We are maintaining our long-term Outperform recommendation on
Arkansas, Little Rock based retailer
), on the back of the company's continued robust quarterly
The first quarter of 2012 marked the seventh consecutive quarter
of comparable store sales and earnings per share growth for
Dillard's. Quarterly earnings of $1.88 per share outpaced the Zacks
Consensus Estimate of $1.67 per share and the prior-year quarter
earnings of $1.27 per share. Comps also increased 5% during the
In addition, Dillard's witnessed an improvement in margins,
mainly due to reduced operating expenses resulting from
restructuring initiatives and inventory reduction efforts.
Management has been taking such prudent steps with an aim boost its
The company has also been benefiting from improved inventory
management by focusing more on conservative purchasing and efforts
to better match the timing of receipts with demand, which
ultimately resulted in reduced markdowns.
Moreover, Dillard's wholly-owned real estate investment trust
(REIT) company and Captive Insurance Company will facilitate better
risk management while enhancing its liquidity position. Further,
Dillard's healthy balance sheet and adequate cash flows allow it to
make shareholder friendly moves, such as acquisitions, dividends
and share repurchases.
Finally, the newly modified credit line agreement is expected to
further enhance its financial flexibility by allowing the company
to borrow more funds at the same level of inventory pledged.
Dillard's, which competes with
), operated 287 Dillard's locations and 17 clearance centers across
29 states and an Internet store at www.dillards.com at the end of
the first-quarter of fiscal 2012.
Based on the company's strong performance over the last seven
consecutive quarters, we expect it to continue to post earnings as
well as revenue growth in the coming quarters.
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