What: Dillard’s beat Wall Streat expectations in terms of losses for the first quarter of 2024.

Why it is important: While comparable sales are dipping, Dillard’s is still investing in new stores and sees its profitability grow thanks to a focus on assortment and inventory control.

Dillard’s Inc. reported a decline in first-quarter net income by nearly 11% to $180 million, down from $201.5 million the previous year, with earnings per share also falling 6.4% to $11.09. Despite these declines, the results surpassed Wall Street expectations, with earnings per share beating the forecasted $9.25 from Zacks Investment Research. The retailer experienced a slight dip in total and comparable-store sales by 1% and 2%, respectively, with net sales decreasing slightly to $1.55 billion.

In response to a challenging consumer environment, CEO William T. Dillard II emphasized the company’s focus on profitable sales through interesting product offerings and stringent inventory control. This strategy led to a reported increase in liquidity, with cash and short-term investments surpassing $1 billion for the first time. However, operating expenses rose to $426.7 million due to increased payroll, accounting for 27.5% of sales, up from 25.7% the previous year.

Amidst inflation and high interest rates affecting consumer spending, Dillard’s has prioritized inventory management and the development of both store and e-commerce platforms. The company highlighted cosmetics as its strongest merchandise category for the quarter, while men’s clothing and accessories lagged. Additionally, Dillard’s announced the opening of a new store in South Dakota and the upcoming closure of an Ohio clearance center, maintaining a total of 274 stores across 30 states.

Dillard’s shares closed nearly 5% down at $434.45, though they have seen a significant increase of over 41% from the previous year, outperforming the S&P 500's gain.

Dillard’s Inc. posts USD 180 million first-quarter profit