Dillard's stock slides 8.5% after earnings miss as consumers continue to shun clothing purchases

By Ciara Linnane

'We are disappointed with our weak performance in the second quarter,' says CEO William Dillard

Dillard's Inc.'s stock tumbled 8.5% Thursday after the department-store chain posted earnings that fell short of estimates, as shoppers struggling with higher prices for essentials continued to shy away from buying new clothes.

"We are disappointed with our weak performance in the second quarter," CEO William T. Dillard said in prepared remarks. "While the consumer environment remained challenged, our expenses were up, squeezing our profitability. We are working to address this."

The Little Rock, Ark.-based company (DDS) had net income of $74.5 million, or $4.59 a share, for the quarter through Aug. 3, down from income of $131.5 million, or $7.98 a share, in the year-earlier period. Sales fell 5% to $1.489 billion from $1.567 billion a year ago.

The FactSet consensus was for earnings per share of $5.97 and sales of $1.526 billion.

Same-store sales fell 5%, while FactSet was expecting a decline of 2%.

Operating costs rose to $433.6 million, to account for 29.1% of sales, from $412.6 million a year ago, when they accounted for 26.3% of sales.

The company ended the quarter with over $1 billion in cash and equivalent, said Dillard.

By category, cosmetics was the strongest performer, while men's clothing, accessories and shoes were the weakest.

CFRA downgraded the stock to hold from buy and lowered its 12-month price target to $372 from $500.

Analyst Zachary Warring said CFRA views Dillard's "as the best department store operator, deserving of a higher-than-peer multiple."

"However, we think valuation is now fair as the company missed the mark in [the second quarter] and as estimates came down for the full year," he wrote in a note to clients.

The stock has fallen 11.3% in the year to date, while the S&P 500 has gained 15.8%.

-Ciara Linnane

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08-15-24 1106ET

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