Dive Brief:
- Dillard’s neither lost nor gained much in Q4 — or all year. The department store Tuesday reported that retail sales in the quarter ending Jan. 31 (not including its construction business) dropped 1% year over year to $1.9 billion, with comps also down 1%. Net income fell 5% to $203.7 million.
- Gross margin was flat at 36.1%. Margins grew moderately in women’s, juniors’ and children’s apparel; were unchanged in women’s accessories and lingerie, shoes, cosmetics, and home and furniture; and declined moderately in men’s apparel and accessories.
- For the full year, total retail sales, comps and gross margin of 39.5% were all essentially flat compared to 2024. Inventory ended up 2%, and net income fell 4% to $570.2 million.
Dive Insight:
Bad weather hurt Dillard’s in Q4, though after the holidays, as more than a third of its stores were in the path of a winter storm in the third weekend in January. More broadly, it was a mixed quarter, with tepid growth but signs of lower promotions.
U.S. search trends at Dillard’s in Q4 were flat year on year, and up compared to Q3, but online visits grew 19% year over year, according to research from the UBS Evidence Lab. Pricing analysis from those researchers also found that discounts declined by 60 basis points compared to last year. Visits to brick-and-mortar stores were also flat compared to the prior year, according to data from Placer.ai.
These results helped achieve what CEO William Dillard called “a respectable year.”
“We achieved retail gross margin of 40.8% in a rapidly changing merchandising environment with unpredictable costs,” he said in a statement. “We rewarded our shareholders with the largest dividend in our history and still held around $1.1 billion in cash and short-term investments at year-end.”
The retailer, which now runs 271 locations across 30 states, is expanding, with plans to open a store in March at The Mall at Fairfield Commons in Beavercreek, Ohio. Though it has slowly expanded, Dillard’s has been hampered by not being a national retailer, according to M Science analyst Matt Jacob.
“They are not in the Northeast, for example, and have a very limited number of stores on the West Coast,” Jacob said by email. “However, among public companies, they do well. I’d put Nordstrom ahead of them, though they are no longer public, they take the most share among the department stores over the past two years.”
Dillard’s is widely seen as among the healthiest department stores, though UBS analysts don’t see that protecting it from the segment’s market share declines. It has carved out a space between mid-tier and luxury, according to Placer data.
Dillard’s ability to draw a broad mix of new shoppers may overcome certain weaknesses against department store peers
One of its apparent weaknesses — a repeat-visit rate that lags behind its peers — may actually reflect a strength, according to Placer’s report. That is, the retailer is attracting new shoppers of various income levels.
“Efforts by Dillard's to refresh its product mix through limited-edition capsule collections and new brand launches may be helping it attract a steady inflow of economically diverse new shoppers,” Placer said.
