They're Growing Again: Analysts Bullish on Holiday Sales As Dillard's Extends Sales Streak

by Mark Friedman  on Monday, Oct. 21, 2013 12:00 am  

Retail experts think Dillard’s Inc. of Little Rock can extend its current streak of 12 straight quarters of positive same-store sales as it heads into the holiday season.

"The things they had to do to get themselves back on track were done beautifully," said Howard Davidowitz, chairman of Davidowitz & Associates Inc., a retail consulting and investment banking firm in New York. "They got their course under control. They’re executing beautifully, which means more sales and more margins. And they’re growing again."

Dillard’s, which has 281 stores and 17 clearance centers in 29 states, will start construction on two stores later this year, according to its filings with the Securities & Exchange Commission. An 180,000-SF location will be built in Sarasota, Fla., and a 200,000-SF store is going up in Las Vegas. Both are expected to open during the company’s third quarter next year. They are the first new locations for Dillard’s since 2010.

“We believe [Dillard’s] has a sustainable strategy that should continue to deliver further improvements,” Credit Suisse analyst Michael Exstein wrote in his Aug. 14 research note. Although Exstein said he was concerned about the company’s rising inventory, he kept the rating on its stock at outperform.

Meanwhile, Dillard’s is preparing for the holiday season.

“I can tell you that our team has been working year-round on setting the stores for Christmas,” Julie Bull, the spokeswoman for Dillard’s, said last week in an email to Arkansas Business. She declined, however, to comment on Dillard’s holiday forecast.

But the National Retail Federation of Washington, D.C., expects retailers will have good cheer this holiday season. U.S. sales in November and December are projected to be $602.1 billion, which will be up 3.9 percent over the same period in 2012, according to an Oct. 3 NRF news release. In 2012, holiday season sales were up 3.5 percent over the previous year.

“Our forecast is a realistic look at where we are right now in this economy — balancing continued uncertainty in Washington and an economy that has been teetering on incremental growth for years,” NRF President and CEO Matthew Shay said in the news release.

IBISWorld Inc. of Los Angeles, which conducts research for various industries, said in an August report that the department store sector should see its revenue climb 2.2 percent in 2013. In 2012, department stores reported a 1.2 percent revenue increase.

And the sector is expected to generate continued growth through 2018, the report said. “Armed with deeper pockets, consumers will likely increase spending on high-end discretionary items,” IBISWorld said.

Davidowitz said Dillard’s has been fortunate because it appeals to the top 10 percent of Americans who account for a high percentage of the spending in the country. He said Dillard’s has the right merchandise mix and the right price points to attract those customers. “Those people don’t want to overpay either,” Davidowitz said.

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