Dillard’s (NYSE:DDS) delivered stronger-than-expected fourth-quarter earnings, but shares fell more than 4% intra-day today as shrinking gross margins and weaker comparable sales weighed on investor sentiment.
The department store chain posted earnings per share of $13.48, significantly beating analyst expectations of $9.35. Revenue reached $2.02 billion, surpassing the $1.95 billion forecast. However, total retail sales dipped 1% on a comparable 13-week basis, signaling softening consumer demand.
Despite the earnings beat, Dillard’s stock tumbled after the report, largely due to a decline in retail gross margin to 36.1% from 37.7% a year earlier. The company acknowledged that while sales slipped 1%, cost controls were in place, but margin pressures persisted.
Comparable store sales fell 1% year-over-year, with home, furniture, and cosmetics outperforming, while men’s apparel, accessories, and footwear underperformed. Meanwhile, inventory levels increased 7%, raising concerns about potential excess stock if demand remains sluggish.
For the full fiscal year 2024, net income declined to $593.5 million ($36.82 per share), down from $738.8 million ($44.73 per share) in 2023, reflecting a more challenging retail environment.