Dillard's (DDS) Rises as Q2 Earnings & Sales Beat Estimates
Dillard's Inc. DDS reported second-quarter fiscal 2021 results, wherein the bottom and top lines surpassed the Zacks Consensus Estimate and advanced year over year. Results gained from continued momentum in consumer demand throughout the fiscal second quarter. This along with the continued focus on inventory management and expense control led to sequential growth in the quarter.
Shares of Dillard’s gained 5.1% on Aug 12, following strong second-quarter fiscal 2021 results. In the past three months, shares of this Zacks Rank #3 (Hold) company have advanced 52.8% compared with the industry’s growth of 5.5%.
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Q2 Details
Dillard's adjusted earnings of $8.81 per share surpassed the Zacks Consensus Estimate of $2.45. The bottom line compared favorably with the year-ago quarter’s loss of 37 cents per share. The uptick can be attributable to robust sales, improved margins and lower expenses.
Net sales of $1,570.4 million surged 70.9% from the prior-year quarter and beat the Zacks Consensus Estimate of $1,258 million. Total retail sales (excluding CDI Contractors, LLC) skyrocketed 72.3% year over year to $1,539.4 million. Total retail sales increased 12% from the second quarter of fiscal 2019. Solid performance in ladies’ apparel and shoes contributed to quarterly growth. Comparable store sales increased 14% from the second quarter of fiscal 2019.
Retail gross margin improved significantly to 41.7% from 31.1% in the year-ago quarter and rose 1,299 basis points (bps) from 28.7% in the second 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 second quarter. On a consolidated basis, gross margin of 41% reflects a sharp improvement from 30.4% in the prior-year quarter.
Dillards, Inc. Price, Consensus and EPS Surprise
Dillards, Inc. price-consensus-eps-surprise-chart | Dillards, Inc. Quote
Dillard's consolidated SG&A expenses (as a percentage of sales) contracted 580 bps to 23.3% from the prior-year quarter’s 29.1%. In dollar terms, SG&A expenses (operating expenses) grew roughly 37% to $365.9 million. The decline was driven by lower payroll and payroll-related expenses as the company operates with reduced operating hours and fewer associates. The retail operating expense rate declined 591 bps to 23.7%. In dollar terms, operating expenses fell 10.6% year over year to $364.2 million.
Financial Details & Liquidity
Dillard’s ended the quarter with cash and cash equivalents of $669.5 million, long-term debt and finance leases of $365.9 million, and total shareholders’ equity of $1,609.6 million.
In the six months ended Jul 31, 2021, the company generated $492.4 million of cash from operating activities. It bought back 0.7 million shares worth $112.2 million in the fiscal second quarter, under its $500-million repurchase program announced in March 2018. As of Jul 31, it had $2.1 million authorization left under the aforementioned program.
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