Fashion apparel, cosmetics and home furnishings retailer, Dillard’s Inc (NYSE:DDS) shares rose to a new 52-week high of $83 a share, supported by higher than expected financial numbers for the fourth quarter of fiscal 2017. Dillard’s has topped revenue and earnings estimates by a wide margin of $80 million and $1.05 per share.

DDS stock price has the 52-weeks trading range of $45.51 to $84.00 – with the market capitalization of $2 billion. DDS shares rallied substantially in the last four months, driven by improving market fundamentals for departmental stores.

 

Departmental stores experienced a lot of depression in the last three year due to increasing competition and the arrival of private labels. Lower revenues have been forcing companies to lower their prices – which had significantly impacted margins and earnings potential.

Dillard’s revenue plunged from $6.69 billion in 2014 to $6.2 billion in 2017. 

Market Trends are Slowly Improving For Dillard’s

After a long depression, market trends are slowly improving for fashion apparel companies. Dillard’s net sales increased 4% to $2.061 billion in the final quarter of 2017. Its total merchandise sales rose almost 7% in the fourth quarter, while comparable store sales grew 3% compared to the same period last year.

Dillard’s Chief Executive Officer, William T. Dillard, II, stated, “The positive sales trends we noted at the end of the third quarter continued through the fourth. Our 3% comparable store sales increase combined with gross margin improvement and relative expense control, led to a notable increase in pretax income for the quarter.”

The company posted net income of $157 million for the final quarter of fiscal 2017, higher from the net income of $156 million in the same period last year.

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Dillard’s cash generation potential also strengthened in fiscal 2017. The company generated operating cash flow of $274 million, which was sufficient to cover its capital requirements of $110 million and dividend payments of $9.4 million. Thus, the company has also been working on a share buyback program. Overall, the company expects slow and steady recovery throughout fiscal 2018.  

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