Here's How Dillard's (DDS) is Positioned Ahead of Q2 Earnings

Dillard’s, Inc. DDS is expected to register year-over-year growth in the top and bottom lines when it reports second-quarter fiscal 2021 numbers. The company’s efforts to manage inventory levels and reduce operating expenses in light of the pandemic-led environment have been aiding the bottom line. The Zacks Consensus Estimate for fiscal second-quarter revenues of $1.26 billion indicates 36.9% growth from the year-ago reported figure.

The Zacks Consensus Estimate for fiscal second-quarter earnings is pegged at $2.45 per share, indicating substantial growth from a loss of 37 cents reported in the year-ago quarter. However, the consensus estimate has been unchanged in the past 30 days.

We note that in the trailing four quarters, the company’s bottom line outperformed the Zacks Consensus Estimate by 206.3%, on average.

Dillards, Inc. Price and EPS Surprise

Dillards, Inc. price-eps-surprise | Dillards, Inc. Quote

Key Factors to Note

Dillard’s has been witnessing a strong earnings growth trend, owing to margin improvement and lower expenses. The company’s initiatives to control inventory and expenses throughout the uncertain pandemic-led environment have been contributing to bottom-line gains in the past four quarters. The trend is expected to have continued in the fiscal second quarter.

Dillard’s has been keen on inventory management since the start of the pandemic through measures like cancellation, suspension and delaying of shipments as well as merchandise purchase reduction. The aggressive measures to lower excess inventory, owing to the pandemic-led decline in demand, have proved beneficial for the company’s margins. Inventory reductions are expected to have resulted in lower markdowns in the fiscal second quarter, which is expected to have boosted the gross margin. The reduced total merchandise purchases have led to a decline in overall inventory levels in the past five quarters.

The ongoing vaccination drive, government stimulus packages and the lifting of restrictions on movement are expected to have aided the recovery in consumer demand and store traffic trends. Gains from these factors are likely to get reflected in the company’s top and bottom lines in second-quarter fiscal 2021.

The company is expected to have witnessed reduced expenses in the fiscal second quarter, owing to various steps like the extension of vendor payment terms, and the reduction of discretionary and capital expenditure as well as payroll.

However, Dillard’s has been witnessing soft comparable store trends due to reduced store operating hours, owing to the pandemic.

What the Zacks Model Suggests

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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Dillard’s currently has a Zacks Rank #3 and an Earnings ESP of 0.00%.

3 Stocks With Favorable Combination

Here are three companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Hibbett, Inc. HIBB has an Earnings ESP of +19.03% and it currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corporation TGT presently has an Earnings ESP of +0.62% and a Zacks Rank #2.

Nordstrom, Inc. JWN currently has an Earnings ESP of +1.61% and a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.