J.P. Morgan analyst Matthew Boss maintained a Sell rating on Dillard’s (DDS – Research Report) yesterday and set a price target of $313.00.
Matthew Boss has given his Sell rating due to a combination of factors affecting Dillard’s financial performance. The company’s recent earnings report showed a decline in same-store sales by 1% and a contraction in gross margins by 170 basis points, resulting in a year-over-year decline in gross profit for the ninth consecutive quarter. This trend indicates a weakening in the company’s ability to maintain profitability amidst challenging market conditions.
Additionally, Dillard’s inventory levels have grown by 7% year-over-year, creating a significant spread between inventory growth and sales growth. This widening gap suggests potential overstocking issues, which could further pressure the company’s margins. Despite efforts to target a higher-income demographic and upscale its product offerings, Dillard’s faces constrained top-line growth and challenges from declining mall traffic. These factors contribute to the potential erosion of its sales base and expense deleverage, prompting a cautious outlook and the Sell rating.
In another report released on February 19, UBS also maintained a Sell rating on the stock with a $200.00 price target.
Based on the recent corporate insider activity of 182 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of DDS in relation to earlier this year.