What happened
Shares of Dillard's (DDS +1.55%) were heading lower today as the department store chain slipped with a broader sell-off in the market on fears of a second wave of coronavirus infections that is hitting Southern states particularly hard. Most of the Arkansas-based department store chain's 285 stores are in the South, meaning it is more exposed to an outbreak the region than its peers.
As of 10:57 a.m. EDT, the stock was down 10.2%.
Image source: Getty Images.
So what
There was no company-specific news out on Dillard's, but more than a third of its stores are located in Florida and Texas, two states that have seen rapid increases in new coronavirus cases in recent days, sparking fears of another round of lockdown measures and that potential shoppers will avoid visiting stores.
New cases in Texas reached 2,569 on June 10 and are regularly topping 2,000 a day, while new daily cases in Florida have also recently surged past 2,000, according to data from Johns Hopkins University. Meanwhile, hospitalizations are at peak levels across a number of Southern states.
After closing all of its stores because of the pandemic, Dillard's began reopening them on May 5, with 45 stores opening back up across several states. Management said at the time that it was "monitoring all markets for easing of government restrictions and will reopen stores as soon as possible." In its first-quarter earnings report on May 14, the company said it would have nearly all of its locations reopened by the third week of May.
Now what
Like its department store peers, Dillard's saw first-quarter results severely impacted by the pandemic, with sales falling 47% and a reported loss of $162 million, compared to net income of $78.6 million in the year-ago quarter.
Management had said as of May 14 that sales at reopened stores, which have reduced hours, were trending at 56% of sales a year ago.
So far, state governments across the South have no plans to delay reopening schedules and Dillard's seems unlikely to close stores again unless it has to, but investors should keep an eye on case numbers in the region, as a second wave could at the very least keep customers away from its stores and weigh on the economic recovery more broadly.
