Please ensure Javascript is enabled for purposes of website accessibility

Why Dillard's Stock Was Falling Today

By Jeremy Bowman – Jun 15, 2020 at 11:51AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the department store chain dipped as coronavirus infections increased in the South.

What happened

Shares of Dillard's (DDS -1.90%) 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%.

A blurry image of a department store

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.

Jeremy Bowman has 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dillard's, Inc. Stock Quote
Dillard's, Inc.
DDS
$262.94 (-1.90%) $-5.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.