Dillard's Q1 Earnings Beat Estimates, Comparable Store Sales Dip 1%

Dillard's Inc. DDS posted mixed first-quarter fiscal 2025 results, wherein the bottom line surpassed the Zacks Consensus Estimate while the top line missed. Meanwhile, the company’s sales and earnings declined year over year. A tough consumer landscape adversely impacted sales and comparable store sales (comps).

Earnings per share (EPS) of $10.39 surpassed the Zacks Consensus Estimate of $9.10. However, the bottom line declined 6.3% from $11.09 in the year-ago quarter. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Net sales of $1.529 billion fell 1.4% from the prior-year quarter and came below the consensus estimate of $1.540 billion. Including service charges and other income, the company reported sales of $1.547 million, down 1.7% year over year.

Dillard’s shares jumped about 6% on May 15, 2025, on better-than-expected earnings results in first-quarter fiscal 2025. Shares of the Zacks Rank #3 (Hold) company have gained 0.8% in the past six months against the industry's 17.3% decline.

Detailed Analysis of DDS’s Q1 Performance

Total retail sales (excluding CDI Contractors, LLC) dipped 1.7% year over year to $1.468 billion. On a 13-week comparison basis, total retail sales dropped 2% year over year while comps slipped 1%. Robust performing categories were juniors’ and children’s apparel and men’s clothing and accessories, whereas home and furniture, shoes and ladies’ apparel were soft. Our model had predicted a comps drop of 1.1% for the fiscal first quarter.

Dillard's, Inc. Price, Consensus and EPS Surprise

Dillard's, Inc. price-consensus-eps-surprise-chart | Dillard's, Inc. Quote

The consolidated gross margin contracted 70 basis points (bps) year over year to 43.9%. The retail gross margin of 45.5% reflected a year-over-year decrease of 70 bps as the metric fell moderately in ladies’ apparel and remained flat in ladies’ accessories and lingerie. All the other merchandise categories declined marginally. We had expected a gross margin of 43%, down 160 bps year over year.

Dillard's consolidated selling, general and administrative expenses (SG&A) expenses, as a percentage of sales, were 27.6%, up 10 bps from the prior-year quarter. In dollar terms, SG&A expenses (operating expenses) dipped 1.2% year over year to $421.7 million. The decrease in SG&A expenses is mainly attributed to payroll and payroll-related costs.

Our model had predicted SG&A expense (as a percentage of sales) to be 28%, up 90 bps. In dollar terms, we expected SG&A expenses to rise 2% year over year to $435.2 million.

Dillard’s Other Financial Details

DDS ended first-quarter fiscal 2025 with cash and cash equivalents of $900.5 million, long-term debt of $321.6 million and a total shareholders' equity of $1.857 billion. The company provided $232.6 million of net cash from operating activities as of May 3, 2025. Inventory climbed 6% year over year as of the same date.

In the first quarter of fiscal 2025, the company repurchased 276,000 shares for $98 million, reflecting an average price of $355.65 per share. As of May 3, 2025, it had $175 million remaining under its current share repurchase authorization announced in May 2023. Total shares outstanding (Class A and Class B Common Stock) were 15.6 million as of the same date.

The company still forecasts capital expenditure of $120 million for fiscal 2025, suggesting an increase from the $105 million reported in fiscal 2024.

As of May 3, 2025, DDS operated 272 Dillard’s stores, including 28 clearance stores across 30 states and an online store at dillards.com.

What Dillard’s Expects for FY25?

For fiscal 2025, Dillard’s continues to expect depreciation and amortization expenses of $180 million compared with $178 million recorded last fiscal. The company projects interest and debt income of $8 million compared with $14 million in fiscal 2024. It still anticipates rentals of $20 million compared with $21 million reported in fiscal 2024.

Eye These Solid Picks in Retail 

We have highlighted three better-ranked stocks, namely Nordstrom JWN, Canada Goose GOOS and Gap GAP. 
 
Nordstrom, a key fashion specialty retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  
 
The Zacks Consensus Estimate for JWN’s current financial-year sales indicates growth of 2.2% from the year-ago figure. The company has delivered an earnings surprise of 22.2% in the last reported quarter. 
 
Canada Goose, a designer and retailer of premium outerwear, currently carries a Zacks Rank #2 (Buy). GOOS delivered an average earnings surprise of 71.3% in the trailing four quarters. 
 
The consensus estimate for Canada Goose’s current financial-year sales indicates a drop of 4.9% from the year-ago figure. 
 
Gap, a specialty retailer of clothing and accessories, currently carries a Zacks Rank of 2. GAP delivered an average earnings surprise of 77.5% in the trailing four quarters. 
 
The Zacks Consensus Estimate for Gap’s current financial-year sales indicates growth of 1.4% from the year-ago figure.  

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This article originally published on Zacks Investment Research (zacks.com).

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