Dillard Stock Prediction: Is Dillard’s Stock a Buy or a Sell?

This Dillard’s stock price prediction article was written by Alexandre Himmelstein, Analyst at I Know First.


  • Dillard’s stock has performed well in the last 3 months and Ted Weschler personally bought a 5.89%. I don’t think it’s a stock to hold for the long term.
  • The Department Stores industry wasn’t showing a good performance even before the coronavirus pandemic, and with the pandemic, consumer and economic conditions are getting worse. 
  • Dillard still has vast real estate holdings and is showing the ability to keep operating costs flat.
  • Even Nasdaq’s highest projection of the stock’s future value is lower than the pre-pandemic standing. Although, I Know First algorithm has a positive forecast for Dillard’s stock.

Dillard’s, Inc., is an American department store that owns 285 stores around the U.S. and is proprietary of a vast real estate holding. Like all companies from this segment, Dillard’s business was greatly affected by the coronavirus pandemic. Between April and August, their stock price dropped to its lowest level. Even with this forecast of an uncertain future, Dillard’s stock is showing a significant recovery in the last 3 months, as shown in the charts below:

Dillard’s stock has still not reached its pre-coronavirus price but has significantly increased by more than 100% in the last 3 months. However, as the stock’s price level remains below its potential value, some market analysts are bearish on the stock.

Should I Buy Dillard’s or Should I Sell it?

Analyzing the department store industry reveals that even before the coronavirus pandemic, the industry has been experiencing financial and business challenges for years. This can be attributed to their obsolete business model. There are significant reasons for categorizing their business model as obsolete, particularly changes in consumer behavior over the last decade. People have started buying things on the internet through e-commerce companies, further motivated by the pandemic.

This scenario shows that the traditional retailer’s business model is hard to maintain and companies from this industry have been unable to adapt its model to e-commerce. “Even as they have worked to transform themselves for e-commerce with apps, websites, and in-store exchanges, the outbreak has laid bare how dependent the department stores have remained on their physical outposts,”. Most analysts argue in this same direction. “As customer behavior evolves and with customers being cautious to walk into a mall in the post-COVID-19 era, we see [Dillard’s] online channel as a weak link of the business compared to its peers.” Says Jen Redding, a Wedbush analyst. Recent trends in department store stocks are consistent with Redding´s analysis:

Source: investor.dillards.com

Analyzing 3 important companies in this segment, we can see DDS is performing relatively well. Unlike its competitors, even though Macy’s has been better adapted to the online sales business comparing with other department stores, it seems their not getting better results. “As with other department stores, Macy’s had stepped up online ordering, delivery, and in-store pickup in an effort to stay current with shopping trends.” 

Source: finance.yahoo.com

Possible Reasons for Dillard’s Stock Increased

The questions are: why is this kind of company having a good performance in the last 3 months? What has significantly changed for the company’s stock to perform well? What positives are the investors seeing in a business model that is largely overpast?

Recently, Ted Weschler personally bought a 5.89% stake in Dillard’s on October 12th, which caused many investors to pay attention to the retailer’s stock. “Dillard’s stock soared more than 35% on Monday.”, as can be seen in the chart below.

Weschler likely purchased the stock because it seems that it has a relatively healthy company, has vast real estate holdings, and is showing a capacity to keep operation costs flat. There are more advantages that Dillard’s demonstrated comparing with the competitors, they mentioned on the quarterly report: Store rent obligations are small compared to the industry, low long-term debt position with next payment due January 2023 ($45 million), and amended $800 million revolving credit facility.

As far as I’m considering, Weschler had bought it not to hold forever, only for a relatively short pandemic term. In my point of view, this industry will not have a significant increase in sales and revenues after the pandemic, it is just a short recovery. Furthermore, Weschler used his personal account to buy it and not Berkshire. “In retrospect, Weschler’s investment seems like a shrewd move”, and may cause a precipitate market movement. Although with this significant rebound, Dillard’s stock still has a long way to go:

Source: https://investor.dillards.com/

Even though it seems that the operating costs have been controlled, the company has been unable to increase its sales revenue. For a business with such small margins, an increase in sales is essential for the company’s performance. According to Dillard’s annual reporting, when looking at the results, you will see that their performance has declined year over year. “The Company expects to finance its operations during fiscal 2020 from cash on hand, cash flows generated from operations and utilization of the credit facility”. When analyzing the net income for the past 3 years, it is clear that it fell 50% between 2018-2020. Net sales from the retail operations segment had decreased $108.6 million during fiscal 2019 compared to fiscal 2018, a decrease of 2% on a percentage basis. Sales in comparable stores decreased 1% for fiscal 2019 compared to fiscal 2018.

On the Second Quarter Results Reports, the company was strongly negatively affected by the pandemic, and that was already expected. Even prior to the pandemic, “Retail operating expenses for the 26 weeks ended August 1, 2020, decreased $256.5 million to $554.4 million (33.7% of sales) compared to $810.9 million (29.0% of sales) for the prior year 26-week period”.

Dillard’s Outlook

The COVID-19 pandemic has had a huge negative effect on the company’s net sales. In Dillard’s annual reporting, the company mentions some uncertainty relating to the impacts of COVID-19 and the market risks: “our liquidity and net sales may be further impacted if we are unable to appropriately manage our inventory levels and expenses.” Furthermore, the company expects to finance its operations this year from cash on hand, cash flows generated from operations, and utilization of the credit facility.

Any other future strategies are not mentioned in both reports or it’s not clear how they will improve the companies’ performance for next year. It’s only mentioned in the second-quarter report the topic “Strong eCommerce business at dillards.com which includes ship-from-store capability”, nothing more.


Even though Dillard’s is still recovering its share value, the price is still below the maximum point. The company must improve its online purchasing services and adapt to this “new reality” in order to increase its revenue. Some analysts are saying that Dillard’s stock is not on a bullish movement as “price target is still about 13% below where the stock sits today.

Seems the company is waiting for the future and for scenery before the pandemic. Nobody knows when it will happen and how will be costumer’s behavior after the pandemic: Do customer will continue going to the malls? Most of them or just a short percentage? No matter what the answers to those questions are, and whenever the pandemic will be over, those kinds of companies should be prepared for that, improve their business model, and adopt new technologies and online services. All those strategies could start now and they don’t have to wait to see how the market will play out. Certainly, this will make a difference in the future.

However, I Know First, has a positive forecast for Dillard’s stock. As can be seen in the table below, according to our Dillard’s stock price prediction, Dillard’s will continue to perform well for next year and could be an option to considerer for one-year-long period term.

DDS forecast.jpg

In my opinion, I don’t think Dillard´s is a stock to hold long term. Even Nasdaq’s highest projection of the stock’s future value is not enough to recover the pre-pandemic standing:

Source: Nasdaq.com

I Know First’s algorithmic trading AI has modeled and generated market movements for 6 time horizons. We provide stock picking strategies for institutional clients, as well as private investors to identify the best investment opportunities in the market. We have various packages of stock market forecast, such as aggressive stocks, top tech stocks as well as Euro to dollar forecast, and Apple stock news that you can find at apple-stock-news.com. Today, we also provide gold predictions and commodity price predictions.

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