Dillard's(US:DDS) ZACKSยท2024-11-08 18:35Core Viewpoint - Dillard's, Inc. is anticipated to report year-over-year declines in both revenue and earnings for the third quarter of fiscal 2024, with revenues expected to be $1.4 billion, reflecting a 3.8% decrease, and earnings per share projected at $6.47, indicating a 30.4% decline from the previous year [1]. Financial Performance - The Zacks Consensus Estimate indicates a revenue decline of 3.8% year-over-year for the fiscal third quarter, with earnings expected to decrease by 30.4% compared to the same quarter last year [1]. - In the last reported quarter, Dillard's experienced a negative earnings surprise of 22.3%, while it has beaten the Zacks Consensus Estimate by an average of 12.4% over the trailing four quarters [2]. Earnings Prediction - The current model does not predict an earnings beat for Dillard's, as it has an Earnings ESP of 0.00% and a Zacks Rank of 3 (Hold) [3]. Market Trends - Dillard's has been affected by a challenging retail environment, leading to cautious consumer buying behavior, which has negatively impacted sales and comparable-store sales [4]. - A predicted decline of 2.4% in comparable-store sales is expected due to the tough retail conditions, with overall retail sales anticipated to drop by 2.7% year-over-year in the fiscal third quarter [5]. Operating Expenses - Selling, General and Administrative (SG&A) expenses are expected to rise by 5.3% for the third quarter, with the SG&A expense rate projected to increase by 240 basis points to 30.4% [6]. - Operating margin is anticipated to decline by 370 basis points, with operating income expected to decrease by 30% year-over-year in dollar terms [6]. Strategic Initiatives - Dillard's has been improving its inventory management and responding to strong consumer demand, which has positioned the company favorably in the competitive retail landscape [7]. - The company is focusing on growth opportunities in both brick-and-mortar and e-commerce, enhancing brand relationships, remodeling stores, and optimizing its activewear segment [8]. E-commerce and Store Performance - Dillard's has made gains through initiatives aimed at enhancing brand relations, focusing on trending categories, and increasing rewards for store personnel, which are expected to contribute positively to sales [9]. - The e-commerce segment has benefited from improved merchandise assortments and effective inventory management, with expectations of enhanced productivity at existing stores and improved omnichannel operations [9]. Valuation Metrics - Dillard's is currently trading at a premium compared to industry benchmarks, with a forward 12-month price-to-sales ratio of 1x, which is below its five-year high of 1.22x but higher than the industry average of 0.36x [10]. - Over the past three months, Dillard's shares have increased by 2.8%, outperforming the industry's growth of 1.5% [10].