Group 1: Price Trends and Inflation - The implementation of new tariffs by the Trump administration is leading to noticeable price increases in various retail categories, particularly in footwear, apparel, and bags, with a trend of "tagged inflation" emerging [1][2] - DataWeave's analysis shows that footwear prices have risen by approximately 4%, with specific increases of 4.2% at Macy's, 3.1% at Nordstrom, and 2% at Dillard's [1] - Apparel prices have seen more moderate increases, with Dillard's at 2%, Macy's at 1.9%, and Nordstrom at 1.8% [1] Group 2: Supply Chain and Tariff Impact - The price increase is closely linked to the type of product and supply chain structure, with footwear heavily reliant on Chinese manufacturing, making it sensitive to tariff changes [2] - A survey by the Footwear Distributors and Retailers of America (FDRA) indicates that over half of the respondents expect retail prices to rise by 6% to 10% due to increased tariffs [2] - The American Apparel and Footwear Association (AAFA) has warned that new tariffs on back-to-school items could lead to price increases of 10% to 30% [2] Group 3: Trade Agreements and Future Implications - The recent trade agreement with Vietnam, imposing a 20% tariff on Vietnamese goods and up to 40% on "transshipped" products, poses a significant challenge for brands like Nike, Lululemon, and H&M that rely on Vietnamese manufacturing [3] - Vietnam is projected to surpass China as the largest supplier of footwear to the U.S. by 2025, with 274 million pairs of shoes imported in 2024, accounting for over half of the total sneaker imports [3] - The overall import costs are expected to rise significantly due to the combination of existing tariffs and the new agreement [3] Group 4: Consumer Behavior and Market Response - Retailers are beginning to pass on the price increases to consumers, with the National Retail Federation noting that the impact of tariffs is becoming evident on retail shelves [4] - The former CEO of Walmart highlighted that consumer choices will ultimately determine whether inflation trends will solidify, as consumers may opt for non-tariffed alternatives if prices rise [4] - Investment analysts are observing that core import prices have already increased, indicating that inflationary pressures are beginning to transmit through the supply chain [4]

Company Overview - Dillard's (DDS) shares increased by 7.8% to $450.49 in the last trading session, with a higher-than-average trading volume, compared to a 6.7% gain over the past four weeks [1] - The company is focusing on growth opportunities in both brick-and-mortar and e-commerce, enhancing its customer base and performance [2] Financial Performance - Dillard's is expected to report quarterly earnings of $3.47 per share, reflecting a year-over-year decline of 24.4%, while revenues are projected to be $1.51 billion, an increase of 1.2% from the previous year [3] - The consensus EPS estimate for Dillard's has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] Shareholder Returns - The company is committed to rewarding shareholders through share buybacks and dividend payouts, which is seen as a positive sign for future performance [2] Industry Context - Dillard's operates within the Zacks Retail - Regional Department Stores industry, where Macy's (M) also operates, having closed 5.7% higher at $12.33 in the last trading session [4] - Macy's has seen a significant change in its EPS estimate, dropping by 14.3% over the past month to $0.18, which is a 66% decrease from the previous year [5]

Financial Performance - Total retail sales declined by 2% and comparable store sales decreased by 1% compared to the prior year first quarter [58] - Net income for the three months ended May 3, 2025, was $163.8 million ($10.39 per share), down from $180.0 million ($11.09 per share) in the prior year [59] - Gross margin as a percentage of net sales decreased to 43.9% from 44.6% year-over-year [83] - Net sales from the retail operations segment decreased by $24.7 million, or approximately 2% [76] - The construction segment saw an increase in net sales of $4.5 million, or approximately 8% [79] - The number of sales transactions decreased by 3%, while the average dollars per sales transaction increased by 2% [77] Expenses and Cash Flow - Selling, general and administrative expenses decreased to $421.7 million (27.6% of sales) from $426.7 million (27.5% of sales) in the prior year [59] - Total Selling, General and Administrative Expenses (SG&A) decreased by $4.98 million to $421.69 million for the three months ended May 3, 2025, compared to $426.67 million for the same period in 2024, representing a 1.2% decrease [86] - SG&A as a percentage of net sales increased to 27.6% for the three months ended May 3, 2025, from 27.5% for the same period in 2024 [87] - Net cash provided by operating activities was $232.6 million, down from $244.4 million in the prior year [60] - Net cash flows from operations decreased by $11.75 million to $232.63 million for the three months ended May 3, 2025, compared to $244.38 million for the same period in 2024, primarily due to lower sales [92] - Capital expenditures were $16.9 million for the three months ended May 3, 2025, down from $35.2 million for the same period in 2024, primarily related to equipment purchases and store construction [97] Inventory and Store Operations - Total inventory increased by 6% as of May 3, 2025, compared to the previous year [85] - The company operated 272 stores, including 28 clearance centers, as of May 3, 2025 [61] Shareholder Actions - During the three months ended May 3, 2025, the Company repurchased 0.3 million shares of Class A Common Stock at an average price of $355.65 per share for a total of $98 million [102] Tax and Income - The estimated federal and state effective income tax rate for fiscal 2025 is expected to approximate 23% [91] - The Company recognized income of $5.9 million from the Citibank Alliance during the three months ended May 3, 2025, down from $11.6 million from the former Wells Fargo Alliance for the same period in 2024 [95] Strategic Focus and Market Conditions - The company is focusing on future income and cash flows from a new credit program with Citi [108] - There are plans for opening new stores while evaluating the closure of existing ones [108] - The company is managing costs amid inflation and trade restrictions, including tariffs [108] - Labor shortages and competition for talent are impacting the company's ability to meet labor needs [108] - Changes in consumer spending patterns and economic conditions are being closely monitored [108] - The company is assessing the impact of potential disruptions from global conflicts on consumer spending [108] - There have been no material changes in market risk disclosures since the last annual report [109]

Group 1 - The investment approach focuses on long-term investments while incorporating short-term shorts to uncover alpha opportunities [1] - The analysis is based on bottom-up evaluation, emphasizing the fundamental strengths and weaknesses of individual companies [1] - The goal is to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

Core Viewpoint - Dillard's has filed a lawsuit against Wells Fargo, claiming breach of a co-branded credit card agreement, resulting in significant financial losses for Dillard's [1][2]. Group 1: Lawsuit Details - Dillard's alleges that Wells Fargo's actions led to a loss of tens of millions of dollars due to the termination of their co-branded credit card relationship [1]. - The complaint states that Wells Fargo became an "unwilling and incapable partner" after regulatory issues arose, effectively abandoning the co-branded card market without notifying Dillard's [2]. Group 2: New Partnerships - In January 2024, Dillard's announced new credit card agreements with Citi and Mastercard, where Citi would acquire existing Dillard's credit card accounts and Mastercard would be the exclusive payment network for Dillard's co-branded cards [3]. - Dillard's President emphasized the importance of providing premium credit services to customers and expressed confidence in the new partnerships [4]. Group 3: Wells Fargo's Regulatory Challenges - Wells Fargo has faced ongoing regulatory issues since the "fake accounts" scandal in 2016, including an asset cap imposed by the Federal Reserve in 2018 [4]. - In April, Wells Fargo reported that the CFPB terminated a consent order related to its compliance risk management program, indicating progress in regulatory compliance [5].

Core Insights - Dillard's Inc. reported mixed results for the first quarter of fiscal 2025, with earnings per share exceeding estimates while net sales fell short of expectations [1][2] Financial Performance - Earnings per share (EPS) reached $10.39, surpassing the Zacks Consensus Estimate of $9.10, but declined 6.3% from $11.09 in the same quarter last year [2] - Net sales amounted to $1.529 billion, a decrease of 1.4% year over year, and below the consensus estimate of $1.540 billion [2] - Total retail sales, excluding CDI Contractors, decreased by 1.7% year over year to $1.468 billion, with comparable store sales (comps) dropping 1% [4] Margin Analysis - The consolidated gross margin contracted by 70 basis points to 43.9%, with retail gross margin at 45.5%, also reflecting a year-over-year decrease of 70 basis points [5] - Selling, general and administrative (SG&A) expenses as a percentage of sales were 27.6%, up 10 basis points from the prior year, while dollar terms saw a 1.2% decline to $421.7 million [6] Cash Flow and Share Repurchase - Dillard's ended the quarter with cash and cash equivalents of $900.5 million and long-term debt of $321.6 million, reporting $232.6 million in net cash from operating activities [8] - The company repurchased 276,000 shares for $98 million, with an average price of $355.65 per share, and has $175 million remaining under its share repurchase authorization [9] Future Outlook - For fiscal 2025, Dillard's expects depreciation and amortization expenses of $180 million and projects interest and debt income of $8 million [12]

Core Insights - Dillard's reported revenue of $1.53 billion for the quarter ended April 2025, a decrease of 1.3% year-over-year, and EPS of $10.39, down from $11.09 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $1.54 billion, resulting in a surprise of -0.74%, while the EPS exceeded expectations by 14.18% against a consensus estimate of $9.10 [1] Financial Performance Metrics - Comparable store sales for domestic retail decreased by 1% year-over-year, slightly better than the estimated decline of 1.4% [4] - Service Charges Interest and Other Income was reported at $18.10 million, significantly lower than the average estimate of $22.40 million, reflecting a year-over-year decline of 23.6% [4] - Dillard's stock has returned +27.6% over the past month, outperforming the Zacks S&P 500 composite's +9.8% change, and currently holds a Zacks Rank 3 (Hold) [3]

Financial Performance - Net income for the first quarter was $163.8 million, or $10.39 per share, down from $180.0 million, or $11.09 per share in the prior year[2] - Total net sales decreased to $1.529 billion from $1.549 billion, while total retail sales (excluding construction business) fell 2% to $1.468 billion[3][4] - Comparable store sales decreased by 1% during the same period[4] - Retail gross margin was 45.5% of sales, down from 46.2% in the previous year[5][6] - Operating expenses were $421.7 million, representing 27.6% of sales, slightly up from 27.5% in the prior year[5][8] - Inventory increased by 6% compared to the previous year[7] Stock and Investments - The company repurchased $98 million in stock, reducing total shares outstanding to 15.6 million[9] - Cash and short-term investments totaled $1.2 billion after stock repurchases[1] Store Operations - The company operates 272 stores across 30 states, totaling 46.3 million square feet[10] Capital Expenditures - Estimated capital expenditures for 2025 are projected at $120 million, up from $105 million in 2024[14] Risk Management and Economic Outlook - The company is monitoring potential impacts on consumer spending patterns and economic changes[16] - Risks and uncertainties are detailed in periodic reports filed with the SEC, particularly in the Annual Report on Form 10-K for the fiscal year ended February 1, 2025[16] - The company emphasizes the importance of understanding demographic changes that may affect its operations[16] - The company is committed to addressing risks outlined under "Item 1A, Risk Factors" in its annual filings[16] - Future strategies will be influenced by ongoing economic and demographic trends[16] - The company is focused on maintaining transparency regarding its financial health and risk management[16] - The company plans to adapt its business strategies in response to identified risks and uncertainties[16] - The company is actively engaged in assessing the potential impact of market changes on its performance[16] - The company will continue to provide updates on its financial outlook and risk factors in future reports[16] - The company is dedicated to ensuring accurate and timely communication with stakeholders regarding its financial status[16]

Group 1 - Dillard's reported quarterly earnings of $10.39 per share, exceeding the Zacks Consensus Estimate of $9.10 per share, but down from $11.09 per share a year ago, representing an earnings surprise of 14.18% [1] - The company posted revenues of $1.53 billion for the quarter ended April 2025, missing the Zacks Consensus Estimate by 0.74% and down from $1.55 billion year-over-year [2] - Dillard's shares have declined approximately 10.4% since the beginning of the year, contrasting with the S&P 500's gain of 0.2% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $3.15 on revenues of $1.51 billion, and for the current fiscal year, it is $28.01 on revenues of $6.55 billion [7] - The Zacks Industry Rank for Retail - Regional Department Stores is in the bottom 22% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Core Viewpoint - Dillard's, Inc. reported a relatively good first quarter despite economic uncertainty, maintaining expense control and a healthy gross margin while executing a significant stock repurchase program [1]. Financial Performance - Net income for the first quarter ended May 3, 2025, was $163.8 million, or $10.39 per share, down from $180.0 million, or $11.09 per share, in the same period last year [2]. - Net sales for the first quarter were $1.529 billion, a decrease from $1.549 billion in the prior year [3]. - Total retail sales, excluding the construction business, decreased by 2% to $1.468 billion compared to $1.493 billion in the previous year, with comparable store sales down by 1% [4]. Gross Margin - Consolidated gross margin for the first quarter was 43.9% of sales, down from 44.6% in the prior year [5]. - Retail gross margin was 45.5% of sales, compared to 46.2% in the same period last year, with declines noted in ladies' apparel and slight decreases in other categories [5]. Inventory and Expenses - Inventory increased by 6% as of May 3, 2025, compared to the previous year [6]. - Selling, general, and administrative expenses were $421.7 million, or 27.6% of sales, slightly down from $426.7 million, or 27.5% of sales, in the prior year, primarily due to reduced payroll expenses [7]. Share Repurchase - The company repurchased $98 million worth of Class A Common Stock, approximately 276,000 shares, at an average price of $355.65 per share, with $175 million remaining under the current repurchase program [10]. Store Operations - Dillard's operates 272 stores across 30 states, including 28 clearance centers, totaling 46.3 million square feet of retail space [11].