Dillard's earnings slide 17%

Shares fall 6.4% as retail industry slump worries investors

Graph showing Dillard's earnings for the 3rd Quarter.
Graph showing Dillard's earnings for the 3rd Quarter.

Shares of Dillard's Inc. plunged 6.4 percent Monday after the company reported a 17 percent decline in third-quarter profit, reflecting Wall Street's concerns about a slowdown in the retail industry.

Dillard's reported a profit of $45.7 million, or $1.19 per share, for the quarter, down from $55.2 million, or $1.30 per share, during the same period a year ago. That missed analysts' estimates of $1.20 per share.

Dillard's reported revenue of $1.47 billion for the period ending Oct. 31, compared with $1.5 billion a year ago. Sales in comparable stores fell 4 percent during the quarter.

"We are disappointed with our third quarter sales performance and in the resulting decline in profit," Chief Executive Officer William Dillard II said in a statement.

Shares of Dillard's fell $4.99 to close Monday at $72.52 on the New York Stock Exchange. The retailer's shares hit a 52-week low of $68.06 during intraday trading. Dillard's shares have traded as high as $144.21 during the past 52 weeks.

Dillard's drop in earnings comes as several department stores, such as Macy's and Nordstrom Inc., have reported financial results that missed analysts' estimates for the third quarter.

The gloomy quarterly reports for retailers -- just ahead of the start of the Christmas shopping season -- raise concerns about the health of consumer spending, analysts said.

Retailers have fallen short of earnings and growth estimates for the third quarter, said Rob Lutts, president and chief investment officer for Cabot Wealth Management.

"I think the concern is: Is this a bigger issue relative to the consumer?" Lutts said. "Or is it a bigger trend going on in the transition to online from in-store?"

Because of stagnant wages, consumers don't have as much disposable income, which is evident in the way they have been saving cash and paying down debt, rather than spending the savings they're enjoying this year because of lower gasoline prices, economists say.

At the same time, department stores, which are facing a decline in mall shopping, have physical and online stores, but their online presence is minimal, Lutts said. He said e-commerce businesses such as Amazon are faring better.

"People who dominate in-store retail are not really skilled in online and don't know how to do it," Lutts said, adding that companies such as Dillard's and Macy's "are very good at what they do, but it's very hard for them to be the best and the leader in the next phase -- and often they don't make that transition very well."

As of Oct. 31, Dillard's had 274 stores and 23 clearance centers in 29 states. That includes a 155,000-square-foot store the company opened in Cincinnati and a 126,000-square-foot location in Slidell, La.

Business on 11/17/2015

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