Dillard's: Fundamentals Have Deteriorated (Rating Downgrade)
Summary
- I downgrade Dillard’s from hold to sell due to deteriorating fundamentals and potential for further earnings pressure in upcoming quarters.
- Macro conditions have worsened, consumer confidence is low, and Trump’s tariffs could further impact discretionary spending, affecting DDS negatively.
- Gross profit dollars have declined for nine consecutive quarters, with inventory growth outpacing sales, indicating more markdowns and earnings pressure ahead.
- Despite valuation derating, DDS still trades at historical averages, suggesting more downside potential given the ongoing earnings weakness and challenging retail environment.
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