Dillard's (DDS 0.30%), a well-known U.S. department store chain, released its earnings report for its fiscal third quarter on Nov. 14. The company surprised analysts by reporting earnings per share (EPS) of $7.73, surpassing expectations of $6.50 by 18.9%. However, revenue of $1.427 billion was slightly below the analysts' forecast of $1.434 billion.
| Metric | Fiscal Q3 2024 Result | Fiscal Q3 2024 Analysts' Estimate | Fiscal Q3 2023 Result | % Change YOY |
|---|---|---|---|---|
| Diluted EPS | $7.73 | $6.50 | $7.98 | (3.1%) |
| Total revenue | $1.427 billion | $1.434 billion | $1.476 billion | (4.2%) |
| Total retail sales | $1.356 billion | — | $1.409 billion | (3.8%) |
| Net income | $124.6 million | — | $155.3 million | (19.8%) |
Source: Analyst estimates for the quarter provided by FactSet.
About Dillard's
Dillard's is a popular department store chain that focuses on upscale products. It offers a wide array of clothing, cosmetics, and home goods. It uses private-label and exclusive brands like Antonio Melani and Gianni Bini to stand out. The retailer's commitment is towards creating a unique shopping experience with competitive pricing.
Recently, Dillard's has focused on several strategic initiatives to boost its competitive position. These included transitioning its credit card program from Wells Fargo to Citibank, and enhancing its holiday season merchandise strategy. Seasonal sales remain a key factor for the company's success.
Quarterly Highlights
During the fiscal third quarter, which ended Nov. 2, Dillard's demonstrated a robust earnings performance but failed to maintain revenue growth. Its diluted EPS outperformed expectations significantly, reporting $7.73 against an estimated $6.50. However, the retailer's total retail sales declined by 3.8% year over year, reflecting ongoing pressures in consumer spending and intense competition. Notably, cosmetics performed strongly, while categories such as juniors', children's, and men's apparel were soft.
Operating expenses decreased slightly from $421.8 million to $418.9 million, helping offset some sales pressures. Despite this, net income for the quarter was $124.6 million, down from $155.3 million in the prior-year period. Gross margin dipped from 45.3% to 44.5%. In addition, Dillard's reported an inventory increase of 3%, anticipating demand fluctuations during the key holiday shopping season.
Looking Ahead
The company did not detail specific financial guidance. However, management has indicated a strategic emphasis on margin management and maintaining a strong balance sheet. This focus will be crucial as it attempts to navigate the unpredictable retail market. CEO William T. Dillard II highlighted the importance of excellent customer service and maintaining competitive pricing going into the holiday season. Investors and analysts should keep a close eye on its holiday season sales performance and ongoing inventory management strategies.
