Dillard's surprises with 73% sales spike
Dillard's posted a 73% year-over-year increase in retail sales, to $1.3 billion, for the first quarter.
The company had a record performance on earnings and gross margin, the latter of which leaped to 41.7% from 12.5% last year, CEO William Dillard said in a press release.
The retailer's performance compares to a miserable Q1 2020 for the sector but still handily beat analyst expectations. Compared to the pre-pandemic period (2019), Dillard's retail sales remain down nearly 9%, with comparable sales down 6%.
Dive Insight: Department stores as a sector were fated to have an excellent Q1 in year-over-year terms, given how terrible the first period of 2020 was, with stay-at-home orders, store closures, economic turmoil and other headwinds weighing on the industry. Around this time last year, Dillard's posted a loss of $162 million as sales fell by nearly half. And that was after furloughing most of its workforce for weeks, stretching vendors and making other painful cuts across the business to try to save whatever cash it could. The retailer swung back into the black in Q1, with net income of $158.2 million. But there is more going on with Dillard's numbers than just an easy comparison. The department store's chief cited increased vaccinations, government stimulus and warmer weather as drivers of sales. Its strongest categories during the period were junior's and children's, men's apparel and accessories, and ladies' accessories and lingerie. The company's earnings per share of $7.25 whizzed past market expectations of $1.20, according to Telsey Advisory Group analysts led by Dana Telsey. That profit beat reflected "broad-based strength with better-than-expected topline growth, greater gross margin leverage, and tighter SG&A cost control during the period," the analysts said in an emailed research note. Top-line sales also beat analyst consensus. In a report from earlier this month, Moody's analysts said that department stores in the main were poised for some of the strongest growth this year, as they rebound from the deep lows of 2020. The pandemic had an outsized impact on their business, as apparel was one of the main categories hurt by the pandemic and shoppers avoided malls. With Dillard's, Wedbush analysts Jen Redding and Gene Gallagher said they were "impressed by all good things going on this quarter," including a 17% decline in inventory and the closing gap between pre-pandemic and current sales. They noted, however, that "ultimately we have less visibility beyond reopening and stimulus strength."