Shares of Dillard's
Significant earnings discrepancies, both to the upside and the downside, are commonplace for Dillard's. The company is controlled by the Dillard family, which not only has several board members but also owns all of the class B shares and hence the voting power to elect two-thirds of the directors.
The firm refuses to issue guidance and communicates minimally with analysts, thus quarterly results often vary widely from estimates. Almost exactly a year ago, Fool LouAnn Lofton reported a mirror-image second quarter, with a $0.35 loss that was nearly double the $0.18 prediction. On the other hand, not all of the surprises are negative. Three months ago, Dillard's blew away the $0.22 consensus estimate by 191%.
Unfortunately, such quarters have been the exception to the rule. Dillard's revenues have declined for four consecutive years, and yesterday's results show few signs of a turnaround. Comps fell by 3%, and overall sales dropped 2.9% to $1.67 billion. After starting the year with four straight months of improvements, same-store sales have now slipped 5%, 1%, and 4%, respectively, over the past three months.
It is difficult to make the case that Dillard's rivals in the mid-upper tier of the retail world are currently suffering the same softness. Federated Department Stores
Dillard's made a few minor improvements in gross margins and outlined several merchandising plans, but aside from that, there was little to cheer in yesterday's results. The sale of the firm's credit card division to General Electric
Until then, Dillard's P/E of 47 seems a little pricey for a company with an ROE of 1.7, a profit margin below one-half of one percent, and a history of unpredictability.
Fool contributor Nathan Slaughter owns none of the companies mentioned.