Dillard’s Inc (NYSE: DDS) is among the retailers that have returned a significant amount to investors in the form of share price appreciation, dividends, and share buybacks. Increasing returns from Dillard’s represents the management’s confidence in its future fundamentals and cash generation potential. The company repurchased $219 million of common stock last year under its buyback program of $500 million.
Dillard’s is an American apparel, cosmetics, and home furnishings, retailer. DDS stock jumped more than 75% in the last twelve months, supported by improving financials numbers and increasing investor confidence.
DDS stock trades around $80 at present, down slightly from the 52-week high of $89 a share. DDS shares have the 52-week trading range of $45 to $89 – with the market capitalization of close to $2 billion.
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The company has exceeded analysts’ consensus revenue and earnings forecast for the fourth quarter FY2017 by $80 million and $1.08 per share. Its revenue and earnings also jumped sharply from the past year periods. Dillard’s posted net revenue of $2.1 billion in the fourth quarter, up 6.6% from the year-ago period. Higher revenue growth was driven by robust demand for of ladies’, juniors’ and children’s, and men’s apparels.
Dillard’s Chief Executive Officer, William T. Dillard, II, stated, “The positive sales trends we noted at the end of the third quarter continued through the fourth. Our 3% comparable store sales increase combined with gross margin improvement and relative expense control which led to a notable increase in pretax income for the quarter. We are working to keep this momentum into 2018.”
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Beside from cost improvement, the tax benefit of $77 million added to the fourth quarter earnings of $5.55 per share, compared to earnings of $1.72 per share in the year-ago period. DDS operating cash flows were standing around $517 million, and its capital requirements were at $104 million last year. Thus, its free cash flows were at $412 million, which are sufficient to cover its aggressive share buyback program and dividend payments.
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