When thinking of top earning stocks in the market, the first names that come to mind are usually companies in the tech industry such as Tesla, Apple, and Microsoft. Despite this grand digital era we have found ourselves in, a brick-and-mortar department store is managing to not only hold its own, but is also surpassing much of its competition in the market. Dillard’s, a family-owned and run department store, opened its doors a little short of a century ago that has survived the general public’s mass exodus to online shopping.
Nostalgia sold by Dillard’s
In an age where consumers arguably have too much choice, Dillard’s appears to favor a more simplistic approach in terms of inventory and aesthetic appeal. In a somewhat saturated market, with huge competitors like Macy’s and Nordstrom, this South and Southwest giant thrives in a rather old-fashioned and calm way. Ignoring inevitably short-lived microtrends, and instead focusing on efficiently run stores and fulfilling customer merchandising desires has resulted in a steadily increasing market value when compared to its competitors over the last few years. As is the norm with department stores, Dillard’s too opts for merchandise that leans more on the side of high-end or luxury.
Can a department store really overtake Apple?
Dillard’s, now in its 86th year, still runs like a private company, despite going public in 1969 which could be an ingredient in their recipe for success.
In a word, Dillard’s could be described purely as consistent. Shares have risen by a whopping 604% maintaining its position near their all time high, as analyzed since January 2021 — a dream for investors! During the same period, competitors have shown a drop in shares with Macy’s down by 25%, Nordstrom down 34%, and Kohl’s down 62%. In addition to this, Dillard’s has managed to surpass the likes of almost every big company such as Tesla or Apple over the last four years. Nvidia does remain higher, however.
In an erratic economy, this truly could be considered the feat of a lifetime. The company’s success is further bolstered by the fact that their store count and sales have remained consistent for the last decade whilst the same cannot be said for their competitors whose numbers have shrunk a fair amount.
No to nationwide
In 1938, in a world on the cusp of World War II, founder William Thomas Dillard expressed a desire to open a clothing store in Arkansas and this is precisely what he had done with the help of a loan from his father and an MBA from Columbia university. The company began with family and remains under their tight control. Much regarding ownership and management remains a mystery but it is quite evident that consumer satisfaction is the key driving force for the business. In a letter to shareholders, current CEO and son of the founder, William Dillard II writes, “We are the place where customers are far more motivated by fashion and newness than by price or promotional measures”.
Though well established in the South with no desire for a nationwide expansion, the company did attempt a mass acquisition of the Mercantile Store chain in 1998. The $2.9 billion cheque gained the company 100 new locations, bringing the total number of locations to 342 with a $8.5 billion revenue for 1999. Unfortunately, the debt from this deal was too much to bear and by 2003, analysts were compelled to mention the possibility of putting itself up for sale.
Dillard’s did eventually recover from the debt and has seemingly decided to not attempt another acquisition, thereby keeping debt to a minimum. Today, the number of locations remains close to what it was in 2004 – post debt. In this line of business, this kind of stagnancy in numbers is aspired to as the market can be extremely volatile and luck can simply turn. Take, for example, Macy’s who is undertaking another round of store closures.