Three months ago, Dillard's (NYSE: DDS) reported that its profitability improved year over year in its fiscal second quarter, which ended Aug 1. While the regional department store chain still reported a small quarterly loss, this was a surprisingly good result , considering how the COVID-19 pandemic is crushing most department stores' revenue.
Notwithstanding the company's Q2 outperformance, retail analysts still had low expectations for its fiscal third quarter, which ended Oct. 31. On Thursday afternoon, Dillard's proved the doubters wrong again, posting a surprise quarterly profit.
Inventory management was the key to Dillard's big fiscal Q2 earnings beat. The onset of the pandemic caused it to report a massive loss in the first quarter of its fiscal 2020, but aggressive inventory clearance measures did allow the retailer to exit the period with inventory down more than 14% year over year. That contrasted with the frequent inventory gluts that have hurt Dillard's gross margin in recent years.
For further details see:
This Department Store Chain Is Making Money Despite COVID-19