Shares of Dillard's Inc. DDS have jumped more than 2%, following the impressive third-quarter fiscal 2022 results. The bottom and top lines surpassed the Zacks Consensus Estimate and advanced year over year. This marked the seventh straight quarter of a top and bottom-line beat. Results gained from the continued momentum in consumer demand.
Adjusted earnings of $10.96 per share significantly surpassed the Zacks Consensus Estimate of $4.87. The bottom line rose 11.7% from the year-ago quarter's $9.81 per share.
Total revenues of $1,544 million increased 4.3% from the prior-year quarter and beat the Zacks Consensus Estimate of $1,490 million. However, the figure came below our estimate of $2,100.7 million.
Total retail sales (excluding CDI Contractors, LLC) advanced 3% year over year to $1,499 million . Comparable store sales rose 3% year over year. The company witnessed robust sales in cosmetics, men’s apparel and accessories, home and furniture, and shoes. On the flip side, juniors’ and children’s apparel was the weakest performing category.
The retail gross margin contracted 100 basis points (bps) to 45.7% from the year-ago quarter. On a consolidated basis, the gross margin of 44.6% reflects a 160-bps contraction from 46.2% in the prior-year quarter.
Dillard's consolidated SG&A expenses (as a percentage of sales) expanded 30 bps to 26.8% from the prior-year quarter's 26.5%. In dollar terms, SG&A expenses (operating expenses) grew 5.2% to $413.8 million.
The retail operating expense rate expanded 70 bps to 27.5%. In dollar terms, retail operating expenses grew 5.2% to $411.9 million due to elevated payroll and payroll-related expenses amid the current competitive and inflationary wage environment.
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Shares of DDS have gained 9.6% in the past three months against the industry's decline of 2.8%.
Dillard's ended the quarter with cash and cash equivalents of $532.7 million, long-term debt of $321.3 million, and total shareholders' equity of $1,609.4 million. The company provided $558.4 million of cash through operating activities. Capital expenditure for fiscal 2022 is likely to be $130 million, up from year ago reported figure of $104 million.
In third-quarter fiscal 2022, it repurchased $24.3 million worth of Class A common stock under its existing repurchase program. As of Oct 29, 2022, Dillard's had $175.4 million authorization left under its February 2022 plan.
The Zacks Rank #2 (Buy) stock closed stores in Sikes Senter in Wichita Falls, TX, and East Hills Mall in St. Joseph, MO, in the third quarter. Also, it recently opened its store in Westgate Mall in Amarillo, TX. That said, DDS currently operates 249 full-line Dillard’s stores, and 28 clearance stores in 29 states and on dillards.com.
Dillard's, Inc. Price, Consensus and EPS Surprise
Dillard's, Inc. price-consensus-eps-surprise-chart | Dillard's, Inc. Quote
For fiscal 2022, Dillard’s expects depreciation and amortization to be $190 million compared to prior year’s reported figure of $199 million. Net interest expense is likely to be $32 million compared with $43 million reported in the earlier year.
Other Stocks to Consider
Here are three other top-ranked stocks to consider — Wingstop WING, Kroger KR and Chipotle Mexican Grill CMG.
Wingstop currently sports a Zacks Rank #1 (Strong Buy). WING has a long-term earnings growth rate of 11%. Shares of WING have declined 9.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the year-ago period’s reported levels.
Kroger, a renowned grocery retailer, currently carries a Zacks Rank #2. KR has an expected EPS growth rate of 11.7% for three to five years.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 7.8% and 9.8%, respectively, from the year-ago reported figures. KR has a trailing four-quarter earnings surprise of 15.7%, on average.
Chipotle Mexican Grill, an operator of fast-casual restaurants, currently carries a Zacks Rank #2. The expected EPS growth rate of the company for three to five years is 23.4%.
The Zacks Consensus Estimate for Chipotle Mexican Grill’s current financial-year revenues and EPS suggests growth of 15.2% and 30.8%, respectively, from the year-ago reported figures. CMG has a trailing four-quarter earnings surprise of 4.1%, on average.
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