2023, it repurchased $48 million worth of its Class A common stock and had $410.2 million remaining under its May 2023 plan.
Higher Expenses Create Hurdles
In the third quarter of fiscal 2023, Dillard's experienced an increase in its consolidated Selling, General, and Administrative (SG&A) expenses. These expenses, as a proportion of sales, rose 180 basis points year over year, reaching 28.6%.
In terms of dollar value, SG&A expenses, which include operating costs, went up 1.9% year over year to $421.8 million. This rise in operating expenses was primarily due to an increase in payroll and related costs.
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 Casey's General Stores, Inc. CASY, Abercrombie & Fitch Co. ANF and Deckers Outdoor Corporation DECK.
Casey's offers a comprehensive range of products and services to meet the needs of its customers. 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 Casey's current fiscal-year earnings and sales indicates growth of 7.8% and 0.3%, respectively, from the previous year’s reported figures. CASY has a trailing four-quarter average earnings surprise of 17.8%.
Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently flaunts a Zacks Rank #1. ANF delivered a 60.5% earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales implies growth of 13.3% from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 713%.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Deckers’ current fiscal-year earnings and sales indicates growth of 21.9% and 11.7%, respectively, from the previous year’s reported figures. DECK has a trailing four-quarter average earnings surprise of 26.3%.
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Dillard's, Inc. (DDS) : Free Stock Analysis Report
Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
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Casey's General Stores, Inc. (CASY) : Free Stock Analysis Report
