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  

Dillard’s, which is celebrating its 75th year in business, struggled for most of the 2000s. In November 2008, its stock price dropped to $2.50 at one point during the month.

But the company’s stock price rebounded and then soared. It closed at an all-time high of $93.69 on May 21. The price has declined since then, however, and was around $75 last week.

One of the key areas in which Dillard’s saw a turnaround was its same-store sales, a key industry comparison of sales at stores open at least a year. Between August 2008 and January 2010, when Dillard’s was reporting sales figures on a monthly basis, Dillard’s had 18 straight months of same-store sales declines.

In 2008, the company started its turnaround by closing underperforming stores, slashing expenses and improving merchandise. The moves improved the company’s books. Since the quarter that ended Oct. 30, 2010, Dillard’s has reported positive same-store sales numbers.

“It was a great turnaround, one of the best,” Davidowitz said.

Dillard’s sales for its first two quarters that ended Aug. 3 were $3.03 billion, which was down less than 1 percent from the same period a year earlier, in part because it closed three stores during that time. Its net income, though, was $153.7 million, up 22 percent from the same period in 2012.

While Dillard’s improved during the past couple of years, other department stores struggled. “Weak consumer confidence and low disposable income deterred households from making discretionary purchases during the recession, causing demand and sales to fall substantially for traditional department stores,” IBISWorld said in its report on department stores.

What’s Selling

The ladies’ accessories and lingerie category was the hot seller for Dillard’s in its six-month period than ended Aug. 3. Sales were up 7.9 percent over the same period in 2012. But the category only accounted for 15 percent of net sales. Meanwhile, ladies’ apparel, which accounted for 24 percent of Dillard’s net sales in the first six months of the year, saw sales fall 2.5 percent in its first two quarters of 2013 compared with the same time last year.

Davidowitz said he’s not surprised or worried about sales of ladies’ apparel being off at Dillard’s because that category has been sluggish nationally.

Still, for Dillard’s six-month period that ended Aug. 3, the number of sales transactions fell 3 percent compared with the same period a year earlier. But the average dollar value per transaction increased 3 percent.

Davidowitz said those numbers tell him that Dillard’s has the right merchandise mix, meaning the category doesn’t need to be promoted as strongly. “If you promote more, here’s what happens: You sell more units, [but] you get low margins,” he said. “You have higher labor costs, because you have more and more transactions.”



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