Dillard’s stock slammed as key brick-and-mortar retailers miss Wall Street targets

Shares in Little Rock department store operator Dillard’s Inc. were hammered in trading on Thursday as the Dow Jones Industrial Average declined for the third straight day and the Arkansas retailer and brick-and-mortar rivals Macy’s and Kohl’s missed their earnings targets.

Dillard’s closed the day down 17.5%, or $10.13 at $47.77, as more than 5.5 million shares traded hands on the New York Stock Exchange, nearly six times the normal volume. With 28.15 million shares outstanding, the Arkansas department store owner saw a market loss of $284.6 million. Ahead of Thursday’s opening bell, the southern upscale retailer reported sales of cosmetics, home furnishings and accessories for women negatively impacted the Little Rock department store operator’s first quarter results.

“While our sales decline weighed heavily on our operating results, we remained active in returning cash to shareholders through $93 million of share repurchase and dividends,” said Dillard’s CEO William T. Dillard. “We still ended the quarter with $302 million of cash largely due to better cash management.”

For the period ended April 29, Dillard’s reported net income of $66.3 million, or $2.12 per share, compared to net income of $77.4 million, or $2.17 per share, for the prior year first quarter. Net sales in the first quarter fell 5.3% to $1.42 billion, compared to $1.5 billion in the same period of 2015.

Wall Street had expected Dillard’s to report first quarter earnings of $2.02 per share on revenue of $1.47 billion, according to Thomson Reuters. Still, Dillard’s was not the lone retailer loser in the penultimate day of trading this week. Macy’s stock sank to its lowest level since 2011 after the Cincinnati-based department store operator reported sales and profits were off target in the first quarter as more shoppers flee malls for cheaper offerings from online retailers and discount rivals such as T.J. Maxx.

“In 2017, we are focused on taking actions to stabilize our brick and mortar business, including the testing and iteration of additional pilot programs in order to bring them to scale in future years,” Macy’s CEO Jeff Gennette said. “At the same time, we will invest to aggressively grow our digital and mobile business, while continuing the integration of our online and offline experience to allow our customers to shop the way they live.”

In the first quarter, Macy’s sales were down 7.5% to $5.33 billion. Profits were only $70 million, or 23 cents per share, down 39% from $115, or 37 cents, per share, a year ago. Wall Street had expected the upscale department store chain to report first quarter earnings of 35 cents on revenue of $5.47 billion, according to Thomson Reuters. Macy’s shares closed down 17%, or $4.99 at $24.35 in New York. The company announced plans to close 100 stores earlier this year.

Department store rival Kohl’s reported stronger earnings, but the company’s stock still ended down nearly 8% in Thursday session. The Menomonee Falls, Wisc.-based retailer reported that profits of $66 million were four times higher than a year ago, yet a sales decline of 3% caused the company’s stock to fall $3.16 to $37.16 on the New York Stock Exchange.

ARKANSAS STOCKS DOWN WIDELY

The weakness in the retail sector pulled down the Dow Jones Industrial Average by 0.11%, or 23.69 to 20,919.42. The Dow fell as much as 140 points before recovering at Thursday’s close. The S&P 500 index gave up 5.2 points, or 0.2%, while the tech-focused Nasdaq Composite ended lower for the first time in six sessions, dropping 13.2 points, or 0.2%.

Arkansas stocks were mostly down across the board in Thursday’s session, but trimmed early losses before the day’s closing bell. Besides Dillard’s, Windstream Holdings Inc. was the biggest decliner, closing down 26 cents, or 5.5% at $4.49 per share.

Murphy USA, Deltic Timber and Tyson Foods were the only advancers among Arkansas’ publicly traded concerns, each eking out less than a 1% gain as most U.S. stocks moved backwards.