Dillard’s, Inc. DDS is expected to register year-over-year top and bottom-line declines when it reports third-quarter fiscal 2024 numbers.
The Zacks Consensus Estimate for fiscal third-quarter revenues of $1.4 billion indicates a 3.8% decline from the year-ago figure. The consensus estimate for fiscal third-quarter earnings is pegged at $6.47 per share, implying a 30.4% decrease from the year-ago quarter’s figure. The consensus estimate has remained unchanged in the past 30 days.
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In the last reported quarter, the company registered a negative earnings surprise of 22.3%. We note that in the trailing four quarters, its bottom line beat the Zacks Consensus Estimate by 12.4%, on average.
What the Zacks Model Predicts for DDS
Our proven model does not conclusively predict an earnings beat for Dillard’s this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Dillard’s currently has an Earnings ESP of 0.00% and a Zacks Rank #3.
Trends to Drive DDS’ Q3 Results
Dillard’s has been witnessing the adverse impacts of a tough retail environment due to the cautious buying behavior of consumers for a while now. This has continued to impact the company’s sales and comparable-store sales (comps), as well as resulted in higher operating expenses. The persistence of these trends is expected to have impacted the top and bottom lines in the to-be-reported quarter.
Our model predicts comps decline of 2.4% for the fiscal third quarter due to a challenging retail environment. Retail sales are expected to dip 2.7% year over year in the fiscal third quarter.
Additionally, higher payroll and payroll-related expenses are likely to have dented margins and the bottom line in the fiscal third quarter.
We expect SG&A expenses to rise 5.3% for the third quarter fiscal 2024, while the SG&A expense rate is anticipated to expand 240 basis points (bps) to 30.4%. Our model anticipates the operating margin to decline 370 bps for the fiscal third quarter. Operating income is expected to decline 30% year over year in dollar terms.
Dillard's, Inc. Price and EPS Surprise
Dillard's, Inc. price-eps-surprise | Dillard's, Inc. Quote
However, Dillard's has been gaining from better inventory management initiatives and strong consumer demand. The company’s strategic focus on inventory management, store and e-commerce development, along with offering trendy merchandise, has positioned it strongly in the competitive retail landscape. It exited the fiscal second quarter with lower year-over-year inventory levels, which is expected to have aided the top line in the to-be-reported quarter.
The company’s efforts to capture growth opportunities in brick-and-mortar stores and e-commerce have been key drivers. It has been focused on enhancing brand relationships, remodeling stores and optimizing its activewear segment. Gains from these initiatives are likely to have widened the customer base and boosted the company's overall sales in the fiscal third quarter.
On the storefront, DDS has been gaining from initiatives to enhance brand relations, focus on in-trend categories, store remodels and increased rewards to store personnel. Its activewear brands are expected to have gained market share in the to-be-reported quarter.
Also, the e-commerce business has been well-placed on the enhancement of merchandise assortments and effective inventory management. We expect the company’s fiscal third-quarter performance to have gained from its focus on increasing productivity at existing stores, improving the omnichannel platform and enhancing domestic operations.
DDS Stock’s Price Performance & Valuation Picture
From a valuation perspective, Dillard’s is trading at a premium relative to industry benchmarks. With a forward 12-month price-to-sales ratio of 1x, which is below the five-year high of 1.22x but higher than the Retail - Regional Department Stores industry’s average of 0.36x.
The recent market movements show that DDS’ shares have risen 2.8% in the past three months compared with the industry's 1.5% growth.
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Stocks Poised to Beat Earnings Estimates
Here are some companies, that you may want to consider, as our model, shows that these have the right combination of elements to post an earnings beat.
Target TGT has an Earnings ESP of +0.73% and a Zacks Rank #2 at present. TGT is likely to register top and bottom-line growth when it reports third-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $26 billion, indicating 2.2% growth from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Target’s fiscal third-quarter earnings is pegged at $2.28 per share, indicating 8.6% growth from the year-ago quarter. The consensus mark has remained unchanged in the past 30 days.
Walmart WMT presently has an Earnings ESP of +1.61% and a Zacks Rank #2. WMT is likely to register top and bottom-line growth when it reports third-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $167.5 billion, indicating a 4.2% rise from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for WMT’s fiscal third-quarter earnings is pegged at 53 cents per share, implying year-over-year growth of 3.9%. The consensus mark has been unchanged in the past 30 days.
Dollar Tree DLTR currently has an Earnings ESP of +3.06% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports third-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $7.5 billion, indicating 1.9% growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Dollar Tree’s earnings is pegged at $1.07 per share, indicating 10.3% growth from the year-ago quarter. The consensus mark has moved up a penny in the past seven days.
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