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Dillard's (DDS) Stock Up on Q3 Earnings Beat, Sales Rise Y/Y

Dillard's Inc. DDS reported impressive third-quarter fiscal 2021 results, wherein the bottom and top lines surpassed the Zacks Consensus Estimate and advanced year over year. Results gained from the continued momentum in consumer demand, which somewhat offset global supply-chain issues, including shipping delays and disruptions in the transportation network. Strength in children's apparel as well as men's wear and accessories bode well.

Shares of Dillard's gained 10% during the close of the trading session on Nov 11. Shares of this Zacks Rank #3 (Hold) company have skyrocketed 66.1% in the past three months compared with the industry's growth of 33.7%.

 

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Q3 Details

Dillard's adjusted earnings of $9.81 per share surpassed the Zacks Consensus Estimate of $1.93. The bottom line surged more than six-fold from the year-ago quarter's figure of $1.49 per share. The uptick can be attributed to robust sales, improved margins and lower expenses.

Net sales of $1,481 million rallied 44.5% from the prior-year quarter and beat the Zacks Consensus Estimate of $1,267 million. Total retail sales (excluding CDI Contractors, LLC) advanced 47% year over year to $1,460.2 million. Total retail sales increased 9% from the third quarter of fiscal 2019. Comparable store sales increased 48% year over year and 12% from the third quarter of fiscal 2019. The solid performance in children's apparel as well as men's apparel and accessories contributed to quarterly growth.

Retail gross margin improved significantly to 46.7% from 36.6% in the year-ago quarter and expanded 1,221 basis points (bps) from 34.5% in the third 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 third quarter. On a consolidated basis, the gross margin of 46.2% reflects a sharp improvement from 35.7% in the prior-year quarter.

Dillard's consolidated SG&A expenses (as a percentage of sales) contracted 450 bps to 26.5% from the prior-year quarter's 31%. In dollar terms, SG&A expenses (operating expenses) grew 23.6% to $393.2 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 442 bps to 26.8% on a two-year basis. In dollar terms, operating expenses fell 6% to $391.5 million.

Financial Details & Liquidity

Dillard's ended the quarter with cash and cash equivalents of $619.7 million, long-term debt and finance leases of $366 million, and total shareholders' equity of $1,564.2 million. The company generated $728 million of cash from operating activities in the nine months ending Oct 30, 2021.

In the nine months ended Oct 30, 2021, the company bought back 2.6 million shares worth $410.3 million, while it repurchased 1.2 million shares worth $239.2 million in the fiscal third quarter under its March 2018 and May 2021 share repurchase program. With this, Dillard's completed all share repurchases under its earlier share repurchase plan announced in March 2018. As of Oct 30, it had $262.9 million authorization left under its May 2021 plan.

Dillard's, Inc. Price, Consensus and EPS Surprise

 

Dillard's, Inc. price-consensus-eps-surprise-chart | Dillard's, Inc. Quote

Store Update

In the fiscal third quarter, Dillard's opened its store at Mesa Mall in Grand Junction, CO and closed its leased clearance center in Harlingen, TX. It currently operates 250 full-line stores and 30 clearance stores in 29 states and on dillards.com.

Upcoming Earning Releases in the Industry

Bath & Body Works, Inc. BBWI is slated to report earnings on Nov 17, 2021. The company is expected to register a bottom-line decline when it reports third-quarter 2021 results. The Zacks Consensus Estimate for third-quarter earnings per share has been unchanged in the past 30 days at 59 cents. The figure suggests a slump of 47.8% from the year-ago quarter's reported number.

Bath & Body Works' top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1,598 million, suggesting a decrease of 47.7% from the figure reported in the prior-year quarter. BBWI presently carries a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

DICK'S Sporting Goods DKS is slated to report earnings on Nov 23, 2021. The company is anticipated to register a bottom-line decline when it reports third-quarter fiscal 2021 earnings. Although the consensus mark for quarterly earnings has moved up 3.9% in the last 30 days to $1.88 per share, it projects a 6.5% dip from the year-ago quarter's reported number.

That said, DICK'S Sporting's top line is expected to rise year over year. The consensus mark for quarterly revenues is pegged at $2,422 million, which suggests slight growth of 0.4% from the figure reported in the prior-year quarter. DKS presently carries a Zacks Rank #3.

Ulta Beauty, Inc. ULTA is slated to report earnings on Dec 2, 2021. The company is expected to register an increase in the bottom line when it reports third-quarter fiscal 2021 numbers. Although the Zacks Consensus Estimate for quarterly earnings moved down by a penny in the last 30 days to $2.39 per share, it projects a 45.7% jump from the year-ago quarter's reported number.

Ulta Beauty's top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1,886 million, suggesting a rise of 21.5% from the figure reported in the prior-year quarter. ULTA presently carries a Zacks Rank #3.


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