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Dillard's (DDS) Q4 Earnings & Sales Beat on Robust Demand

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Dillard's Inc. DDS reported impressive fourth-quarter fiscal 2021 results, wherein the bottom and top lines surpassed the Zacks Consensus Estimate and advanced year over year. This marked the fourth straight quarter of the top and bottom-line beat. Results gained from the continued momentum in consumer demand and better inventory management.

Dillard's adjusted earnings of $15.68 per share have significantly surpassed the Zacks Consensus Estimate of $8.75. The bottom line surged more than four-fold from the year-ago quarter's figure of $3.43 per share. The uptick can be attributed to robust sales, improved margins and lower operating expenses as a percentage of sales.

Total revenues of $2,153.4 million increased 33.4% from the prior-year quarter and beat the Zacks Consensus Estimate of $2,016 million. Total retail sales (excluding CDI Contractors, LLC) advanced 36.6% year over year to $2,078 million. Comparable store sales increased 37% year over year and 12% from the fourth quarter of fiscal 2019. The company witnessed robust sales in the cosmetics and juniors' and children's apparel, which outperformed the other categories, compared with the fourth quarter of fiscal 2019.

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

The retail gross margin expanded 950 basis points (bps) to 41.4% from the year-ago quarter and improved 1,116 bps from 30.2% in the fourth quarter of fiscal 2019. The increase can be attributed to improved consumer demand and better inventory management, which led to lower markdowns in the fiscal fourth quarter. On a consolidated basis, the gross margin of 40.8% reflects a 970-bps improvement from 31.1% in the prior-year quarter.

Dillard's consolidated SG&A expenses (as a percentage of sales) contracted 50 bps to 20.9% from the prior-year quarter's 21.4%. In dollar terms, SG&A expenses (operating expenses) grew 31.3% to $440.9 million.

The retail operating expense rate declined 320 bps to 21.1% on a two-year basis. The decline from the fiscal 2019 period was driven by lower payroll and payroll-related expenses as the company operates with reduced operating hours and fewer associates. In dollar terms, retail operating expenses fell 3.9% to $439 million.

Shares of the Zacks Rank #3 (Hold) company have skyrocketed 193.2% in the past year compared with the industry's growth of 43.4%.

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Financial Details & Liquidity

Dillard's ended fiscal 2021 with cash and cash equivalents of $716.8 million, long-term debt and finance leases of $321.3 million, and total shareholders' equity of $1,451.2 million. The company generated $1,280 million of cash from operating activities in fiscal 2021.

In fiscal 2021, Dillard’s returned $866 million to shareholders through dividends and share buyback. In fourth-quarter fiscal 2021, it repurchased 0.6 million shares for $150.8 million under its May 2021 share repurchase program, bringing the total buybacks for fiscal 2021 to 3.2 million shares for $561.1 million. As of Jan 29, 2022, Dillard's had $112 million authorization left under its May 2021 plan.

Store Update

In mid-March 2022, Dillard's plans to open a 160,000-square-feet store at University Place in Orem, UT, which will replace the 200,000-square-feet Provo Towne Centre store in the same market. In the fall of 2022, it plans to replace the Westgate Mall store in Amarillo, TX, which is located in a leased building. This store will be replaced with a newly remodeled owned facility. It currently operates 250 full-line Dillard’s stores and 30 clearance stores in 29 states and on dillards.com.

Stocks to Consider

We have highlighted three better-ranked stocks in the Retail - Wholesale sector, namely Build-A-Bear Workshop BBW, Fastenal FAST and Tractor Supply Co. TSCO.

Build-A-Bear, a multi-channel retailer of plush animals and related products, currently sports a Zacks Rank #1 (Strong Buy). Shares of BBW have rallied 178.8% in the past year.

You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Build-A-Bear's current financial-year sales and earnings per share suggests growth of 61.2% and 326.2%, respectively, from the year-ago period's reported figures. BBW has a trailing four-quarter earnings surprise of 261.4%, on average.

Fastenal, a national wholesale distributor of industrial and construction supplies, currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 3.3%, on average. Shares of FAST have risen 9.3% in the past year.

The Zacks Consensus Estimate for Fastenal's current financial-year sales and earnings per share suggests growth of 12.6% and 11.9%, respectively, from the year-ago period. FAST has an expected EPS growth rate of 9% for three-five years.

Tractor Supply, the largest retail farm and ranch store chain in the United States, currently has a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 22%, on average. Shares of TSCO have rallied 24.5% in the past year.

The Zacks Consensus Estimate for Tractor Supply’s current financial-year sales and earnings per share suggests growth of 8.2% and 6.3%, respectively, from the year-ago period. TSCO has an expected EPS growth rate of 9.8% for three-five years.


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

Fastenal Company (FAST) : Free Stock Analysis Report

Tractor Supply Company (TSCO) : Free Stock Analysis Report

BuildABear Workshop, Inc. (BBW) : Free Stock Analysis Report

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