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Category: Stock Market and Dillards (DDS)
Date: 18 August 2020 Stock Price of Dillards: $27.28 We take a look at the 2nd quarter 2020 earnings report of Dillards, a fashion retailer whose 2nd quarter 2020 revenues topped $945 million, which is down -35.2% from the same quarter of the previous year and they recorded a net loss of -$8.6 million. The group currently operates out of 250 locations across the US.
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About Dillards
Dillard’s, Inc. ranks among the nation’s largest fashion retailers, with annual sales exceeding $6.3 billion. The Company focuses on delivering style, service and value to its shoppers by offering compelling apparel, cosmetics and home selections complemented by exceptional customer care. Dillard’s stores offer a broad selection of merchandise and feature products from both national and exclusive brand sources. The Company operates 265 Dillard’s locations and 26 clearance centers spanning 29 states, plus an internet store at www.dillards.com.
Overview of Dillards' 2nd quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Sales: $945.1 million (down from $1.458 billion from the same quarter of the previous year)
- Sales decreased by -35.2% over the last 12 months
- Cost of sales: $639.8 million (down from $1.032 billion for the same quarter of the previous year)
- Cost of sales decreased by -37.9% over the last 12 months
- Net loss: -$8.6 million (up from -$40.7 million for the same quarter of the previous year)
- Diluted loss per share: -$0.37 (up from -$1.59 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 23.2 million (down from 25.6 million for the same quarter of the previous year)
- Cash and cash equivalents: $82.9 million
- Cash and cash equivalents per share: $3.57
- Cash and cash equivalents makes up 13.1% of Dillard's market capital
- Cash and cash equivalents makes up 2.7% of Dillard's total assets
- Inventories: $1.283 billion
- Inventories makes up 41.6% of Dillard's total assets
- Stockholders equity in Dillards: $1.371 billion
- Stockholders equity per Dillards share: $59.09
- Dillards is trading at 0.46 times its shareholders equity which is outside the expected range of between 2 and 4 times that most firms tend to trade at
Dillards' management commentary on their 2nd quarter 2020 earnings report
LITTLE ROCK, Ark.--(BUSINESS WIRE)-- Dillard’s, Inc. (NYSE: DDS) (the “Company” or “Dillard’s”) announced operating results for the 13 and 26 weeks ended August 1, 2020. This release contains certain forward-looking statements. Please refer to the Company’s cautionary statements included below under “Forward-Looking Information.” In particular, these results include certain effects of the COVID-19 pandemic which has had, and is continuing to have, a significant negative impact on the Company’s business, results of operations and financial position. Given the uncertainty surrounding the COVID-19 pandemic and its economic effects, the related financial impact to fiscal 2020 cannot be reasonably estimated at this time. For a more detailed discussion of the factors that could materially and adversely affect Dillard’s business, financial condition and results of operations, see the caption “Risk Factors” in the Company’s most recent Form 10-K filed on March 31, 2020, as updated by our periodic filings with the SEC.
Dillard's Chief Executive Officer William T. Dillard, II stated, “We thank our dedicated associates for their outstanding service to our customers as we continue to navigate the pandemic. During the quarter, we worked hard to control inventory and expenses. These measures allowed us to improve gross margin and substantially narrow the loss from the prior year second quarter. We will maintain this conservative financial approach as we move forward.”
Dillard's Chief Executive Officer William T. Dillard, II stated, “We thank our dedicated associates for their outstanding service to our customers as we continue to navigate the pandemic. During the quarter, we worked hard to control inventory and expenses. These measures allowed us to improve gross margin and substantially narrow the loss from the prior year second quarter. We will maintain this conservative financial approach as we move forward.”
Share Repurchase
During the 13 weeks ended August 1, 2020, the Company purchased $14.3 million (approximately 0.6 million shares) of Class A Common Stock under its $500 million share repurchase program. As of August 1, 2020, authorization of $192.6 million remained under the program. During the 26 weeks ended August 1, 2020, the Company purchased $76.1 million (approximately 1.6 million shares) of Class A Common Stock. Total shares outstanding (Class A and Class B Common Stock) at August 1, 2020 and August 3, 2019 were 22.6 million and 25.3 million, respectively.
Strengths
Management reiterates its belief that Dillard's is uniquely positioned, among U.S. department store retailers, to weather the COVID-19 pandemic:
Store Information
The Company's El Centro, California location has temporarily closed again under local government mandate. During the second quarter, the Company permanently closed store locations in Waterloo, Iowa (150,000 square feet), Clovis, New Mexico (62,000 square feet) and Lawton, Oklahoma (100,000 square feet). The Company operates 251 Dillard’s locations and 31 clearance centers spanning 29 states and an Internet store at www.dillards.com. Total store square footage at August 1, 2020 was 48.0 million square feet.
During the 13 weeks ended August 1, 2020, the Company purchased $14.3 million (approximately 0.6 million shares) of Class A Common Stock under its $500 million share repurchase program. As of August 1, 2020, authorization of $192.6 million remained under the program. During the 26 weeks ended August 1, 2020, the Company purchased $76.1 million (approximately 1.6 million shares) of Class A Common Stock. Total shares outstanding (Class A and Class B Common Stock) at August 1, 2020 and August 3, 2019 were 22.6 million and 25.3 million, respectively.
Strengths
Management reiterates its belief that Dillard's is uniquely positioned, among U.S. department store retailers, to weather the COVID-19 pandemic:
- The Company owns 90% of its retail store square footage and 100% of its corporate headquarters, distribution and fulfillment facilities.
- Store rent obligations are small compared to the industry.
- Low long-term debt position with next payment due January, 2023 ($45 million).
- Amended $800 million revolving credit facility with no financial covenants as long as availability exceeds $100 million and no event of default occurs and is continuing
- Strong eCommerce business at dillards.com which includes ship-from-store capability
Store Information
The Company's El Centro, California location has temporarily closed again under local government mandate. During the second quarter, the Company permanently closed store locations in Waterloo, Iowa (150,000 square feet), Clovis, New Mexico (62,000 square feet) and Lawton, Oklahoma (100,000 square feet). The Company operates 251 Dillard’s locations and 31 clearance centers spanning 29 states and an Internet store at www.dillards.com. Total store square footage at August 1, 2020 was 48.0 million square feet.
Dillards (NYSE: DDS) stock price history over the last 5 years
The image below, obtained from Google, shows the stock price history of Dillards (NYSE: DDS) for the last 5 years. And its not been a good time for Dillards stockholders 5 years ago the stock was trading around $1197 and today its trading at $76.87. That's a loss of -34.5% suffered by Dillards stockholders. The stock of Dillards is currently trading at a lot closer to its 52 week high of $86.71 than it is to its 52 week low of $47.95 which to us is a clear indication that the short term sentiment and momentum of Dillard's stock is positive
Dillards (DDS) stock vs Urban Outfitters (URBN) stock over the last 5 years
The image below shows the stock price history of Dillards (DDS) and Urban Outfitters (URBN) over the last 5 years. Both are active in the clothing retail and fashion space
- Urban Outfitters: -34.4%
- Dillards: -70.3%
Recent coverage of Dillards (NYSE: DDS)
The extract below shows recent coverage of Dillards as obtained from TheStreet.com
What happened
Shares of Dillard's (NYSE:DDS) were shooting higher today after the department store chain turned in a second-quarter earnings report that was much better than expectations. The company actually reported a narrower loss than in the quarter a year ago, even with challenges from the COVID-19 pandemic.
So what
Revenue at the Southern retailer fell 35.2% to $945.1 million, as a number of its stores were closed at the beginning of the quarter and retail traffic has generally been down because of the pandemic. That total missed revenue estimates of $1.01 billion. However, investors were happy to overlook that figure as the company controlled its costs; gross margin actually rose 271 basis points due to decreased markdowns from a year ago as retail gross margin improved to 31.1%. Inventory was also down 20%, showing that the company effectively cut back on orders as stores closed in the first quarter. Lower payroll expenses also helped keep overhead costs down, and Dillard's finished the quarter with an operating loss of $33.4 million, an improvement from a $52.2 million loss in the year-ago quarter.
On a per-share basis, the company reported a net loss of $0.37 per share, while analysts had expected a loss of $4.82. CEO William Dillard II said, "During the quarter, we worked hard to control inventory and expenses. These measures allowed us to improve gross margin and substantially narrow the loss from the prior year second quarter. We will maintain this conservative financial approach as we move forward."
Read the full article here
What happened
Shares of Dillard's (NYSE:DDS) were shooting higher today after the department store chain turned in a second-quarter earnings report that was much better than expectations. The company actually reported a narrower loss than in the quarter a year ago, even with challenges from the COVID-19 pandemic.
So what
Revenue at the Southern retailer fell 35.2% to $945.1 million, as a number of its stores were closed at the beginning of the quarter and retail traffic has generally been down because of the pandemic. That total missed revenue estimates of $1.01 billion. However, investors were happy to overlook that figure as the company controlled its costs; gross margin actually rose 271 basis points due to decreased markdowns from a year ago as retail gross margin improved to 31.1%. Inventory was also down 20%, showing that the company effectively cut back on orders as stores closed in the first quarter. Lower payroll expenses also helped keep overhead costs down, and Dillard's finished the quarter with an operating loss of $33.4 million, an improvement from a $52.2 million loss in the year-ago quarter.
On a per-share basis, the company reported a net loss of $0.37 per share, while analysts had expected a loss of $4.82. CEO William Dillard II said, "During the quarter, we worked hard to control inventory and expenses. These measures allowed us to improve gross margin and substantially narrow the loss from the prior year second quarter. We will maintain this conservative financial approach as we move forward."
Read the full article here
Dillards (NYSE: DDS) latest stock valuation
So based on the 2nd quarter 2020 earnings report of Dillards (NYSE: DSS) what do we value Dillards stock at? Based on the earnings reported and the fact that the group is currently loss making we value the stock of Dillards at their stockholders equity a stock which is sitting at $59.10 a stock.
We therefore feel that the stock of Dillards is significantly undervalued and a good price long term fundamental or value investors should look to enter the stock at is at least 10% below our target price (full value price) which in this case is $59.10. We therefore believe a good entry point into Dillard's stock would be around $53.20 or below.
We expect the stock of Dillards to kick up from its current level to levels closer to our target price in coming weeks and months.
We therefore feel that the stock of Dillards is significantly undervalued and a good price long term fundamental or value investors should look to enter the stock at is at least 10% below our target price (full value price) which in this case is $59.10. We therefore believe a good entry point into Dillard's stock would be around $53.20 or below.
We expect the stock of Dillards to kick up from its current level to levels closer to our target price in coming weeks and months.
Next earnings release of Dillards
It is expected that Dillards will release their 3rd quarter 2020 earnings report in mid November 2020
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