Dillard's, Inc.'s Dreadful Second Quarter Shows the Importance of Inventory Management

Dillard's, Inc.'s Dreadful Second Quarter Shows the Importance of Inventory Management

It wasn't surprising that Dillard's (NYSE: DDS) performed poorly in the second quarter of fiscal 2017. After all, department store sales have been falling in recent years. Furthermore, Dillard's hasn't been as diligent about reducing its inventory as rivals like Macy's (NYSE: M) and Kohl's (NYSE: KSS).

Nevertheless, the scale of Dillard's Q2 earnings wipeout was shocking. The company posted a $0.58 per share loss, whereas every Wall Street analyst following the company had expected it to be profitable. This just goes to show that struggling department stores must be more careful than ever to maintain lean inventories.

During Q1, Dillard's reported seemingly solid earnings results. While the company did experience some pressure on sales, gross margin recovered relative to a weak performance in the first quarter of fiscal 2016.

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Source: Fool.com