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Factors Likely to Influence Dillard's (DDS) Q1 Earnings

Zacks Equity Research

Dillard’s, Inc. DDS is expected to report a year-over-year decline in the bottom line when it reports first-quarter fiscal 2020 numbers. Notably, higher SG&A and operating expenses have led to year-over-year earnings declines over the past few quarters. However, we note that in the trailing four quarters, the company’s bottom line outperformed the Zacks Consensus Estimate by 1.8%, on average.

The Zacks Consensus Estimate for first-quarter earnings has deteriorated to a loss of 90 cents from earnings of 72 cents over the past 30 days. Moreover, this suggests a significant decrease from earnings of $2.77 reported in the year-ago quarter. Also, the Zacks Consensus Estimate for revenues is pinned at $1,032 million, indicating a 29.6% decline from the year-ago quarter’s reported figure.

Key Factors to Note

Dillard’s has been grappling with elevated SG&A and retail operating expenses, which are likely to have affected the company’s bottom line in the first quarter of fiscal 2020. Moreover, it has been witnessing sluggishness in comparable sales. Additionally, the company’s fiscal first-quarter results might reflect the impacts of store closures due to the coronavirus outbreak.

Nevertheless, Dillard’s strategies like the enhancement of merchandise assortments and effective inventory management have been acting as growth drivers for the e-commerce business. Also, initiatives to enhance brand relations, focus on in-trend categories, store remodeling and increased rewards to store personnel bode well.

Further, it is on track to offer activewear merchandise as more and more consumers are switching to a health-conscious lifestyle. To this end, the company launched Antonio Melani Active, an activewear brand, inspired by the fitness-focused lifestyle and changing fashion trends. Such endeavors are likely to have provided some cushion to the top line in the quarter under review.

Dillards Inc Price and EPS Surprise

Dillards Inc Price and EPS Surprise

Dillards Inc price-eps-surprise | Dillards Inc Quote

Zacks Model

Our proven model does not conclusively predict 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Dillard’s carries a Zacks Rank #3, its Earnings ESP of -143.51% makes surprise prediction difficult.

3 Stocks With Favorable Combinations

Here are three companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Dollar General Corporation DG presently has an Earnings ESP of +1.25% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Big Lots BIG currently has an Earnings ESP of +18.72% and a Zacks Rank #3.

J. C. Penney Company JCP currently has an Earnings ESP of +6.86% and a Zacks Rank #3.

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