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Dillard's (DDS) to Report Q1 Earnings: Is a Beat in Store?

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Dillard’s, Inc. DDS is expected to register year-over-year growth in the top and bottom lines when it reports first-quarter fiscal 2021 numbers. The company’s efforts to manage inventory levels and reduce operating expenses in light of the pandemic-led environment have been aiding the bottom line. The Zacks Consensus Estimate for revenues of $1.21 billion indicates 53.9% growth from the year-ago reported figure.

The Zacks Consensus Estimate for fiscal first-quarter earnings is pegged at $1.20 per share, indicating growth of 117.3% from the year-ago quarter’s reported number. However, the consensus estimate has moved down 26.8% in the past 30 days.

We note that in the trailing four quarters, the company’s bottom line outperformed the Zacks Consensus Estimate by 10.9%, on average.

Key Factors to Note

Despite the decline in sales, Dillard’s has been witnessing a strong earnings growth trend, owing to margin improvement and lower expenses. Notably, the company’s initiatives to control inventory and expenses throughout the uncertain pandemic-led environment have been contributing to bottom-line gains in the past three quarters. The trend is expected to have continued in the fiscal first quarter.

Dillard’s has been keen on inventory management since the start of the pandemic through measures like cancellation, suspension and delaying of shipments as well as merchandise purchase reduction. The aggressive measures to lower excess inventory, owing to the pandemic-led decline in demand, have proved beneficial for the company’s margins. The reduced total merchandise purchases have led to a decline in overall inventory levels in the past four quarters. The continued implementation of the measures is likely to have aided margins in the fiscal first quarter.

Dillards, Inc. Price and EPS Surprise

Dillards, Inc. Price and EPS Surprise
Dillards, Inc. Price and EPS Surprise

Dillards, Inc. price-eps-surprise | Dillards, Inc. Quote

Additionally, the company is expected to have witnessed reduced expenses in the fiscal first quarter, owing to various steps like the extension of vendor payment terms, and the reduction of discretionary and capital expenditure as well as payroll. The measures helped reduce operating expenses by $123 million in the fourth quarter of fiscal 2020, thus, aiding the bottom line and operating margin.

However, Dillard’s has been witnessing soft top-line trends due to losses from soft retail traffic trends as well as reduced store operating hours due to the pandemic.

What the Zacks Model Suggests

Our proven model conclusively predicts an earnings beat for Dillard’s this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Dillard’s currently has a Zacks Rank #2 and an Earnings ESP of +6.49%.

3 Other Stocks With Favorable Combination

Here are three more companies that you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat in their upcoming releases:

Abercrombie & Fitch Company ANF has an Earnings ESP of +22.92% and it currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Macy’s, Inc. M presently has an Earnings ESP of +28.60% and a Zacks Rank #2.

Target Corporation TGT currently has an Earnings ESP of +7.42% and a Zacks Rank #2.

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Target Corporation (TGT) : Free Stock Analysis Report

Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

Macys, Inc. (M) : Free Stock Analysis Report

Dillards, Inc. (DDS) : Free Stock Analysis Report

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