As the Q1 earnings season comes to a close, it’s time to take stock of this quarter's best and worst performers in the department store industry, including Dillard's (NYSE:DDS) and its peers.
Department stores emerged in the 19th century to provide customers with a wide variety of merchandise under one roof, offering a convenient and luxurious shopping experience. They played an important role in the history of American retail and urbanization, and prior to department stores, retailers tended to sell narrow specialty and niche items. But what was once new is now old, and department stores are somewhat considered a relic of the past. They are being attacked from multiple angles–stagnant foot traffic at malls where they’ve served as anchors; more nimble off-price and fast-fashion retailers; and e-commerce-first competitors not burdened by large physical footprints.
The 4 department store stocks we track reported a strong Q1; on average, revenues beat analyst consensus estimates by 2.6%. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and department store stocks have had a rough stretch, with share prices down 13.2% on average since the previous earnings results.
Best Q1: Dillard's (NYSE:DDS) With stores located largely in the Southern and Western US, Dillard’s (NYSE:DDS) is a department store chain that sells clothing, cosmetics, accessories, and home goods.
Dillard's reported revenues of $1.57 billion, down 2.5% year on year, exceeding analysts' expectations by 1.5%. Overall, it was a strong quarter for the company with an impressive beat of analysts' gross margin estimates and a solid beat of analysts' earnings estimates.
Dillard’s Chief Executive Officer William T. Dillard, II stated, “While the consumer environment remained challenging, we focused on profitable sales by offering interesting product combined with inventory control. As a result, our retail gross margin was 46.2% and inventory was down 2%. For the first time in our history, we reported cash and short-term investments exceeding $1 billion.”
The stock is down 16.4% since reporting and currently trades at $380.91.
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Macy's (NYSE:M) With a storied history that began with its 1858 founding, Macy’s (NYSE:M) is a department store chain that sells clothing, cosmetics, accessories, and home goods.
Macy's reported revenues of $5 billion, down 3.3% year on year, outperforming analysts' expectations by 3.9%. It was a strong quarter for the company with an impressive beat of analysts' earnings estimates and optimistic earnings guidance for the full year.
Although it had a great quarter compared its peers, the market seems unhappy with the results as the stock is down 17.4% since reporting. It currently trades at $15.80.
Weakest Q1: Kohl's (NYSE:KSS) Founded as a corner grocery store in Milwaukee, Wisconsin, Kohl’s (NYSE:KSS) is a department store chain that sells clothing, cosmetics, electronics, and home goods.
Kohl's reported revenues of $3.38 billion, down 5.3% year on year, in line with analysts' expectations. It was a weaker quarter for the company with underwhelming earnings guidance for the full year and a miss of analysts' earnings estimates.
Kohl's posted the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 25.7% since the results and currently trades at $20.25.
Nordstrom (NYSE:NYSE:JWN) Known for its exceptional customer service that features a ‘no questions asked’ return policy, Nordstrom (NYSE:JWN) is a high-end department store chain.
Nordstrom reported revenues of $3.34 billion, up 4.8% year on year, surpassing analysts' expectations by 4.3%. Overall, it was a mixed quarter for the company with optimistic earnings guidance for the full year but a miss of analysts' earnings estimates.
Nordstrom delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 5.5% since reporting and currently trades at $22.19.
This content was originally published on Stock Story
