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Dilliard's to Boost Shareholder Value

Zacks Equity Research

In an effort to boost shareholders’ value, Dillard's Inc. (DDS) announced a cash dividend of 6 cents per share on its Class A and B shares and an additional share buyback program. The dividend will be paid on Feb 3, 2014 to stockholders of record as of Dec 31, 2013.

The board also authorized an additional $250 million share repurchase program on its Class A shares through either open market purchases or private agreements. The company as of Nov 2 had $40.4 million remaining under its existing share repurchase authorization of $250 million passed by management in Mar 2013.

Recently, this leading fashion apparel and cosmetics retailer reported strong third-quarter earnings that benefited from positive comparable store sales combined with prudent cost control measures and increased share buybacks.

Third-quarter adjusted earnings per share of $1.13 grew 17.7% from 96 cents reported in the prior-year quarter and surpassed the Zacks Consensus Estimate of $1.00.

The company’s total revenue (including service charges and other income) of $1,506.9 million reflected a marginal increase of 1.4% from $1,486.3 million reported in the year-ago quarter and was above the Zacks Consensus Estimate of $1,497 million.

During the quarter, Dillard’s bought back 2.4 million shares worth about $186.9 million, at a price of $77.80 per share.

Going forward, this home furnishing retailer remains positive, based on its strong performance over the last several quarters. We expect it to continue posting earnings and revenue growth in the upcoming quarters.

Moreover, the company expects to spend about $100 million toward capital expenditure in fiscal 2013, compared with $137 million incurred in fiscal 2012.

Dillard's offers a distinctive mix of name brand and private label merchandise, appealing to a broad range of customers. It currently holds a Zacks Rank #3 (Hold).

Other better-ranked stocks in the retail sector include Best Buy Co. Inc. (BBY), DSW Inc. (DSW) and Finish Line Inc. (FINL). All 3 companies carry a Zacks Rank #2 (Buy).

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