Why Dillard's Rallied Today
Dillard's trounced analyst estimates in the second quarter.
The department store had low expectations coming in, but managed to post a decent quarter while conveying optimism for Q3.
Dillard's operates in a differentiated manner compared with your average department store.
10 stocks we like better than Dillard's ›
Shares of department store company Dillard's (NYSE: DDS) rallied on Thursday, up 5.4% as of 2 p.m. ET.
Dillard's reported second-quarter earnings that, while certainly not eye-opening from a growth perspective, nevertheless beat analyst expectations by a fair amount. Given low expectations, perhaps due to tariff-related fears, Dillard's surged and now trades at all-time highs.
Dillard's goes about its business
In the second quarter, Dillard's saw revenue rise 1.4% on a 1% rise in same-store sales relative to the year-ago quarter. While margins came down slightly and net income declined by 2.3%, earnings per share of $4.66 was actually up 1.5%, thanks to the company's consistent share repurchases over the past year, which retired 3.7% of shares outstanding relative to last year. The EPS figure also handily beat analyst expectations by over 10%.
As an added bonus, CEO William T. Dillard noted the company was seeing stronger sales trends in July, perhaps fueling optimism for the current quarter.
Dillard's has fared better than other department stores due to its unique approach. The company has pursued slower growth, but usually opts to buy its real estate rather than lease it. As a result of not having a lot of rent expenses, Dillard's can often price its merchandise competitively while still generating profits.
Dillard's is a rare department store stock worth paying attention to
The own-versus-lease strategy as well as heavy inside ownership not only by the Dillard family, who are also executives, but also the employee stock fund, which together own over 50% of shares, separates Dillard's from most large department stores. Apparently, the closely held, modest, and differentiated strategy is working, as the stock has far outperformed peers.
Even after today's surge, shares trade at a relatively modest 14.5 times earnings, which isn't demanding for a company generating consistent profits and having a solid net cash position on the balance sheet.
Do the experts think Dillard's is a buy right now?
The Motley Fool's expert analyst team, drawing on years of investing experience and deep analysis of thousands of stocks, leverages our proprietary Moneyball AI investing database to uncover top opportunities. They've just revealed their to buy now — did Dillard's make the list?
When our Stock Advisor analyst team has a stock recommendation, it can pay to listen. After all, Stock Advisor's total average return is up 1,062% vs. just 185% for the S&P — that is beating the market by 877.34%!*
Imagine if you were a Stock Advisor member when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $649,544!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,113,059!*
The 10 stocks that made the cut could produce monster returns in the coming years. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
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*Stock Advisor returns as of August 13, 2025
Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Dillard's Rallied Today was originally published by The Motley Fool
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