We have maintained our long-term 'Outperform' recommendation
) based on the company's better-than-expected bottom-line
performance in seven back-to-back quarters.
On November 8, 2012, Dillard's posted its third-quarter 2012
results with earnings jumping two-folds to 96 cents per share,
beating the Zacks Consensus Estimate of 75 cents per share.
Dillard's has surpassed the Zacks Consensus Estimate in the
trailing seven quarters in the range of 10.5%-57.9%.The average
surprise over the last seven quarters remained at 29.1%.
The company's improved results were backed by solid
comparable-store sales performance and reduced input and
operating costs, resulting from restructuring initiatives and
inventory reduction efforts. Further, total revenue grew 4.8%
year over year to 1,450.0 million and surpassed the Zacks
Consensus Estimate of $1,442.0 million.
We believe that the company benefits from improvements in
inventory management, focusing on conservative purchasing and
efforts to better match the timing of receipts with demand,
ultimately resulting in reduced markdown.
Following the strong quarterly performance in the third
quarter of fiscal 2012, the Zacks Consensus Estimates has moved
upwards. For fiscal 2012 and 2013, the Zacks Consensus Estimate
elevated 33 cents and 70 cents to $6.33 and $7.20 per share,
respectively, in the last 60 days.
Apart from strong third-quarter results, Dillard's growth
story looks compelling. Management is undertaking restructuring
initiatives and inventory reduction efforts to reduce costs while
boosting its profitability. We believe that Dillard's healthy
balance sheet and adequate cash flows allow it to make
shareholder-friendly moves, such as acquisitions, dividends and
Moreover, in our point of view, Dillard's wholly-owned Captive
Insurance Company and REIT facilitate efficient risk management
ability as well as boost its liquidity position.
Other Stock to Consider
Besides Dillard's, other stock in the large departmental store
chain retail sector that is currently performing well is
Bon-Ton Stores Inc.
). Both the companies hold a Zacks #1 Rank (Strong Buy)
BON-TON STORES (BONT): Free Stock Analysis
DILLARDS INC-A (DDS): Free Stock Analysis
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