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Category: Stock Market and Dillards
Date: 16 November 2019 Stock Price: $76.87 We take a look at the 3rd quarter 2019 earnings report of Dillards, a fashion retailer with annual sales topping $6.3 billion and operating from 250+ locations.
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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.
Ladies coats. Image as obtained from Dillards
Overview of Dillards' 3rd quarter 2019 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Sales: $1.388 billion (down from $1.419 billion from the same quarter of the previous year)
- Sales decreased by -2.1% over the last 12 months
- Cost of sales: $926.8 million (down from $954.9 million for the same quarter of the previous year)
- Cost of sales decreased by -2.9% over the last 12 months
- Net income: $5.5 million (down from $7.4 million for the same quarter of the previous year)
- Diluted earnings per share: $0.22 (down from $0.27 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 24.9 million (down from 27.3 million for the same quarter of the previous year)
- Cash and cash equivalents: $79.1 million
- Cash and cash equivalents per share: $3.17
- Cash and cash equivalents makes up 4.1% of Dillard's market capital
- Cash and cash equivalents makes up 2.1% of Dillard's total assets
- Inventories: $1.970 billion
- Inventories makes up 51.8% of Dillard's total assets
- Stockholders equity in Dillards: $1.612 billion
- Stockholders equity per Dillards share: $64.73
- Dillards is trading at 1.18 times its shareholders equity which is outside the expected range of between 2 and 4 times that most firms tend to trade at
- Cash generated from operation (for the 3 quarters): $23million
- Cash generated from operations per share: $0.92
Dillards' management commentary on their 3rd quarter 2019 earnings report
LITTLE ROCK, Ark.--(BUSINESS WIRE)-- Dillard’s, Inc. (NYSE: DDS) (the “Company” or “Dillard’s”) announced operating results for the 13 and 39 weeks ended November 2, 2019.
Dillard’s Chief Executive Officer William T. Dillard, II, stated, “While we were not satisfied with the third quarter, it was a substantial improvement over the second quarter. We were pleased with our retail gross margin improvement (13 basis points) following a second quarter decline of 319 basis points. We managed inventory to a 4% decrease from flat at the end of the second quarter. Our flat comparable sales performance improved from the 2% second quarter sales decline.”
Dillard’s Chief Executive Officer William T. Dillard, II, stated, “While we were not satisfied with the third quarter, it was a substantial improvement over the second quarter. We were pleased with our retail gross margin improvement (13 basis points) following a second quarter decline of 319 basis points. We managed inventory to a 4% decrease from flat at the end of the second quarter. Our flat comparable sales performance improved from the 2% second quarter sales decline.”
Share Repurchase
During the 13 weeks ended November 2, 2019, the Company purchased $35.2 million (approximately 0.6 million shares) of Class A Common Stock under its $500 million share repurchase program. During the year-to-date period ended November 2, 2019, the Company purchased $101.5 million (approximately 1.7 million shares). As of November 2, 2019, authorization of $305.4 million remained under the program. Total shares outstanding (Class A and Class B Common Stock) at November 2, 2019 and November 3, 2018 were 24.7 million and 26.9 million, respectively.
Store Information
Dillard's plans to open an expansion at Killeen Mall in Killeen, Texas by the end of the fiscal year, replacing a 70,000 square foot leased facility with a 75,000 square foot owned facility at this dual anchor location totaling 110,000 square feet. During the first quarter of 2020, the Company will open an 85,000 square foot expansion at Columbia Mall in Columbia, Missouri (dual anchor location totaling 185,000 square feet). Also in early 2020, Dillard's will replace a 100,000 square foot leased facility at Richland Fashion Mall in Waco, Texas with a 125,000 square foot owned facility (dual anchor location totaling 190,000 square feet).
Dillard's has announced the upcoming closure of its Fiesta Mall Clearance Center in Mesa, Arizona (100,000 square feet). The location is expected to close in January, 2020. The Company operates 259 Dillard’s locations and 30 clearance centers spanning 29 states and an Internet store at www.dillards.com. Total square footage at November 2, 2019 was 48.9 million square feet.
During the 13 weeks ended November 2, 2019, the Company purchased $35.2 million (approximately 0.6 million shares) of Class A Common Stock under its $500 million share repurchase program. During the year-to-date period ended November 2, 2019, the Company purchased $101.5 million (approximately 1.7 million shares). As of November 2, 2019, authorization of $305.4 million remained under the program. Total shares outstanding (Class A and Class B Common Stock) at November 2, 2019 and November 3, 2018 were 24.7 million and 26.9 million, respectively.
Store Information
Dillard's plans to open an expansion at Killeen Mall in Killeen, Texas by the end of the fiscal year, replacing a 70,000 square foot leased facility with a 75,000 square foot owned facility at this dual anchor location totaling 110,000 square feet. During the first quarter of 2020, the Company will open an 85,000 square foot expansion at Columbia Mall in Columbia, Missouri (dual anchor location totaling 185,000 square feet). Also in early 2020, Dillard's will replace a 100,000 square foot leased facility at Richland Fashion Mall in Waco, Texas with a 125,000 square foot owned facility (dual anchor location totaling 190,000 square feet).
Dillard's has announced the upcoming closure of its Fiesta Mall Clearance Center in Mesa, Arizona (100,000 square feet). The location is expected to close in January, 2020. The Company operates 259 Dillard’s locations and 30 clearance centers spanning 29 states and an Internet store at www.dillards.com. Total square footage at November 2, 2019 was 48.9 million square feet.
Dillards (NYSE: DDS) stock price history
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 (NYSE:DDS) stock price history over the last 5 years.
Recent coverage of Dillards (NYSE: DDS)
The extract below shows recent coverage of Dillard's as obtained from TheStreet.com
Dillard's (NYSE: DDS) is pleased to further its commitment to Ronald McDonald House Charities (RMHC) Chapters and their efforts to keep families with ill or injured children close to each other and the medical care they need with Dillard's 26 th annual holiday fundraiser. Since 1994, Dillard's has supported RMHC in strengthening families during difficult times with a fundraiser benefiting several Ronald McDonald House programs.
Dillard's (NYSE: DDS) is pleased to further its commitment to Ronald McDonald House Charities (RMHC) Chapters and their efforts to keep families with ill or injured children close to each other and the medical care they need with Dillard's 26 th annual holiday fundraiser. Since 1994, Dillard's has supported RMHC in strengthening families during difficult times with a fundraiser benefiting several Ronald McDonald House programs.
Various menswear . Image as obtained from Dillards
Dillards (NYSE: DDS) latest stock valuation
So based on the 3rd quarter 2019 earnings report of Dillards (NYSE: DSS) what do we value Dillards stock at? Based on the earnings reported our valuation model provides a target (full value) price for Dillards at $61.40 a stock. Note that our valuation model takes into account the fact that Dillards still has enough cash available under their share repurchase program to repurchase almost 16% of their issued stock. While this is a great thing for stockholders of Dillards we still cannot justify its current stock price levels.
We therefore feel that the stock is overvalued and a good price long term fundamental or value investors should look to enter the stock at is at least 10% below our target (full value) price which in this case is $61.40. We therefore believe a good entry point into Dillard's stock would be around $55.30 or below.
We expect the stock of Dillards to pull back from current levels to levels closer to our target (full value) price in coming weeks and months.
We therefore feel that the stock is overvalued and a good price long term fundamental or value investors should look to enter the stock at is at least 10% below our target (full value) price which in this case is $61.40. We therefore believe a good entry point into Dillard's stock would be around $55.30 or below.
We expect the stock of Dillards to pull back from current levels to levels closer to our target (full value) price in coming weeks and months.
Next earnings release of Dillards
It is expected that Dillards will release their 4th quarter and full fiscal 2019 earnings report in mid February 2020